HPCL MITTAL ENERGY LTD vs. ASSISTANT COMMISSIONER OF INCOME TAX AND ANR

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CWP/1722/2016HC Punjab & HaryanaPHHC01082056201621 July 2016Author: MR. JUSTICE M.M. AGGARWAL,MR. JUSTICE AVNEESH JHINGAN3 pages
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What did the High Court hold?

The High Court acknowledged that the recovery of the penalty was made contrary to the stay order dated 05.06.2015. However, it held that there was no wilful disobedience on the part of the respondents. The court accepted that the respondents acted under the impression that the stay order was limited to 180 days, considering it a bona fide error in perception. The court noted that an affidavit of apology had been filed by the officer and, in the circumstances, the apology ought to be accepted. The court also observed that the final stay order passed on 03.02.2016 was restricted to 180 days, which would expire on 02.08.2016. The court directed that in the event of the stay being extended by the Tribunal for any period, the respondents shall refund the amount recovered, subject to any conditions imposed by the Tribunal. The petition was disposed of with this direction.

What were the facts?

The petitioner, HPCL Mittal Energy Limited, filed a writ petition seeking to quash a notice issued under Section 226(3) of the Income Tax Act, 1961, for recovery of Rs.10.50 crores. The petitioner also sought a refund of the recovered amount and a direction to the Income Tax Appellate Tribunal (Tribunal) to dispose of its appeal for Assessment Year 2008-09 expeditiously. The dispute arose from a penalty imposed under Section 271(1)(c) of the Act. The Tribunal had granted interim stay orders, first on 30.09.2014 for 180 days, and subsequently on 05.06.2015, directing no coercive measures. However, the petitioner alleged that despite these stay orders, the respondents issued a recovery notice and recovered the amount from the petitioner's bank account.

What were the issues?

1. Whether the recovery of the penalty amount by the respondents was in violation of the interim stay order granted by the Income Tax Appellate Tribunal on 05.06.2015, and if so, whether it constituted wilful disobedience or contempt of court. Assessee's Contention: The petitioner argued that the recovery notice and subsequent recovery were made contrary to and in violation of the stay order dated 05.06.2015, which had not specified a time limit and directed that no coercive measures be taken. The petitioner sought quashing of the recovery notice and refund of the amount. Revenue's Contention: The respondents contended that they were under the impression that the stay order dated 05.06.2015 was operative only for 180 days, as stipulated in the Act. They submitted an affidavit apologizing for the action, attributing it to a bona fide error in perception. The revenue argued that there was no wilful disobedience.

Which sections of the Income-tax Act were involved?

Section 226(3),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Writ Petition No.1722 of 2016(O&M) DATE OF DECISION: 21.07.2016 HPCL Mittal Energy Limited …..Petitioner versus Assistant Commissioner of Income Tax, Bathinda and another .....Respondents CORAM:- HON'BLE MR.JUSTICE S.J.VAZIFDAR, ACTING CHIEF JUSTICE HON’BLE MR. JUSTICE DEEPAK SIBAL Present: Mr. Ajay Vohra, Senior Advocate with Mr. Rohit Jain, Advocate for the petitioner Mrs. Urvashi Dhugga, Advocate for the Revenue Mrs. Madhu Dayal, Advocate for respondent-Bank .. S.J. VAZIFDAR, ACTINGCHIEF JUSTICE: The petitioner seeks an order quashing a notice dated 04.01.2016 issued under Section 226(3) of the Income Tax Act, 1961, a writ of mandamus directing the respondents to refund an amount of Rs.10.50 crores, a writ restraining respondent No.2-State Bank of India from taking coercive steps for recovery of the tax demand till disposal of its appeal before the Income Tax Appellate Tribunal for the Assessment Year 2008-09 and a writ of mandamus directing the Tribunal to dispose of the appeal in a time-bound manner. The petition is based essentially on the ground that the recovery of the penalty was made contrary to and in violation of an interim order granted by the Tribunal. It is not necessary to refer to the facts in detail. It is sufficient to note only a few facts. PARKASH CHAND 2016.07.27 15:45 I attest to the accuracy and integrity of this document

CWP-1722-2016

2.

On 18.02.2014, the Assessing Officer passed an order under Section 271(1)(c) imposing a penalty which was affirmed by the order of the CIT (Appeals) dated 02.07.2014. The appellant filed an appeal before the Tribunal which, by an order dated 30.09.2014, allowed the stay application filed by the petitioner. We are informed that the petitioner sought a stay of 180 days. The order, therefore, was limited to 180 days. On 25.03.2015, the petitioner filed another application for stay which, by an order dated 05.06.2015, was adjourned sine die and the Tribunal directed that no coercive measures be taken for recovery of the disputed demand in the meantime and directed status-quo to continue. There was no time limit of the stay order. The appeal was heard on 26.08.2015. As there was a difference between the members, a reference was made on 06.01.2016 to the President of the Tribunal for placing the appeal before a third member. By an order dated 03.02.2016, the third member noted that the Judicial Member and the Accountant Member, who had differed with each other, had agreed that the stay order was required to be extended as the delay in deciding the appeal was not attributable to the petitioner. Accordingly, the third member, by the order dated 03.02.2016, extended the stay by 180 days.

3.

The petitioner’s grievance is that despite the stay granted on 05.06.2015 and on 03.02.2016, the respondents issued the said recovery notice under Section 226(3) and proceeded to recover the amount lying to the credit of the petitioner in the respondent No.2-Bank.

4.

We will assume that the order dated 05.06.2015 was not limited in time and that, therefore, recovery of the penalty was contrary to the order. In our view, however, there was no wilful PARKASH CHAND 2016.07.27 15:45 I attest to the accuracy and integrity of this document

CWP-1722-2016 disobedience on the part of the respondents in having recovered the amount. They were under the impression that the order dated 05.06.2015 was operative only for 180 days, which is the period stipulated in the Act. Even assuming that the order dated 05.06.2015 was in existence, this would, at the highest, be only a bona fide error in perception on the part of the officer. There is no question of contempt. In any event, an affidavit has been filed by the officer apologizing for the same. Even assuming that the action was contrary to the order, the apology ought, in the circumstances, to be accepted.

5.

It is not necessary to consider the effect of the order dated 05.06.2015 for ultimately by the order dated 03.02.2016, the final stay order was passed which was restricted to only 180 days. This period would come to an end on 02.08.2016. 6. In the circumstances, the ends of justice would be met by following order:- In the event of the stay being extended by the Tribunal for any period, the respondents shall refund the amount recovered, but subject to any conditions imposed by the Tribunal.

7.

The petition is accordingly disposed of (S.J. VAZIFDAR) ACTING CHIEF JUSTICE 21.07.2016 (DEEPAK SIBAL) parkash* JUDGE PARKASH CHAND 2016.07.27 15:45 I attest to the accuracy and integrity of this document

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