2019 (4) TMI 574 - HC - Income Tax

Stay petition - recovery proceedings - attachment of bank accounts - AO issued a notice initially by letter to the Bank of India withdrawing the earlier notice on the ground that petitioner was having business of essential commodities in the interest of general public for consumers - After addressing such letter on 20.1.2019, respondent no.1 issued a fresh notice u/s 226(3) for attaching the accounts of the petitioners, attachment the petitioners are unable to make payment to Bharat Petroleum Corporation Limited which is required to be paid for supply of Cooking gas cylinders to the customers of the petitioners - HELD THAT - Statement of learned Counsel for the petitioners that the petitioners are required to pay various amounts to Bharat Petroleum Corporation Limited towards supply of LPG cylinders and if such amount is not paid, large number of the customers of the petitioners would be seriously affected is accepted. There is substance in the submission made by the learned Counsel for the petitioners. AO is directed to dispose of the application for stay filed by the petitioners on 23.1.2019 (Exh. 3 Colly) to the petition within two weeks from the date of communication of this order after giving an opportunity of being heard to the petitioners. Till such application for stay is decided by the Assessing Officer, the petitioners would be permitted to make payment of ₹ 3,00,000/- to the Bharat Petroleum Corporation Limited without prejudice to the rights and contentions of the respondents.

Summary

Issues:
1. Amendment to implead a party respondent
2. Ad-interim relief sought by petitioners
3. Impugning notices issued by Income Tax Officer
4. Pending appeal and application for stay
5. Alleged breach of principles by respondent
6. Payment to Bharat Petroleum Corporation Limited
7. Court's directives on stay application and payment

Amendment to Implead a Party Respondent:
The High Court granted leave to amend to implead Bharat Petroleum Corporation Limited as a party respondent. The amendment was to be carried out immediately, with re-verification dispensed with. The petitioners were directed to serve a copy of the petition upon respondent no. 2 within one week, who was then required to file an affidavit in reply within two weeks.

Ad-Interim Relief Sought by Petitioners:
The petitioners sought ad-interim relief to restrict the payment of a specific amount per day to Bharat Petroleum Corporation Limited until their application for stay before the Assessing Officer was disposed of. The learned Counsel for the petitioners pressed for this relief, emphasizing the urgency of the matter.

Impugning Notices Issued by Income Tax Officer:
The petitioners challenged the notices issued by the Income Tax Officer under Section 226(3) of the Income Tax Act, 1961, attaching their bank accounts with various banks. They had already appealed against the Assessment Order, which was pending. The petitioners highlighted that the attachment of their accounts was affecting their ability to pay Bharat Petroleum Corporation Limited for the supply of cooking gas cylinders, impacting their customers.

Pending Appeal and Application for Stay:
The petitioners' appeal before the Commissioner of Income Tax (Appeals) and the application for stay before the Assessing Officer were both pending. The Assessing Officer had issued notices for attaching accounts, causing financial constraints on the petitioners. The petitioners argued that the respondent had breached principles laid down by the Court in a previous judgment.

Alleged Breach of Principles by Respondent:
The petitioners contended that the respondent had violated principles established by the Court in a prior judgment while issuing notices for recovery. The petitioners' Counsel referenced a specific case to support their argument regarding the improper issuance of notices under the Income Tax Act.

Payment to Bharat Petroleum Corporation Limited:
The Court accepted the statement from the petitioners' Counsel regarding the necessity to pay various amounts to Bharat Petroleum Corporation Limited for LPG cylinders. The inability to make these payments due to the attachment of their accounts was acknowledged as a significant concern affecting their customers.

Court's Directives on Stay Application and Payment:
The Court directed the Assessing Officer to dispose of the petitioners' application for stay promptly and permitted the petitioners to make a specific payment to Bharat Petroleum Corporation Limited until the stay application was decided. Additionally, the Corporation was required to provide an affidavit detailing the petitioners' liabilities towards them within a specified timeframe. The order also outlined the consequences if the stay application and appeal were rejected, emphasizing the obligations under the Income Tax Act.

This detailed analysis of the judgment covers the various issues involved, the arguments presented by the parties, and the Court's directives and considerations in addressing the legal matters at hand.