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Judgment
The petitioner herein an Agency of the State Government is challenging the order of the third respondent-Income Tax Officer in recovering the tax
assessed by him for the assessment years 2010-11, 2011-12, 2012-13, 2013-14 and 2015-16 by letter dated 28.03.2018 vide F.No. PAN-
AABAN0989K/226(3)/ITO-W-1/2017-18 which is at Annexure-A and vide letter bearing F.No.226(3)/ITO/W-1/BIDAR/17-18 which is at
Annexure-B in recovering a sum of Rs.16,95,48,869/-from the account of the petitioner maintained with the fourth respondent Axis Bank Limited,
Bidar Branch which according to them is in excess of 20% upper limit permissible under the cases where the appeals are filed against the
confirmation order of assessment passed by the Commissioner of Income Tax (Appeals) under Section 253 of the Income Tax Act in confirming the
assessment order under Section 143 read with Section 147 of the Income Tax Act (Hereinafter, referred to as ‘the Act’ ).
Brief facts leading to these writ petitions are as under:-
Petitioner herein is a development agency constituted by the State Government for development of Bidar District and the same is headed by the
Deputy Commissioner of Bidar as its Chairman. It is stated that the revenue generated to the said organization is assessed to income tax by the third
respondent-Income Tax Officer under Section 143 Read with Section 147 of the Act. The petitioner would state that, for the assessment years 2010-
11 to 2013-14 and 2015-16 two separate orders were passed on 22.02.2016 and 07.03.2016. The said order of assessment was subjected to challenge
by the petitioner herein belatedly by filing a revision under Section 264 of the Act before the Commissioner of Income Tax (Appeals). The appeal
came to be allowed by order dated 29.12.2016 in setting aside the assessment order passed by the third respondent and remanding the same for
reassessment. The said remanded matter was taken up for assessment by the third respondent and separate order came to be passed by him on
28.12.2017. The same was subject matter of appeal before the Commissioner of Income Tax (Appeals) under Section 248 of the Act, which came to
be decided by order dated 19.03.2018 passed under Section 250 of the Act. The petitioner would submit that, it has taken up the said order in
challenge before the Income Tax Appellate Authority by filing an appeal on 29.05.2018.
Their grievance is that though an order of accepting the assessment of the third respondent was passed by the second respondent Commissioner of
Income Tax (Appeals) on 19.03.2018, the same was communicated to them on 27.03.2018. It is stated that an appeal is provided under the Act to
challenge the correctness or otherwise of the order of the second respondent. The time stipulated for filing of the appeal is 60 days from the date of
communication of the order. According to petitioner even before the same could be taken up in the appeal, the confirmation order passed by the
second respondent is given effect to. The respondent is said to have attached the amount standing in the account of the petitioner with fourth
respondent Bank by issuing notice dated 28.03.2018. Consequently an amount of Rs.24,10,15,782/- is recovered as against 15% and 40% which are
required to be recovered as against order of each assessment year in accordance with the rules governing for payment of statutory deposit to maintain
the appeal. According to the petitioner the said amount would be in a range of Rs.7,64,38,411/-. Thereby indicating that the third respondent has high
handedly collected an excessive amount of Rs.16,45,77,371/-. Thereby causing hurdle to day-to-day functioning of the petitioner, inasmuch, as the
petitioner rendering the institution to the level of not having funds to pay the salary of its employees and to take up development activities for which the
said income is generated through Government schemes.
The sum and substance of the dispute in this writ petition is whether the third respondent Assessment Officer was entitled to recover the entire tax
which was assessed by him immediately after the order passed by him is confirmed by the Commissioner of Income Tax (Appeals) without waiting
for appeal period which is statutorily provided under the Act as contemplated in Section 253 (3) of the said Act. According to the petitioner, under
similar situation the Division Bench of Bombay in the matter of UTI Mutual Fund vs. Income Tax Officer 19(3) (2) and others reported in 2012 SCC
Online Bom 390 : (2012) 345 ITR 71, held as under:-
No recovery of tax should be made pending.
(a) Expiry of the time limit for filing an appeal;
(b) Disposal of a stay application, if any, moved by the assessee and for a reasonable period thereafter to enable the assessee to move a higher forum,
if so advised. Coercive steps may, however, be adopted where the authority has reason to believe that the assessee may defeat the demand, in which
case brief reasons may be indicated.
The stay application, if any, moved by the assessee should be disposed of after hearing the assessee and bearing in mind the guidelines in KEC
International;
If the Assessing Officer has taken a view contrary to what has been held in the preceding previous years without there being a material change in
fats or law, that is a relevant consideration in deciding the application for stay;
When a bank account has been attached, before withdrawing the amount, reasonable prior notice should be furnished to the assessee to enable the
assessee to make a representation or seek recourse to a remedy in law;
In exercising the powers of stay, the Income Tax Officer should not act as a mere tax gatherer but a quasi judicial authority vested with the public
duty of protecting the interest of the Revenue while at the same time balancing the need to mitigate hardship to the assessee. Though the assessing
officer has made an assessment, he must objectively decide the application for stay considering that an appeal lies against his order: the matter must
be considered from all its facets, balancing the interest of the assessee with the protection of the Revenue.
In view of the aforesaid discussion, we are of the view that the assessee in the present case has a serious issue to urge as regards the legitimacy
of the demand which has been raised by the impugned notice dated 29 February 2012, including in regard to the applicability of Section 177(3) of the
Income Tax Act, 1961 on which the demand has been founded. The assessee has intervened in the appeal filed by the trust before the Commissioner
(Appeals). We direct that pending the disposal of the appeal and for a period of six weeks thereafter, the Revenue shall not take any coercive steps
against the petitioner for enforcing the demand as contained in the communication dated 29 February 2012. The Revenue shall also refrain from taking
any coercive steps or from enforcing the notice issued by the Assessing Officer on 12 March-2102 under Section 226(3). The attachment, if any, that
has been levied shall stand lifted.
and the said point is sought to be reiterated by relying upon several other judgments which are as under:-
UTI Mutual Fund v. Income Tax, (2012) 354 ITR 71.
Oracle India Pvt. Ltd. v. Union of India, W.P.No.21752/2013 (T-TAR), decision dated 18.06.2013.
The Director of Income Tax (Exemption), Mumbai v. The Income Tax Appellate Tribunal and Maharashtra Housing and Area Development
Authority, W.P. (L) No.3174 of 2013, decision dated 04.02.2014.
Mahindra and Mahindra Ltd. v. Union of India, (1992) 59 ELT 505.
Ocean Driving Centre Ltd. v. Union of India, 2004 (3) Mh. L.J.
Givaudan India Pvt. Ltd. v. Union of India (2013) 292 ELT 161.
Flipkart India Private Limited v. The Assistant Commissioner of Income Tax and others, W.P.No.1339-1342/2017 (T-IT), decision dated
23.02.2017.
Jagdish Gandabhai Shah v. Principal Commissioner of Income Tax, Spl. Civ. Application No.5679 of 2017, decision dated 29.03.2017.
The Shri SaibabaSansthan Trust (Shirdi) v. The Union of India and others, W.P.No.939 of 2018 decided on 27.03.2018.
Tata Teleservices (Maharashtra Limited) v. The Ministry of Finance, Department of Revenue and others, W.P.No.1014 of 2014 decided on
29.01.2014.
Greater Mohali Area Development Authority v. The DCIT, M.A.No.70/Chd/2018.
Authorized Officer, State Bank of Travancore and Another v. Mathew K.C. (2018) 3 SCC 85.
Commissioner of Income Tax and Others v. Chhabil Dass Agarwal (2014) SCC 603.
Ram and Shyam Compnay v. State of Haryana and Others (1985) 3 SCC 267.
Press release of the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, Dated 07.11.2014.
The sum and substance of the aforesaid judgments clearly support the contention of the petitioner that the third respondent has acted beyond the
scope of the provision of the Act in high handed manner and recovered the amount in excess of prescribed minimum limit which is required to be
deposited by the petitioner, while challenging the order of Commissioner of Income Tax (Appeals).
In this proceedings the learned counsel appearing for the respondent Nos.1 to 3 tried to substantiate the act of the third respondent in relying upon
Section 225 of the Act and other relevant provisions which are coming under Chapter 17(d) in support of the action of third respondent Income Tax
officer in recovery of the tax assessed. This Court is of the opinion that the respondents have miserably failed to substantiate the illegal act committed
by the third respondent in high handedly recovering the assessed amount. Despite the fact that statutorily he is prevented from doing so which is
fortified by several judgments of various High Courts and Hon’ble Apex Court. In that view of the matter only thing this Court can understand is
the pathetic incompetence of the officer either in understanding the legal provisions which is borne out from the book or in understanding the judgment,
which governs the law with reference to the manner of recovery. The conduct of third respondent is nothing but causing harassment to assessee. In
that view of the matter this Court finds the amount of Rs.15,82,41,007/- which is recovered by third respondent is in excess of his right in the fact
situation, also in the light of the judgment referred to supra as could be seen from Annexure-A, the same is ordered to be refunded within one week
from the date of receipt of copy of this order.
If the same is not refunded, liberty is reserved to the petitioner to approach this Court in contempt of Court proceedings, where the high handed
respondent will be dealt with appropriately.
However it is made clear that refund of Rs.15,82,41,007/- is subject to recovery of Rs.74,03,763/-.