2020 (7) TMI 131 - HC - Income Tax

Stay of recovery - petitioner paid an amount equal to 20% of the tax demand - Attachment over the bank accounts of the petitioner - HELD THAT - Respondents have already recovered an amount of ₹ 1,51,00357/- from the petitioner through garnishee proceedings, and the appeal preferred by the petitioner against the assessment order has been heard finally by the 2nd respondent Appellate Authority, who is expected to pass orders in the appeal in the near future, there need not be a further recovery effected from the petitioner at this stage. Accordingly, while upholding the recovery already effected by the respondents for the time being, we deem it to be sufficient for safeguarding the interests of the revenue pending disposal of the appeal by the 2nd respondent. Writ petition is disposed, by directing the respondents to lift the attachment over the bank accounts of the petitioner maintained with respondents 4 to 6 banks forthwith, with a further direction to the 2nd respondent to pass final orders in the appeal within an outer time limit of two months from the date of receipt of a copy of this judgment.

Issues:
1. Stay of recovery pending disposal of appeal under Section 220(6) of the Income Tax Act.
2. Garnishee proceedings and attachment of bank accounts.
3. Relief sought for lifting the attachment orders and staying further recovery proceedings.

Issue 1: Stay of recovery pending disposal of appeal under Section 220(6) of the Income Tax Act

The petitioner appealed against an assessment order under the Income Tax Act and sought a stay of recovery pending the appeal. The 1st respondent initially granted a stay on the condition of payment of 20% of the tax demand. Dissatisfied, the petitioner filed a fresh petition under Section 220(6) before the 1st respondent, which did not result in a favorable order. Subsequently, the petitioner approached the 2nd respondent for a stay petition, but it was not considered, leading to garnishee proceedings and attachment of bank accounts. The High Court, after considering the facts and submissions, upheld the recovery already made by the respondents and directed the lifting of the attachment over the bank accounts, emphasizing the need to safeguard the revenue's interests pending the final decision by the 2nd respondent Appellate Authority.

Issue 2: Garnishee proceedings and attachment of bank accounts

The respondents initiated garnishee proceedings and attached the petitioner's bank accounts, withdrawing a significant amount towards the tax liability. The petitioner argued that the amount withdrawn represented approximately 11% of the tax demand confirmed against them. The High Court acknowledged the recovery made but deemed it sufficient at that stage, especially considering that the appeal had been heard by the 2nd respondent Appellate Authority, who was expected to pass final orders soon. Consequently, the High Court directed the immediate lifting of the attachment over the bank accounts maintained with specific banks.

Issue 3: Relief sought for lifting the attachment orders and staying further recovery proceedings

The petitioner's prayer in the writ petition was primarily to lift the attachment orders over their bank accounts and to stay further recovery proceedings until final orders were passed by the 2nd respondent in the pending appeal. The High Court, after thorough consideration, disposed of the writ petition by instructing the respondents to lift the attachment over the bank accounts promptly and directing the 2nd respondent to issue final orders in the appeal within a specified time frame. Until the 2nd respondent's orders were communicated to the petitioner, any further recovery proceedings related to the assessment order were to be put on hold, allowing the petitioner to operate the bank accounts during that period.

This detailed analysis of the judgment from the Kerala High Court provides insights into the issues of stay of recovery, garnishee proceedings, and relief sought by the petitioner, along with the High Court's decision and directions in each aspect of the case.

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