2024 (11) TMI 701 - HC - Income Tax

Assessment Order Set Aside: Case Remitted for Reconsideration with Detailed Evaluation Required.

Mudalaipatti Kunnudaiyan Muthukrishnan Versus Income Tax Officer, Ward 1 (1), Trichy

The HC allowed the writ petition, setting aside the impugned assessment order as non-speaking and remitting it back to the respondent for reconsideration. ... Stay of demand - petitioner had not paid 20% of the disputed amount as per the instructions given by the Board on 31.07.2017 - HELD THAT:- A learned single Judge of this Court in [2021 (4) TMI 609 - MADRAS HIGH COURT] had categorically held that such order passed u/s 220(6) of the Act would only hold good and will have to give way as and when the appellate authority passes an order on the stay petition filed by the aggrieved assessee. The nomenclature stay used in the circular would only mean the powers that is vested with him. The reason for coming to such conclusion is that the power to grant stay is a power that is incidentally available to the appellate authority as held in the judgment reported in ITO Vs M.K. Mohammed Kunhi [1968 (9) TMI 5 - SUPREME COURT] As rightly pointed out by the learned Standing Counsel, even the application filed by the petitioner before the respondent for grant of stay is bald and bereft of any material facts and even if the circular is to be made applicable, then the respondent could have invoke his power u/s 220(6) by directing the petitioner to deposit the sum equivalent to 20% of the disputed amount in appeal. Further, the impugned order does not specify any reason as to why the petitioner was not entitled for the relief under Section 220 (6) of the Act. Since we found that the impugned order is a non speaking order, we am inclined to interfere with the same. The order impugned issued by the respondent is set aside and the matter is remitted back to the respondent by treating the application as one under Section 220(6) of the Act and pass appropriate orders on merits and in accordance with law. The petitioner shall also file a supplementary petition containing the additional particulars and contentions in support of his claim within a period of two weeks from the date of receipt of a copy of this order. On receipt of such application, the respondent shall consider the same and pass appropriate orders within a period of four weeks thereafter. Issues:Challenge to assessment order and stay of proceedings under Section 220(6) of the Income Tax Act, 1961.Analysis:The petitioner filed a writ petition seeking a Writ of Certiorari to challenge the assessment order for the year 2016-17 and to quash the same, as the order was deemed to be a non-speaking order without reasons provided. The petitioner contended that the respondent had rejected the application for stay of proceedings under Section 220(6) of the Act, based on the requirement of paying 20% of the disputed amount, which was not a precondition as per the circular. The petitioner relied on judgments in similar cases and requested the Court to set aside the impugned order (paragraphs 2 and 3).The respondent, represented by the standing counsel, argued that the Assessing Officer does not have the power to grant stay of proceedings under Section 220(6) of the Act. It was emphasized that the Assessing Officer's power is limited to not treating the assessee as in default regarding the disputed amount, subject to conditions at his discretion. The standing counsel further contended that the appellate authority is the proper entity to grant stay, and reasons must be provided for such a decision. The respondent urged the Court to dismiss the writ petition (paragraph 4 and 5).Upon hearing both parties and reviewing the records, the Court noted that the impugned order referred to a circular allowing the Assessing Officer to grant a stay of demand upon payment of 20% of the disputed amount. The Court referred to a previous judgment which clarified that the Assessing Officer's power under Section 220(6) is subordinate to the appellate authority's decision on a stay petition. The Court found the impugned order to be non-speaking and intervened to set it aside, remitting the matter back to the respondent for appropriate orders (paragraphs 7, 8, and 9).In conclusion, the Court allowed the writ petition, setting aside the impugned order and instructing the respondent to reconsider the application for stay under Section 220(6) of the Act with proper reasons provided. The petitioner was directed to submit a supplementary petition with additional details, and the respondent was mandated to make a decision within a specified timeframe. No costs were awarded, and the connected Miscellaneous Petition was closed (paragraphs 10, 11, and 12).