Friday, April 6, 2012

S. 220(6): AO must pass reasoned order to deal with stay applications


The AO passed an assessment order raising a demand of Rs.5.76 Crores. The assessee filed a stay application stating that the CIT (A) had heard the appeal and stay of demand be granted till the order on the appeal. The AO rejected the stay application and directed that the demand be paid without giving any reasons. The assessee approached the Addl CIT who noted that as the AO had already started recovery proceedings, there was no point before him to consider. The assessee’s bank accounts were attached u/s 226(3). The assessee filed a Writ Petition. HELD by the Court:

In several judgments of this Court, the parameters for the exercise of jurisdiction u/s 220(6) of the Act have been spelt out. In KEC International Ltd. v. B.R. Balakrishnan 251 ITR 158, the importance of reasoned orders being passed on the stay applications was emphasized. The AOs consistently refuse to follow the law laid down in the judgment of this Court. The AO & the appellate authorities are duty bound to act in accordance with binding precedent and there is no reason or justification to act in the manner in which the applications for stay have been disposed of in this case.

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