DEEPALI DESIGNS & EXHIBIT PVT LTD vs. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -17

PDF · subscribers
W.P.(C)/12836/2018HC DelhiDLHC01473774201816 November 2022Bench: HON'BLE MR. JUSTICE MANMOHAN,HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA4 pages
AI SummaryPartly Allowed

What did the High Court hold?

The Delhi High Court accepted the undertaking given by the learned counsel for the respondent-revenue, on instructions from the Assessing Officer, that the attachment orders passed against the petitioner and the order dated November 26, 2018, under Section 226(3) would be withdrawn within two working days. The Court held the respondent-revenue bound by this statement. Consequently, the writ petition along with the pending application was disposed of in terms of this undertaking. The Court did not delve into the merits of the original assessment or the validity of the attachment prior to the undertaking, as the matter was resolved by the revenue's commitment to withdraw the action.

What were the facts?

The petitioner, M/s Deepali Designs & Exhibit Pvt. Ltd., filed a writ petition challenging an action by the Assistant Commissioner of Income Tax, Central Circle-17. The Assessing Officer (AO) had issued a notice under Section 226(3) of the Income Tax Act, 1961, on November 26, 2018, to the petitioner's bankers, attaching accounts for outstanding demands. The demands related to the petitioner's own assessment and also as a member of M/s Pico Deepali Overlays Consortium (AOP). The assessment history involved an order under Section 143(3) passed on March 21, 2013, rectified later. Appeals were filed before the CIT(A) and ITAT. The ITAT remanded the case back to the AO, leading to a subsequent order on December 13, 2019. The petitioner also opted for the VSV Scheme. The status report filed by the AO indicated that the attached bank accounts had been closed, and the demand in the AOP case had been reduced and recovered.

What were the issues?

1. Whether the attachment of bank accounts under Section 226(3) of the Income Tax Act, 1961, was justified given the subsequent developments in the assessee's case and the AOP's case? Assessee's Contention (Implicit): The petitioner, by filing the writ petition, implicitly argued that the attachment was unwarranted and caused hardship, especially considering the ongoing proceedings and the eventual reduction/recovery of demands. The petitioner sought the withdrawal of the attachment orders. Revenue's Contention: The revenue, through the AO and Standing Counsel, initially maintained the validity of the attachment for recovery of outstanding demands. However, during the court proceedings, the revenue undertook to withdraw the attachment orders.

Which sections of the Income-tax Act were involved?

Section 226(3),Section 143(3),Section 254,Section 154,Section 275(1A),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

$~29 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 12836/2018 & C.M.No.49794/2018 DEEPALI DESIGNS & EXHIBIT PVT LTD ..... Petitioner Through: Mr.Abhishek Gupta, Advocate. versus ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -17 ..... Respondent Through: Mr.Kunal Sharma, Sr.Standing Counsel for the Revenue with Mr.Bal Krishan Gopal, AO in person and Mr. S.K.Singh, PCIT (through VC) CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA O R D E R % 16.11.2022 In pursuance to the last order, the Assessing Officer is personally present in Court. He has handed over a status report dated 15th November, 2022. The same is taken on record. The relevant portion of the said status report is reproduced hereinbelow:- “F.No.DCIT/CC-17/2022-23/314 Dated: 15.11.2022 To, Shri Kunal Sharma, Sr. Standing Counsel, New Delhi. Sir, Sub: WP(C) No.12836/2018 in the case of M/s. Deepali Design & Exhibit Pvt. Ltd. vs. ACIT – status of the case – reg. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 26/06/2026 at 21:27:20

Kindly refer to your mail dated 11.11.2022 vide which you have sought Calculation Sheet and Status Report as directed by Hon’ble Court vide order dated 27.10.2022. 2. In this regard, the present status report of the case is as under: 2.1 The notice u/s 226(3) dated 26.11.2018 was issued to banker in this case and details thereof are as under: S. No Name of the Bank Name of the account holder Demand in case A/c no. Outstanding Demand 1. HDFC Bank Ltd. M/s Deepali Designs & Exhibits Pvt. Ltd. M/s Deepali Designs & Exhibits Pvt. Ltd 13498470000012 4,26,59,025/- 2. HDFC Bank Ltd. M/s Deepali Designs & Exhibits Pvt. Ltd M/s Pico Deepali Overlays Consortium 13498470000012 1,87,01,84,000/- 3. HDFC Bank Ltd. M/s Deepali Designs & Exhibits Pvt. Ltd M/s Pico Deepali Overlays Consortium 50200002541972 1,87,01,84,000/- 4. HDFC Bank Ltd. M/s Deepali Designs & Exhibits Pvt. Ltd M/s Deepali Designs & Exhibits Pvt. Ltd 50200002541972 4,26,59,025/- 5. Vijaya Bank M/s Deepali Designs & Exhibits Pvt. Ltd M/s Deepali Designs & Exhibits Pvt. Ltd 604700301000368 4,26,59,025/- 6. Vijaya Bank M/s Deepali Designs & Exhibits Pvt. Ltd. M/s Pico Deepali Overlays Consortium 604700301000368 1,87,01,84,000/- 2.2. In this case assessment u/s 143(3) was passed 21.03.2013 at income of ₹ 13,84,78,070/-, subsequently rectified at assessed income of ₹ 14,47,11,213/-. Aggrieved with the assessment order, the assessee company filed appeal before the CIT(A)-27, which was partly allowed. Further, the department as well as assessee filed appeal before the Hon’ble ITAT against the order of the Ld. CIT(A). The Hon’ble ITAT dismissed the appeal of the revenue on 14.03.2019. Further, the Hon’ble ITAT, during pronouncement of its decision in the appeal of the assessee, remanded back the case to the AO. Therefore order u/s 254 r.w.s. 143(3) of the I.T. Act, 1961 was passed on This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 26/06/2026 at 21:27:20

13.12.2019 at an income of ₹ 2,71,27,057/- and refund of ₹19,55,790/- was determined u/s 154/254 on 23.06.2020 and issued through ITBA system. Another refund of ₹47,71,410/- was determined and issued u/s 275(1A) r.w.s. 271(1)(c) of the I.T. Act 1961 dated 23.06.2020 through ITBA system (copies of orders along with computation are enclosed). 2.3 Against the order passed by the AO u/s 254 r.w.s. 143(3) in compliance to the ITAT order, the assessee has filed appeal before the Ld CIT(A), aggrieved with the addition made. Subsequently, the assessee has opted VSV Scheme against the addition made by the A.O. and tax was determined to be payable of ₹ 20,43,783/- under VSV Scheme. Accordingly Form 5 was issued to the assessee on 0.5.05.2022 by Pr. CIT(C)- 02, New Delhi. In compliance to Form 5, after giving effect of prepaid taxes already paid by the assessee, refund of ₹ 3,70,637/- is computed. 3. It is also submitted that the notice u/s 226(3) dated 26.11.2018 was issued to the assessee (petitioner) with regard to the outstanding demand amounting ₹1,87,01,84,000/- in the case of M/s Pico Deepali Overlays Consortium (AOP) as the assessee M/s Deepali Designs & Exhibits Pvt. Ltd. is member of AOP. However, the outstanding demand in the case of M/s. Pico Deepali Overlays Consortium has been reduced to ₹ 34,19,35,460 u/s 143(3)/144C/254 of the I.T. Act, 1961 and same has been recovered. Hence as of now there is no demand outstanding in the case of M/s Pico Deepali Overlay Consortium also. 4. As far as, status of notice u/s 226(3) is concerned, the concerned, HDFC Bank has informed that the accounts attached u/s 226(3) have been closed on 19.03.2021. 5. Submitted for kind perusal and necessary action please. Yours faithfully, Encl.: As above. (Bal Krishan Gopal) Dy. Commissioner of Income Tax, Central Circle-17, New Delhi” Learned counsel for the respondent-revenue, on instructions of the Assessing Officer, who is personally present in Court, assures and undertakes to this Court that the attachment orders passed against the petitioner and the order dated 26th November, 2018 shall be withdrawn within two working days. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 26/06/2026 at 21:27:20

The aforesaid undertaking/statement given by learned counsel for the respondent-revenue is accepted by this Court and the respondent-revenue is held bound by the same. Accordingly, the present writ petition along with pending application is disposed of in terms thereof. MANMOHAN, J MANMEET PRITAM SINGH ARORA, J NOVEMBER 16, 2022 KA This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 26/06/2026 at 21:27:20

More judgments on Section 226(3)

All 95 judgments and leading authorities on Section 226(3) →

Recent GST High Court judgments

Search GST case law →