|DATE:||(Date of pronouncement)|
|DATE:||March 30, 2010 (Date of publication)|
|Click here to download the judgement (paramount_recovery_strictures.pdf)|
Strictures against dept for disposing stay applications without proper reasons
Pursuant to orders u/s 201(1) & 201(1A), the assessee was liable to make payment of Rs. 59.06 crores for three years. The AO rejected the stay application and directed that 50% of the demand be paid. A part of the demand was paid by the assessee. The assessee filed a stay application before the CIT. Of the three years, the CIT granted stay for two years and directed the AO to realize the demand for AY 2010-11 amounting to Rs. 7.69 crores. No reasons were given for the decision. Despite the stay granted by the CIT, the AO issued garnishee notices u/s 226 (3) for the entire amount of Rs. 59.06 crores. The assessee filed a writ petition to challenge the same. HELD allowing the Petition:
(i) The action of the AO in issuing garnishee notices for the entire demand despite the partial stay by the CIT shows defiance and non-application of mind;
(ii) There is no reasoning in the CIT’s order for refusing to stay the demand for AY 2010-11 despite KEC International v. B.R. Balakrishnan 251 ITR 158 where parameters have been laid down to govern the manner in which applications for stay should be dealt with. Either the CIT is ignorant of the law laid down by the Court or has acted in breach of the principles enunciated in the judgment. In either view of the matter, the entire approach of the CIT (TDS) is thoroughly misconceived. In KEC International it was noted that in a large number of matters orders are passed perfunctorily by the department only with an idea of effecting recovery before March 31, though such orders could have been passed earlier in detail and after recording proper reasons. The law laid down by the Division Bench has not led the authorities to act in compliance. This is an unfortunate state of affairs;
(iii) Accordingly, the garnishee notices were stayed and the CIT was directed to pass a fresh order in line with KEC International.