Court sets aside orders, grants stay, directs refund with interest, imposes costs on Revenue.

The Court allowed the Petition, setting aside the impugned orders and notices, granting an unconditional stay of the demand, and directing the Revenue to refund the amounts withdrawn and adjusted, along with interest. The Court also imposed costs on the Revenue for their unfair conduct.

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Issues Involved:
1. Provisional attachment under Section 281B of the Income Tax Act, 1961.
2. Notices under Section 226(3) attaching the Petitioner’s bank accounts.
3. Rejection of the Petitioner’s applications for stay on recoveries under Section 220(6).
4. Adjustment of refund under Section 245 against the outstanding demand.
5. Conduct of the Revenue officers and adherence to legal procedures.

Issue-wise Detailed Analysis:

1. Provisional Attachment under Section 281B:
The Petitioner challenged the order dated 18th December 2018, issued by the Assessing Officer (AO) for provisional attachment of its bank account under Section 281B. The Court observed that the attachment order was issued without proper justification and just two days before the assessment order was passed. The Revenue failed to provide a basis for apprehending that the tax dues would be in jeopardy. The Court set aside the order, noting that the Revenue did not justify the necessity of the attachment.

2. Notices under Section 226(3) Attaching Bank Accounts:
The Petitioner contested the notices dated 19th December 2018, issued under Section 226(3) to its bankers, which sought to recover amounts from its bank accounts. The Court found that these notices were issued when no amount was due from the Petitioner, making them contrary to Section 226(3). The Court set aside these notices and directed the Revenue to redeposit the amount withdrawn from the Petitioner’s bank account along with interest.

3. Rejection of Stay Applications under Section 220(6):
The Petitioner’s applications for stay of demand pending appeal were rejected by the AO and the Principal Commissioner of Income Tax (Pr. CIT). The Court noted that the orders rejecting the stay did not adhere to the guidelines laid down in previous judgments, which require a detailed consideration of the issues and submissions. The Court found the rejection arbitrary and unsustainable, granting an unconditional stay of the demand until the disposal of the appeal by the Commissioner of Income Tax (Appeals) [CIT(A)].

4. Adjustment of Refund under Section 245:
The Petitioner objected to the adjustment of a refund due for the Assessment Year 2013-14 against the demand for the Assessment Year 2015-16. The Court held that the adjustment was done without following the mandatory procedure of giving prior intimation to the Petitioner, as required by Section 245 and as established in the case of Hindustan Unilever Ltd. The Court set aside the adjustment notice and directed the refund to be processed in accordance with law.

5. Conduct of Revenue Officers:
The Court expressed dismay at the conduct of the Revenue officers, highlighting their high-handed and unfair actions towards the Petitioner. The officers were found to have acted in defiance of statutory provisions and binding judicial decisions, causing unnecessary harassment to the Petitioner. The Court emphasized the importance of equal application of law and rule of law, directing the Revenue to pay costs of Rs. 50,000 to the Petitioner for the undue harassment.

Conclusion:
The Court allowed the Petition, setting aside the impugned orders and notices, granting an unconditional stay of the demand, and directing the Revenue to refund the amounts withdrawn and adjusted, along with interest. The Court also imposed costs on the Revenue for their unfair conduct.

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