2017 (3) TMI 1528 - HC - Income Tax

Attachment orders - stay petition - Held that - It is not in dispute that the petitioner Co-operative Bank, after suffering an order of assessment, has preferred an Appeal before the First Appellate Authority namely, the Commissioner of Income Tax (Appeals) Pondicherry, who in turn dismissed such Appeal only on 20.03.2017, by serving a copy of the same on the petitioner only on 23.03.2017. It is also evident that the 1st respondent, in the meantime, has issued the impugned attachment order as on 21.03.2017, i.e., just immediately a day after the disposal of the appeal by the Appellate Authority, without even waiting for the petitioner to approach the Tribunal and seek for appropriate interim relief while filing the Appeal challenging the order of the First Appellate Authority. It is also seen from the proceedings of the 2nd respondent dated 22.03.2017 that in pursuant to the impugned order of attachment, a sum of ₹ 1,51,07,000/- was also debited from the account of the petitioner to the credit of the 1st respondent. This Court, at this stage, cannot go into the correctness or otherwise of the order of attachment as confirmed by the Appellate Authority, as the petitioner is still having further remedy of Appeal before the Income Tax Appellate Tribunal as provided under the statute itself. It is also not in dispute that the petitioner is entitled to seek for interim relief of stay of the proceedings while preferring the appeal and it is for the Tribunal to consider such request and pass orders on the same on its own merits and in accordance with law. But in the meantime, in pursuant to the order of attachment, already a sum of ₹ 1,51,07,000/- was debited from the account of the petitioner. Therefore, in all fairness, the 1st respondent has to wait till the Income Tax Appellate Tribunal passes an order on the stay petition to be filed by the petitioner while preferring the appeal. The petitioner shall prefer an Appeal before the Income Tax Appellate Tribunal within a period of 30 days from the date of receipt of a copy of this order along with a stay petition.Such Stay Petition filed by the petitioner shall be taken up by the Income Tax Appellate Tribunal and decided on its own merits and in accordance with law within a period of 7 days from the date of such filing.

Summary

Issues:
1. Impugned attachment orders issued under Section 226(3) of the Income Tax Act.
2. Justification of issuing the attachment orders before filing further appeal.
3. Inconvenience caused by the attachment to the petitioner, a Co-operative Bank.

Analysis:
1. The petitioner, a Central Co-operative Bank, challenged the assessment order before the Commissioner of Income Tax (Appeals) Pondicherry. The Appellate Authority dismissed the appeals on 23.03.2017. However, the impugned attachment notices were issued on the respondents 2 and 3. The petitioner argued that the attachment affected their right to move a stay petition before the Tribunal while challenging the order of the Appellate Authority. A significant amount was already debited from the petitioner's account due to the attachment, causing inconvenience to the bank's day-to-day operations.

2. The 1st respondent contended that the petitioner should have challenged the dismissal of appeals before the Tribunal before approaching the Court to challenge the attachment order. The Court noted that the attachment order was issued immediately after the dismissal of the appeal by the Appellate Authority, without allowing the petitioner time to approach the Tribunal for interim relief. The Court emphasized that the petitioner had the right to seek interim relief before the Tribunal and that the 1st respondent should have waited for the Tribunal's decision on the stay petition.

3. The Court acknowledged that it could not review the correctness of the attachment order at that stage, as the petitioner still had the option to appeal before the Income Tax Appellate Tribunal. However, considering the significant amount already debited from the petitioner's account and the potential hardship caused, the Court allowed the writ petition, setting aside the attachment order. The Court imposed conditions requiring the petitioner to file an appeal before the Tribunal within 30 days and for the Tribunal to decide on the stay petition within 7 days of filing. The 1st respondent was instructed to wait for the Tribunal's decision before taking further action.

In conclusion, the Court granted relief to the petitioner, emphasizing the importance of following proper legal procedures and allowing the petitioner the opportunity to seek appropriate relief before the Tribunal.