S. 220(6): An order disposing off a stay application has to objectively consider the prima facie case on merits, financial hardship and balance of convenience and give reasons for the rejection

The Petitioner is engaged in developing industrial infrastructure within the State and in that process, allots industrial plots on account of lease premium. This premium received is on behalf of the State Government and is directly taken as deposits to the Petitioner’s balance sheet. Thus not subjected to tax. However, for the first time in Assessment Year 201112, the Assessing Officer subjected the deposits on account of lease premium to tax as Petitioner’s income. However, the Income Tax Appellate Tribunal (Tribunal) by order dated 27th March, 2015 for Assessment Year 2011-12 set aside the order of the Authorities under the Act, bringing to tax the deposits on account of lease premium and restored the issue to the Assessing Officer for denovo consideration… In the meantime, the Assessing Officer reopened the Assessment for Assessment Years 2007-08, 2008-09, 2009-10 and 2010-11 and the Assessing Officer by orders held that deposits on account of lease premium to be the Petitioner’s income. Similarly, for the Assessment Year 2012-13 in regular Assessment proceedings the Assessing Officer held the deposits on account of lease premium taxable as Petitioner’s income…

We find that neither the Assessing Officer in the impugned orders dated 13th October, 2015 nor the Commissioner of Income Tax (Exemptions) in the order dated 25.2.2016 has dealt with the Petitioner’s primary contentions that the amounts received as lease premium and shown as deposits, cannot be taxed as income. This Court has time again set out parameters to be kept in mind while considering the stay application under Section 220(6) of the Act. the Commissioner of Income Tax (Exemptions) has completely misunderstood the scope of her powers and issues to be considered while disposing of the stay applications. In the above view, we set aside the orders dated 13th October, 2015 of the Assessing Officer and order dated 25th February, 2016… However, the Petitioner’s stay application is restored to the file of the Commissioner of Income Tax (Exemptions) for fresh disposal in accordance with law and after considering, prima facie, merits of the Petitioner’s case and in accordance with law. This would include considering the Petitioner’s stand that the issue is concluded by the decision of the Tribunal in CIDCO in its favour. It is made clear that the Revenue would not adopt any coercive proceedings to recover the aggregate demand of Rs.4069.83 Crores or any part thereof till disposal of the Petitioner’s Application for stay by Commissioner of Income Tax (Exemptions) and for a period of two weeks from the date of communication.