2018 (3) TMI 1531 - HC - Income Tax

Stay application filed under Section 220(6) - Held that - We directed the petitioners to once more serve the respondent-Commissioner of Income-Tax and place the matter for consideration at 5.00 p.m. When the petition was taken up at 5.00 p.m. the respondent-Revenue was represented by Mr. Sharma. We are informed by Mr. Sharma the Learned Counsel appearing for the Revenue that he had no occasion to examine the papers and therefore seeks time. At his request, time is granted and the petition is fixed on Monday, 2nd April, 2018 as First on Board. In the meantime, the respondent-Revenue is directed to deposit the amounts withdrawn from the attached bank accounts on the next bank working day. We are informed that the banks are working on 31st March, 2018. Stand over to 2nd April, 2018 as First on Board.

Summary

Issues:
1. Rejection of application for stay of demand
2. Commencement of coercive proceedings by Revenue before appeal time expired
3. Attachment and withdrawal of amounts from petitioner's bank accounts without notice

Analysis:
1. The petition challenged the order rejecting the petitioner's application for stay of demand following penalty proceedings. The rejection was based on the condition of paying 20% of the demand raised, contrary to established court decisions on the procedure for stay applications under Section 220(6) of the Income-Tax Act, 1961.

2. The Revenue initiated coercive proceedings even before the appeal time from the penalty proceedings order had lapsed. The petitioner's bank accounts were attached by the Assessing Officer, and the entire available amount of ?9.88 lacs was withdrawn without prior notice, which was deemed contrary to the court's precedent in UTI Mutual Funds vs. Income-Tax Officer.

3. The court directed the petitioners to re-serve the Commissioner of Income-Tax for consideration. The Revenue was granted time to examine the case, and the petition was scheduled for a later date. However, the Revenue was instructed to deposit the withdrawn amounts back into the bank accounts on the next working day, emphasizing the necessity of providing reasonable notice before withdrawing funds from attached bank accounts as per court guidelines.

This comprehensive analysis covers the issues of rejection of stay application, premature commencement of coercive proceedings, and unauthorized attachment and withdrawal of funds from the petitioner's bank accounts, highlighting the legal discrepancies and court directives in the judgment delivered by the Bombay High Court.