Court directs stay on garnishee notices pending appeal decision

The Court held that issuing garnishee notices without deciding on the appeal or stay application was unjustified. The rejection of the stay request before issuing the notices was deemed inconsequential. The Court directed the first appellate authority to hear and decide the appeal within four weeks, keeping the notices in abeyance. The petitioner was instructed to cooperate, with no opinion on merit expressed. If the appeal favored the revenue authorities, the petitioner had an additional two weeks to avail statutory remedies. The writ petition was disposed of without implying any judgment on the case's merits.

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Issues:
Challenge to notice of demand under Section 156 of the Income Tax Act, 1961 and garnishee notices issued to directors under Section 179 of the Act.

Analysis:
The petitioner sought to quash a notice of demand under Section 156 of the Income Tax Act, 1961, and garnishee notices issued to the directors under Section 179 of the Act. The assessment order dated 27.12.2018 determined a taxable income for the petitioner based on fair market value of shares under Sections 60 and 63 of the Act. The demand notified a substantial sum as income tax payable. The petitioner appealed against this order before the Commissioner of Income Tax (Appeals) and submitted written arguments. Additionally, the petitioner approached the administrative Commissioner for stay of the demand, making a partial payment under protest. Despite pending stay application and appeal, notices were issued under Section 226(3) and Section 179 of the Act for recovery. The petitioner contended that issuing such notices without deciding on the stay application was unjustified. The revenue authority argued that a speaking order rejecting the stay request had been issued before issuing the notices.

The Court considered the arguments and held that without deciding on the appeal or stay application, issuing the impugned notices was unjustified. The rejection of the stay request by the Assessing Officer, while the appeal and stay application were pending, was deemed inconsequential. The Court directed the first appellate authority to hear and decide the appeal within four weeks, keeping the impugned notices in abeyance during this period. The petitioner was instructed to cooperate during the appeal process. The Court clarified that no opinion on merit was expressed, and all contentions were left open. If the appeal order favored the revenue authorities, the petitioner was granted an additional two weeks to avail statutory remedies. The writ petition was disposed of, emphasizing that the decision did not imply any judgment on the merits of the case.

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