2015 (6) TMI 970 - HC - Income Tax

Attachment orders - recovering the Tax - Held that - Inasmuch as the petitioner s only source of livelihood viz. the pension cannot be attached even for satisfaction of a court decree and more particularly when the petitioner s statutory appeal filed under Section 246 of the Act along with the stay application filed on 01.05.2015 is pending the order of attachment cannot be legally sustained and hence this Court is of the view that the petitioner is entitled for the relief sought for. Net result the writ petition is allowed by setting aside the Demand Notice dated 31.03.2015 and by lifting the Pre-Assessment Order of Attachment dated 26.03.2015 as regards Item Nos.2 to 6. The first respondent / appellate authority is consequently directed to dispose of the statutory appeal preferred by the petitioner before him within a period of 8 weeks from the date of receipt of a copy of this order on merits and in accordance with law.

Summary

Issues:
Seeking mandamus to keep Notice of Demand in abeyance and lift Pre-Assessment Order of Attachment.

Analysis:
The petitioner, a retired employee, challenged the tax liability imposed by the Income Tax Officer for the Assessment Year 2009-2010. The petitioner explained the sources of income for a house property allotted to him, but the 2nd respondent did not agree and imposed a tax liability. The petitioner filed a statutory appeal under Section 246 of the Income Tax Act, seeking a stay on tax collection as per departmental circular. Despite this, an order of attachment was issued, including the petitioner's savings bank account. The petitioner argued that since the assessment order is under challenge, provisional attachment is unnecessary. The respondents justified the provisional attachment to protect revenue interests but agreed to confine it to a property that could cover the dues. The court noted the departmental circular's guidelines to keep tax collection in abeyance for substantial income discrepancies.

The court emphasized that the department should adhere to its circulars and guidelines, especially regarding the attachment of a retired employee's pension. Citing a Supreme Court ruling, the court clarified that pension and gratuity cannot be attached even for court decrees. Since the petitioner's pension was the sole livelihood source and the statutory appeal was pending, the court deemed the attachment order unsustainable. Consequently, the court allowed the writ petition, setting aside the Notice of Demand and lifting the Pre-Assessment Order of Attachment for specific items. The appellate authority was directed to decide the statutory appeal within eight weeks.

This judgment highlights the importance of following departmental guidelines, protecting pension rights, and ensuring fair treatment during tax assessments and appeals.