Assessing authority not in contempt for issuing notice of demand pre-vacating stay petition.

The Court found that the assessing authority did not commit contempt by issuing a notice of demand before vacating the stay petition. Filing an appeal without disclosing the pendency of a writ petition was not contemptuous. Dismissal of the rectification petition was not contempt as it concerned different assessment years. The notice of demand was justified based on valid grounds and did not violate the interim order. The contemnor was discharged, allowing the petitioner to challenge the notice through legal avenues.

---

---

Issues involved:
Violation of interim order by issuance of notice of demand before vacating stay petition, Contempt of court for filing appeal without disclosing pendency of writ petition, Dismissal of rectification petition as contempt, Justification of notice of demand by assessing authority.

Violation of interim order by issuance of notice of demand before vacating stay petition:
The petitioner challenged an income tax order for the assessment year 2015-16 and obtained an interim stay from the High Court. Subsequently, the assessing authority issued a notice of demand under Section 156 of the Income Tax Act, calling for payment of a substantial sum. The petitioner contended that this notice was a willful breach of the interim order. The Senior Counsel argued that the notice was issued before filing an application to vacate the stay order, and the subsequent appeal filed by the contemnor was contumacious. The Court noted that the vacate stay petition was filed after the contempt petition, allowing for the contempt matter to proceed. However, the Court found that the statutory right to appeal cannot be stifled by contempt threats, and filing an appeal did not violate the interim order.

Contempt of court for filing appeal without disclosing pendency of writ petition:
The petitioner alleged that the assessing authority filed an appeal before the Income Tax Appellate Tribunal without disclosing the pendency of the writ petition challenging the original order. The Senior Counsel argued that this act was contumacious and violated the interim stay granted by the High Court. The Court disagreed, stating that filing a statutory appeal does not constitute contempt of the High Court's order. The Court emphasized that the assessing authority has the right to appeal, and the petitioner can present arguments before the Tribunal without violating the interim order.

Dismissal of rectification petition as contempt:
The petitioner's rectification petition was summarily dismissed by the assessing authority, citing the applicability of a particular statutory provision. The Senior Counsel contended that this dismissal amounted to contempt as it contradicted the High Court's interim stay order. The Court clarified that the rectification petitions were for different assessment years not covered by the writ petition. The Court held that the assessing authority's stand on the statutory provision's applicability did not violate the interim order, as the issue was still pending before the Court.

Justification of notice of demand by assessing authority:
The assessing authority justified the issuance of the notice of demand by explaining the basis for the penalty imposed on the petitioner. The authority highlighted the findings of the appellate authority regarding undisclosed income and tax liabilities. The Court reviewed the justifications provided and concluded that the notice of demand was issued based on valid grounds and did not violate the High Court's interim order. The Court discharged the contemnor and allowed the petitioner to challenge the notice of demand through legal means.

---