2018 (5) TMI 590 - HC - Income Tax

Attachment of bank accounts - Petitioner seeks refund of the amount of the amounts in excess of 20% of the tax demand consequent to the Assessment Order being retained by the Revenue - Held that - In the present facts, as the order of the Assessment for Assessment Year 2014-15 was passed on 29th December, 2016 under Section 143(3) of the Act. A notice under Section 156 of the Act was also served on that date upon the Petitioner. Thus, time to pay the tax dues in terms of the notice would expire on 29th January, 2017. The Petitioner had admittedly not filed any application for stay of the demand under Section 220(6) of the Act with the Assessing Officer or the Commissioner of Income Tax during aforesaid period of 30 days. This, although an appeal before the CIT(A) was filed on 29th January, 2017. Thus, the action of the Respondent in recovering an amount after attachment of bank accounts of the Petitioner after 1st February, 2017, can not be found fault with, as the Petitioner was an Assessee in default. Thus, we find no reason to interfere.

Summary

Issues:
Challenge to attachment of bank account and recovery of amount, Excess amount retained by Revenue, Compliance with CBDT Circular on stay of disputed demands, Failure to file application for stay of demand under Section 220(6) of the Act, Timely disposal of appeal by CIT(A)

Analysis:
The petition under Article 226 challenges the action of the Revenue in attaching the petitioner's bank account and recovering an amount of ?12.82 lakhs following the assessment order confirming a demand of ?23.26 lakhs for the Assessment Year 2014-15. The petitioner contends that the retained amount exceeds the 20% limit set in the CBDT Circular of February 29, 2016, which governs the stay of disputed demands pending appeal before the CIT(A). The petitioner seeks a refund of the excess amount retained by the Revenue beyond the 20% threshold.

The assessment order for the relevant year was issued on December 29, 2016, with a notice served under Section 156 of the Act on the same date. The petitioner did not apply for a stay of the demand under Section 220(6) of the Act within the 30-day period before the tax dues were due, despite filing an appeal before the CIT(A) on January 29, 2017. Consequently, the Revenue's recovery of funds post-February 1, 2017, following the attachment of the petitioner's bank accounts, was deemed valid as the petitioner was in default as an Assessee.

Although the petitioner's appeal was heard by the CIT(A) on December 11, 2017, no order had been issued to date. In response, the court directed the CIT(A) to expedite the disposal of the petitioner's appeal from the assessment order dated December 29, 2016, ideally within six weeks from the judgment date, granting the petitioner a fresh personal hearing for the same. The petitioner's counsel confirmed the petitioner's cooperation in the speedy resolution of the appeal.

Ultimately, the petition was disposed of with no order as to costs, maintaining the Revenue's right to recover the assessed amount within the legal framework while emphasizing the need for timely disposal of pending appeals by the tax authorities to ensure procedural fairness and efficiency in tax matters.