Tribunal allows Stay Petitions, directs Revenue to recover tax from debtor, assets attached, bank accounts released

The Tribunal allowed the Stay Petitions partially, directing the Revenue to recover the disputed tax liability from the debtor, Mr. Darmendra Bafna, whose address was provided by the assessee. The assets of the assessee remained attached, but bank accounts were to be released. Recovery against the assessee was stayed, permitting the Revenue to proceed with recovery from the debtor until the debt was fully settled. The Order was pronounced in Open Court, with enforcement of recovery from the debtor emphasized over encashment of assets.

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Issues: Stay of recovery of disputed tax liability, Loan given to Mr. Darmendra Bafna, Recovery from debtor, Assets seizure, Enforcement of recovery

Stay of Recovery of Disputed Tax Liability:
The Stay Petitions were filed by the assessee for the assessment years 2006-07 and 2012-13, involving a total demand of &8377; 3.18 crores. The demand arose due to cash loans given to Mr. Darmendra Bafna of M/s. Surana Corporation Ltd. The assessee's assets were seized by the Department, including silver articles. The Tax Recovery Officer proposed liquidating the assets against the demand. The assessee submitted that the disputed demand could be recovered from Mr. Darmendra Bafna, providing his address. The Revenue argued for the payment of the disputed tax liability without granting a stay of recovery.

Loan Given to Mr. Darmendra Bafna:
The loans given to Mr. Darmendra Bafna were not properly explained during the assessment proceedings, resulting in penalties under sections 271D and 271E of the Act. The unexplained loan amount of &8377; 4.65 crores was added in the case of C. Kishanlal and Sons HUF. Additionally, assets found during a search were added as unexplained income for AY 2012-13 in the case of Late Mr. Champalal, with an outstanding balance tax amounting to &8377; 15.93 lakhs.

Recovery from Debtor:
The Tribunal directed the Revenue to recover the disputed liability from the assessee's debtor, Mr. Darmendra Bafna, whose address was provided by the assessee. The attachments on the assets of the assessees were to remain unaltered. However, the Bank accounts attached by the Revenue were to be lifted. The recovery of disputed tax against the assessees was stayed, allowing the Revenue to proceed with recovery from the hands of the debtors. No enforcement or encashment of the assets would be executed until the debt due from Mr. Darmendra Bafna was fully recovered against the disputed demand.

Assets Seizure and Enforcement of Recovery:
Given that the assessee's assets were already attached, the Tribunal recognized the inability of the assessee to make further payments or take loans by mortgaging the assets. Hence, the recovery against the assessees was stayed, emphasizing the availability and enforceability of the debtors. The Department was directed to recover the disputed tax from the assessee's debtors until the debt due from Mr. Darmendra Bafna was fully recovered. The Stay Petitions filed by the assessees were partly allowed, with the Order pronounced in the Open Court on September 14, 2018, at Chennai.

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