2023 (6) TMI 934 - HC - Income Tax

Court upholds conditional stay order, rejects petitioner's challenge. Stay petition allowed before Appellate Authority.

Parambath Sunaij, Versus Union Of India, The Principal Commissioner Of Income Tax, Kozhikode, Additional / Joint / Deputy / Assistant Commissioner Of Income Tax/ Income-Tax Officer, (Presently Assessment Unit), New Delhi, Income Tax Officer, Kannur,

The Court upheld the conditional stay order (Ext. P8) issued by the second respondent, rejecting the petitioner's argument that it was arbitrary and ... Stay of demand - petitioner directed by fourth respondent to deposits 20% of the demand - discretionary power exercised by the second respondent reducing deposit 15% of the demand - HELD THAT:- The Hon’ble Supreme Court has in a catena of precedents laid down the circumstances under which, this Court can interfere with orders passed by quasi-judicial authorities under Article 226 of the Constitution of India. In Sarvepalli Ramaiah v. District Collector, Chittoor and others [2019 (3) TMI 1690 - SUPREME COURT] has succinctly laid down the principles of judicial review of administrative decisions. As held that this Court shall interfere with administrative decisions only on grounds of perversity, patent illegality and irrationality. That is when the error of law on the face of decision goes to the root of the decision, and this Court does not sit in appeal over such decisions. A reading of Ext. P8 order demonstrates that the second respondent has very cautiously and carefully considered the matter and has passed a reasoned order, without going into the merits of the appeal. Accordingly, the second respondent has directed the petitioner to deposit 15% of the demand to stay the recovery proceedings. No manifest error or illegality in Ext. P8 order warranting interference by this Court under Article 226 of the Constitution of India. Issues involved: The writ petition to quash Ext. P8 order passed by the third respondent for a conditional stay of Ext. P1 assessment order.Judgment Summary:Issue 1: Stay Application Process The petitioner filed Ext. P4 stay application before the Assessing Authority under Section 220(6) of the Income Tax Act, 1961. Dissatisfied with the conditional order of stay, the petitioner moved a review application before the second respondent. The second respondent, after finding the assessment high pitched, passed Ext. P8 conditional order of stay. The petitioner contends that Ext. P8 is arbitrary and illegal, failing to consider fulfillment of trinity parameters laid down under the law.Issue 2: Legal Arguments Counsel for the petitioner cited the office memorandum by the Central Board of Direct Taxes and a decision of the Madras High Court to support the contention that the second respondent erred in not unconditionally staying the demand. The petitioner argued that the discretionary power exercised by the second respondent was unjustified and requested the order to be quashed for reconsideration.Issue 3: Respondent's Defense The respondent argued that Ext. P8 order was well-reasoned and followed CBDT guidelines. The respondent contended that the discretionary power exercised was valid, and there were no grounds for interference by the Court under Article 226 of the Constitution of India.Issue 4: Judicial Review Referring to precedents, the Court highlighted the circumstances under which it can interfere with quasi-judicial orders. It emphasized that interference is limited to cases of perversity, patent illegality, and irrationality in administrative decisions.Final Decision: The Court found no manifest error or illegality in Ext. P8 order warranting interference. The petitioner was permitted to move a stay petition before the Appellate Authority in Ext. P2 appeal, reserving the right to do so within two weeks. The Court clarified that it had not expressed any opinion on the merits of the proposed application in Ext. P2 appeal, instructing the appellate authority to consider and dispose of the application without influence from previous orders.This summary provides a detailed breakdown of the judgment, covering the issues involved, legal arguments presented, the respondent's defense, judicial review principles, and the final decision rendered by the Court.