2023 (6) TMI 225 - HC - Income Tax

Stay petition - garnishee proceeding - two appeals have been preferred by the petitioner, one against the intimation u/s 143(1) and the second one against the order passed u/s 154 - petitioner has not paid the outstanding dues as per the intimation as rectified - HELD THAT - From Stay petition, we find that the same has been filed u/s 220(6) of the Act, as per which provision such a petition is required to be filed before the assessing officer. An appellate authority which is competent to hear an appeal has also the power to grant interim relief relatable to the appeal. Power to grant stay is incidental and ancillary to the power to entertain an appeal. Notwithstanding wrong mentioning of the provision, we are of the view that since an application has been filed by the petitioner before the 4th respondent appellate authority, the said authority should consider the stay prayer of the petitioner one way or the other within a reasonable time. We direct the 4th respondent to consider the stay prayer of the petitioner dated 31.01.2023 after giving an opportunity of hearing to the petitioner and thereafter pass an appropriate order in accordance with law. We make it clear that the garnishee notice dated 17.11.2022, as modified on 12.12.2022, will be subject to such order that may be passed by the 4th respondent on the stay petition of the petitioner.

Summary

Issues:
Challenging garnishee notice under Income Tax Act, 1961; Typographical error in the notice; Appeal against intimation and rectification order; Failure to pay outstanding dues; Filing stay petition before appellate authority; Delay in decision by appellate authority; Filing writ petition for relief; Jurisdiction to grant stay by appellate authority; Direction to consider stay prayer; Timely consideration by appellate authority; Impact on garnishee notice; Disposal of Writ Petition; Communication of order to respondent.

Analysis:
The petitioner challenged a garnishee notice issued by the 2nd respondent under Section 226(3) of the Income Tax Act, 1961, directed at the 6th respondent, Axis Bank Limited, Hyderabad, for attaching the petitioner's bank account. A typographical error in the notice was corrected through a Corrigendum, specifying different assessment years and amounts due. The petitioner had filed its income tax return for the assessment year 2019-20, received an intimation under Section 143(1) of the Act, and subsequently a rectification order under Section 154, leading to an appeal by the petitioner against both. However, the outstanding dues were not paid, prompting the garnishee notice.

The petitioner sought a stay of demand by filing a petition before the 4th respondent, the appellate authority. Faced with a lack of decision by the appellate authority and ongoing garnishee proceedings, the petitioner filed a writ petition. The court noted that the stay petition was filed under Section 220(6) of the Act, which should have been before the assessing officer, but emphasized that the appellate authority has the power to grant interim relief related to appeals, including stay. Despite the procedural error, the court directed the appellate authority to consider the stay prayer within a reasonable time after providing an opportunity for a hearing to the petitioner.

The court instructed the 4th respondent to evaluate the stay prayer by a specified date and clarified that the outcome would affect the garnishee notice. The Writ Petition was disposed of with no costs imposed, and any pending miscellaneous applications were closed. The petitioner was directed to share a copy of the order with the 4th respondent within seven days of receipt to ensure compliance and communication of the decision.