Case Law Details
Mrs. Kannammal Vs ITO (Madras High Court)
Conclusion: The parameters to be taken into account in considering the grant of stay of disputed demandare well settled – the existence of a prima facie case, financial stringency and the balance of ‘Financial stringency’ would include within its ambit the question of ‘irreparable injury’ and ‘undue hardship’ as well. Notwithstanding that assessee might not have specifically invoked the three parameters for the grant of stay, it was incumbent upon AO to examine the existence of a prima facie case as well as call upon assessee to demonstrate financial stringency, if any and arrive at the balance of convenience in the matter.
Held: In the present case, the return of income admitted taxable income of Rs.6,23,770/- claiming an exemption in respect of an amount of Rs.10,19,74,341/-. The exemption had been denied by AO, who bought the same to tax. Thus the income had been computed at a sum of Rs.10,26,01,710/-, which was several times in excess of the income returned. Since this assessment was a ‘high pitched assessment’ he would state that a complete stay of recovery ought to have been granted in such a case. The parameters to be taken into account in considering the grant of stay of disputed demandare well settled – the existence of a prima facie case, financial stringency and the balance of ‘Financial stringency’ would include within its ambit the question of ‘irreparable injury’ and ‘undue hardship’ as well. It was only upon an application of the three factors as aforesaid that AO could exercise discretion for the grant or rejection, wholly or in part, of a request for stay of disputed demand. Notwithstanding that assessee might not have specifically invoked the three parameters for the grant of stay, it was incumbent upon AO to examine the existence of a prima facie case as well as call upon assessee to demonstrate financial stringency, if any and arrive at the balance of convenience in the matter. AO was directed to pass orders de novo on the stay application filed by assessee within a period of four weeks from date of receipt of a copy of this Order.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
Mr.Jayapratap, learned counsel for the respondent takes notice on behalf of the respondent. By consent of both learned counsels, the writ petition is taken up for final disposal at the stage of admission.
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