Refund Ordered for Rs. 81,53,038 Wrongly Recovered for Sister Concern's Tax Arrears; Original Orders Set Aside

The HC directed the refund of Rs. 81,53,038 to the petitioner, which was recovered from their bank account for alleged tax arrears of a sister concern. The Court set aside the assessment orders against the sister concern for the years 2012-13, 2013-14, and 2014-15, recognizing the business succession agreement that transferred liabilities to the petitioner. The demand against the petitioner was deemed invalid, and the Court ordered the refund within six weeks, allowing for re-adjudication of related transactions.

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Issues involved:
The issues involved in the judgment are the recovery of a sum of Rs. 81,53,038 from the petitioner's bank account towards alleged arrears of tax and penalty of the petitioner's sister concern, the legality of the attachment and appropriation of the amount by the first respondent, and the subsequent request for refund based on the assessment order.

Details of the Judgment:

Issue 1: Recovery of amount from petitioner's bank account
The petitioner filed a Writ Petition seeking a mandamus to direct the first respondent to refund the amount recovered from the petitioner's bank account, pertaining to the alleged arrears of the petitioner's sister concern. The petitioner argued that the attachment and recovery were made for the sister concern's arrears, and not for the petitioner's concern. The Court noted the business succession agreement between the petitioner and the sister concern, where the entire business was transferred to the petitioner. The Court set aside the assessment orders against the sister concern for the years 2012-13, 2013-14, and 2014-15, and directed the refund of the amount appropriated from the petitioner's bank account.

Issue 2: Legal basis for attachment and recovery
The respondent-Department contended that despite the business transfer agreement, the petitioner did not immediately surrender the TIN No. of the sister concern, leading to the issuance of show cause notices to the petitioner. The Government Advocate argued that the petitioner, by succeeding the business, is liable for any dues of the sister concern. However, following the Court's decision to set aside the assessment orders against the sister concern, the demand raised against the petitioner was deemed invalid, leading to the request for refund.

Issue 3: Court's Decision
The Court acknowledged the business succession agreement and the transfer of liabilities to the petitioner. It emphasized that the petitioner's sister concern did not conduct any business after the agreement for three assessment years, filing nil returns. Based on the Court's orders setting aside the assessment against the sister concern, the amount recovered from the petitioner's bank account was deemed refundable. The Court directed the first respondent to refund the sum of Rs. 81,53,038 to the petitioner's bank account within six weeks. Additionally, the Court allowed for re-adjudication of any transactions related to the sister concern's business in the assessment years, considering the agreement between the parties.

This summary provides a detailed overview of the judgment, covering the issues involved and the Court's decision on each aspect of the case.

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