Thrissur Expressway Limited vs Income Tax Officer

Heard Mr. Raja Shekar Rao Salvaji, learned counsel for the petitioner and Ms. K.Mamata Choudary, learned Senior Standing Counsel, Income Tax Department for respondent Nos.1 to 4. We have also heard Mr. G.Praveen Kumar, learned Deputy Solicitor General of India for respondent No.5.

By filing this petition under Article 226 of the Constitution of India, petitioner has assailed garnishee notice dated 17.11.2022 issued by the 2nd respondent under Section 226(3) of the Income Tax Act, 1961 (briefly referred to hereinafter as ‘the Act’) and addressed to the 6th respondent i.e., Axis Bank Limited, Hyderabad for attachment of bank account of the petitioner.

We may mention that subsequent to issuance of the aforesaid notice dated 17.11.2022, 2nd respondent had issued a Corrigendum dated 12.12.2022 stating that there was a typographical error in the notice dated 17.11.2022. Instead of assessment years 2017-18, 2018-19 and 2019-20 for a sum of Rs.73,25,51,250.00 due from the petitioner, it should be assessment years 2019-20 and 2020-21 for a sum of Rs.31,65,81,430.00.

Be it stated that for the assessment year 2019-20, petitioner had submitted its return of income on 29.10.2019. Ultimately intimation under Section 143(1) of the Act was issued by the Centralized Processing Centre to the petitioner on 10.11.2020. As per the aforesaid intimation, net amount payable by the petitioner for the aforesaid assessment year was quantified at Rs.27,70,90,200.00. However, an order of rectification was passed under Section 154 of the Act. Thereafter, petitioner preferred appeal.

On a query by the Court, learned counsel for the petitioner submits that the appeal was filed on 28.02.2022. As a matter of fact, two appeals have been preferred by the petitioner, one against the intimation under Section 143(1) of the Act and the second one against the order passed under Section 154 of the Act. However, petitioner has not paid the outstanding dues as per the intimation as rectified. Therefore, 2nd respondent has issued the impugned garnishee notice dated 17.11.2022.

Faced with such a situation, petitioner has filed stay petition on 03.01.2023 before the appellate authority i.e., respondent No.4 for stay of demand.

With the grievance that no decision has been taken by the appellate authority while the petitioner continues to face garnishee proceeding, the present writ petition has been filed.

On a perusal of the stay petition, we find that the same has been filed under Section 220(6) of the Act, as per which provision such a petition is required to be filed before the assessing officer.

Be that as it may, it is trite law that an appellate authority which is competent to hear an appeal has also the power to grant interim relief relatable to the appeal. Power to grant stay is incidental and ancillary to the power to entertain an appeal.

Notwithstanding wrong mentioning of the provision, we are of the view that since an application has been filed by the petitioner before the 4th respondent appellate authority, the said authority should consider the stay prayer of the petitioner one way or the other within a reasonable time.

Accordingly, we direct the 4th respondent to consider the stay prayer of the petitioner dated 31.01.2023 after giving an opportunity of hearing to the petitioner and thereafter pass an appropriate order in accordance with law.

Let the above exercise be carried out and concluded within a period of four (04) weeks from the date of receipt of a copy of this order.

We make it clear that the garnishee notice dated 17.11.2022, as modified on 12.12.2022, will be subject to such order that may be passed by the 4th respondent on the stay petition of the petitioner.

This disposes of the Writ Petition. However, there shall be no order as to costs.

Miscellaneous applications pending, if any, in this Writ Petition shall stand closed.

Petitioner to communicate a copy of this order to the 4th respondent within seven days from receipt of a copy of this order.