Income-tax---

----Recovery of tax---Stay of recovery proceedings---Application for stay-- I.T.O. must give assessee opportunity to be heard and pass a speaking order---Indian Income Tax Act, 1961, S. 220(6)---Constitution of India, Art.226.

The Income-tax Officer is required to afford an opportunity of hearing to the assessee and pass a speaking order while deciding the application filed by the assessee under section 220(6) of the Income Tax Act, 1961.

Aggarwal Rice and General Mills v. CI.T (Appeals) (1993) x,04 ITR 480 (P & H) and Kuku Rice Mills v. Assessing Authority-cum-Income-Tax Authority (1992) 196 ITR 326 (P&H) ref.

K.L. Goyal for Petitioner.

B.S. Gupta, Senior Advocate with Sanjay Bansal for Respondent

JUDGMENT

ASHOK BRAN, J.---For the assessment year 1993-94, the petitioner filed his return of income before the Income-tax Officer, Ward No.2, Bhatinda, declaring an income of Rs.37,565. The Income-tax Officer vide his order, dated March 14, 1997, Annexure P-1, made an assessment of the petitioner on a total income of Rs.10,78,310 against the returned income of Rs.37,565, raising an additional demand of Rs.8,97,907. The petitioner, filed an appeal against the said order of the Income-tax Officer before the Commissioner of Income-tax (Appeals), Bhatinda.

During the pendency of the appeal, the petitioner filed an application under section 220 (6) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), not to declare him as an assessee in default during the pendency of the appeal. The said application has been rejected by the impugned order, dated June 17, 1997, Annexure P-5, by passing the following order:

"Please refer to your application dated Nil received on June 4, 1997. Your application has been considered and I find no force in the same, your application is, therefore, rejected. You are, therefore, requested to make the outstanding payment and show the necessary challan before June 27, 1997."

The petitioner has challenged the impugned order, Annexure P-5, on the ground that the same has been passed without affording any opportunity to him and without recording reasons in support of the order passed. For this, reliance has been placed upon two judgments of this Court in Kuku Rice Mills v. Assessing Authority-cum-Income-tax Authority (1992) 196 ITR 326 and Aggarwal Rice and General Mills v. CIT (Appeals) (1993) 204 ITR 480.

Written statement has not been filed. Records have been produced.

We find substance in the submission raised by counsel for the petitioner. In Kuku Rice Mills' case (1992) 196 ITR 326 (P & H) and Aggarwal Rice and General Mills's case (1093) 204 ITR 480 (P & H), it has been held that the Income-tax Officer is required to afford an opportunity of hearing to the assessee and pass a speaking order while deciding the application filed by the assessee under section 220(6) of the Act.

Mr. B. S. Gupta, learned counsel appearing for the Department, sought to challenge the correctness of the judgments in Kuku Rice Mills' case (1992) 196 ITR 326 (P & H) and Aggarwal Rice and General Mills' case (1993) 204 ITR 480 (P & H). We do not propose to go into the question raised by counsel for the Department in this case.

In view of the law laid down in Kuku Rice Mills' case (1992) 196 ITR 326 (P & H) and Aggarwal Rice and General Mills' case (1993) 204 ITR 480 (P & H), the order, Annexure P-5, is liable to be quashed being violative of the principles of natural justice as the petitioner was not afforded an opportunity of hearing before passing the impugned order and the Income tax Officer had also not supported the order by recording reasons for rejecting the application filed by the petitioner.

Accordingly, the writ petition is allowed. The order, Annexure P-5, is set aside. The consequent order, Annexure P-7, attaching the bank account of- the petitioner is also quashed. However, the Income-tax Officer, Bhatinda, i.e., the assessing authority, shall be at liberty to pass a fresh order on the application filed by the petitioner in accordance with law, keeping in view the principles laid down by this Court in Kuku Rice Mills' case (1992) 196 ITR 326 (P & H), and Agarwal Rice and General Mills' case (1993) 204 ITR 480 (P & H). The assessee-petitioner is directed to appear before the Income tax Officer, Ward No. 2, Bhatinda, on September 23, 1997. No costs.

Copy of this order be given dasti to counsel for the parties.

M.B.A.13325/FCPetition allowed.