2020 (2) TMI 727 - HC - Income Tax

Recovery proceedings - Validity of notice u/s 226(3) - notice was issued to the banker of the petitioner on account of recovery of the amount due and payable from the petitioner for the assessment year 2017-2018 - HELD THAT - A prima facie case has been made out by the petitioner with regard to the error apparent on the face of record and perversity in the proceeding. Hence this writ petition is entertained, for the limited purpose for consideration of the validity of the notice under Section 226(3) of the Income Tax Act, 1961. It also appears that the petitioner has preferred an appeal against the assessment order as also the demand notice. The petitioner is directed to pursue the appeal filed before the Assistant Commissioner of the Income Tax Circle 2(1), Jalpaiguri by depositing 20% of the assessed amount. Such appeal will be disposed of within a period of one month from the date of deposit of the amount as herein before stated. Till the appeal is disposed of, the demand notice as also the notices issued under Section 226(3) of the Income Tax Act to the Banks are stayed and the same will be subject to the result of the appeal. The observations made herein are only with regard to the notice issued to the Bank and for disposal of the writ petition. The appellate authority shall not be prejudiced with the observations made hereinbefore and should proceed with the appeal on its own merit and on the available documents, in accordance with law.

Summary

Issues: Challenge to notice under Section 226(3) of the Income Tax Act, 1961; Error apparent on the face of record and perversity in the proceeding; Validity of the recovery notice; Appeal against assessment order and demand notice; Stay on demand notice and notices issued under Section 226(3) of the Income Tax Act; Disposal of the writ petition.

The judgment by the High Court of Calcutta involved a challenge to a notice under Section 226(3) of the Income Tax Act, 1961. The petitioner contested a recovery notice issued by the Assistant Commissioner of Income Tax for an amount due and payable for the assessment year 2017-2018. The petitioner argued that the recovery notice could not precede the demand, pointing out an error apparent on the face of the record and perversity in the proceeding. The Court entertained the writ petition to consider the validity of the notice under Section 226(3) of the Income Tax Act, 1961.

Furthermore, it was revealed that the petitioner had also filed an appeal against the assessment order and the demand notice. The Court directed the petitioner to pursue the appeal by depositing 20% of the assessed amount. The appeal was to be disposed of within one month from the date of deposit, and during this period, the demand notice and notices issued to the banks were stayed, subject to the result of the appeal.

The judgment clarified that the observations made regarding the notice issued to the bank were solely for the purpose of disposing of the writ petition. The appellate authority was instructed not to be influenced by these observations and to proceed with the appeal based on its own merit and the available documents, in accordance with the law. Ultimately, the writ petition was disposed of without any order as to costs, and the parties were to receive an urgent certified copy of the order if requested.