Hitech Outsourcing Services vs Income Tax Officer and Others

Jayant M. Patel, J.

Rule. Mr. Nitin Mehta, learned counsel appears for respondents Nos. 1 to 3 and waives notice. With the consent of the learned advocates appearing for both the sides, the matter is finally heard. The only question arise for consideration in the present matter is "Whether the order below the stay application could be passed by respondent No. 2 without recording any reasons or not?"

The relevant facts show that after the Assessing Officer passed the order of assessment and made the demand of tax of Rs. 2,07,55,490 for the assessment year 2011-12, the petitioner carried the matter in appeal before the Commissioner of Income-tax (Appeals) contending, inter alia, that it was only a typographical error for claiming the benefit under section 10A, though wrongly typed as section 10B of the Income-tax Act, 1961 (hereinafter referred as "the Act"). It is also not in dispute that the petitioner preferred stay application. However, below stay application, vide order dated August 25, 2014 (annexure D), the said stay application has been initially granted on the condition to furnish the bank guarantee but subsequently, as the bank guarantee was not furnished, the application is dismissed. Under the circumstances, the present petition before this court.

We have heard Mr. Soparkar, learned counsel appearing for the petitioner and Mr. Nitin Mehta, learned counsel appearing for the respondents.

The perusal of the order dated July 28, 2014, as well as the order dated August 25, 2014, shows that when the application for stay came to be decided for the first time, vide order dated July 28, 2014, the reasons are not mentioned for prima facie consideration of the merit or even on the aspect of balance of convenience. Nothing is recorded in the order as to why the ground of bank guarantee for grant of stay is taken into consideration. In our considered view, the order can be said to be non-speaking order since no reasons are mentioned. We may also record that the Department has issued Instruction No. 1914, dated December 2, 1993, for the procedure to be followed while considering the matter for grant of stay application. Mr. Mehta, learned counsel for the respondent-Revenue has not been able to show, any reasons which has weighed the authority for passing the order but he submitted that by way of securing the amount, the bank guarantee is ordered to be furnished. In our view, when the matter is to be considered for grant of stay against any demand made of tax, it may be required for the authority to prima facie consider the merits and balance of convenience and also irreparable injury. None has been examined nor considered. In any event, as the appeal is pending, we leave it at that. Suffice it to observe that when the application is to be considered and decided, it would be required for the concerned authority to record the reasons and then to reach to the ultimate conclusion as to whether the stay should be granted or not and if yes on what condition. In absence of any reasons, the order cannot be sustained.

In view of the aforesaid, the impugned order dated July 28, 2014 (annexure C) and the subsequent order dated August 25, 2014 (annexure D) based on the earlier order, are quashed and set aside with the further direction that the stay application shall stand restored to the Commissioner of Income-tax (Administration) and the stay application shall be considered on the merits and appropriate decision after recording the reasons shall be passed. It would also be open to the petitioner to move the Commissioner of Income-tax (Appeals) for early hearing of the appeal and if such prayer is made, we are sure that the competent authority shall make attempt to dispose of the appeal. In any event, until fresh order is passed below the stay application and/or final order in appeal, whichever is earlier, the ad interim relief granted by this court for not to take coercive action shall remain in operation. The petition is allowed to the aforesaid extent. Rule made absolute accordingly.