2019 (4) TMI 1037 - HC - Income Tax

Court quashes non-speaking order, emphasizes CBDT guidelines for stay petitions. Petitioners win, bank attachments lifted.

The court quashed the non-speaking order rejecting the stay petition, emphasizing the necessity for a detailed and reasoned decision. It highlighted the ... Stay of recoveries - As the assessee has filed appeal before CIT(A) and 20% of the tax demand is not paid on additions made hence this application is here by rejected - attachment orders - HELD THAT:- This order is non-speaking, merely making reference to nonpayment of 20% of the tax demand by the assessee. Also to consider the impact of the Circulars on the powers of the Assessing Officer/Authorities under the Act to grant a stay, in the case of Mrs.Kannammal V. Income Tax Officer [2019 (3) TMI 1 - MADRAS HIGH COURT] as held that Assessing Officer ought to have taken note of the conditions precedent for the grant of stay as well as the Circulars issued by the CBDT and passed a speaking order. Of course the petition seeking stay filed by the petitioner is itself cryptic. The impugned order which is unacceptable on all counts, is quashed in limine. Pursuant to rejection of stay application on 12.12.2019, the Assessing Officer has issued notices under Section 226(3) of the Income Tax Act to the Axis Bank, Anna Salai branch and the State Bank of India, Leather and International Branch, Kilpauk. Consequent upon my quashing of the order dated 12.02.2019, the aforesaid notices also stand quashed and the bank attachments stand lifted forthwith. Issues Involved:1. Challenge to the rejection of a stay petition by the Assessing Officer.2. Examination of the validity and adherence to CBDT Circulars and guidelines in the rejection of the stay petition.3. Evaluation of the necessity for a speaking order in the rejection of the stay petition.4. Consequences of quashing the impugned order and subsequent actions by the Assessing Officer.Detailed Analysis:1. Challenge to the Rejection of a Stay Petition by the Assessing Officer:The writ petitions challenge an order dated 12.02.2019, which is a single-line, handwritten order rejecting the stay petition filed by the assessee. The order states: 'As the assessee has filed appeal before CIT(A) and 20% of the tax demand is not paid on additions made. Hence this application is hereby rejected.' The court found this order to be non-speaking, merely referencing the non-payment of 20% of the tax demand by the assessee without further elaboration.2. Examination of the Validity and Adherence to CBDT Circulars and Guidelines:The court referenced several CBDT Circulars and Instructions, including Office Memorandum F.No.1/6/69/-ITCC dated 21.08.1969, Instruction No.1914 dated 21.03.1996, Office Memorandum dated 29.02.2016, and Office Memorandum bearing number F.No.404/72/93 – ITCC dated 31.07.2017. These guidelines outline the parameters and conditions under which a stay of disputed demand can be granted. The court emphasized that these guidelines are intended to assist assessing authorities but cannot override the fundamental principles of considering a stay petition.3. Evaluation of the Necessity for a Speaking Order:The court highlighted the importance of a speaking order, which should consider the existence of a prima facie case, financial stringency faced by the assessee, and the balance of convenience. The court noted that the Assessing Officer's rejection of the stay petition was non-speaking and did not adhere to the conditions precedent for the grant of stay as outlined in the CBDT Circulars. The court cited the Supreme Court's decision in Commissioner of Income tax vs Mahindra Mills, emphasizing the duty of the department to assist taxpayers in claiming reliefs.4. Consequences of Quashing the Impugned Order and Subsequent Actions:The court quashed the impugned order dated 12.02.2019, deeming it unacceptable on all counts. Consequently, the notices issued under Section 226(3) of the Income Tax Act to Axis Bank and State Bank of India, following the rejection of the stay application, were also quashed. The court ordered that the bank attachments be lifted forthwith.Conclusion:The writ petitions were allowed, and the connected miscellaneous petitions were closed with no costs. The court's decision underscores the necessity for assessing officers to provide a detailed and reasoned order when considering stay petitions, adhering to the guidelines and principles set forth by the CBDT and judicial precedents.