Stay Application Rejected by Income Tax Dept Over alleged Under-Reporting: Madras HC  directs to Resolve Appeal in 4 Months [Read Order]

In a recent ruling, the Madras High Court instructed the Income Tax Department to resolve an appeal within four months in a matter where the department had rejected the stay application based on an incorrect impression of under-reporting by the assessee.

The assessee-petitioner, Aparajitha Foundations challenged the impugned orders dated 01.12.2023 and 28.02.2024 related to the Assessment Year 2018-2019, seeking a directive to treat the petitioner as not being in default under Section 220(6) of the Income Tax Act, 1961.

Get a Copy of Handbook To Income Tax Rules, Click here

The assessee contended that the original assessment orders, passed by the respondent- income tax Department, were appealed before the fourth respondent (The Commissioner of Income Tax, NFAC).

During this period, the assessee sought a stay on the demand by filing petitions with the second and first respondents, both of which were denied, leading to the current writ petitions. Following the filing of these petitions, an interim stay was granted by the Court.

The assessee submitted that the income tax appeals against the original assessment orders have been pending since 01.03.2022 and requested the Court to direct the department to expedite the disposal of these appeals while extending the interim stay order.

The Senior Standing Counsel for the respondents requested the extension of the interim order, contingent upon the petitioner paying 20% of the penalty amount.

The court noted the assessee's submission that they were not liable to pay any tax, yet the Assessment Officer erroneously concluded that there was under-reporting. This incorrect assessment led respondents 2 and 3 to reject the stay application under the same mistaken belief.

Get a Copy of Handbook To Income Tax Rules, Click here

Justice Krishnan Ramasamy noted that the assessee’s previous stay applications had been rejected by two authorities. However, analysing the circumstances, the Court found it appropriate to direct the fourth respondent, the Commissioner of Income Tax, to dispose of the appeals within 4 months from the receipt of the Court’s order. The interim stay granted on 11.03.2024 was extended until the appeals are resolved.

Mr.P.Vinod Kumar and Mr.V.Mahalingam  appeared for the assessee and the respondents respectively.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates