2018 (5) TMI 1769 - AT - Income Tax

Recovery proceedings - amount recovered illegally during the stay application - Held that - Since the amount recovered illegally during the stay application has been refunded by the Department to the assessee and the assessee at this stage is no more aggrieved; further the concerned officials have also tendered unconditional apology and also in view of our observations made above that these lower rank departmental officers have to succumb to the pressure of their higher ups for the sake of their service / career, we accept the unconditional apology tendered by the Assessing officer and Addl. CIT.

Summary

Issues Involved:
1. Illegal recovery of outstanding tax demand by the Department.
2. Violation of Tribunal's stay order dated 20.12.2017.
3. Adjustment of refund for assessment year 2008-09 against the demand for assessment year 2009-10.
4. Non-compliance with Tribunal's directions to refund ?50 lakhs recovered from the debtor of the assessee.
5. Contempt of court proceedings against departmental officials for non-compliance with Tribunal's orders.

Issue-wise Detailed Analysis:

1. Illegal Recovery of Outstanding Tax Demand by the Department:
The Tribunal noted that the Department had made coercive recoveries from the assessee, including attaching the bank account and recovering ?10 crores before the assessee received the CIT(A) order. The Tribunal found that the Department's actions were against judicial conscience, breaking the canons of law, justice, and ethics. The Tribunal observed that the Assessing Officer (AO) managed events to put the assessee in a helpless condition, thereby foreclosing the remedy available to the assessee under the Act.

2. Violation of Tribunal's Stay Order Dated 20.12.2017:
The Tribunal had initially stayed the recovery of the balance amount for assessment year 2009-10. Despite this, the Department recovered the outstanding demand by adjusting against the refund for assessment year 2008-09. The Tribunal strongly depreciated the Department's actions, noting that the AO continued coercive actions even after the filing of the appeal and stay application before the Tribunal. The Tribunal reaffirmed its directions to refund the amount collected from the debtor and stayed further recovery.

3. Adjustment of Refund for Assessment Year 2008-09 Against the Demand for Assessment Year 2009-10:
The Tribunal observed that the Department ignored the submissions made by the assessee against the adjustment of the refund for assessment year 2008-09. The Tribunal reiterated that the recovery of the remaining amount was stayed for six months or until the disposal of the appeal, whichever was earlier. The Tribunal directed the Department to refund the amount illegally adjusted.

4. Non-compliance with Tribunal's Directions to Refund ?50 Lakhs Recovered from the Debtor of the Assessee:
The Tribunal noted that the Department had not complied with its directions to refund ?50 lakhs recovered from the debtor of the assessee. The Tribunal reaffirmed its directions for the refund and emphasized that the Department's actions were in complete violation of its orders.

5. Contempt of Court Proceedings Against Departmental Officials for Non-compliance with Tribunal's Orders:
The Tribunal summoned the concerned AO and other officials to explain their actions and consider initiating contempt of court proceedings. The officials appeared and tendered an unconditional apology, stating that the refund had been issued. The Tribunal accepted the apology but expressed concern over the Department's practice of coercive recoveries to meet targets, urging the CBDT to take necessary steps to prevent such actions.

Conclusion:
The Tribunal's judgment highlighted the illegal and coercive actions of the Department in recovering tax demands despite stay orders, emphasizing the need for adherence to judicial directions and principles of natural justice. The Tribunal's detailed observations and directions aimed to ensure compliance with legal processes and protect the rights of the assessee.