2019 (9) TMI 561 - HC - Income Tax

Stay of demand - petitioner is ready to make the deposit for the purpose that the cash credit account of the petitioner may be released from attachment - HELD THAT - The offer given by the learned counsel for the petitioner, prima facie, appear to be genuine to us, in view of the fact that the cash credit account of the petitioner has already been attached, which may be causing hindrance in the business of the petitioner. Accordingly, we direct the petitioner to make the deposit of ₹ 30,00,000/- and upon the deposit of this amount, the attachment order dated 24.06.2019 attaching the cash credit account of the petitioner shall remain in abeyance, till the period one week, and if revision / review is filed against the order dated 08.04.2019 within the same period, the attachment order shall be guided by the final order passed by the Commissioner of Income Tax, on the revision / review application, and upon its compliance by the petitioner. All these writ petitions are disposed of, directing the petitioner to avail the alternative remedy first.

Summary

Issues:
1. Rejection of stay of demands by Income Tax Officer for multiple financial years.
2. Direct approach to the High Court without availing alternative remedy.
3. Attachment of cash credit account by Income Tax Department.
4. Offer made by petitioner's counsel for deposit to release attachment.

Issue 1: The petitioner was aggrieved by the Income Tax Officer's rejection of stay of demands for financial years 2012-2013 to 2017-2018 due to non-fulfillment of the condition of paying 20% of the gross demand before filing the stay application. The petitioner had the option to seek revision before the Commissioner of Income Tax under Section 264 of the Income Tax Act, but chose to directly approach the High Court without availing this alternative remedy.

Issue 2: The petitioner moved directly to the High Court due to the imminent attachment of their cash credit account by the Income Tax Department, as confirmed by a letter from the petitioner's banker. Despite the pending challenges to demand notices before the Appellate Authority, the petitioner bypassed the statutory remedy. The High Court emphasized the importance of exhausting alternative remedies before seeking judicial intervention.

Issue 3: The petitioner's counsel offered to deposit 20% of the gross demand to release the attached cash credit account, citing provisions in circulars issued by the CBDT allowing for a reduction in the required deposit percentage for staying demand notices. The High Court found the offer genuine, considering the hindrance caused to the petitioner's business by the attachment. The court directed the petitioner to make a deposit of a specified amount, with the attachment remaining in abeyance pending the outcome of a revision/review application before the Commissioner of Income Tax.

Issue 4: The High Court disposed of the writ petitions, instructing the petitioner to first avail the alternative remedy of filing a revision/review petition before the Commissioner of Income Tax. The court's directions included making a deposit to release the attachment of the cash credit account and specified the process to be followed based on the Commissioner's final decision on the revision/review application. The pending Interlocutory Applications were also disposed of in light of the court's directives.