2019 (3) TMI 1138 - HC - Income Tax

Issuance of Garnishee notices during the pendency of the stay application - AO empowerment to grant stay provided 20% of the disputed demand paid - - HELD THAT - There is considerable force in the arguments advanced by the learned counsel for the revenue. That the Assessing Officer was empowered to grant an interim order of stay provided 20% of the disputed demand is paid by the assessee. However, it is not in dispute that 10% of the disputed demand is already paid by the assessee. In such circumstances, justice will be met if a direction is issued to the petitioner to deposit 10% of the balance disputed amount before the respondent within a period of two weeks. Writ petition stands disposed of directing the respondent to restore the amount if any collected from the petitioner s bankers pursuant to the garnishee notices issued impugned herein and withdraw the garnishee notices subject to the undertaking to be given by the petitioner that 10% of the disputed demand would be deposited within a period of two weeks from today

Summary

Issues:
1. Writ of mandamus sought to withdraw Garnishee notices dated 12.02.2019 issued to petitioner's bankers for Assessment Year 2016-2017.

Analysis:
The petitioner filed a writ petition seeking a mandamus to direct the respondent to withdraw Garnishee notices related to the Assessment Year 2016-2017. The petitioner contended that after receiving the assessment order under S.143(3) of the Income Tax Act, a demand notice was issued, and a portion of the disputed demand was paid. The petitioner challenged the assessment order through a First Appeal, and a stay application was disposed of by the respondent. During the pendency of the stay application, garnishee notices were issued. The department recovered an amount from the petitioner's bankers, which remains uncashed. The petitioner requested the restoration of the amount and the opportunity to address the matter before the Appellate Authority.

The revenue's counsel argued that as per the Office Memorandum dated 29.02.2016, if the assessee is dissatisfied with the stay order, they should approach the administrative Pr. CIT/CIT for a review. The petitioner's appeal before the Commissioner of Income-tax (Appeals) was deemed inadmissible. The revenue contended that if the balance ten percent of the demand is paid, as required by the Competent Officer, it shall be considered.

After considering the arguments, the Court found merit in the revenue's submissions. It noted that the Assessing Officer could grant an interim stay order upon payment of 20% of the disputed demand, although the petitioner had paid only 10%. The Court directed the petitioner to deposit the remaining 10% of the disputed amount with the respondent within two weeks. The writ petition was disposed of, instructing the respondent to refund any amount collected from the petitioner's bankers through the garnishee notices and withdraw the notices, subject to the petitioner's undertaking to deposit the remaining 10% within the specified timeframe.