2018 (5) TMI 1442 - HC - Income Tax

Recovery of tax dues - Withdrawal of amount from the petitioner s Bank account - Held that - even if the Department has such powers it must be realized that the powers are drastic and would result into extremely harsh consequences to the assessee - merely because the statute authorizes the Government agency to carry out coercive recovery - it would not permit such an authority to access individual s bank account - even without his knowledge - the power of attachment of the Bank accounts and other immovable properties can always be exercised - Withdrawal of the amount must be rare and exceptional - hence the amount already recovered from the petitioner s bank account must be returned forthwith - Decided in favor of assessee

Summary

Issues:
Challenge to the Commissioner of Income-tax's dismissal of the petitioner's appeal without a hearing and the subsequent recovery of a sum from the petitioner's bank account by Revenue authorities.

Analysis:
The petitioner challenged the action of the Commissioner of Income-tax for dismissing the appeal without a hearing and the recovery of a substantial sum from the petitioner's bank account. The petitioner's return for AY 2013-2014 was assessed by the Assessing Officer, resulting in an order assessing the total income at a higher amount than the returned income. The petitioner appealed this assessment before the Appellate Commissioner and requested a stay on the recovery of tax dues, which was partially granted with a condition to deposit 15% of the disputed tax in installments. The petitioner complied with this condition by depositing a significant amount within the specified timeframe. However, the Appellate Commissioner dismissed the appeal ex parte without serving notice to the petitioner, leading to further complications.

The Revenue authorities directly contacted the petitioner's bank and withdrew a substantial sum from the petitioner's account on 27th February 2018, causing distress to the petitioner. The High Court found that the petitioner's contention regarding the disposal of the appeal without proper notice was accurate, and therefore, the appellate order was set aside. The Court directed the appeal to be reconsidered by the Appellate Commissioner after hearing the petitioner, with the petitioner required to appear before the Commissioner on a specified date to avoid the need for formal notice.

The Court expressed concern over the Revenue authorities' unilateral withdrawal of funds from the petitioner's bank account, emphasizing that such actions should be exercised with caution due to their severe impact on the assessee. While acknowledging the statutory powers of the Department for coercive recovery, the Court stressed the need for circumspection and rare use of such powers, suggesting that attachment of assets could be a more suitable approach. In this specific case, the Court ordered the immediate return of the amount withdrawn from the petitioner's bank account, highlighting the need for fairness and adherence to legal procedures. The petition was disposed of with instructions for the return of the withdrawn amount by a specified date.