Court directs reconsideration of Income Tax Act stay application, lowers deposit requirement, mandates personal hearing. The court set aside the order rejecting the application for stay of demand notice under the Income Tax Act, 1961, due to lack of cogent reasons. The ...
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Court directs reconsideration of Income Tax Act stay application, lowers deposit requirement, mandates personal hearing.
The court set aside the order rejecting the application for stay of demand notice under the Income Tax Act, 1961, due to lack of cogent reasons. The Principal Commissioner of Income Tax (PCIT) was directed to conduct a fresh review, consider the petitioner's financial situation, and scale down the deposit requirement of 20% based on the case's facts. The PCIT must grant a personal hearing, issue a notice, and pass a speaking order on the stay application. The court also instructed remittance of funds from the petitioner's bank account to the PCIT and lifted the debit freeze, allowing the National Faceless Assessment Centre (NFAC) to proceed with the pending appeal.
Issues involved: The judgment deals with the rejection of an application for stay of demand notice under the Income Tax Act, 1961, based on lack of cogent reasons. The petitioner raised concerns regarding the substantial unsustainability of the demand and inability to meet the terms of the order.
Details of the judgment: The petitioner's grievance was that the impugned order lacked cogent reasons for rejecting the application for stay of demand notice. The order referred to CBDT instructions and required a deposit of 20% of the outstanding demand for stay. An ex parte assessment order was passed, leading to a significant demand raised against the petitioner for the Assessment Year 2021-22.
The petitioner argued that the demand was substantially unsustainable, given its financial situation. The petitioner's assets, turnover, and net worth were highlighted to support this claim. The petitioner contended that a substantial part of the addition to taxable income was unsustainable, particularly related to the sale of machinery, current liabilities, and disallowed expenses.
The court noted that the concerned authority should have considered these aspects while dealing with the application for stay. It emphasized that the requirement to deposit 20% of the demand is not absolute and can be scaled down based on the facts of the case. The court set aside the order dated 08.04.2023 and directed the Principal Commissioner of Income Tax (PCIT) to conduct a fresh review of the application for stay.
The PCIT was instructed to grant a personal hearing to the petitioner's representative, issue a notice for the hearing, and pass a speaking order addressing the assertions made in the stay application. Additionally, the court directed the remittance of the amount available in the petitioner's bank account to the PCIT, with the lifting of the debit freeze.
Despite the PCIT hearing the stay application, the court clarified that it would not hinder the National Faceless Assessment Centre (NFAC) from hearing and deciding on the pending appeal related to the assessment order. The writ petition was disposed of accordingly, and the pending application was closed.
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