NIRAAMAYA RETREATS PVT. LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX,

PDF · subscribers
WP(C)/9426/2020HC KeralaKLHC01024015202007 April 20205 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court disposed of the writ petition by directing the respondents to lift the attachment over the petitioner's bank accounts forthwith. The Court also directed the 2nd respondent (Commissioner of Income Tax (Appeals)) to pass final orders in the pending appeal within two months from the date of receiving a copy of the judgment. It was clarified that further recovery proceedings would be kept in abeyance until the 2nd respondent passed and communicated the order. The petitioner was also permitted to operate their bank accounts during this period. The Court found that since an amount of Rs. 1,51,00,357 had already been recovered and the appeal had been heard, further recovery was not necessary at that stage. The recovery already effected was upheld as sufficient to safeguard the revenue's interests pending the appeal's disposal. The ratio decidendi is that when an appeal has been heard and is awaiting final orders, and a substantial portion of the demand has already been recovered, further coercive recovery measures should be stayed to protect the assessee's interests, provided the recovered amount adequately secures the revenue.

What were the facts?

The petitioner, Niraamaya Retreats Pvt Ltd, filed an appeal against an assessment order before the Commissioner of Income Tax (Appeals) (2nd respondent). While the appeal was pending, the petitioner sought a stay of recovery from the Assistant Commissioner of Income Tax (1st respondent) under Section 220(6) of the Income Tax Act. Initially, a stay was granted on condition of paying 20% of the tax demand. A subsequent petition for a stay was not favourably considered. The petitioner claims the Appellate Authority (2nd respondent) did not consider their stay petition, despite hearing the appeal on March 5, 2020. Subsequently, garnishee proceedings were initiated, leading to the attachment of the petitioner's bank accounts with HDFC Bank, Andhra Bank, and State Bank of India (respondents 4-6). An amount of Rs. 1,51,00,357, approximately 11% of the tax demand, was withdrawn. The petitioner filed a writ petition seeking to lift the attachment and stay further recovery until the appeal is decided.

What were the issues?

1. Whether the respondents should be directed to lift the attachment orders over the petitioner's bank accounts and stay further recovery proceedings pending the disposal of the appeal by the 2nd respondent? Assessee's Contentions: The petitioner argued that garnishee proceedings were initiated and bank accounts were attached, leading to the withdrawal of Rs. 1,51,00,357. They contended that the Appellate Authority (2nd respondent) had heard the appeal and orders were awaited. The petitioner sought to lift the attachment and stay further recovery until the final orders were passed by the 2nd respondent. They relied on the principle that recovery should be stayed when an appeal is pending and has been heard. Revenue's Contentions: The revenue, represented by the Standing Counsel, did not explicitly record arguments against the petitioner's prayer for a stay of recovery and lifting of attachment in the judgment. However, the court's observation that the recovery effected was sufficient for safeguarding the interests of the revenue implies an implicit acknowledgment of the revenue's interest in recovery.

Which sections of the Income-tax Act were involved?

Section 220(6)

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 A.K. JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SHAJI P. CHALY TUESDAY, THE 7th DAY OF APRIL, 2020/18th CHAITHRA, 1941 W.P.(C). No.9426 OF 2020 PETITIONER: Niraamaya Retreats Pvt Ltd, Pulinkudi Mullur P.O Kovalam, Thiruvananathapuram – 695527, Represented by its Chief Financial Officer - Mohan D Aiyar By Adv. Sri. V. V. Asokan (Sr.) Adv. Sri. V. V. Nandagopal Nambiar RESPONDENTS: 1. Assistant Commissioner of Income Tax, Officer of Assistant Commissioner of Income Tax Aayakar Bhavan, Ist FloorKawdiar P.O, Thiruvananathapuram – 695003 2. Commissioner of Income Tax (Appeals), Office of the Commissioner of Income Tax (Appeals), Aayakar Bhavan, 2nd Floor, Kawdiar P.O, Thiruvananathapuram – 695003 3. Principal Commissioner of Income Tax Office of the Principal Commissioner of Income Tax, Aayakar Bhavan, 3rd Floor, Kawdiar P.O, Thiruvananathapuram – 695003 4. HDFC Bank Limited,Kenton Towers, DPI, Near Kalabhavan Theatre, Vazhuthacaud,Trivandrum, Kerala 695014 Represented by its Branch Manager WP(C). No. 9426 OF 2020 2 5. Andhra Bank RBTowers, Azhakulam,Muttackad, Trivandrum,Kerala 695014 Represented by its Branch Manager 6. State Bank of India Fathima Building, Pachalloor Road, Vizhinjam, Trivandrum,Kerala 695521 Represented by its Branch Manager By Sri. Christopher Abraham, SC, Income Tax Department This Writ Petition having come up for admission on 07/04/2020, the Court on the same day passed the following:- WP(C). No. 9426 OF 2020 3 A.K. JAYASANKARAN NAMBIAR, J. & SHAJI P. CHALY, J. ------------------------------- WP(C). No. 9426 OF 2020 ----------------------------------- Dated this the 7thday of April, 2020

J U D G M E N T A.K. Jayasankaran Nambiar, J. Against an order of assessment under the Income Tax Act, the petitioner preferred an appeal before the First Appellate Authority, the 2nd respondent herein, and during the pendency of the appeal, the petitioner also approached the 1st respondent with a petition under Section 220(6) of the Income Tax Act for a stay of recovery pending disposal of the appeal. It would appear that the 1st respondent, on the application preferred by the petitioner, granted a stay of recovery of the amounts confirmed by the assessment order, on condition that the petitioner paid an amount equal to 20% of the tax demand. Not satisfied with the same, the petitioner preferred a fresh petition under Section 220(6) before the 1st respondent. The said petition however did not result in any favourable order to the petitioner. It is the case of the petitioner that, although he thereafter approached the 2nd respondent with a stay petition seeking for a stay of recovery pending disposal of the appeal, the same was not considered by the 2nd respondent, and instead, the 1st respondent dismissed the said application in the light of the earlier order passed by him. The petitioner would submit that the 2nd respondent Appellate Authority has WP(C). No. 9426 OF 2020 4 since heard the appeal on 5.3.2020, and orders are awaited in the appeal. In the meanwhile, however, the respondents initiated garnishee proceedings and attached the bank accounts of the petitioner maintained with respondents 4 to 6 banks. It is also stated that an amount of Rs.1,51,00357/-was withdrawn from the said accounts towards the tax liability of the petitioner. We are told that the amount of Rs.1,51,00357/-represents approximately 11% of the tax demand confirmed against the petitioner. The prayer in the writ petition, at this stage, is essentially for a lifting of the attachment orders over the bank accounts of the petitioner maintained with respondents 4 to 6 banks, and to stay further recovery proceedings till such time as final orders are passed by the 2nd respondent in the appeal pending before him.

2.

We heard Sri.V.V.Asokan, the learned senior counsel duly assisted by Sri.Nandagopal Nambiar, the learned counsel for the petitioner and also Sri.Christopher Abraham, the learned Standing Counsel for the respondents.

3.

On a consideration of the facts and circumstances of the case, as also the submissions made across the bar, we find that inasmuch as the respondents have already recovered an amount of Rs.1,51,00357/- from the petitioner through garnishee proceedings, and the appeal preferred by the petitioner against the assessment order has been heard finally by the 2nd respondent Appellate Authority, who is expected to pass orders in the appeal in the near future, there need not be a further recovery effected from the petitioner at this stage. Accordingly, while upholding the recovery already effected by the respondents for the time being, we deem it to be sufficient for safeguarding the interests of the revenue pending disposal of the appeal by the 2nd respondent.

WP(C). No. 9426 OF 2020 5

4.

Accordingly, the writ petition is disposed, by directing the respondents to lift the attachment over the bank accounts of the petitioner maintained with respondents 4 to 6 banks forthwith, with a further direction to the 2nd respondent to pass final orders in the appeal within an outer time limit of two months from the date of receipt of a copy of this judgment. It is also made clear that till such time as orders are passed by the 2nd respondent, as directed and the order communicated to the petitioner, further proceedings for recovery of amounts confirmed against the petitioner by the assessment order in question shall be kept in abeyance. The petitioner shall also be permitted to operate the bank accounts maintained with respondents 4 to 6 during the said period. The writ petition is disposed as above. (Sd/-) A.K.JAYASANKARAN NAMBIAR JUDGE (Sd/-) SHAJI P. CHALY JUDGE prp/7/4/2020

More judgments on Section 220(6)

All 54 judgments and leading authorities on Section 220(6) →

Recent GST High Court judgments

Search GST case law →