Court sets aside order rejecting stay application for disputed taxes, directs petitioner to file stay petition within two weeks.

The Court allowed the writ petition, setting aside the impugned order rejecting the stay application for disputed taxes. The petitioner was directed to file a stay petition before the Appellate Authority within two weeks. The Appellate Authority was instructed to decide on the application within four weeks, with no coercive action against the petitioner until then. No costs were to be incurred in the matter.

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Issues involved:
1. Rejection of stay application by the first respondent
2. Petitioner's appeal before the Appellate Authority
3. Failure to pay 15% of the tax liability as demanded
4. Justifiability of the first respondent's order
5. Entitlement of the petitioner to file a stay petition before the Appellate Authority
6. Setting aside the impugned order and directing the petitioner to file a stay petition before the Commissioner of Income Tax (Appeals)

Analysis:

1. The petitioner was aggrieved by the first respondent's order rejecting the stay application for the demand of disputed taxes until the appeal by the CIT (A) -1 was disposed of. The petitioner had filed an appeal against the assessment order passed by the Assessing Officer and sought a stay on the recovery of the disputed tax demand. However, the first respondent rejected the application without providing any reason or finding, which the petitioner found unjustifiable.

2. The petitioner contended that the order of the first respondent was unreasonable as the appeal was still pending before the Appellate Authority. The petitioner cited a previous judgment where a similar order was set aside, allowing the assessee to file a stay petition before the Appellate Authority. The petitioner argued that they should have been given the opportunity to file a stay petition before the Appellate Authority.

3. The Standing Counsel for the respondents argued that the petitioner had not filed a stay petition before the Appellate Authority and had failed to pay 15% of the tax liability as demanded by the Assessing Officer. Therefore, the order of the Principal Commissioner was justified in rejecting the petitioner's application.

4. The Court observed that the order of assessment had not reached finality as the appeal was pending before the CIT (A). The petitioner was entitled to file a stay petition before the Appellate Authority and present all relevant points in support of their petition. The Court noted that the first respondent's order lacked reasoning and could not be sustained. However, the Court decided not to remit the matter back to the first respondent, as the petitioner could file a stay petition before the Commissioner of Income Tax (Appeals) where the appeal was pending.

5. Consequently, the Court allowed the writ petition, setting aside the impugned order. The petitioner was directed to file a stay petition before the Commissioner of Income Tax (Appeals) within two weeks. The Appellate Authority was instructed to dispose of the application on merits and in accordance with the law within four weeks. No coercive action was to be taken against the petitioner until a decision was made by the Appellate Authority. The Court also ordered no costs to be incurred in this matter.

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