Court denies petition to quash tax notice, emphasizes timely appeal filing. Stay on recovery pending appeal.

The Court denied the petitioner's challenge to quash the notice under Section 226(3) of the Income Tax Act, 1961, citing procedural lapses as not fatal. The Court directed the expeditious disposal of the petitioner's appeal within twelve weeks by the National Faceless Appeals Centre. Coercive recovery proceedings were stayed until the appeal's resolution, with partial recovery already made. The Writ Petition was disposed of without costs, emphasizing the importance of seeking interim protection through administrative channels pending appeal.

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Issues:
Challenge to notice under Section 226(3) of the Income Tax Act, 1961 for illegal appropriation of funds without serving a copy to the petitioner, non-filing of return of income by the petitioner, order of assessment under Section 144 of the Act, lack of response to notices issued under Section 142(1), coercive recovery proceedings initiated, absence of stay application before the Court, pending first appeal challenging the assessment order.

Analysis:
The petitioner, a Primary Agricultural Cooperative Credit Society, challenged a notice issued under Section 226(3) of the Income Tax Act, 1961, alleging it was illegal as a copy was not served upon them. The notice led to the appropriation of funds without proper communication. The petitioner sought a refund of the amount. The order of assessment under Section 144 of the Act was based on the petitioner's failure to file a return of income despite notices. The assessment brought the entire bank balance under tax along with penalties due to non-cooperation during proceedings.

The petitioner's challenge was made in a first appeal, pending disposal, without an application for stay before the Court. The Court noted the absence of illegality in the recovery proceedings initiated, except for the failure to issue the Section 226 notice to the petitioner simultaneously with the bank manager. However, the Court deemed this procedural lapse not fatal as the petitioner was aware of the recovery proceedings but took no action. The Court denied the prayer to quash the Section 226(3) notice, suggesting seeking interim protection pending appeal.

A direction was issued for the expeditious disposal of the petitioner's appeal within twelve weeks by the National Faceless Appeals Centre. No further coercive recovery proceedings were permitted until the appeal's disposal, considering a partial recovery already made. The Writ Petition was disposed of with no costs, emphasizing the need for appropriate interim protection through administrative authorities pending appeal.

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