2025 (2) TMI 988 - HC - Income Tax

Attachment of bank account - disposal of the appeal filed under Section 251 - HELD THAT - According to the petitioner since the aforesaid assessment is a high pitched assessment the petitioner had prayed for stay of the entire demand raised by the respondent authorities u/s 156. Record would reveal that not only the Deputy Commissioner of Income Tax but the PCIT had in the year 2019 itself rejected the petitioner s application for staying the entirety of the demand and the petitioner was called on to make immediate payment of 20% of the demand already raised. It is true that in case where a high pitched assessment is made ordinarily when an appeal is preferred within the stipulated period of limitation the demand may not to be enforced till disposal of the appeal. The Hon ble Division Bench of this Court in the case of Jankalyan Vinimay 2023 (8) TMI 723 - CALCUTTA HIGH COURT has taken the above view. In the present case however taking note of the fact that there is no explanation for the delay for the petitioner approaching this Court after four and half years from the date of rejection his application for stay of the entirety of the demand and the order attaching his bank account petitioner is not entitled to the stay of the order of attachment at this stage. Appellate authority should expeditiously hear out and dispose of the appeal not later than six weeks from the date of communication of this order upon giving reasonable opportunity of hearing to the petitioner. It is made clear that in the interregnum if any amount is credited to the petitioner s bank account which is the subject matter of attachment the same shall be retained with the bank to the credit of the appeal.

Summary

The present writ petition challenges the order of attachment of the petitioner's bank account by the Deputy Commissioner of Income Tax. The petitioner had filed an appeal under Section 251 of the Income Tax Act, 1961, for the Assessment Year 2011-2012, disputing the assessment made by the Assessing Officer. The petitioner also sought a direction to de-freeze the bank account and expedite the disposal of the appeal.The petitioner argued that the assessment was high-pitched, and despite filing the appeal within the limitation period, the demand raised by the authorities should not have been enforced. The petitioner relied on the judgment in the case of Jankalyan Vinimay Pvt. Ltd. vs. Deputy Commissioner of Income-tax & Ors. to support their position. The petitioner claimed that the delay in disposing of the appeal was causing irreparable loss and prejudice.On the other hand, the respondent authorities argued that the attachment order had been in place since 2019, and the petitioner had not challenged it for over six years. They contended that the petitioner should not be granted any relief until the appeal was disposed of.The Court noted that the petitioner's returned income was significantly lower than the revised income determined by the Assessing Officer. The petitioner had appealed the assessment and requested a stay of the entire demand. However, both the Deputy Commissioner and the Principal Commissioner had rejected the petitioner's application for a stay and directed immediate payment of 20% of the demand.While acknowledging the general principle that in cases of high-pitched assessments, demands may not be enforced until the appeal is decided, the Court found that the petitioner had not provided a satisfactory explanation for the delay in approaching the Court after the rejection of the stay application. Consequently, the Court held that the petitioner was not entitled to a stay of the attachment order at that stage.However, recognizing the prolonged pendency of the appeal, the Court directed the appellate authority to expedite the hearing and disposal of the appeal within six weeks from the date of the Court's order. The Court further instructed that any amount credited to the petitioner's bank account subject to attachment should be retained by the bank pending the appeal's outcome.In conclusion, the writ petition was disposed of with no order as to costs, and the parties were directed to act based on the server copy of the Court's order downloaded from the official website.Key Issues:1. Challenge to the order of attachment of the petitioner's bank account.2. Request for de-freezing the bank account and expedited disposal of the appeal.3. Dispute over the enforcement of the demand raised by the authorities.4. Consideration of the principles regarding high-pitched assessments and stay of demands during appeal proceedings.Significant Holdings:1. The petitioner was not entitled to a stay of the attachment order due to the delay in approaching the Court after the rejection of the stay application.2. The appellate authority was directed to expedite the hearing and disposal of the appeal within six weeks, with any credited amounts retained by the bank pending the appeal's outcome.