2017 (3) TMI 107 - HC - Income Tax

Attachment orders - Notice under Section 226(3) - Held that - Admittedly, 15% of the disputed amount has already been recovered by the respondent- Revenue and such amount is covered by the Office Memorandum dated 29th February, 2016 issued by the CBDT. In such circumstances, we find that the respondents were not justified to pass the impugned attachment Notices under Section 226(3) of the Act. The claim of the petitioner, at this stage, seeking refund of the amounts attached pursuant to such directions, is not at all justified and cannot be granted in the present petition. Petitioner has placed on record a Memo showing the actual amount in dispute for the subject assessment years, as well as the amounts recovered based on refund orders, which figures are not disputed by the learned Counsel appearing for the respondents. The said Memo is marked X for identification. In view of the above, the impugned notices dated 16th January, 2017 and 17th January, 2017 issued to the State Bank of India, ICICI Bank Ltd., and HDFC Bank under Section 226(3) of the Act in respect of the Assessment Years 2011-12 and 2012-13 are quashed and set aside. - Decided n favour of assessee

Summary

Issues:
Challenge to notices under Section 226(3) of the Income-tax Act, 1961 and proceedings initiated in pursuance thereof.

Analysis:
The petitioner sought to quash notices dated January 16, 2017, and January 17, 2017, issued to several banks under Section 226(3) of the Income-tax Act, 1961, and all related proceedings. The petitioner argued that the tax demands for Assessment Years 2011-12 and 2012-13, totaling ?12.85 Crores and ?21.61 Crores respectively, were already settled in their favor by various Appellate Authorities. Despite pending appeals before the CIT (Appeals), the respondent issued a demand notice for ?40.25 Crores, including the disputed amount. The petitioner contended that recovery exceeding 15% of the demand had already been made, which was against CBDT guidelines and a previous court decision. The respondent rejected the petitioner's plea, leading to the present challenge.

The petitioner's counsel argued that attaching the petitioner's bank accounts was unjustified, as more than 15% of the disputed demand had been recovered and appeals were pending. Citing a prior judgment, the counsel emphasized that the petitioner's grievance was already addressed in case law. On the other hand, the respondent's counsel acknowledged that over ?10.74 Crores had been refunded to the petitioner, exceeding the 15% threshold of the disputed demand. The respondent did not contest the similarity of facts with the aforementioned case law.

After considering the arguments and examining the records, the Court found that the facts mirrored those of the previous case law, where 15% of the disputed amount had already been recovered, aligning with CBDT guidelines. Consequently, the Court held that the attachment notices issued by the respondent were unwarranted. The petitioner's claim for a refund of the attached amounts at this stage was deemed unjustified and not granted in the present petition. The Court also acknowledged a Memo submitted by the petitioner's counsel, detailing the disputed amounts and recoveries, which was uncontested by the respondent's counsel. As a result, the Court quashed the notices issued to the banks under Section 226(3) for the mentioned Assessment Years, thereby ruling in favor of the petitioner.