KAY KAY ENTERPRISES vs. THE INCOME TAX OFFICER, WARD 2(2)

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WP(C)/34294/2019HC KeralaKLHC01089481201916 December 2019Author: HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Kerala quashed the conditional stay order passed by the Commissioner of Income Tax (Appeals). The Court held that the CIT(A) failed to provide reasons for requiring the petitioner to deposit 20% of the disputed amount as a condition for the stay. Citing the precedent in Archana Agencies v Commercial Tax Officer, the Court emphasized that an authority considering a stay petition is bound to give reasons, even when granting a conditional stay. Consequently, the matter was remanded to the CIT(A) for reconsideration. The CIT(A) was directed to pass fresh orders on the stay petition within one month of receiving the judgment, after hearing the petitioner. Recovery steps against the petitioner were to be kept in abeyance until fresh orders were passed and communicated.

What were the facts?

The petitioner, Kay Kay Enterprises, is an assessee under the Income Tax Act, 1961. The petitioner filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] against an assessment order passed by the Income Tax Officer. Along with the appeal, a stay petition was filed. The CIT(A), in its order on the stay petition, directed the petitioner to deposit 20% of the disputed amount as a condition for granting a stay against the recovery of the balance amounts confirmed in the assessment order. The petitioner filed a writ petition before the High Court of Kerala challenging this conditional stay order, contending that the CIT(A) had not exercised its discretion validly.

What were the issues?

1. Whether the Commissioner of Income Tax (Appeals) exercised his discretion validly while passing a conditional stay order, requiring the petitioner to deposit 20% of the disputed amount? Assessee's Contention: The petitioner argued that the CIT(A) had not exercised its discretion validly in passing the conditional stay order. The petitioner relied on the decision in Archana Agencies v Commercial Tax Officer - 2014 (2) KLT 715, which mandates that an authority considering a stay petition must provide reasons even for a conditional stay. Revenue's Contention: The judgment does not record any specific contentions made by the revenue.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR MONDAY, THE 16TH DAY OF DECEMBER 2019 / 25TH AGRAHAYANA, 1941 WP(C).No.34294 OF 2019(J) PETITIONER/S: KAY KAY ENTERPRISES X/78,KUNNATH COMPLEX,VARAVOOR, WADAKKANCHERY,THRISSUR,REPRESENTED BY ITS MANAGING PARTNER,SRI.K.K.MOIDEEN. BY ADVS. SRI.N.MURALEEDHARAN NAIR SMT.K.HYMAVATHY RESPONDENT/S: 1 THE INCOME TAX OFFICER, WARD 2(2) WARD 2(2),INCOME TAX DEPARTMENT, THRISSUR-680001. 2 THE COMMISSIONER OF INCOME TAX(APPEALS), INCOME TAX DEPARTMENT,3RD FLOOR, AAYKAR BHAVAN,THRISSUR-680001. SC SRI.JOSE JOSEPH THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 16.12.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C).No.34294/19 2

JUDGMENT The petitioner is an assessee under the Income Tax Act, 1961 on the files of the 1st respondent. Against Ext.P1 assessment order, petitioner had preferred Ext.P3 appeal before the 2nd respondent. Along with the appeal, the petitioner had also preferred Ext.P4 stay petition. The 2nd respondent has now passed Ext.P5 order on the stay petition directing the petitioner to pay 20% of the amount as a condition for the grant of stay against recovery of the balance amounts confirmed against the petitioner vide Ext.P1 assessment order.

2.

In the writ petition, the petitioner impugns the said conditional order of stay, inter alia, on the ground that the 2nd respondent had not exercised his discretion validly while passing the said order.

3.

I have heard the learned counsel for the petitioner and also the learned Government Pleader for the respondents. On a consideration of the facts and circumstances of the case and submissions made across the bar, I dispose the writ petition with the following directions:- (i) In Ext.P5 order, the 2nd respondent does not state reasons as to why the petitioner was required to deposit the amounts as a condition for the grant of stay. This Court has held in Archana Agencies v Commercial Tax Officer - 2014 (2) KLT 715 that an authority considering a stay petition is bound to give reasons even while granting conditional stay. (ii) Ext.P5 order is quashed and the 2nd respondent is directed to reconsider the matter and pass fresh orders in the stay petition, within one month from the date of receipt of a copy of this judgment after hearing the petitioner. (iii) Recovery steps, if any, initiated against the petitioner shall be kept in abeyance till such time as fresh orders are passed by the 2nd respondent as directed above and communicated to the petitioner. A.K.JAYASANKARAN NAMBIAR JUDGE okb //// P.S. to Judge

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE ASSESSMENT ORDER PASSED BY 1ST RESPONDENT FOR THE YEAR 2016-2017 DATED 28.12.2018. EXHIBIT P2 TRUE COPY OF THE DEMAND NOTICE DATED 28.12.2018. EXHIBIT P3 TRUE COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT DATED 28.01.2019. EXHIBIT P4 TRUE COPY OF THE STAY PETITION FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT DATED 07.12.2019 EXHIBIT P5 TRUE COPY OF THE STAY ORDER PASSED BY THE 2ND RESPONDENT FOR THE YEAR 2016-17 DATED 07.11.2019.

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