Stay petition rejection set aside for being based on an incorrect view of Instruction No. 1914 and remitted for fresh consideration.

The Madras HC held that rejection of a stay petition under section 220(6) could not stand where it rested solely on the incorrect premise that the assessee was outside Instruction No. 1914, as modified by the Office Memoranda dated 29.02.2016 and 31.07.2017. Because the interim relief was refused on that erroneous assumption, the order required interference without examining the merits of the assessment. The rejection was set aside and the stay petition was remitted to the Assessing Officer for fresh consideration on merits and in accordance with law, including application of the relevant instruction.

---

---

Issues: Whether the order rejecting the assessee's stay petition under section 220(6) of the Income-tax Act, 1961 was liable to be set aside and the matter remitted for fresh consideration by applying Instruction No. 1914 dated 02.12.1993 as modified by the Office Memoranda dated 29.02.2016 and 31.07.2017.

Analysis: The impugned order proceeded only on the basis that the assessee was not covered by the said instruction. That premise was not in dispute and was found to be incorrect. As the rejection of interim relief rested solely on that erroneous assumption, the order could not stand and required interference. The merits of the assessment were not examined.

Conclusion: The rejection order was set aside and the stay petition was remitted to the Assessing Officer for reconsideration on merits and in accordance with law, including application of the said instruction.

---