2024 (1) TMI 166 - HC - Income Tax

Court Orders Lifting of Bank Attachments After Petitioner Pays 20% of Tax Liabilities; Accounts to Be Operated Freely.

Lawrence Educational Trust, Rep by its Managing Trustee, Mr. A. Lawrence, S/o. Annamalai Versus The Commissioner of Income Tax (Exemptions), The Commissioner of Income Tax (Appeals), The Income Tax Officer (Exemptions), The Branch Manager, Bank of Baroda, The Branch Manager, Karur Vysya Bank Limited, The Branch Manager, Axis Bank

The court directed the lifting of bank attachments on the petitioner's accounts for tax liabilities from Assessment Years 2015-16 and 2021-22, as the ... Stay of demand - seeking permission for removal of attachments placed on the petitioner's bank accounts in relation to the outstanding demand - since around 30% of the tax liability has already been collected from the petitioner, a stay application was filed by the petitioner to lift the attachment order on 10.02.2022 and the same has not been disposed of by the respondent till date - HELD THAT:- Department had already collected around 30% of the tax liability. In terms of the provisions of the Act, if 20% of the tax liability is paid to the Department, the Assessee will be automatically entitled for stay of recovery proceedings, which were initiated against him. When such being the case, since the petitioner had remitted around a sum of Rs. 62,00,000/-, which comes around 30% of the tax liability, the continuation of bank attachment will prejudicially affect the interest of the petitioner. Hence, this Court is inclined to lift the bank attachment issued against the petitioner. Accordingly, the bank attachment issued by the respondent stands lifted. Further, the respondent is directed to dispose of the stay application filed by the petitioner by taking into consideration of the payment of 30% of the tax liability made by the petitioner. The impugned order was passed by the respondent on 30.11.2023, in which case, the time limit for filing appeal is not expired. Hence, if the petitioner preferred to file the appeal, this Court does not find any impediment for the appellate Authority to entertain the said appeal since the petitioner had already paid 30% of the tax liability. The respondent-bank is directed to permit the petitioner to operate their accounts upon production of this order copy. Issues involved:The judgment involves a petition to direct the 3rd respondent to remove attachments on the petitioner's bank accounts in relation to outstanding tax demands for the Assessment Year 2015-16 and 2021-22.Assessment Year 2015-16:The assessment order for 2015-16 quantified the tax liability as Rs. 1,76,92,890. The petitioner had paid around Rs. 62,00,000, which is approximately 30% of the total tax liability. The petitioner filed a stay application to lift the attachment order, which was not disposed of by the respondent. The court acknowledged that once 20% of the tax liability is paid, recovery proceedings should be stayed automatically. Since the petitioner had paid more than 20%, the court lifted the bank attachment and directed the respondent to consider the payment made by the petitioner.Assessment Year 2021-22:For the assessment year 2021-22, the tax liability was quantified as Rs. 37,15,329. The petitioner had also paid a portion of this liability. The court noted that the petitioner had paid around 30% of the total tax liability, which meets the criteria for stay of recovery proceedings. As a result, the court lifted the bank attachment issued by the respondent and instructed the respondent to process the stay application considering the payment made by the petitioner.Appeal Possibility:The court observed that the time limit for filing an appeal had not expired since the impugned order was passed recently. The court stated that the petitioner, having paid 30% of the tax liability, could file an appeal if desired, and there should be no impediment for the appellate authority to entertain the appeal.Operational Bank Accounts:The court directed the respondent-bank to allow the petitioner to operate their accounts upon production of the court order. The writ petitions were disposed of with these directions, and the connected miscellaneous petitions were closed without any costs.