2020 (3) TMI 885 - HC - Income Tax

High Court deems premature recovery proceedings due to pending stay application, emphasizes due process. Commissioner to decide within 4 weeks.

Ekambaram Manonmani Versus The Commissioner of Income Tax, The Income Tax Officer, Ward 1 (6), The Branch Manger, Axis Bank, The Branch Manager, Bank of Baroda

The High Court found recovery proceedings initiated by the Assessing Officer premature as the petitioner had a pending stay application before the ... Stay application - recovery proceedings - HELD THAT:- Recovery proceeding are pre-mature, since the petitioner has admittedly filed an application seeking stay before the Appellate Commissioner and the Central Board of Direct Taxes (CBDT) has, in Instruction No. 1914 F. No. 404/72/93 ITCC dated 02.12.1993 directed the Appellate Commissioner to dispose the applications for stay filed by an assessee within a period of two weeks from date of filing of the same. In view of the aforesaid, the impugned communication dated 21.02.2020 is set aside. The petitioner is permitted to appear before the Commissioner of Income Tax (Appeals)/R2 on Tuesday, the 09th March of 2020 at 10.30 a.m. without expecting any further notice in this regard. After hearing the petitioner and considering the stay application, an order shall be passed by R2, taking into consideration the three fold aspects of prima facie case, financial stringency and balance of convenience. This exercise shall be completed within a period of four (4) weeks from 09.03.2020, i.e., on or before 07.04.2020. Let no coercive measures for recovery be insisted upon till 07.04.2020 Issues:1. Premature recovery proceedings initiated by the Assessing Officer.2. Stay application pending before the Commissioner of Income Tax (Appeals).3. Compliance with CBDT Instruction No. 1914 dated 02.12.1993 for disposal of stay applications.4. Setting aside the impugned communication and granting the petitioner a hearing date.5. Directions for the Commissioner of Income Tax (Appeals) to consider the stay application within a specified timeline.6. Prohibition on coercive measures for recovery until a specified date.7. Concluding the Writ Petition without costs.Analysis:1. The High Court noted that the petitioner had been subjected to recovery proceedings by the Assessing Officer despite having filed a stay application before the Commissioner of Income Tax (Appeals). The Court deemed these recovery proceedings premature given the pending application for stay, emphasizing the need for due process and fair consideration of the petitioner's case.2. Highlighting the petitioner's efforts to seek relief through a stay application, the Court referenced Instruction No. 1914 issued by the Central Board of Direct Taxes (CBDT) on 02.12.1993. This instruction directed the Appellate Commissioner to promptly dispose of such applications within a specific timeframe, ensuring timely resolution of disputes and preventing unnecessary coercive actions against the taxpayer.3. Consequently, the Court set aside the impugned communication dated 21.02.2020, providing the petitioner with an opportunity to present their case before the Commissioner of Income Tax (Appeals) on a specified date. The petitioner was instructed to attend the hearing on 09th March 2020 without further notice, and the Commissioner was directed to consider the stay application based on various factors, including prima facie case, financial constraints, and the balance of convenience.4. To ensure a fair and expeditious resolution, the Court imposed a deadline of four weeks from the hearing date for the Commissioner to make a decision on the stay application, i.e., on or before 07.04.2020. During this period, the Court prohibited any coercive recovery measures against the petitioner, emphasizing the importance of a thorough review and assessment of the petitioner's circumstances before taking any enforcement actions.5. The Court concluded the Writ Petition in the aforementioned terms, emphasizing that no costs were to be incurred by either party. Additionally, all connected Miscellaneous Petitions were closed, bringing the legal proceedings to a comprehensive and decisive end while safeguarding the petitioner's rights and ensuring procedural fairness in the tax dispute resolution process.