2019 (11) TMI 809 - HC - Income Tax

Court emphasizes procedural safeguards in tax recovery challenge, directs evaluation of response before decision.

Shri M.A. Zahid Versus Assistant Commissioner of Income Tax (OSD)

The court addressed the challenge against show-cause notices for tax recovery, emphasizing procedural safeguards and fair treatment for the petitioner. ... Procedure for Recovery of Tax - Arrest and Detention of the Defaulter under the Income Tax Act, 1961 - defreeze the savings bank account of the petitioner standing in his name at HDFC Bank Limited, Nandidurga Main Road Branch, Jayamahal Extension, Bangalore - HELD THAT:- It is not in dispute that pursuant to the show-cause notice impugned dated 28.03.2018 relating to the assessment years in question, the petitioner has submitted the detailed reply dated 31.03.2018. In terms of Rule 73 of Schedule – II, show-cause notices have been issued calling upon the petitioner to appear before the Tax Recovery Officer on the dates specified in the notices. The apprehension of the petitioner that he may be committed to the civil prison on the date of appearance can be allayed with, directing the Tax Recovery Officer to consider the reply submitted by the petitioner and to take a decision in accordance with law after providing reasonable opportunity of hearing to the petitioner. Petitioner shall appear before the respondent on 14.10.2019 without waiting for any further notice and respondent shall consider the explanation of the petitioner in terms of the reply submitted and after providing reasonable opportunity of hearing shall take a decision in the matter in accordance with law in an expedite manner. All rights and contentions of the parties are left open. Issues:Challenge to show-cause notices under Rule 73 of Schedule II for recovery of tax, defreezing of savings bank account, relief granted by Income Tax Appellate Tribunal, invocation of custody pending hearing under Rule 75, apprehension of civil prison detention, appeal process under Rule 86, rejection of anticipatory bail, consideration of reply by Tax Recovery Officer, direction for expedited decision-making.Analysis:The judgment addresses the challenge posed by the petitioner against the show-cause notices issued by the respondent under Rule 73 of Schedule II for the recovery of tax related to specific assessment years. The petitioner, an assessee under the Income Tax Act, operating a business, expressed grievance despite relief granted by the Income Tax Appellate Tribunal. The petitioner's concern was the potential detention in civil prison due to alleged tax payment default.The petitioner's counsel argued for protection of the petitioner's interest under Rule 75 of Schedule II, emphasizing the need for fair treatment pending the hearing. Conversely, the revenue's counsel highlighted the procedural safeguards available, including the opportunity for the petitioner to respond to the show-cause notice and the provision for appeal under Rule 86 of Schedule II. Reference was made to a previous court order rejecting anticipatory bail, indicating no immediate arrest threat.Upon careful consideration of the arguments and records, the court acknowledged the petitioner's detailed reply to the show-cause notice and directed the Tax Recovery Officer to evaluate it before making any decision. The court instructed the petitioner to appear before the respondent on a specified date, emphasizing the need for a fair hearing and prompt decision-making in accordance with the law. The judgment concluded by disposing of the writ petitions, ensuring no hasty actions until a final order is issued.In essence, the judgment focused on ensuring procedural fairness and adherence to legal requirements in the context of tax recovery proceedings, balancing the interests of the petitioner with the statutory framework governing such matters.