Court sets aside non-speaking order, remits for fresh assessment. Petitioner allowed supplementary petition.

The court set aside the impugned non-speaking order and remitted the matter to the assessing officer for a fresh order in compliance with the law. The petitioner was permitted to file a supplementary petition with additional details, and the assessing officer was directed to consider all petitioner contentions in the new order under Section 220(6). The writ petition was granted without costs, and related miscellaneous petitions were closed.

---

---

Issues Involved:
1. Reopening of assessment years 2015-16 and 2016-17.
2. Legality of the notice issued under Section 143(2) of the Income Tax Act.
3. Validity of the recovery proceedings initiated by the first respondent.
4. Compliance with Office Memorandum and CBDT instructions.
5. Nature and adequacy of the impugned order passed under Section 220(6) of the Income Tax Act.
6. Jurisdiction and authority of the Principal Commissioner of Income Tax in stay petitions.

Detailed Analysis:

Reopening of Assessment Years 2015-16 and 2016-17:
The petitioner, a major distributor of ITC products and a partnership firm, underwent a survey under Section 133A of the Income Tax Act on 05.12.2017. Based on this survey, the assessments for the years 2015-16 and 2016-17 were reopened. The petitioner contended that after the issue was initially settled, a second notice under Section 143(2) was issued on 20.09.2018, leading to adverse orders on 29.12.2018. An appeal was filed before the Commissioner of Income Tax (Appeals), Madurai.

Legality of Notice Issued Under Section 143(2):
The petitioner argued that the second notice under Section 143(2) was issued improperly after the issue had been settled. The petitioner sought to challenge the adverse orders resulting from this notice by filing an appeal.

Validity of the Recovery Proceedings:
The petitioner submitted an application under Section 220(6) to avoid being treated as an assessee in default during the pendency of the appeal. The first respondent directed the petitioner to pay 20% of the demand for stay, failing which follow-up action would be taken. The petitioner questioned this communication dated 06.02.2020 through the writ petition.

Compliance with Office Memorandum and CBDT Instructions:
The petitioner’s counsel argued that the first respondent failed to consider the Office Memorandum dated 21.08.1969 and other relevant CBDT instructions. The counsel cited several decisions, including Kannammal vs. Income Tax Officer, to support the contention that the parameters for stay application consideration were ignored.

Nature and Adequacy of the Impugned Order:
The court observed that the impugned order under Section 220(6) was non-speaking and did not comply with the requirement of a reasoned order as mandated by CBDT Instruction No. 1914. The court noted that the assessing officer must consider all relevant factors and communicate the decision in a speaking order. The court emphasized the need for the assessing officer to be proactive and consider the appeal memorandum while applying the trinity principles of prima facie case, financial stringency, and balance of convenience.

Jurisdiction and Authority of the Principal Commissioner of Income Tax:
The court clarified that the Principal Commissioner of Income Tax could only exercise jurisdiction under Section 220(6) upon a reference from the assessing officer or if the assessee is aggrieved by the assessing officer's order. The Principal Commissioner cannot assume jurisdiction in the first instance. The court also noted that the Hon’ble Supreme Court in Principal Commissioner of Income Tax vs. LG Electronics India Private Limited clarified that authorities could grant deposit orders of a lesser amount than 20% without reference to administrative instructions.

Conclusion:
The court set aside the impugned order for being non-speaking and remitted the matter to the assessing officer to pass a fresh order in accordance with the law. The petitioner was allowed to file a supplementary petition with additional particulars. The court directed the assessing officer to consider all contentions raised by the petitioner while passing the order under Section 220(6). The writ petition was allowed with no costs, and connected miscellaneous petitions were closed.

---