2015 (5) TMI 1160 - HC - Income Tax

Stay against the recovery of demand - order of attachment - petitioner preferred stay application before the Commissioner of Income-tax (Appeals) in the month of January-February 2015. Meanwhile the respondents issued a notice under section 226(3) for recovery of the amount - Held that - We see no reason to criticise the respondents for issuance of this notice. On the contrary if the Department has not issued notice we would have criticised such action because enough time has lapsed after the order of reassessment was passed and therefore this notice is rightly issued by the respondents for recovery in the light of the fact that there was no stay application filed by the petitioner before the Commissioner of Income-tax (Appeals). The respondents has to recover the reassessed Income-tax. Thus no sub stance in the hue and cry made by the petitioners against the conduct of the respondents and we find no undue haste made by the respondents for recovery of the Income-tax reassessed. On the contrary it is apparent that the Department has waited for a considerable period. In view of the total turnover of the petitioner which runs into more than 56, 00, 00, 000 (rupees 56 crores) per annum (as it appears from the entries of the financial year 2013- 14) perhaps lesser number of instalments could have been allowed. As this is not the matter in dispute we are not going into the leniency shown by the respondents but suffice it to say that no undue haste has been dis played by the respondents with respect to recovery of the amount of the Income-tax reassessed. Unfortunately order of 16 instalments which is without a doubt very lenient in the facts of the present matter has also not been complied with as it is submitted by counsel for the respondents that there is default in payment of the very first instalment and therefore a letter has been writ ten by the Assistant Commissioner of Income-tax Circle III Jamshedpur that if this instalments are not paid they will initiate all permissible legal actions under the provisions of the Income-tax Act of 1961 and the Rules made thereunder which are absolutely in accordance with law and can never be termed as excessive. At this stage the counsel for the petitioner submits that this petitioner will make payment of 4, 00, 000 as monthly instalments granted by the Assessing Officer. It would not be out of context to mention here that if the order was complied with earlier i.e. if the petitioner had scrupulously complied with the order of instalments granted by the respondents there would not have been any occasion for the respondents to take actions which were necessary for recovery of the reassessed amount of the Income-tax. Petition dismissed.

Summary

Issues Involved:
1. Quashing of notices dated January 21, 2015, issued under section 226(3) of the Income-tax Act, 1961.
2. Refund of money appropriated under the order of attachment.
3. Quashing, withdrawing, rescinding, and revoking the impugned final reassessment order and the demand dated March 25, 2014, for assessment years 2010-11 and 2011-12.
4. Interim order restraining the respondent authorities from giving effect to the impugned orders dated March 25, 2014.

Issue-wise Detailed Analysis:

1. Quashing of notices dated January 21, 2015, issued under section 226(3) of the Income-tax Act, 1961:

The petitioner argued that the Income-tax Department showed undue haste in recovering the reassessed tax amount while the appeal was pending before the Commissioner of Income-tax (Appeals). The petitioner contended that the Department should have waited until the appeal was decided. The respondents countered this by stating that the reassessment order was passed on March 25, 2014, and the petitioner did not file a stay application until January-February 2015. The Department waited for a considerable period before issuing the notice on January 21, 2015, after the petitioner's writ petition was dismissed on January 20, 2015. The court found the Department's actions reasonable and did not accept the petitioner's contention.

2. Refund of money appropriated under the order of attachment:

The petitioner sought a refund of the money appropriated under the order of attachment during the pendency of the appeal. The respondents argued that the petitioner failed to comply with the instalment plan granted by the Commissioner of Income-tax (Appeals) and the Assistant Commissioner of Income-tax, Circle-III, Jamshedpur. The court noted that the respondents had shown leniency by granting 16 instalments for the payment of approximately Rs. 64,00,000, but the petitioner defaulted on the very first instalment. The court found no reason to entertain the request for a refund.

3. Quashing, withdrawing, rescinding, and revoking the impugned final reassessment order and the demand dated March 25, 2014, for assessment years 2010-11 and 2011-12:

The petitioner challenged the reassessment order and the subsequent demands. The court observed that the petitioner had already appealed against the reassessment order before the Commissioner of Income-tax (Appeals) without filing a stay application. The writ petition challenging the reassessment order was dismissed on January 20, 2015. The court found no illegality in the reassessment order or the demands and upheld the actions of the respondents.

4. Interim order restraining the respondent authorities from giving effect to the impugned orders dated March 25, 2014:

The petitioner sought an interim order to restrain the respondent authorities from enforcing the reassessment order and demands. The court noted that the Commissioner of Income-tax (Appeals) had granted a stay on the demand of interest under section 234B of the Income-tax Act, 1961, and allowed instalments for the payment of the remaining amount. The petitioner failed to comply with the instalment plan, leading the respondents to take legal recourse for recovery. The court found no reason to grant the interim order requested by the petitioner.

Conclusion:

The court dismissed the writ petition and all interlocutory applications, finding no substance in the petitioner's arguments. The respondents' actions were deemed reasonable and in accordance with the law, given the petitioner's failure to comply with the instalment plan and the absence of a stay application before the Commissioner of Income-tax (Appeals). The court upheld the reassessment order and the subsequent demands, stating that the Department acted within its rights to recover the reassessed tax amount.