2019 (11) TMI 1010 - HC - Income Tax

Assessee deemed in default - Recovery of Outstanding Tax demands - HELD THAT - A plain reading of the impugned letter dated 12th September, 2019, reveals that the writ petitioner has been asked to make an upfront payment of ₹ 20 lacs before 15th September, 2019 and from October, 2019, it has been directed to pay monthly instalments of ₹ 7 lacs for a period of 12 months or decision of the pending First Appeal, whichever is earlier. Whether the Deputy Commissioner of Income Tax, Central Circle, Meerut, while issuing the letter dated 12.09.2019, gave any cogent or justifiable reason in order to substantiate the payment requirement in order to have the assessee s bank account released? - Certainly, the Deputy Commissioner of Income Tax, Central Circle, Meerut, is well within his right to impose conditions for release of the bank account, provided the same conforms to the applicable instructions/circulars/ guidelines, issued by the CBDT from time to time. In the facts of the instant case, however, it is palpably evident that the conditions imposed upon the assessee for release of its bank account is bereft of any reason, not to mention, absence of cogent or justifiable reasons. As such, the impugned letter dated 12th September, 2019, cannot be sustained in law and is liable to be set aside and quashed and is, accordingly, set aside and quashed. The concerned AO is directed to take a fresh decision in the matter upon considering the letter of the writ petitioner dated 22nd August, 2019 addressed to the DCIT, Central Circle, Room No. 319, 3rd Floor, Central Circle, Meerut. Such decision, needless to mention, shall be supported with cogent and justifiable reasons and shall conform to the applicable written instructions/circulars/guidelines, issued by the CBDT from time to time.

Summary

Issues:
Challenge to letter dated 12th September, 2019 issued by Deputy Commissioner of Income Tax regarding release of bank account.

Analysis:
The judgment involves a challenge to a letter dated 12th September, 2019, issued by the Deputy Commissioner of Income Tax, Central Circle, Meerut, to the Principal Officer/Director of a company, setting conditions for releasing a bank account. The petitioner argued that the letter was contrary to CBDT circular Instruction No. 1914 related to tax collection and recovery. The Revenue's advocate referred to an Office Memorandum dated 31st July, 2017, modifying Instruction No. 1914 regarding guidelines for stay of demand at the first appeal stage.

The impugned letter required an upfront payment of ?20 lacs by 15th September, 2019, and subsequent monthly instalments of ?7 lacs from October, 2019 for 12 months or until the First Appeal decision. The court examined if the Deputy Commissioner provided justifiable reasons for these payment conditions as per CBDT instructions. It was found that the conditions lacked reasoning and justification, making the letter unsustainable in law. Consequently, the letter was set aside and quashed.

The Assessing Officer was directed to reconsider the matter, taking into account the petitioner's letter dated 22nd August, 2019. The new decision should be supported by valid reasons and comply with CBDT instructions. The Assessing Officer was instructed to complete this process promptly, preferably within a fortnight or a maximum of three weeks from the date of receiving a certified copy of the court's order. The application was disposed of accordingly.