2021 (11) TMI 929 - HC - Income Tax

Recovery proceedings - Stay of demand - Properties including the stock-in-trade have been attached - petitioner submits that as his properties including the stock-in-trade have been attached, his business activities have been completely jeopardized, for which reason he is unable to generate any revenue for payment of the tax dues - HELD THAT - In the light of the contentions made and taking an over all view of the matter, we feel that it would meet the ends of justice, if the attachment of the stock-in-trade of the petitioner is withdrawn to enable him to meet the tax dues in terms of the first proviso to Section 254 (2A) of the Act. In view of the statement made by the revenue itself that not much money could be appropriated through attachment of bank accounts, attachment of the bank accounts may be withdrawn. Order - Tribunal is directed to expeditiously hear the three appeals of the Revenue and corresponding Cross Objections of the petitioner, preferably within a period of six months from today.Petitioner shall deposit 20% of the tax dues following the order passed by the first appellate authority on 31.03.2018.On such deposit, attachment of the petitioner s bank accounts as well as the stock-in-trade shall stand withdrawn forthwith

Summary

Issues:
1. Legality of notices issued under Section 226(3) of the Income Tax Act, 1961.
2. Validity of the notice dated 18.03.2014 by Tax Recovery Officer.
3. Direction to allow the petitioner to operate bank accounts and release attached properties.
4. Assessment orders passed against the petitioner for various demands.
5. Appeals filed by the petitioner and the revenue before different authorities.
6. Stay application filed by the petitioner and non-compliance with the order.
7. Consideration of attachment of bank accounts and properties.
8. Provisions of Section 254(2A) of the Income Tax Act.
9. Impact of attachment on petitioner's business activities and revenue generation.

Analysis:
1. The Writ Petition challenges the legality of notices issued under Section 226(3) of the Income Tax Act, 1961, dated 12.12.2019, attaching nine bank accounts of the petitioner. The petitioner seeks a declaration that these actions are illegal and void, along with a similar challenge against a notice dated 18.03.2014 attaching properties, including stock in trade. The High Court considers the drastic nature of such attachments and emphasizes the need for expeditious resolution through the Tribunal.

2. The judgment outlines the background of a search and seizure action against a company, leading to assessments against the petitioner for various demands. Despite appeals and revisions, outstanding dues remain. The Tribunal is directed to hear the appeals and cross-objections within six months. The Court also highlights the provision of Section 254(2A) of the Act, allowing for a stay subject to certain conditions.

3. The petitioner's inability to generate revenue due to the attachment of properties, affecting business activities, is considered. In a balanced approach, the Court orders the withdrawal of the attachment of stock-in-trade to enable the petitioner to meet tax dues as per the provisions of Section 254(2A). The judgment further directs the withdrawal of bank account attachments, considering the limited recovery through such means.

4. The Court orders the petitioner to deposit 20% of the tax dues following the first appellate authority's order. Upon such deposit, the attachments on bank accounts and stock-in-trade are to be withdrawn immediately. Additionally, a condition is imposed on future deposits into bank accounts to ensure a portion is maintained until necessary. The judgment concludes by disposing of the Writ Petition and related applications, with no costs awarded.