Court orders stay on tax recovery pending hearing with Principal Commissioner of Income Tax The Court found that the authorities violated the principle of natural justice by not allowing the petitioner to be heard before demanding the entire tax ...
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Court orders stay on tax recovery pending hearing with Principal Commissioner of Income Tax
The Court found that the authorities violated the principle of natural justice by not allowing the petitioner to be heard before demanding the entire tax amount. The Court directed the petitioner to apply for a stay with the Principal Commissioner of Income Tax, depositing 20% of the tax demand. The Principal Commissioner was to decide on the stay application after hearing the petitioner's representative. No further recoveries were permitted until the stay application was decided. Failure to comply would allow the Department to proceed with further recoveries, while the petitioner's bank account was to be released immediately.
Issues: Challenge to garnishee notice and tax demand deposit order under Income Tax Act, 1961.
Analysis: The petitioner challenged the garnishee notice and deposit order issued by the Respondents under Section 226(3) of the Income Tax Act, 1961. The petitioner's return of income for the Assessment Year 2016-17 resulted in a tax demand of Rs. 10,35,03,417. The Assessing Officer initiated coercive recovery measures before the appeal period was over, attaching the petitioner's bank account. The petitioner requested the release of the account by offering to deposit 20% of the disputed tax demand, which was rejected by the Assessing Officer. The petitioner expressed willingness to deposit 20% of the tax demand and requested a stay on further recoveries pending appeal. The Department argued that the Assessing Officer was justified in demanding the entire tax amount based on a CBDT Circular. The Court noted that the authorities violated the principle of natural justice by not allowing the petitioner to be heard before demanding the entire tax amount.
The Court directed the petitioner to apply for a stay with the Principal Commissioner of Income Tax by a specified date and deposit Rs. 30 lakhs with the Department to cover 20% of the tax demand. The Principal Commissioner was instructed to decide on the stay application after hearing the petitioner's representative. Until the stay application was decided, no further recoveries were permitted. The petitioner's bank account was to be released immediately. Failure to comply with the conditions would allow the Department to proceed with further recoveries. The petition was disposed of in accordance with these directions.
Full Summary is available for active users!
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
of 
Join Channel
TaxTMI 
