HI CARE GLOVES PVT.LTD. vs. DEPUTY COMMISSIONER OF INCOME TAX

WP(C)/21526/2019HC KeralaKLHC01054813201907 August 2019Author: HONOURABLE MR.JUSTICE S.V.BHATTI10 pages

AI SummaryPartly Allowed

What did the High Court hold?

The High Court disposed of the writ petition by balancing the interests of both parties. It acknowledged that the appeals were statutory appeals that should not be shut out without valid reasons. The Court noted that all issues were pending before the Commissioner of Income Tax (Appeals). To enable the petitioner to pursue its remedy of appeal while preserving the Revenue's interest, the Court directed the petitioner to deposit 10% of the tax amount demanded within one week. Subsequently, the petitioner, along with proof of payment, was to appear before the Commissioner of Income Tax (Appeals) to request consideration of the delay condonation petitions within one week thereafter. The Commissioner was directed to consider and dispose of the delay condonation petitions within two weeks of the petitioner's appearance. Furthermore, the Revenue was directed not to recover or realize the amount from the frozen bank accounts for a period of three weeks from the date of the order. The Court explicitly stated that any observations made were not to be construed as expressing a view on the conduct of the petitioner, and that the Commissioner would exercise jurisdiction in accordance with law.

What were the facts?

The petitioner, Hi Care Gloves Pvt. Ltd., filed a writ petition before the High Court of Kerala seeking to stay coercive proceedings, including the freezing of its bank accounts, initiated by the Deputy Commissioner of Income Tax (Revenue) for the realization of tax demanded in assessment orders (Exts. P1 and P2). The petitioner had filed appeals (Exts. P3 and P4) before the Commissioner of Income Tax (Appeals) with significant delays of 937 and 555 days, respectively, along with stay applications. The petitioner apprehended that the Revenue would proceed to realize the tax amount from its frozen bank accounts maintained with State Bank of India, Kottayam District Co-operative Bank, and Axis Bank. The petitioner offered to deposit 10% of the disputed tax amount to demonstrate bonafides.

What were the issues?

1. Whether the High Court, under Article 226 of the Constitution, should direct the Commissioner of Income Tax (Appeals) to consider and dispose of the delay condonation petitions and appeals filed by the petitioner, and consequently, stay coercive proceedings for the realization of tax. Assessee's Contention: The petitioner argued that the substantial prayers and grounds were pending consideration before the Commissioner of Income Tax (Appeals). To prove bonafides and for the ends of justice, the petitioner offered to deposit 10% of the tax demanded to facilitate the consideration and disposal of the delay condonation petitions. The petitioner sought a direction to keep coercive proceedings, including the freezing of bank accounts, in abeyance until the disposal of appeals. Revenue's Contention: The Revenue opposed the writ prayers, arguing that they were not maintainable as the coercive steps were in the nature of execution of orders that had become final. The Revenue contended that the appeals were filed with enormous delay and that directing the Commissioner to consider and dispose of the stay petitions in such a case would not be appropriate judicial review under Article 226. The Revenue also objected to allowing the petitioner to operate bank accounts, stating it would prejudice the Department.

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 S.V.BHATTI WEDNESDAY, THE 07TH DAY OF AUGUST 2019 / 16TH SRAVANA, 1941 WP(C).No.21526 OF 2019(M) PETITIONER: HI CARE GLOVES PVT.LTD. MARANGATTUPALLY, KOTTAYAM DISTRICT, PIN - 686 635, REPRESENTED BY ITS MANAGING DIRECTOR, MR. JOHNS A NEERAKKAL, AGED 50 YEARS, S/O. ALEXANDER, NEERAKKAL @ KALLIDUKKIL @ VADAKKEKALAPPURAKKAL HOUSE, KOOTHATTUKULAM POST, ERNAKULAM. BY ADV. SRI.JOHN MATHEW (THEREZHATH) RESPONDENTS: 1 DEPUTY COMMISSIONER OF INCOME TAX WARD NO.V, CENTRAL CIRCLE, KOTTAYAM - 686 001. 2 THE COMMISIONER OF INCOME TAX (APPEALS) PUBLIC LIBRARY BUILDING, LAL BAHADUR SASTHRI ROAD, KOTTAYAM - 686 001. 3 THE STATE BANK OF INDIA MARANGATTUPILLI BRANCH, PALA MARANGATTUPILLY KOZHA ROAD, MARANGATTUPILLI, PIN - 686 635, REPRESENTED BY ITS BRANCH MANAGER. 4 THE KOTTAYAM DISTRICT CO-OPERATIVE BANK, KADAPLAMATTOM BRANCH, KADAPLAMATTOM, KOTTAYAM, PIN - 686 571, REPRESENTED BY ITS BRANCH MANAGER. 5 THE AXIS BANK PALA BRANCH, PUTHUMANA ARCADE, PALA, KOTTAYAM, PIN – 686 575 REPRESENTED BY ITS BRANCH MANAGER WP(C).No.21526 OF 2019(M) 2 6 THE AXIS BANK THODUPUZHA BRANCH, MINI CIVIL STATION, 10/72, A & B, RUBBER MARKETING SOCIETY BUILDING, THODUPUZHA, IDUKKI DISTRICT, PIN - 685 584. BY SRI.JOSE JOSEPH - S.C SMT. N. DEEPA SRI.ATHUL SHAJI SRI.PAULOCHAN ANTONY THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07.08.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.21526 OF 2019(M) 3

JUDGMENT The petitioner apprehending imminent execution or realisation of the tax payable by the petitioner vide Exts. P1 and P2 orders, filed Exts.P3 and P4 appeals before the second respondent, with delay of 937 and 555 days respectively and also applications for stay of the assessment orders in Exts.P1 and P2. The petitioner further apprehending realisation of amount pursuant to freezing of Bank Account No: 67091379742 maintained with the State Bank of India at Marangattupally

Branch,

Account

No: 050161000620001 of the Kottayam District Co- operative Bank at Kadaplamattom Branch, Account No: 616010200000347 maintained with Axis Bank at Pala Branch, Account No: 909030033720170 of Axis Bank at Thodupuzha Branch and Account No: 909020033056029 of Axis Bank, Thodupuzha Branch has filed the instant writ petition for the following reliefs:-

WP(C).No.21526 OF 2019(M) 4 “i) Direct the second respondent to keep all the coercive proceedings including the freezing of the bank accounts of the petitioner company initiated under Ext.P5 summons under abeyance till the final disposal of the Ext.P3 and P4 appeal. ii) Direct the Respondents 3 to 6 to defreeze the respective banks accounts of the petitioner company bearing No. 67091379742 maintained with the State Bank of India at Marangattupally Branch, Account No: 050161000620001 of the Kottayam District Co-operative Bank at Kadaplamattom

Branch,

Account

No. 616010200000347 maintained with Axis Bank at Pala Branch, Account No: 909030033720170 of Axis Bank at Thodupuzha Branch and Account No. 909020033056029 of Axis Bank, Thodupuzha Branch. iii) Issue such other orders, directions or writ as this Hon'ble Court may deem fit, just and necessary in the interest of justice.”

The writ prayers challenge the coercive steps now taken by the respondents for realising the amount determined by the orders in Exts. P1 and P2. 3. Adv. John Mathew Therezhath, by referring to several grounds in fact and law raised in the writ petition firstly attempts to convince this court to stay

WP(C).No.21526 OF 2019(M) 5 all further proceedings pursuant to freezing of bank accounts. He alternatively submits that the substantial prayers and grounds are now pending consideration in Exts.P3 & P4 appeals, this Court, if considers directing the second respondent to pass appropriate orders on Exts.P3 and P4 appeals, where the applications for condonation of delay are pending ends of justice are met and to prove bonafides of petitioner, the learned counsel offers to deposit 10% of the tax demanded in Exts. P1 and P2 orders for consideration and disposal of delay condonation petitions in Exts.P3 and P4. 4. The learned Standing Counsel opposes the writ prayers in all fours. The first and foremost objection is against the maintainability of the writ prayers, for the prayers are not independent or stand alone reliefs available to petitioner, in as much as the coercive steps are in the nature of execution of orders which have become final. Unless the assessment orders are set aside or modified to exception to these realisations steps could be taken in the particular fact

WP(C).No.21526 OF 2019(M) 6 situation of this case. The orders made by the respondents 1 and 2, freezing bank accounts is either in continuation of tax liability already determined and the accounts are frozen only to recover the tax legitimately determined by the first respondent. The appeals are filed with enormous delay and this Court if shows indulgence and issues direction to the second respondent to consider and dispose of the stay petitions pending in Exts.P3 and P4, such direction in a matter with singular facts does not go with the judicial review this Court exercises under Article 226 of the Constitution of India, particularly, where all the issues are substantially pending before the second respondent. He objects to granting stay or allowing the petitioner to operate the bank accounts referred to above for the petitioner if is allowed to operate the bank accounts, the Department will again have to start the proceedings afresh, in such an event, the Department will also suffer prejudice.

I have perused the record and noted the WP(C).No.21526 OF 2019(M) 7 realities staring at the petitioner and also that the appeals now filed before the second respondent are statutory appeals which ought not to be shut out except for valid reasons noted and recorded by the second respondent.

While recording the above statement, this Court hastens to add that all issues in this behalf are at large before the second respondent. The second respondent exercises his jurisdiction in accordance with law and no guidance is warranted from Court. Any observation made in this behalf ought not to be appreciated as expressing a view by this Court on the conduct of the petitioner.

Be that as it may, all the bank accounts of the petitioner are frozen. The petitioner offers to deposit 10% of the amount determined in Exts.P1 and P2. Now the apprehension voiced by the petitioner is that the first respondent will go to the next step and withdraw the entire tax amount payable by the petitioner from the frozen account.

WP(C).No.21526 OF 2019(M) 8

Keeping in view the balance of convenience and also enable the petitioner to work out the remedy of appeal, the writ petition is disposed of by this judgment. The case no doubt presents on both sides singular facts, therefore the discretion of this Court is also exercised in a measured way ensuring preservation of the interest of all the parties during the pendency of consideration of delay petitions or disposal of appeals. a) The petitioner deposits 10% of the tax amount demanded through Exts.P1 and P2 within one week from today. b) The petitioner accompanied by a copy of this judgment and also proof of payment of 10% as directed by this Court, appears before the second respondent and requests for consideration and disposal of delay condonation petitions within one week thereafter. c) The second respondent considers and disposes of the delay condonation petitions within two weeks from the date of appearance marked by the WP(C).No.21526 OF 2019(M) 9 petitioner as directed by this judgment. d) The respondents are directed not to recover or realise the amount from the frozen bank accounts for a period of three weeks from today. S.V.BHATTI JUDGE DCS

WP(C).No.21526 OF 2019(M) 10

Appendix — schedule of exhibits

APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE ASSESSMENT ORDER DATED 1.12.2016 PASSED BY THE INCOME TAX OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. EXHIBIT P2 THE TRUE COPY OF THE ASSESSEMNT ORDER DATED 18.12.2017 PASSED BY THE INCOME TAX OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. EXHIBIT P3 THE TRUE COPY OF THE APPEALS FILED ON EXT.P1 ASSESSMENT ORDER UNDER SECTION 246A OF THE INCOME TAX ACT, 1961 PENDING ON THE FILE OF 2ND RESPONDENT AS CIT (A) 732825511300719. EXHIBIT P4 THE TRUE COPY OF THE APPEALS FILED ON EXT.P1 ASSESSMENT ORDER UNDER SECTION 246A OF THE INCOME TAX ACT, 1961 PENDING ON THE FILE OF 2ND RESPONDENT AS CIT (A) 733797901300719. EXHIBIT P5 THE TRUE COPY OF THE SUMMONS NO. TRO/KTM/TR-9&10/2019-20 DARED 23.7.2019 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P6 THE TRUE COPY OF THE INTERIM APPLICATION FOR STAY FILED ALONG WITH EXT.P3 APPEAL PENDING ON THE FILE OF THE 2ND RESPONDENT.

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