Court dismisses petition to quash tax notice, accepts apology, sets stay order limit

The court dismissed the petition seeking to quash a notice under Section 226(3) of the Income Tax Act and for a refund of an amount, noting that the respondents acted in good faith based on their understanding of the stay order's validity. The court accepted the officer's apology for any perceived error and found no contempt. The final stay order was limited to 180 days. The court ordered that if the Tribunal extended the stay, the respondents should refund the recovered amount, subject to Tribunal conditions. The petition was disposed of in light of the Tribunal's stay orders.

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Issues:
1. Quashing of notice under Section 226(3) of the Income Tax Act, 1961
2. Refund of amount by the respondents
3. Restraining State Bank of India from taking coercive steps
4. Time-bound disposal of appeal by Income Tax Appellate Tribunal

Analysis:

1. The petitioner sought the quashing of a notice dated 04.01.2016 issued under Section 226(3) of the Income Tax Act, 1961, along with a writ of mandamus for the refund of an amount of Rs. 10.50 crores. The petition was based on the recovery of penalty allegedly made in violation of an interim order granted by the Tribunal. The Assessing Officer had imposed a penalty under Section 271(1)(c) on 18.02.2014, which was affirmed by the CIT (Appeals) on 02.07.2014. The Tribunal initially granted a stay application for 180 days on 30.09.2014. Subsequently, on 05.06.2015, another application for stay was adjourned sine die with directions not to take coercive measures for recovery. The appeal was heard on 26.08.2015, and a reference was made to the President of the Tribunal for placing the appeal before a third member on 06.01.2016. The third member extended the stay by 180 days on 03.02.2016.

2. Despite the stay orders granted by the Tribunal on 05.06.2015 and 03.02.2016, the respondents issued a recovery notice under Section 226(3) and proceeded with the recovery from the petitioner's bank account. The court noted that there was no wilful disobedience on the part of the respondents, as they believed the stay order was only valid for 180 days as per the Act. The court accepted an affidavit filed by the officer apologizing for any perceived error and stated that there was no contempt involved. The final stay order was restricted to 180 days, ending on 02.08.2016.

3. The court concluded that the ends of justice would be met by ordering that in the event of the Tribunal extending the stay for any period, the respondents should refund the recovered amount, subject to any conditions imposed by the Tribunal. The petition was accordingly disposed of, considering the circumstances and the stay orders issued by the Tribunal.

This detailed analysis of the judgment provides a comprehensive understanding of the issues raised, the legal proceedings, and the court's final decision in the case.

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