BOMBAY HIGH COURT
KEC INTERNATIONAL LTD. VS. B.R. Balakrishnan And ORS.
DATED : 29.03.2001
Summarised
Judgement (Scroll for Complete Judgement)
It was stated that the
authority while deciding the stay application has to at least briefly set out
the case of the assessee. Further, it
was stated that in case assessed income far exceeds the returned income, the
authority has to consider for unconditional stay or in the alternative
considering the issue involved a part of the amount should be ordered to be
deposited. Further it was provided that
authority should also keep in mind time for filing the appeal and coercive
measures should not be taken during the period provided by the statute to go in
appeal. In case the authority is taking recourse to coercive action during
this period, brief reasons should be given in the order.
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Complete Judgement
BOMBAY HIGH COURT
KEC INTERNATIONAL LTD. VS. B.R. Balakrishnan And ORS.
DATED : 29.03.2001
DATED : 29.03.2001
JUDGMENT :
1. Rule. The respondents waive service. By consent,
rule made returnable forthwith.
2. In a large number of matters, this court finds
orders being passed perfunctorily by the Department only with the idea of
effecting recovery before March 31, though such orders could have been passed
earlier in detail and after recording proper reasons. This is one of those
cases.
3. The Assessing Officer passed the assessment order
on February 5, 2001, under Section 143(3) for the assessment year 1998-99
(previous year ending on March 31, 1998). Pursuant to the said assessment
order, a notice of demand of Rs. 12.93 crores including interest was issued on
February 5, 2001, under Section 156 of the Act. On receipt of the notice of
demand, the assessee filed a stay petition on February 23, 2001, before the
Assessing Officer and requested him to stay the demand in order to enable the
petitioner-assessee to file an appeal with the Commissioner of Income-tax. The
stay petition was rejected by the Assessing Officer on March 5, 2001. Being
aggrieved by the rejection of the stay application filed by the assessee, the
matter was carried to the second respondent on the administrative side vide
letter dated March 13, 2001. By the impugned order, respondent No. 2 dismissed
the stay petition.
4. For the sake of clarity, the impugned order is
quoted hereinbelow :
"I am directed to refer to your application for
stay of demand dated March 13, 2001, and to say that the matter was discussed
by the Commissioner of Income-tax, MC-I, Mumbai, with your representative Shri
Haresh G. Buch and Shri Yogesh Thar, C. As. from B. S. Mehta and Co. and Shri
R. Ramji, Financial Controller of the company. The Commissioner of Income-tax,
MC-I, Mumbai, declines to interfere in the matter as the company did not agree
to make even part payment of 25 per cent, of the existing demand."
5. At the outset, it may be mentioned that the
impugned order is passed by respondent No. 2 on the administrative side. It
does not give any reason. However, it is important to bear in mind that in this
case even the Assessing Officer has not given any reasons for rejecting the
stay application. As a result of the impugned order, a garnishee notice has
been issued under Section 226(3) to the Central Bank of India, J. B. Nagar
Branch, Andheri (East), Mumbai. About 500 workers have not been paid salary
because of the garnishee notice. This is the consequence of an order being
passed without giving any reasons. Hence, we intend to lay down certain
parameters which are required to be followed by the authorities in cases where
a stay application is made by an assessee pending appeal to the first appellate
authority.
6. Parameters :
(a) While considering the stay application, the
authority concerned will at least briefly set out the case of the assessee.
(b) In cases where the assessed income under the
impugned order far exceeds returned income, the authority will consider whether
the assessee has made out a case for unconditional stay. If not, whether
looking to the questions involved in appeal, a part of the amount should be
ordered to be deposited for which purpose, some short prima facie reasons could
be given by the authority in its order.
(c) In cases where the assessee relies upon
financial difficulties, the authority concerned can briefly indicate whether
the assessee is financially sound and viable to deposit the amount if the
authority wants the assessee to so deposit.
(d) The authority concerned will also examine
whether the time to prefer an appeal has expired. Generally, coercive measures
may not be adopted during the period provided by the statute to go in appeal.
However, if the authority concerned comes to the conclusion that the assessee
is likely to defeat the demand, it may take recourse to coercive action for
which brief reasons may be indicated in the order.
(e) We clarify that if the authority concerned
complies with the above parameters while passing orders on the stay
application, then the authorities on the administrative side of the Department
like respondent No. 2 herein need not once again give reasoned order.
7. The above parameters arc not exhaustive. They are
only recommendatory in nature.
8.Subject to the above, the impugned order is set
aside with a direction to the Assessing Officer to dispose of the stay
application preferred by the assessee in accordance with law. Consequent upon
our setting aside the impugned order, the above garnishee notice is also set
aside.
9. The writ petition is accordingly allowed with no
order as to costs.
10. Issuance of certified copy expedited.
11. Parties to act on an ordinary copy of this
order, duly authenticated by the associate of this court.
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