2019 (8) TMI 626 - HC - Income Tax

Stay of demand - pre-deposits - HELD THAT - The appeals now filed before the second respondent are statutory appeals which ought not to be shut out except for valid reasons noted and recorded by the second respondent. While recording the above statement, this Court hastens to add that all issues in this behalf are at large before the second respondent. The second respondent exercises his jurisdiction in accordance with law and no guidance is warranted from Court. Any observation made in this behalf ought not to be appreciated as expressing a view by this Court on the conduct of the petitioner. All the bank accounts of the petitioner are frozen. The petitioner offers to deposit 10% of the amount determined in Exts.P1 and P2. Now the apprehension voiced by the petitioner is that the first respondent will go to the next step and withdraw the entire tax amount payable by the petitioner from the frozen account. Keeping in view the balance of convenience and also enable the petitioner to work out the remedy of appeal, the writ petition is disposed of by this judgment. The case no doubt presents on both sides singular facts, therefore the discretion of this Court is also exercised in a measured way ensuring preservation of the interest of all the parties during the pendency of consideration of delay petitions or disposal of appeals. a) The petitioner deposits 10% of the tax amount demanded through Exts.P1 and P2 within one week from today. b) The petitioner accompanied by a copy of this judgment and also proof of payment of 10% as directed by this Court, appears before the second respondent and requests for consideration and disposal of delay condonation petitions within one week thereafter.

Summary

Issues:
1. Challenge to coercive steps for tax realization
2. Stay of coercive proceedings and freezing of bank accounts
3. Maintainability of writ prayers
4. Validity of freezing bank accounts for tax recovery
5. Jurisdiction of the second respondent in appeals
6. Disposition of the writ petition

Analysis:
1. The petitioner filed appeals with delays of 937 and 555 days against tax orders and sought stay on coercive proceedings. The writ petition challenged the coercive steps taken by freezing bank accounts for tax realization.

2. The petitioner's counsel argued for a stay on further proceedings related to frozen bank accounts, suggesting depositing 10% of the tax demanded for consideration. The Standing Counsel opposed, citing the finality of assessment orders and potential prejudice to the Department if accounts are unfrozen.

3. The Standing Counsel contended that the writ prayers were not maintainable as they sought relief from execution of final orders. The freezing of accounts was deemed necessary for legitimate tax recovery, pending appeal delays notwithstanding.

4. The judgment noted the statutory nature of the appeals before the second respondent and refrained from interfering with their jurisdiction. The petitioner's offer to deposit 10% of the tax amount was seen as a step towards addressing the situation.

5. The Court emphasized that all issues were before the second respondent and refrained from guiding their decision. The frozen bank accounts raised concerns about the potential withdrawal of the entire tax amount by the tax authority.

6. Considering the balance of convenience and the need for appeal remedy, the Court disposed of the petition by directing the petitioner to deposit 10% of the tax amount and follow specific steps for appeal consideration, while also instructing a temporary halt to recovery from frozen accounts. The judgment aimed to preserve interests during appeal proceedings.