2020 (4) TMI 764 - HC - Income Tax

Stay petition - given the present COVID-19 pandemic in the country, the Hon ble Supreme Court directed that, no recovery measures to be taken by revenue authorities including Income Tax authorities - petitioner submits that, the petitioner should be allowed to operate bank accounts as, the recovery notice issued by the Income Tax authorities directs blanket stay operation of such bank accounts - HELD THAT - The petitioners suffered an order of assessment in the year 2019. The petitioners preferred an appeal against such order of assessment. There is a stay petition pending also. The revenue authorities issued recovery notice on March 5, 2020 - revenue authorities received the recovery amount from the concerned banks. All these measures took place prior to the order dated March 20, 2020 passed by the Hon ble Supreme Court. Therefore, the order of attachment on the bank account of the petitioners therein are lifted as the revenue received the demanded amount. It is clarified that this order is an interim measure given the COVID-19 pandemic situation in the country. The appellate authority is at liberty to dispose of the appeal of the petitioner in accordance with law, as expeditiously as possible. None of the observations made herein will prejudice any of the parties in the pending appeal.

Summary

Issues:
Three writ petitions involving tax assessment, recovery notices, and bank account attachments amid COVID-19 pandemic.

Tax Assessment and Recovery Notices:
The petitioners, engaged in extending business opportunities to tribals, were assessed to tax by Income Tax authorities. Appeals and stay petitions were pending consideration. Income Tax authorities issued recovery notices and attached bank accounts of the petitioners. The petitioners argued that recovery notices should be stayed during appeal proceedings as per the usual practice upon depositing 20% of the demanded amount. Referring to a Supreme Court order during the COVID-19 pandemic, the petitioners requested permission to operate their bank accounts, highlighting the potential infringement of their livelihood guaranteed under Article 19(1)(g) of the Constitution of India.

Judgment Analysis - Writ Petitions:
In two writ petitions, the revenue authorities had already received the recovery amount from the banks before a Supreme Court order dated March 20, 2020. Therefore, the attachment orders on the bank accounts of the petitioners in these two cases were lifted. However, in the third writ petition, the demand notice was issued before the Supreme Court order. The court directed the bank to set aside the demanded amount in a separate interest-bearing fixed deposit account pending the appellate authority's decision. Once the amount was set aside, the petitioners were allowed to operate the bank account. This interim measure was deemed necessary due to the COVID-19 pandemic situation, with the appellate authority instructed to expedite the appeal process without prejudice to any party.

Conclusion:
The court's interim order addressed the differing circumstances of the three writ petitions concerning tax assessment, recovery notices, and bank account attachments. While the attachment orders were lifted in two cases due to the revenue authorities already receiving the demanded amounts, a separate arrangement was made for the third case to protect the petitioners' interests during the appeal process. The judgment emphasized the impact of the COVID-19 pandemic on the petitioners' ability to operate their bank accounts and highlighted the need for expeditious resolution of the pending appeals. The parties were instructed to follow the court's directives until normal court functions resumed.