2019 (3) TMI 1557 - HC - Income Tax

Alternate remedy - writ petition - availability of statutory remedy of approaching the ITAT - penalty u/s 271(1)(c) - application for stay of demand - seize the bank accounts - HELD THAT - Since the petitioner has a statutory remedy of approaching the ITAT against the order passed by the CIT (A), the petitioner has not yet approached the ITAT, all the pleas raised in the writ petition can very well be taken in the appeal filed before the ITAT, the petitioner can also make an application for interim relief which can be considered by the ITAT, we do not find any reason to grant indulgence. Writ petition is finally disposed of with the observation that in case the petitioner prefers an appeal before the ITAT, the same may be considered by the ITAT expeditiously including the application for interim relief which may be considered by the ITAT, if possible, on the date of filing of the appeal. In the meantime, the petitioner may move an application for release of bank accounts to the opposite parties who may consider the same taking into consideration the difficulties faced by the petitioner and looking to the fact that the petitioner is a Government Corporation involved in the generation of electricity which is an essential commodity.

Issues:
1. Coercive recovery of penalty demand for assessment year 2013-14 and release of bank account.
2. Consideration of pending application under Section 154 of the Income Tax Act.
3. Alleged concealment of income under Section 271 (1) (c) of the Income Tax Act.
4. Arbitrary and illegal seizure of bank accounts by the opposite parties.
5. Statutory remedy of approaching the ITAT against the order passed by CIT (A).
6. Request for release of other bank accounts for payment to suppliers.

Analysis:
1. The writ petition sought direction to prevent coercive recovery of penalty demand for the assessment year 2013-14 and immediate release of the petitioner's bank account following a notice under Section 226 (3) of the Income Tax Act. The petitioner also requested consideration of their pending application under Section 154 of the Income Tax Act dated 23.2.2018 in line with CBDT Circular No. 25 of 2015.

2. The petitioner's counsel argued that the penalty for alleged income concealment under Section 271 (1) (c) was unjustly imposed, and the application for stay of demand was rejected. Despite filing an appeal before the CIT (Appeals II), the penalty was upheld. The petitioner contended that as per CBDT circulars and High Court orders, the penalty should not have been imposed, and the pending Section 154 application, filed on 23.2.2018, remains undecided beyond the stipulated time frame.

3. The petitioner faced arbitrary and illegal seizure of bank accounts by the opposite parties, causing severe financial distress. The petitioner's accounts were frozen, hindering payment to suppliers and potentially leading to the shutdown of generation plants. The opposite parties justified their actions post the CIT (A) appeal dismissal, asserting their authority to recover the demand coercively.

4. The Court noted the petitioner's statutory remedy to approach the ITAT against the CIT (A) order, emphasizing that all arguments could be raised during the appeal. The Court declined immediate intervention, suggesting the petitioner pursue relief through the ITAT, including interim measures, while directing the opposite parties to consider releasing the remaining bank accounts for essential business operations.

5. The Court disposed of the writ petition, advising the petitioner to appeal before the ITAT promptly. It instructed the ITAT to expedite the appeal process, including the interim relief application, and urged the opposite parties to review the request for releasing bank accounts promptly, considering the petitioner's critical role as a Government Corporation involved in electricity generation, an essential service.

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