2013 (11) TMI 530 - HC - Income Tax

Whether revenue should be restrained from taking coercive measures for recovering any amount from the petitioner - Refund due to the present petitioner has been adjusted towards penalty Held that - Entire penalty has been recovered by adjusting refund due to the petitioner and admittedly appeals filed by the assessee and the revenue are pending adjudication, no reason, to grant any relief to the petitioner, except to the extent of directing the Income Tax Appellate Tribunal, Amritsar to decide the appeals filed by the assessee and the revenue within one month of receipt of a certified copy of this order.

Summary

Issues:
1. Quashing penalty order and refund adjustment
2. Restraint on coercive measures by revenue
3. Adjustment of refund against penalty
4. Pending appeals before Income Tax Appellate Tribunal

Issue 1: Quashing penalty order and refund adjustment
The petitioner sought to quash the penalty order of Rs.2,22,17,032/- imposed on them and the subsequent adjustment of their refund towards the penalty. The petitioner argued that the revenue should have awaited the outcome of pending appeals before the Income Tax Appellate Tribunal instead of adjusting the refund against the penalty. The counsel for the petitioner contended that coercive measures should be restrained until the appeals are heard.

Issue 2: Restraint on coercive measures by revenue
The counsel for the revenue asserted that the revenue has the statutory right to adjust penalty against the refund due to an assessee. They argued that the petitioner's grievance should be raised before the Tribunal where the appeals are pending. It was emphasized that the Income Tax Act, 1961 grants the revenue the right to effect recovery through permissible means, and thus, the petitioner should not be granted any relief against coercive recovery.

Issue 3: Adjustment of refund against penalty
The High Court noted that the entire penalty had been recovered by adjusting the refund due to the petitioner. Considering that the appeals filed by both the assessee and the revenue were pending adjudication, the Court did not find grounds to grant immediate relief to the petitioner. However, the Court directed the Income Tax Appellate Tribunal to decide on the appeals within one month of receiving a certified copy of the order. If the petitioner succeeds in the appeals, the Tribunal was instructed to make appropriate consequential orders regarding the adjustment of the refund by the revenue.

Issue 4: Pending appeals before Income Tax Appellate Tribunal
The High Court disposed of the matter by directing the Income Tax Appellate Tribunal to expedite the adjudication of the appeals filed by both the assessee and the revenue. The Court specified a timeline for the Tribunal to decide on the appeals and instructed on the course of action in case the petitioner succeeds in the quantum of appeals.

In conclusion, the High Court's judgment primarily focused on the pending appeals before the Income Tax Appellate Tribunal and the adjustment of refund against the penalty. The Court provided directions for the Tribunal to decide on the appeals promptly and to address any consequential adjustments in case of success for the petitioner.