Triveni Kshetriya Gramin Bank vs Deputy Commissioner of Income Tax and Others

The Petitioner is a Cooperative Bank. For the assessment year 2008-09, it filed the return declaring a total income of Rs. 2, 27, 08, 050/-on 30.9.2008. The Assessing Officer made huge addition to the declared income and assessed the Petitioner-bank on total income of Rs. 17, 77, 23, 570/-. The AO also directed to issue penalty notice u/s 271(1)(c) of the Income Tax Act, 1961 (in short the Act).

The Petitioner-bank has preferred an appeal before the CIT (Appeals), which is pending.

The AO has, by his order dated 3.3.2011 with reference to the application dated 31.1.2011 filed by the Petitioner, directed it to pay 50% of demand by 15.3.2011, and had stayed the remaining demand till decision of the first appeal.

It is contended by Shri Shakeel Ahmad, learned Counsel for the Petitioner, that the stay application filed by the Petitioner on 15.3.2011 for staying the demand u/s 156 of the Act is still pending with CIT (Appeals); and that an application u/s 154 of the Act has also been filed on 16.8.2011. The bank has also approached by way of abandoned caution CIT (Admin) for staying the demand and not to treat the bank as defaulter. Pending these applications, a notice u/s 226(3) of the Act has been issued to the Allahabad Bank, Main Branch, Orai and the Branch Manager, Allahabad Bank, Orai Branch, Orai, Jalaun (UP) for recovering Rs. 5, 19, 47, 797/-.

Shri Shakeel Ahmad has relied upon a judgment of this Court in

Sultan Leather Finishers Pvt. Ltd. v. Assistant Commissioner of Income Tax and Anr. (1991) (19) C.I.T. 179 in which pending application u/s 154 the Court had interfered and directed the tax recovery officer not to proceed with the recovery until the disposal of the application.

Prima facie we find that pending stay applications before the CIT (Appeals) and CIT (Administration) and application after issuing the impugned order has been filed u/s 154 of the Act, the orders u/s 226(3) of the Act, are not justified.

In view of above, we stay the impugned notice u/s 226(3) of the Act dated 11.8.2011 to recover Rs. 5, 19, 47, 797/-against the Petitioner-bank. The interim order will continue to operate till the decision of the stay application by CIT (Appeals) or CIT (Administration) as the case may be, or until further directions of this Court, whichever is earlier. Let copy of the order be given to learned Counsel for the Petitioner on payment of usual charges today.