2019 (10) TMI 554 - HC - Income Tax

Stay of Recovery from the savings account of the petitioner towards a tax liability confirmed against the petitioner - assessment years 2011-2012 and 2012-2013 - HELD THAT - It is not in dispute that as against the orders passed by the Appellate Authority/Assessing Authority, the petitioner defaulted in an amount of ₹ 8,54,509/-. It would normally follow, as a consequence, that on the default committed by the petitioner, he would lose the benefit of the stay order granted by the authority and the entire confirmed tax demand would become payable to the Department. Taking note of the plea of financial hardship urged by the learned counsel for the petitioner, and the fact that, had the petitioner effectively complied with the directions of the first Appellate Authority as also the assessing authority, he would have been obliged to pay only an amount of ₹ 8,54,509/- which he did not - If the petitioner pays an amount of ₹ 15,00,000/- in lieu of the balance ₹ 8,54,509/- that he was required to pay out of the amounts ordered by the Assessing Authority/Appellate Authority, as condition for the grant of stay of recovery of balance amount confirmed against him by the assessment orders, then the respondents shall promptly, and at any rate within two weeks from today, re-credit the balance amount from the amounts already recovered from the petitioner, to the respective Bank account - 2nd respondent Appellate Authority shall thereafter proceed to hear the petitioner and pass final orders in the Appeals Petition disposed off.

Summary

Issues:
Recovery of tax liability from petitioner's savings account, default in payment leading to loss of stay order benefit, financial hardship plea, appropriateness of recovery action by Income Tax Department.

Analysis:
The petitioner approached the High Court aggrieved by the Income Tax Department's action of recovering ?39,35,313 from their savings account towards a tax liability for the assessment years 2011-2012 and 2012-2013. The petitioner had appealed the assessments before the Appellate Authority and had been directed to pay specific amounts as confirmed demands. However, the petitioner defaulted on the payments, leading to the Department proceeding with the full recovery. The petitioner argued financial hardship, stating they could have paid a lesser amount if they had effectively complied with the directions given. The Court noted a previous judgment directing the Department to consider an extension of time for compliance, which the Department had not acted upon before initiating recovery.

The Court considered the plea of financial hardship and the fact that the petitioner could have paid a lesser amount if they had complied with the directions. The Court disposed of the Writ Petition with specific directions. The petitioner was directed to pay ?15,00,000 in lieu of the balance they were required to pay. Upon payment, the Department was instructed to re-credit the balance amount to the petitioner's bank account promptly. The Appellate Authority was directed to hear the petitioner and pass final orders on the appeals within six months. It was clarified that the Department should refrain from coercive recovery steps until the appellate orders are communicated to the petitioner.

In conclusion, the Court acknowledged the default in payment by the petitioner but considered the financial hardship plea. The Court provided specific directions for partial re-crediting of the recovered amount, continuation of the appeal process, and a stay on further recovery actions by the Department.