SMT. MEERA SRIKANT MEHARWADE vs. DEPUTY/ ASST COMMISSIONER OF INCOME TAX

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WP/31073/2019HC KarnatakaKAHC01021599201925 July 2019Bench: S.SUJATHA6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court observed that it was prima facie apparent that recovery proceedings were initiated by respondent No.1 during the pendency of the appeal before the CIT(Appeals) and while a notice to review the stay order was issued. The Court found it obligatory for the respondent No.3 – CIT(Appeals) to dispose of the appeals in an expedited manner, especially since the matter had already been heard. Therefore, the Court directed the respondent No.3 to pass orders in accordance with law and in an expedited manner, not later than four weeks from the date of receipt of a certified copy of the order. Until the order was passed by the CIT(Appeals), no recovery proceedings were to be initiated by the respondents. The writ petition was disposed of with these observations and directions.

What were the facts?

The petitioner, Smt. Meera Srikant Meharwade, an assessee, filed a writ petition challenging an attachment notice issued under Section 226[3] of the Income Tax Act, 1961, by the Deputy/Assistant Commissioner of Income Tax (R-1) dated April 19, 2018, for assessment year 2014-2015. The petitioner also sought a direction for the Tax Recovery Officer (R-4) to dispose of an appeal against an order passed under Section 143[3] by the respondent No.4 on December 30, 2016. The assessment order under Section 143[3] was passed by R-1 on December 30, 2016, creating a tax liability of Rs. 11,56,21,760/-. The petitioner's appeal was pending before the Commissioner of Income Tax (Appeals) (R-3). The petitioner had sought a stay on the demand from R-1, which was granted by the Pr. Commissioner of Income Tax (R-2) on August 17, 2017, subject to monthly installments of Rs. 10,00,000/- and a review of the stay. Despite the review application pending, R-1 issued the attachment notice.

What were the issues?

1. Whether the attachment notice issued under Section 226[3] of the Income Tax Act, 1961, by the respondent No.1 dated April 19, 2018, is valid during the pendency of an appeal before the Commissioner of Income Tax (Appeals) and while a stay order review is pending. Assessee's contentions: The petitioner argued that the attachment notice was issued prematurely and inappropriately while an appeal was pending before the CIT(A) and a review of the stay order was under consideration by the Pr. Commissioner of Income Tax. The petitioner contended that recovery proceedings were initiated despite the pending review of the stay application. Revenue's contentions: The judgment records that learned counsel for the respondents accepted notice, but no specific arguments for the revenue were detailed in the provided text.

Which sections of the Income-tax Act were involved?

Section 156,Section 234A,Section 234B,Section 234C,Section 234D

AI-generated summary — verify with the full judgment below

Before: SMT.MEERA SRIKANT MEHARWADE

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF JULY, 2019 BEFORE: THE HON’BLE MRS. JUSTICE S.SUJATHA WRIT PETITION No.31073/2019 (T – IT) BETWEEN: SMT.MEERA SRIKANT MEHARWADE AGED ABOUT 48 YEARS, NO.9, KHODAY HOUSE, SESHADRI ROAD, GANDHI NAGAR, BANGALORE - 560 009.

…PETITIONER

(BY SRI SHANKAR A., SENIOR ADV. FOR SRI S.SUKUMAR, ADV.)

AND: 1. DEPUTY/ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 5(2)(1) 3RD FLOOR, BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KORAMANGALA, BENGALURU - 560 095.

2.

THE PRL. COMMISSIONER OF INCOME TAX BENGALURU-5, BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KORAMANGALA BENGALURU - 560 095.

3.

THE COMMISSIONER OF INCOME TAX (APPEALS)-5, 7TH FLOOR, BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KORAMANGALA BENGALURU - 560 095.

4.

TAX RECOVERY OFFICER – 5, 5TH FLOOR, BMTC BUILDING 80 FEET ROAD, 6TH BLOCK,

- 2 - KORAMANGALA BENGALURU - 560 095.

…RESPONDENTS

(BY SRI JEEVAN J. NEERALGI, ADV.)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ATTACHMENT NOTICE ISSUED UNDER SECTION 226[3] OF THE INCOME TAX ACT, BY THE R-1 DATED 19.04.2018 [ANNEXURE-A] FOR THE ASSESSMENT YEAR 2014-2015.

THIS PETITION COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:-

O R D E R

Learned counsel Sri.Jeevan J. Neeralgi accepts notice for the respondents.

2.

The petitioner, an assessee under the provisions of the Income Tax Act, 1961 ['Act' for short] is before this Court challenging the attachment notice issued under Section 226[3] of the Act and the order passed by the respondent No.1 dated 05.06.2018 as well as the notices issued by the respondent No.4 dated 10.07.2019 and 17.07.2019 inter alia seeking a direction to the respondent No.4 to dispose of the appeal against the order under Section 143[3] of the Act by the

- 3 - respondent No.4 on 30.12.2016 relating to the assessment year 2014-15 within a time frame.

3.

The assessment orders were concluded under Section 143[3] of the Act by the respondent No.1 on 30.12.2016. Being aggrieved by the tax liability created on the additions made to the returned income, the petitioner preferred an appeal before the respondent No.3. In the meantime, the respondent No.1 has issued the notice of demand under Section 156 demanding a sum of Rs.11,56,21,760/- including interest under Section 234A, B, C and 234D of the Act. The petitioner has filed an application before the respondent No.1 to stay the collection of demand. The respondent No.1 has insisted the petitioner to pay 15% of the outstanding demand against which the petitioner had approached the second respondent to grant absolute stay till disposal of the appeal pending before the respondent No.3. The second respondent has disposed of the said

- 4 - application vide order dated 17.08.2017 and directed the petitioner to pay the installment of Rs.10,00,000/- every month from August 2017 to December 2017 and stayed the balance demand subject to review of directions in the last week of December 2017.

4.

It is the contention of the petitioner that the installments as per the directions of the respondent No.2 has been paid. However, the respondent No.2 has issued communication to review the stay order, and the said proceedings are pending consideration before the respondent No.2. That being the position, in spite of review of stay application is pending for consideration before the respondent No.2, the respondent No.1 has issued the notice under Section 226[3] of the Act and attached the petitioner’s bank account.

5.

Heard the learned counsel for the parties and perused the material on record.

- 5 -

6.

It is prima facie apparent that during the pendency of the appeal before the CIT [Appeals] – respondent No.3, notice is issued by the respondent No.1 to review the stay order granted and during the said proceedings, recovery proceedings being initiated, the petitioner is compelled to approach this Court.

7.

In the circumstances, it was obligatory on the part of the respondent No.3 – CIT [Appeals] to dispose of the appeals in accordance with law in an expedite manner in view of the matter being already heard.

Hence, this Court deems it appropriate to direct the respondent No.3 to pass the orders in accordance with law in an expedite manner in any event not later than four weeks from the date of receipt of certified copy of the order. Till the passing of the order by the respondent No.3 – CIT [Appeals], no recovery

- 6 - proceedings shall be initiated by the respondents. Ordered accordingly.

With the aforesaid observations and directions, writ petition stands disposed of.

Sd/- JUDGE

NC.

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