Union Bank of India and Others vs Tax Recovery Officer and Others

Ramesh Kumar Datta, J.—Heard learned counsel for the petitioners and learned counsel for the IT Department. All the three writ applications raise common issues and accordingly they have been heard together and are being disposed of by this common order.

All the writ petitioners are aggrieved and they seek quashing of the show-cause notices all dt. 28 July, 2014 issued by the TRO, Patna, by which the respective petitioners have been called upon to show cause as to why they should not be treated as "assessee in default" under s. 226(3)(ix) of the IT Act, 1961. They have further challenged the orders dt. 29th/30th Sept., 2014 passed by the TRO, by which he has enhanced the rent of the premises of which they are tenants. They further seek quashing of the notices dt. 31st Oct., 2014 under s. 226(3) of the Act issued by the RBI by which directions have been issued by the TRO to the Manager, RBI to make payment of Rs. 1,41,50,196, Rs. 98,13,588 and Rs. 1,19,12,963 respectively with respect to the three petitioners and the consequential letters dt. 31st Oct., 2014 issued by the respondent No. 2, RBI.

The short facts of the present cases are that all the three petitioners are Public Sector Banks, being Government of India Undertakings, who are tenants of premises located on Fraser Road, Patna, of which the present owner is M/s. Sabicon Estates (P) Ltd.

It is not in dispute that the petitioners were regularly paying rent to the said landlord, and after the premises were taken over by the IT Department by issuing notices dt. 28th July, 2014 under s. 226(3) of the Act, they have been paying rent to the TRO. By the aforesaid action, the TRO has sought to unilaterally enhance the rent payable by the petitioners manifold and to recover the same from the respective accounts of the petitioners maintained by the RBI, pursuant to which the aforesaid notices were issued and action taken.

The simple submission of learned counsel for the petitioners is that the TRO has no jurisdiction under the law of the land to unilaterally enhance the rent being paid by the petitioners and any such revision/enhancement/determination of rent can be made in accordance with the procedure prescribed by law.

It is urged by learned counsel for the petitioners that in the present matters there is no agreement between the petitioners and the original landlord or the IT Department regarding the enhancement of rent and thus, it was not open to the TRO to fix higher rent or rate of rent and realize the same by invoking his coercive powers under the provisions of the IT Act.

Learned counsel for the IT Department, on the other hand, submits that there have been a series of correspondences between the landlord of the premises and the tenants Banks for renewal of the lease as also for enhancement of the rent of the premises but the petitioners not having come forward in the matter, the TRO has been compelled to take action in the matter by applying the provisions of s. 23(1)(a) of the IT Act under which the TRO has powers of the landlord for the purpose of enhancement of rent.

On a consideration of the rival submissions of learned counsel for the parties, this Court does not find any force in submission of learned counsel for the IT Department. The provisions of s. 23(1)(a) of the Act relied upon by learned counsel relate to the determination of income from house property for the purpose of filing of IT returns and assessment thereof and the same has no relevance at all so far as fixation of rent payable by a tenant to the landlord is concerned. Any such fixation of fair rent or higher rent can only be either on the basis of agreement between the parties or by the exercise of powers in areas covered by the provisions of the Bihar Buildings (Lease, Rent and Eviction) Control Act, 1982 by the competent authorities therein and not unilaterally by the TRO or any other Officer of the IT Department. In the light of the aforesaid discussions, we find that the entire action of the TRO and the consequential action taken by the respondent No. 2, RBI, are de hors the powers conferred upon them by the law of the land and they are, accordingly, quashed. Any amount, which may have been recovered from the accounts of the petitioners, shall be refunded to the petitioners forthwith.

The writ applications are accordingly allowed with the aforesaid observations and directions.