Tax payment notice deferred pending appeal, procedural fairness emphasized

The court deferred the execution of the notice issued by the Income Tax Officer demanding payment of income tax dues pending appeal. It directed the ITO to consider the petitioner's application for a stay within six weeks and instructed not to enforce compliance with the notice until the application is resolved. The petitioner was authorized to inform the bank not to act on the notice. The judgment emphasized procedural fairness and the need for the ITO to consider the petitioner's request for stay before enforcing payment, promoting a balanced approach in tax recovery proceedings.

---

---

Issues: Challenge to notice issued by Income Tax Officer to remit a specific amount by petitioner's bank towards income tax payment pending appeal.

Analysis:
1. Challenge to Notice: The petitioner challenged the notice dated 12.02.2020 issued by the Income Tax Officer (ITO) to the petitioner's bank, demanding payment of Rs. 33,42,040 as income tax dues. The petitioner had already filed an appeal against the assessment order forming the basis of the demand. The ITO had communicated that 20% of the demanded amount, approximately Rs. 13,37,462, could stay the recovery pending appeal. The petitioner requested adjustment of this amount from the expected tax refunds of Rs. 23,66,633. The petitioner argued that the notice was unjustified as the application for adjustment was pending before the ITO.

2. Contentions: The Standing Counsel for the respondent argued that since the amount was due and payable without any stay granted, the notice was valid. However, the court noted that the petitioner had not refused to pay the 20% demanded amount but sought adjustment from anticipated tax refunds. The court emphasized that the ITO should have considered the petitioner's application seeking a stay before issuing the notice.

3. Decision: The court decided to defer the execution of the notice dated 12.02.2020. It directed the ITO to hear the petitioner and dispose of the application seeking a stay within six weeks. Until the application is resolved, the ITO was instructed not to enforce compliance with the notice. The petitioner was asked to appear before the ITO and provide a copy of the court order. Additionally, the petitioner was authorized to inform the bank not to act on the notice until further instructions from the ITO.

4. Disposition: The rule was disposed of with no costs imposed, and all parties were instructed to act based on an authenticated copy of the court order. The judgment focused on the procedural fairness and the need for the ITO to consider the petitioner's request for stay before enforcing the payment notice, ensuring a balanced approach in tax recovery proceedings.

---