Court sets aside order, directs deposit, emphasizes financial hardship consideration & natural justice principles.

The court set aside the impugned order rejecting the stay application, directing the petitioner to deposit Rs. 30 lakhs within two weeks and the balance to make up 10% of the demanded amount within an additional two weeks. The Principal Commissioner was ordered to hear the petitioner's appeal on merit, subject to the deposit conditions. The court emphasized the importance of considering financial hardship and providing reasons for rejecting stay applications, highlighting the need for adherence to principles of natural justice.

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Issues Involved:
1. Legality of the impugned order dated 02.12.2022 rejecting the stay application.
2. Requirement for the petitioner to deposit 20% of the disputed demand.
3. Consideration of financial hardship in rejecting the stay application.
4. Compliance with principles of natural justice by the Assessing Officer and Principal Commissioner.
5. Appropriate relief and directions to be granted to the petitioner.

Detailed Analysis:

1. Legality of the Impugned Order Dated 02.12.2022 Rejecting the Stay Application:
The petitioner-Corporation challenged the impugned order dated 02.12.2022, which rejected their stay application on the ground of non-deposit of 20% of the disputed demand. The court noted that the Assessing Officer and the Principal Commissioner failed to provide reasons for rejecting the stay application, indicating non-application of mind. The court emphasized the necessity for the concerned authority to give reasons for rejecting stay applications, adhering to principles of natural justice.

2. Requirement for the Petitioner to Deposit 20% of the Disputed Demand:
The petitioner was required to deposit 20% of the disputed demand, amounting to Rs. 1,56,24,350/-, as per the impugned order. The petitioner argued that the bank deposits and sale price of a vehicle were wrongfully considered as unexplained income and expenditure, respectively. The court observed that the Assessing Officer rejected the stay application in a single line without considering the petitioner's financial hardship and other relevant explanations.

3. Consideration of Financial Hardship in Rejecting the Stay Application:
The petitioner highlighted financial constraints and the hardships it would face if the entire demand was not stayed. The court referred to previous decisions, including the case of Mumbai Metropolitan Region Development Authority v/s. Deputy Director of Income-tax (Exemption-1), which underscored the importance of considering financial hardship when deciding stay applications. The court found that the Principal Commissioner did not adequately consider the petitioner's financial hardship claim.

4. Compliance with Principles of Natural Justice by the Assessing Officer and Principal Commissioner:
The court criticized the Assessing Officer and the Principal Commissioner for failing to apply the principles of natural justice by not providing reasons for rejecting the stay application. The court highlighted the necessity for the concerned authority to briefly set out the case of the assessee and provide reasons, especially when financial hardship is claimed.

5. Appropriate Relief and Directions to be Granted to the Petitioner:
The court decided against remanding the matter, which would cause further delay. Instead, it directed the petitioner to deposit Rs. 30 lakhs within two weeks and the balance to make up 10% of the demanded amount within an additional two weeks. This decision balanced the petitioner's financial hardships and the interests of the revenue. The court ordered the Principal Commissioner to hear the petitioner's appeal on merit, subject to the deposit conditions. The impugned order on pre-deposit was set aside, and a stay on the demand notices was granted, contingent on compliance with the deposit conditions.

Conclusion:
The court made the rule absolute, directing the Principal Commissioner to consider the petitioner's appeal on merit, provided the petitioner deposits 10% of the demanded amount within the stipulated timeframe. The court emphasized the need for the concerned authorities to adhere to principles of natural justice and provide reasons when rejecting stay applications, especially in cases of claimed financial hardship.

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