2002 (10) TMI 52 - HC - Income Tax

Court upholds bank account attachment for tax recovery, emphasizes timely appeal resolution

Govind Nagar Sugar Ltd. Versus Commissioner of Income-Tax.

The court upheld the attachment of the petitioner's bank accounts by the Income-tax Officer for recovery of outstanding demand from the assessment year ... This writ petition under article 226 of the Constitution of India is directed against: (i) the notice, dated October 4, 2002, issued by the Income-tax Officer, Ward 12(2), New Delhi, attaching the bank accounts of the petitioner in the Central Bank of India, Basti, U. P., for recovery of the outstanding demand pending against the petitioner in respect of the assessment year 1999-2000, and (ii) the order dated October 11, 2002, passed by the Commissioner of Income-tax, Delhi-IV, New Delhi, rejecting the application of the petitioner for stay of the said demand. Having regard to the aforenoted rival stands and bearing in mind the fact that after the passing of order dated August 5, 2002, it was only in the second week of October that the petitioner thought of moving the Commissioner (Appeals) as also the jurisdictional Commissioner for stay of the demand, we find it difficult to hold that the action taken by the respondents in attaching the bank accounts of the petitioner is arbitrary or unwarranted. Issues:1. Challenge against the notice issued by the Income-tax Officer for attaching bank accounts.2. Challenge against the order rejecting the application for stay of demand.3. Dispute regarding the delay in disposing of the application for stay of demand.4. Justification for attaching the bank accounts by the respondents.5. Request for expeditious disposal of the appeal by the Commissioner of Income-tax (Appeals).Analysis:The writ petition challenged a notice dated October 4, 2002, issued by the Income-tax Officer attaching the petitioner's bank accounts for recovery of an outstanding demand from the assessment year 1999-2000. Additionally, the petition contested the order dated October 11, 2002, passed by the Commissioner of Income-tax rejecting the petitioner's application for stay of the demand. The petitioner argued that the delay in disposing of the stay application by the Commissioner of Income-tax (Appeals) while coercive recovery measures were being taken was unjust. The petitioner contended that even if the Assessing Officer's additions/disallowances were upheld, the computed income would not exceed brought forward losses, resulting in no tax liability for the relevant assessment year.On the other hand, the respondents justified attaching the bank accounts, citing the petitioner's failure to comply with the conditional stay order issued by the Assessing Officer in August 2002. The petitioner was required to deposit 50% of the outstanding demand by August 20, 2002, which was not done. The respondents argued that the petitioner's delay in approaching the appellate authorities for stay of demand after the Assessing Officer's order in August 2002 warranted the coercive actions taken.Considering the arguments presented, the court found it difficult to deem the attachment of bank accounts as arbitrary, given the petitioner's delayed response to the conditional stay order. While acknowledging the delay, the court emphasized the need for expeditious disposal of the appeal by the Commissioner of Income-tax (Appeals). The court directed the Commissioner to decide on the appeal or the stay application within two weeks, ensuring a timely resolution of the matter. The petition and the application for interim relief were disposed of accordingly, with instructions for issuing copies of the order to the parties' counsels.