2015 (3) TMI 104 - HC - Income Tax

Attachment orders - demand notice - Held that - The authority should have considered the legal submissions raised by the petitioner before passing the impugned order. In any event since the matter is sub judice before the appellate forum, the authority should have considered whether 50% of the demand could be ordered, taking into account the totality of circumstances. Though this Court is bound to consider the situation prevalent on the date of the order, taking note of the subsequent events, namely, attaching 100% of the amount, when the petitioner has stated that the order has got to be tested in appeal, attaching 100% amount would clearly shows that the respondent was interested in collecting the entire amount, I am of the view that the impugned order has to be set aside and the matter has to be remanded to the appellate authority to consider the case afresh on merits and in accordance with law. Decided in favour of assessee

Issues:
Challenge to Assessment Order and demand notice for assessment year 2010-2011, Appeal before Commissioner of Income-Tax (Appeals), Stay petition rejection, Coercive action for payment, Attachment of entire assessed amount, Legal grounds for challenging impugned order, Disallowance of provision for slow moving items, Consideration of legal submissions by authority, Remand to appellate authority for fresh consideration.

Analysis:

The petitioner, a Private Limited Company, challenged the Assessment Order and demand notice for the assessment year 2010-2011. The petitioner filed an appeal before the Commissioner of Income-Tax (Appeals) and sought an interim stay along with a personal hearing. The stay petition was initially rejected, leading to a writ petition before the High Court, which remanded the matter for the Assessing Officer to reconsider the stay application on merits.

The petitioner contended that the authority did not communicate effectively, and upon receiving an order to pay 50% of the demand immediately, the entire assessed amount was attached by the respondents. The petitioner argued that the authority should have waited for the hearing of the matter before taking coercive action, especially considering the long delay in communicating the order.

On the other hand, the respondents argued that more than four years had passed since the original order, and the petitioner was obligated to pay the demanded amount. They suggested that if the petitioner succeeded in the appeal, the attached amount would be returned. The respondents proposed a partial refund of the attached amount pending the appeal's disposal.

The petitioner raised objections to the Assessment Order, claiming that the provision for slow moving items was valid and made in compliance with Accounting Standard-2. They argued that the disallowance of this provision was based on an inapplicable ruling and that the authority did not consider their submissions and legal provisions before rejecting the stay application.

After hearing both sides, the Court emphasized the importance of considering legal submissions before passing orders and noted that the authority should have evaluated whether ordering 50% of the demand was appropriate given the circumstances. The Court found that attaching 100% of the amount without proper consideration was unjust, leading to the impugned order being set aside and the matter remanded to the appellate authority for fresh consideration.

The Court highlighted the need to protect government revenue while ensuring parties have the opportunity to raise objections and have their cases heard. It stressed the importance of passing detailed orders after considering all relevant points raised by the petitioner. Ultimately, the Court set aside the impugned order and directed the Authority to pass fresh orders within two weeks from the date of the Court's order, without delving into the merits of the case.

In conclusion, the writ petition was disposed of with no costs, and the connected miscellaneous petition was closed, emphasizing the need for a fair and thorough reconsideration of the petitioner's case by the Authority.

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