2013 (7) TMI 546 - HC - Income Tax

Curtailing of time to pay recovery amount - Acc. to Section 220 petitioner was entitled to a period of thirty days to pay the sum, whereas the notice granted a shorter period of 15 days - Held that - Respondent neither recorded reasons to believe that granting full period of 30 days would be detrimental to the Revenue, nor any previous approval of the Joint Commissioner for curtailing the period was taken - Mere discussion in a meeting of several high ranking tax officers chalking out certain action plan for timely recoveries would not satisfy such a requirement which must be observed individually - Decided in favour of assessee

Summary

Issues involved:
1. Challenge to a notice issued by the Assistant Commissioner of Income Tax seeking recovery of a sum of money within a specified period.
2. Interpretation of Section 220 of the Income Tax Act, 1961 regarding the period allowed for payment of the sum demanded in a notice of demand.
3. Examination of the sufficiency of reasons recorded by the Assessing Officer for curtailing the payment period and the requirement of obtaining prior approval of the Joint Commissioner.
4. Consideration of whether the notice issued to a Government Company complied with the legal requirements and safeguards.
5. Assessment of the impact of granting a full period of 30 days for payment on the recovery process and the interests of the Revenue.

Detailed Analysis:
1. The petitioner, a Government company, challenged a notice issued by the Assistant Commissioner of Income Tax seeking recovery of a sum of Rs.3.22 crores within 15 days, contrary to the usual 30-day period allowed under Section 220 of the Income Tax Act, 1961. The petitioner argued that the notice did not fulfill the requirements of the Act as it did not record reasons for curtailing the period or obtain prior approval of the Joint Commissioner. The respondent did not deny these assertions in their affidavit, and the petitioner had already filed an appeal against the assessment order, leading to a stay on recovery until July 31, 2013.

2. Section 220 of the Act specifies that any amount payable in a notice of demand under Section 156 should be paid within 30 days, with provision for the Assessing Officer to reduce this period if it is believed to be detrimental to the Revenue. However, in this case, doubts were raised regarding the sufficiency of the reasons recorded by the Assessing Officer for curtailing the period and the absence of prior written approval from the Joint Commissioner. The court emphasized the importance of complying with these requirements to safeguard the interests of the assessee and ensure proper application of the law.

3. The respondent argued that the decision to curtail the payment period was based on an action plan decided by the CBDT to recover a certain percentage of demands raised during the financial year. While oral approval from the Joint Commissioner was claimed, the lack of prior written approval raised concerns about the validity of the decision. The court highlighted that individual compliance with the legal provisions, including obtaining written approval, is essential to exercise such powers lawfully.

4. Considering the petitioner's status as a Government Company and the absence of evidence suggesting default or hindrance in recovery if the full 30-day period was allowed, the court expressed reservations about the necessity of curtailing the payment period. The court refrained from altering the period specified in the notice, noting that the petitioner had already received an extended period for recovery and a stay on recoveries had been granted by the Assessing Officer.

5. Ultimately, the court concluded that the purpose of the petitions was fulfilled by the developments in the case, including the stay on recoveries and the extended period granted to the petitioner. As a result, the petitions were disposed of accordingly, without further orders or modifications to the notice period specified.