THANIKKOTTIL UNNIKRISHNAN vs. THE ASSISTANT COMMISSIONER OF INCOME TAX

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WP(C)/6278/2020HC KeralaKLHC01016590202003 March 2020Author: HONOURABLE MR. JUSTICE AMIT RAWAL4 pages
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What did the High Court hold?

The High Court directed the 2nd respondent (Commissioner of Income Tax (Appeals)) to consider the petitioner's application for stay regarding the demand raised, in light of the garnishee orders issued by the 1st respondent to the petitioner's bankers, within 15 days from the date of receipt of the judgment. The petitioner was also directed to appear before the 2nd respondent on March 6, 2020, and the 15-day period would be counted thereafter. Until the stay application is considered, the implementation of the garnishee notices (Ext.P4) was ordered to be kept in abeyance. The Court explicitly stated that these directions should not be construed as an expression of opinion on the merits of the matter. No specific finding was made on the legality or arbitrariness of the garnishee notices themselves, but their implementation was temporarily halted pending the decision on the stay application.

What were the facts?

The petitioner, Thanikkottil Unnikrishnan, a P.W.D. contractor, is challenging an assessment order dated December 18, 2019, which raised a demand of Rs. 48,12,920. He filed an appeal and a stay application against this order. However, while the appeal was pending, the petitioner received notices under Section 226(3) of the Income Tax Act, 1961, from the Assistant Commissioner of Income Tax (1st respondent) addressed to his bankers (3rd, 4th, and 5th respondents). The petitioner contended that this action was illegal and arbitrary as his appeal and stay petition were still under consideration. The Income Tax Department stated that the appellate authority would consider the petitioner's request within a timeframe to be fixed by the Court.

What were the issues?

1. Whether the issuance of garnishee notices under Section 226(3) of the Income Tax Act, 1961, by the Assessing Officer is illegal and arbitrary when an appeal and stay application against the assessment order are pending before the Commissioner of Income Tax (Appeals)? Assessee's Contention: The petitioner argued that the action of the 1st respondent (Assistant Commissioner) in issuing notices under Section 226(3) of the Income Tax Act, 1961, to his bankers is illegal and arbitrary because his appeal and stay petition against the assessment order are still pending. The petitioner relied on the fact that the appeal and stay application were filed against the assessment order. Revenue's Contention: The learned Standing Counsel for the Income Tax Department submitted that the appellate authority would consider the petitioner's request on the basis of a time frame to be fixed by the High Court.

Which sections of the Income-tax Act were involved?

Section 226(3)

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 AMIT RAWAL TUESDAY, THE 03RD DAY OF MARCH 2020 / 13TH PHALGUNA, 1941 WP(C).No.6278 OF 2020(H) PETITIONER/S: THANIKKOTTIL UNNIKRISHNAN AGED 45 YEARS P.W.D CONTRACTOR, THANNIKKOTTIL HOUSE, VENGASSERY, AMBALAPARA, PALAKKAD-679513 BY ADVS. SRI.ANIL D. NAIR SRI.R.SREEJITH SMT. ARYA ANIL SHRI.GOKULRAJ L. SMT.SRI HARINI S.P. RESPONDENT/S: 1 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1, PALAKKAD-678014 2 THE COMMISSIONER OF INCOME TAX(APPEALS) KOZHIKODE-673001 3 THE MANAGER STATE BANK OF INDIA, PALLICKAL, PB NO.2, ALAPPUZHA-590503 4 THE MANAGER SOUTH INDIAN BANK, ST.GEORGE AUDITORIUM BUILDING, KADEESA ORTHODOX CHURCH, KAYAMKULAM, ALAPPUZHA-690502 5 THE MANAGER DHANALAXMI BANK LTD, TDB OFFICE, CLIFF HOUSE ROAD, NANTHANCODE, TRIVANDRUM-695003 SRI JOSE JOSEPH SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.6278 OF 2020(H) 2

JUDGMENT The grievance of the petitioner in the instant case is that against Ext.P1 assessment order dated 18.12.2019 raising a demand of Rs.48,12,920 preferred Ext.P2 appeal and Ext.P3 stay application. However, during the interregnum petitioner is confronted with notices under Section 226(3) of the Income Tax Act, 1961 issued by the 1st respondent addressed to the 3rd, 4th and 5th respondents colly. Learned Counsel for the petitioner submits that the action of the 1st respondent is illegal and arbitrary, since the appeal and stay petition preferred against Ext.P1 assessment order is still pending.

2.

Learned Standing Counsel appearing on behalf of the Income tax submitted that the appellate authority would consider the request of the petitioner on the basis of the time frame to be fixed by this Court.

3.

Having heard learned Counsel for the petitioner and the learned Standing Counsel for the Income Tax Department, this writ petition is disposed with a direction to the 2nd

WP(C).No.6278 OF 2020(H) 3 respondent to consider the application for stay regarding the demand raised, in view of the garnishee orders issued by the 1st respondent addressed to the 3rd,4th, and 5th respondents, within 15 days from the date of receipt of the copy of this judgment. Petitioner shall also appear before the 2nd respondent on 6.3.2020 and the 15 days period will be construed thereafter. Till such time, implementation of Ext.P4 garnishee notices issued colly is ordered to be kept in abeyance. I also make it clear that the directions made above shall not be construed as an expression of opinion on the merits of the matter. AMIT RAWAL JUDGE Jm/

WP(C).No.6278 OF 2020(H) 4

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE ASSESSMENT ORDER DATED 18.12.2019 EXHIBIT P2 TRUE COPY OF THE APPEAL FILED BEFORE TH 2ND RESPONDENT DATED10.1.2020 EXHIBIT P3 TRUE COPY OF THE STAY PETITION FILED BEFORE THE 2ND RESPONDENT DATED 6.2.2020 EXHIBIT P4 TRUE COPY OF THE NOTICE UNDER SECTION 226(3) OF THE INCOME TAX ACT, 1961 ADDRESSED TO THE 3RD RESPONDENT DATED 14.2.2020 EXHIBIT P4(A) TRUE COPY OF THE NOTICE UNDER SECTION 226(3) OF THE INCOME TAX ACT, 1961 ADDRESSED TO THE 4TH RESPONDENT DATED 14.2.2020 EXHIBIT P4(B) TRUE COPY OF THE NOTICE UNDER SECTION 226(3) OF THE INCOME TAX ACT, 1961, ADDRESSED TO THE 5TH RESPONDENT DATED 14.02.2020

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