Hubballi Electricity Supply Co. Ltd. vs The Commissioner of Income Tax (Appeals) and Others

B. Manohar, J.

Petitioner in this writ petition has sought for quashing the order dated 18-03-2015 passed by the First respondent rejecting the application filed by the petitioner seeking for stay of collection of tax for the assessment year 2011-12.

The grievance of the petitioner is against the assessment order for the assessment year 2011-12 and also Rectification order dated 23-12-2014 under Section 154 of the Income Tax Act, 1961 and he preferred an appeal before the Commissioner of Income Tax (Appeals) (hereinafter referred to as ''the First Appellate Authority''). The petitioner also filed an application seeking for stay of collection of tax demanded on the basis of the assessment order or the rectification order to an extent of Rs. 60,47,53,790/-. However, the First Appellate Authority without considering the application for grant of stay of collecting tax passed the order in cryptic manner on 18-3-2015, which reads as under:

"With reference to the letter dated 05-02-2015, this is to inform you that your stay application is not considered. However, the early hearing of your appeal having No. 444/''CIT(A)/HBL/''2014-1''5 is considered. So your stay application is rejected."

While rejecting the application for stay of collection of tax, the petitioner was not heard. Being aggrieved by the said order, the petitioner preferred this writ petition. In the meanwhile, the bank accounts of the petitioner in Syndicate Bank, ING Vysya Bank, State Bank of Mysore, Canara Bank and Vijaya Bank were attached. This Court while issuing notice to respondents granted an interim order of stay of collection of tax demanded for the assessment year 2011-12. Before communication of the said order, the respondent had collected a sum of Rs. 2,44,46,740/- and also collected a Demand Draft for a sum of Rs. 1,89,32,484/-. The said Demand Draft is yet to be encashed.

It is the contention of the petitioner that attachment of bank accounts and encashment of some amount is contrary to law. The Appellate Authority without considering the contentions urged in the appeal and without hearing the petitioner rejected the stay application, which is contrary to law.

Section 246-A of the Income Tax Act provides for an appeal before the Appellate Authority. The Appellate Authority is bound to consider the appeal in proper perspective and pass necessary orders, otherwise, the very purpose of providing statutory appeal will be frustrated. In the instant case, the petitioner being aggrieved by the assessment order as well as the rectification order, had filed an appeal along with the application seeking for stay of the said orders. The First Appellate Authority without hearing the petitioner rejected the said application, which is contrary to law. The order passed by the First Appellate Authority is not a speaking order. Hence, I feel that the First Appellate Authority has to reconsider the matter afresh and pass appropriate orders on the application filed by the petitioner for grant of stay of collection of the tax demanded. Hence, it is appropriate to direct the First Appellate Authority to reconsider the matter afresh and pass orders in accordance with law after hearing the petitioner.

It was brought to the notice of the Court that during the pendency of this writ petition, Rs. 4,33,79,224/- has been recovered from the petitioner. The demand notice was issued for Rs. 60,47,53,790/- and the amount collected is less than 7%. The amount collected may be adjusted to the dues. On the other hand, if the petitioner succeeds in the appeal, the respondent shall refund the said amount with interest, in accordance with law.

With the above observations, the appeal is allowed. Annexure-K is quashed and the matter is remanded to the First Appellate Authority to reconsider both the appeal as well as the stay application in accordance with law, as expeditiously as possible. In view of quashing the order dated 18-03-2015, attachment of bank accounts will have to be withdrawn by the respondents.

The First Appellate Authority is directed to dispose of the stay application within a period of 30 days and the main appeal within three months from the date of receipt of a copy of this order.

The respondents are directed not to take any coercive steps till the stay application is considered.