2019 (6) TMI 1720 - HC - Income Tax

Tax Recovery notices sent to tenants/lessees of the writ petitioners - it is the case of the writ petitioner that the moneys payable to them by their lessees cannot be appropriated by the Department towards alleged dues of writ petitioner's father's brother Late Mr.P.N.Subramaniam - HELD THAT - This Court deems it appropriate to pass an order directing the second respondent to consider all objections raised by the writ petitioners in the aforesaid representation dated 20.06.2019, give an opportunity of personal hearing to the writ petitioners, as also opportunity to submit supporting documents and thereafter pass a considered order qua the impugned notices. The second respondent, in the course of this exercise, shall also hear out others, who are deemed necessary more particularly, the children of late Mr.P.N.Subramaniam. The second respondent is directed to complete this exercise within a period of eights weeks from the date of receipt of a copy of this order. On disposing of the representation, the order disposing of the representation shall be served on each of the writ petitioners under due acknowledgement within seven working days from the date of disposal/order. The impugned notices shall, therefore, be kept in abeyance till the disposal of the representation of the writ petitioner dated 20.06.2019 in the aforesaid manner. If the outcome is in favour of the writ petitioners, that will be the end of the matter and the impugned notices will stand dropped. If the outcome is otherwise, the impugned notices shall be kept in abeyance for a further period of a fortnight from the date of communication of disposal of representation to the petitioner under due acknowledgement.

Summary

Issues:
1. Validity of six notices issued by the Jurisdictional Tax Recovery Officer of the Income Tax Department to the tenants/lessees of the writ petitioners.
2. Appropriation of moneys payable by the lessees to the Department towards alleged tax liability of the writ petitioner's deceased relative.
3. Claim of the writ petitioner that the moneys payable to them by their lessees cannot be appropriated by the Department.
4. Interpretation of Section 226(3) of the Income Tax Act regarding the Department's authority to proceed against the petitioners and other legal heirs.
5. Direction to the second respondent to consider all objections raised by the writ petitioners in their representation, provide a personal hearing, and pass a considered order within a specified timeframe.

Analysis:
1. The case revolved around the validity of six notices issued by the Jurisdictional Tax Recovery Officer to the tenants/lessees of the writ petitioners, calling for payment towards the tax liability of a deceased relative of the petitioners. The notices indicated that failure to comply would result in the noticees being treated as assessees in default. The petitioners contended that the moneys payable to them by their lessees should not be appropriated by the Department for the alleged dues of their deceased relative.

2. The writ petitioner asserted that the deceased relative was their father's brother, and they were only class II legal heirs according to his testament. The Court acknowledged the narrow scope of the matter and refrained from delving into further details. The Revenue Counsel argued that the IT Department could proceed against the petitioners under Section 226(3) of the IT Act and mentioned the availability of other legal heirs who could also be pursued by the Department.

3. Notwithstanding the Revenue Counsel's argument, the Court directed the second respondent to consider the objections raised by the writ petitioners in their representation dated 20.06.2019. The order mandated a personal hearing for the petitioners, an opportunity to submit supporting documents, and a thorough review of the case, including hearing other necessary parties like the children of the deceased relative. The second respondent was instructed to complete this process within eight weeks from the date of the order.

4. The Court emphasized that the impugned notices should be kept in abeyance until the representation was disposed of. If the outcome favored the writ petitioners, the notices would be dropped. However, if the result was unfavorable, the notices would remain suspended for an additional fortnight from the date of communication of the decision to the petitioners. The writ petition was disposed of with these directions, and no costs were awarded. The connected miscellaneous petitions were also closed as a consequence of the judgment.