| The Tax Publishers2019 TaxPub(DT) 3827 (Mad-HC) INCOME TAX ACT, 1961
Section 220(6)
It was incumbent upon AO to examine existence of a prima facie case as well as call upon assessee to demonstrate financial stringency, if any and arrive at the balance of convenience in the matter. Clearly AO did not follow settled principles to be applied in adjudication of stay application and the same was, therefore, quashed.
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Recovery - Rejection of stay application - Three parameters for deciding stay application neither established by assessee nor adjudicated upon by AO -
AO rejected stay application on the ground that assessee had not paid any amount towards disputed taxes, in accordance with the guideline issued by CBDT. Assessee challenged the order passed under section 220(6) by way of writ petition.Held: Well settled parameters for deciding application for stay being, existence of a prima facie case financial stringency and balance of convenience as between the parties, had to be established by assessee and adjudicated upon by Officer concerned in an order upon an application for stay. In the instant case, stay application contained some details regarding the merits of the case. Moreover, AO had himself requested for a copy of grounds of appeal ostensibly to verify the merits of the appeal for prima facie decision on merits. Having done so, there was absolutely nothing in the order to indicate application of mind to this aspect. Of course application seeking stay filed by assessee was itself cryptic assessee might not have specifically invoked three parameters for grant of stay, however, it was incumbent upon AO to examine existence of a prima facie case as well as call upon assessee to demonstrate financial stringency, if any and arrive at the balance of convenience in the matter. Clearly AO did not follow settled principles to be applied in adjudication of stay application and the same was, therefore, quashed. Assessee was directed to appear before AO and AO after hearing assessee and considering all materials placed before him would pass suitable orders.
REFERRED : CIT v. Arun Textile 'C', Mahendra Mills & Anr. (2008) 296 ITR 85 (Mad) : 2008 TaxPub(DT) 575 (Mad-HC), Mrs. Kannammal v. ITO [W.P. No. 3849 of 2019, dated 13-2-2019] : 2019 TaxPub(DT) 1826 (Mad-HC). CIT v. Aircel Ltd. (2008) 296 ITR 0085 (Mad) : 2008 TaxPub(DT) 0575 (Mad-HC)
FAVOUR : In assessee's favour.
A.Y. : 2016-17
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