2025 (1) TMI 244 - HC - Income Tax

Section 220(6) stay application orders set aside for lack of reasoned decisions and procedural violations

Harshit Singhania Buildcon Versus Union Of India, Principal Commissioner Of Income Tax (Central) Bhopal, Assistant Commissioner Of Income Tax Central Circle 2 Raipur, Commissioner Of Income Tax (Appeals) National Faceless Appeal Centre (Nfac), Delhi, The Additional Commissioner Of Income Tax (Central) Raipur, The Deputy Commissioner Of Income Tax (Central) -2 Raipur.

Harshit Singhania Buildcon Versus Union Of India, Principal Commissioner Of Income Tax (Central) Bhopal, Assistant Commissioner Of Income Tax Central ... 1. ISSUES PRESENTED and CONSIDEREDThe core legal issues presented and considered in this judgment include:Whether the orders dated 14.06.2024 and 18.10.2024 rejecting the stay application and review application were passed in a manner consistent with established legal principles and guidelines.Whether the authorities erred in not providing a reasoned and speaking order while rejecting the applications of the petitioner for stay of demand.Whether the principles of natural justice, particularly the requirement of a fair hearing, were violated in the process of passing the impugned orders.Whether the trinity principle of prima facie case, financial hardship, and balance of convenience was duly considered by the authorities while deciding the applications.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Adequacy of the Order Issuance ProcessRelevant Legal Framework and Precedents: The legal framework involves the application of Section 220(6) of the Income Tax Act, 1961, and adherence to guidelines laid down by precedents such as KEC International Ltd. vs. B.R. Balakrishnan and UTI Mutual Fund vs. Income Tax Officer.Court's Interpretation and Reasoning: The court emphasized the necessity for authorities to provide reasoned and speaking orders, reflecting the considerations of the case presented by the assessee.Key Evidence and Findings: The orders were found lacking in detailed reasoning and failed to address the specific circumstances and arguments presented by the petitioner.Application of Law to Facts: The court applied the guidelines from the aforementioned precedents, noting the absence of compliance by the authorities in issuing the impugned orders.Treatment of Competing Arguments: The petitioner argued that the orders were non-speaking and devoid of reasoning, a position supported by the court. The respondents' defense of the orders was not upheld.Conclusions: The court concluded that the orders were improperly issued without adherence to the necessary legal standards and guidelines.Issue 2: Violation of Natural JusticeRelevant Legal Framework and Precedents: The principles of natural justice require that parties be given a fair opportunity to present their case, a principle upheld in various judicial decisions.Court's Interpretation and Reasoning: The court found that the authorities had failed to provide the petitioner with an adequate opportunity to be heard, thereby violating the principles of natural justice.Key Evidence and Findings: The absence of a hearing and lack of detailed reasoning in the orders were critical factors in the court's determination.Application of Law to Facts: The court applied the principles of natural justice to the facts, determining that the petitioner's rights were not adequately protected.Treatment of Competing Arguments: The respondents' arguments supporting the procedural adequacy of the orders were rejected by the court.Conclusions: The court concluded that the orders were issued in violation of the principles of natural justice.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning: 'The impugned orders dated 14.06.2024 and 18.10.2024 are hereby set aside and the matter is remitted to the respondent No. 2 to consider the stay application afresh/review application in the light of the guidelines as stated by the Bombay High Court.'Core Principles Established: The necessity for reasoned and speaking orders, adherence to established guidelines for stay applications, and the protection of natural justice principles were reaffirmed.Final Determinations on Each Issue: The court set aside the impugned orders and remitted the matter back to the authorities for reconsideration in compliance with legal standards and guidelines.