Court sets aside tax demand, lifts attachment order on pension, emphasizes fair treatment, protects pension rights.

The court granted the writ petition, setting aside the Notice of Demand and lifting the Pre-Assessment Order of Attachment for specific items. The court emphasized adherence to departmental circulars, protecting pension rights, and ensuring fair treatment during tax assessments. It noted that pension and gratuity cannot be attached, especially for retired employees. The court deemed the attachment order unsustainable due to the petitioner's pension being the sole livelihood source and the pending statutory appeal. The appellate authority was directed to decide the appeal within eight weeks.

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Issues:
Seeking mandamus to keep Notice of Demand in abeyance and lift Pre-Assessment Order of Attachment.

Analysis:
The petitioner, a retired employee, challenged the tax liability imposed by the Income Tax Officer for the Assessment Year 2009-2010. The petitioner explained the sources of income for a house property allotted to him, but the 2nd respondent did not agree and imposed a tax liability. The petitioner filed a statutory appeal under Section 246 of the Income Tax Act, seeking a stay on tax collection as per departmental circular. Despite this, an order of attachment was issued, including the petitioner's savings bank account. The petitioner argued that since the assessment order is under challenge, provisional attachment is unnecessary. The respondents justified the provisional attachment to protect revenue interests but agreed to confine it to a property that could cover the dues. The court noted the departmental circular's guidelines to keep tax collection in abeyance for substantial income discrepancies.

The court emphasized that the department should adhere to its circulars and guidelines, especially regarding the attachment of a retired employee's pension. Citing a Supreme Court ruling, the court clarified that pension and gratuity cannot be attached even for court decrees. Since the petitioner's pension was the sole livelihood source and the statutory appeal was pending, the court deemed the attachment order unsustainable. Consequently, the court allowed the writ petition, setting aside the Notice of Demand and lifting the Pre-Assessment Order of Attachment for specific items. The appellate authority was directed to decide the statutory appeal within eight weeks.

This judgment highlights the importance of following departmental guidelines, protecting pension rights, and ensuring fair treatment during tax assessments and appeals.

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