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2021 (1) TMI 363 - HC - Income TaxRecovery proceedings - notices under Section 226(3) was issued to its banker, viz., Axis Bank Limited, the Petitioner - HELD THAT - As brought to notice that after the filing of the Writ Petition, assessment of liability for income tax of M/s. Stylog Infrastructure Private Limited has been set aside by Income Tax Tribunal and the matter had been remitted for fresh determination and thereafter, another order of assessment has been passed on 06.02.2020 raising fresh demand for payment against which the said Company has filed appeal before the Commissioner of Income Tax (Appeal) on 20.10.2020, which is pending. In view of the subsequent events after the filing of the Writ Petition, the impugned orders raising demand for payment from Petitioners based upon the assessment orders of M/s. Stylog Infrastructure Private Limited cannot survive and accordingly, the same are set aside. However, this would not preclude the concerned authority to pursue the claim for recovery based on the fresh assessment in the manner recognized by law.
Issues:
1. Validity of orders demanding payment from petitioners based on income tax dues. 2. Effect of subsequent events on the impugned orders. 3. Authority's ability to pursue recovery based on fresh assessment. Analysis: Issue 1: Validity of orders demanding payment The judgment addresses the situation where a company, M/s. Stylog Infrastructure Private Limited, had income tax dues, and recovery measures were initiated by the Deputy Commissioner of Income Tax, Puducherry. The company failed to make the payment, leading to demands for payment issued to other entities associated with the company. The Writ Petitions challenge the orders demanding payment issued by the Deputy Commissioner of Income Tax on various dates. The court examined the legality of these orders under Section 226(3) of the Income Tax Act, 1961. Issue 2: Effect of subsequent events Following the filing of the Writ Petitions, it was revealed that the assessment of income tax liability for M/s. Stylog Infrastructure Private Limited had been set aside by the Income Tax Tribunal. Subsequently, a fresh assessment order was passed in 2020, against which the company filed an appeal before the Commissioner of Income Tax (Appeal). The court considered these subsequent events and their impact on the impugned orders demanding payment from the petitioners based on the earlier assessment orders. Issue 3: Authority's ability to pursue recovery Considering the subsequent events and the fresh assessment raising a new demand for payment, the court set aside the earlier orders demanding payment from the petitioners. The judgment clarified that while the impugned orders were invalidated, the concerned authority retained the right to pursue the claim for recovery based on the new assessment in accordance with the law. The court's decision aimed to balance the interests of the parties involved while upholding legal principles and procedures. In conclusion, the High Court of Madras, in the given judgment, addressed the validity of orders demanding payment based on income tax dues, considered the impact of subsequent events on these orders, and clarified the authority's ability to pursue recovery based on a fresh assessment. The judgment provided a balanced approach by setting aside the earlier orders while allowing the recovery process to continue based on the new assessment.
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