2020 (3) TMI 1032 - HC - Income Tax

Stay petition - Recovery proceedings - Grievance of the petitioner is that without taking any decision on the stay application of the petitioner, respondent No.1 has attached the above three bank accounts of the petitioner by issuing garnishee notices under Section 226(3) - HELD THAT - We feel that it would meet the ends of justice if respondent No.1 takes a decision on the stay application of the petitioner in accordance with law within a period of 10 days from the date of receipt of an authenticated copy of this order. Ordered accordingly. Till the stay application is decided, there shall be no further withdrawal of money from the above three bank accounts of the petitioner and whatever withdrawals have been made, the same shall be subject to such order that may be passed by respondent No.1 in terms of the present order. Attachment of the bank accounts would also be subject to outcome of such order that may be passed by respondent No.1. Petitioner would also be at liberty to move respondent No.4 for early hearing of the appeal as well as for stay of the outstanding demand and if such prayer is made, the same shall be considered in accordance with law by respondent No. 4.

Summary

Issues Involved:
Petition seeking direction to respondents regarding recovery of demand and release of bank accounts.

Analysis:
The petitioner, a partnership firm assessed under income tax jurisdiction, filed a petition under Articles 226/227 seeking relief from coercive recovery steps and release of three bank accounts. The petitioner's income sources include interest from fixed deposits, dividends, and profits from share sales. For the 2017-18 assessment year, the Assessing Officer added an amount under Section 68 of the Income Tax Act as unexplained credit, resulting in a substantial increase in assessed income. A notice of demand was issued for the additional amount. The petitioner applied for a stay of demand and appealed the assessment order. The grievance was that the bank accounts were attached without deciding on the stay application, leading to withdrawals prejudicial to the petitioner, prompting the writ petition.

The High Court directed respondent No.1 to decide on the stay application within 10 days, prohibiting further withdrawals from the bank accounts until then. Any withdrawals made were made subject to the final order. The attachment of bank accounts was also subject to the outcome of the order. The petitioner was allowed to request early appeal hearing and stay of demand from respondent No. 4, with adverse decisions by respondent No.1 not to be enforced for two weeks. The judgment clarified that no opinion on merit was expressed, and the writ petition was disposed of.