Court quashes AO's order, halts recovery, criticizes lack of discretion. Respondent to expedite appeal process.

The Court quashed the Assessing Officer's order and issued an injunction against recovery proceedings until the appeal was resolved. The Court criticized the Assessing Officer for not considering relevant factors and failing to exercise discretion in granting the stay. The second respondent was directed to expedite the appeal process within three months. The decision was based on the need for a timely resolution and the failure of the Assessing Officer to exercise discretion. The writ petition was disposed of without costs, concluding the legal proceedings.

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Issues:
Challenge to order passed by first respondent in PAN: AAATT1082B regarding tax assessment and stay application.

Analysis:
The petitioner, a Public Charitable Trust with exemption under section 12A(a) of the Income Tax Act, challenged an order by the Assessing Officer regarding tax assessment. The Department alleged that the petitioner's property was let out to an Associate Company below market rent, resulting in a tax demand of Rs. 82,70,246. The petitioner appealed this order, seeking a stay on recovery pending appeal. The Assessing Officer dismissed the stay application, citing the requirement to deposit 20% of the assessed tax and interest. The petitioner argued that the circular from CBDT defines "income" in a commercial sense and claimed that all income was utilized for charitable purposes, thus not liable for tax on notional income.

In a detailed discussion, the Court acknowledged the long-standing relationship between the petitioner and their tenants, emphasizing that the tax issue arose only in the assessment year 2016-2017 despite consistent filings since 1973. The Court referred to a previous judgment highlighting that the Commissioner of Income Tax (Appeals) has discretionary powers to grant stay on recovery, especially in cases of high pitched tax assessments. The Court found that a prima facie case was established by the petitioner, as the tax demand was substantial and the tenants were associated with the petitioner for decades. The Assessing Officer was criticized for not considering these factors and failing to exercise discretion in granting the stay.

Ultimately, the Court quashed the order passed by the first respondent and issued an injunction against recovery proceedings until the appeal was disposed of. The second respondent was directed to expedite the appeal process within three months. The Court's decision was based on the failure of the Assessing Officer to exercise discretion and the need for a timely resolution of the appeal. The writ petition was disposed of with no costs, concluding the legal proceedings in this matter.

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