2025 (11) TMI 1176 - HC - Income Tax

PCIT allowed petitioner's counsel to file writ copy as revision petition to decide stay of demand and bank attachment

Sarika Industries Pvt. Ltd. Versus Union Of India And Ors

HC permitted the petitioner's counsel to file a copy of the writ petition before the PCIT, to be treated as a revision petition addressing stay of demand ... Attachment of bank account - As submitted petitioner has a remedy of revision before the PCIT - HELD THAT:- As petitioner states that the petitioner shall avail the revision remedy and take the copy of this petition before the PCIT, which may be considered as revision petition on behalf of the petitioner. If that be so, we permit Mr Kapoor, to file the copy of this writ petition on behalf of the petitioner, which shall be treated as a revision petition, as according to him, this petition encompasses the grounds for stay of the demand and bank attachment. It also goes without saying that the PCIT shall hear the parties and decide the revision petition in accordance with law. All contentions of the parties are kept open to be canvassed before the PCIT. If the petitioner is aggrieved by the decision of the PCIT, the liberty shall be with the petitioner to apply for revival of this petition. ISSUES PRESENTED AND CONSIDERED 1. Whether attachment of the petitioner's bank accounts could be effected without prior notice to the petitioner. 2. Whether, before attaching bank accounts, the Assessing Officer was required to obtain prior approval of the Principal Commissioner/Principal Director/Commissioner/Director of Income Tax in terms of the relevant Central Board of Direct Taxes (CBDT) circular. 3. Whether the petitioner is entitled to an interim stay on recovery proceedings and defreezing/release of attached bank accounts during the pendency of the appeal before the Commissioner of Income Tax (Appeals). 4. Whether the remedy of filing a revision before the Principal Commissioner of Income Tax (PCIT) is adequate and efficacious to challenge the attachment and related orders, and whether a writ petition may be permitted to be treated as such a revision. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Notice prior to attachment Legal framework: Attachment of bank accounts in tax recovery arises under the tax recovery provisions and applicable procedural rules; principles of natural justice and statutory notice requirements govern coercive actions. Precedent Treatment: No precedents were cited or considered by the Court in the judgment. Interpretation and reasoning: The petitioner contended that no notice was issued before attachment. The Court did not make a substantive finding on whether notice was legally required in the particular circumstances; instead the Court focused on directing the parties to avail the revision remedy before the PCIT and left all contentions open for adjudication by the PCIT. Ratio vs. Obiter: The Court's treatment on this point is procedural and interlocutory; the statement that contentions on notice are to be ventilated before the PCIT is not a final ratio on the legal requirement of notice. Conclusions: No adjudication made by the Court on the legal obligation to issue notice prior to attachment; the question is left open for decision by the PCIT on revision. Issue 2 - Requirement of prior approval under CBDT circular Legal framework: The petitioner relied on a CBDT circular allegedly mandating prior approval of senior tax authorities (PCIT/Principal Director/Commissioner/Director) before account attachment. Precedent Treatment: No judicial authorities were invoked or overruled; the Court did not apply or distinguish prior case law on the effect of the circular. Interpretation and reasoning: On being informed by Revenue's counsel that PCIT approval had been given, the Court proceeded on that factual premise. The Court did not examine the validity, scope or mandatory nature of the circular but permitted the petitioner to raise and canvass these contentions before the PCIT in revision. Ratio vs. Obiter: The acceptance of Revenue's representation that approval was granted is a factual finding for the purpose of interlocutory management; there is no pronouncement on the legal effect of the circular. Conclusions: Whether statutory or circular approval was required and if it was properly obtained remains to be considered by the PCIT on revision; the Court did not resolve the legal issue. Issue 3 - Entitlement to interim stay of recovery and defreezing of accounts pending appeal Legal framework: Relief from coercive recovery measures pending appeal is governed by statutory appeal/procedure provisions and the discretionary jurisdiction of authorities and courts to grant interim relief. Precedent Treatment: No authorities considered; the Court's order does not grant the interim relief sought but preserves the petitioner's ability to seek it before the PCIT and thereafter before the Court if aggrieved. Interpretation and reasoning: The Court declined to entertain immediate quashing of the attachment or grant of a stay, choosing instead to permit the writ petition to be treated as a revision petition before the PCIT and directing the PCIT to hear and decide the revision in accordance with law, keeping all contentions open. Ratio vs. Obiter: The direction to treat the writ petition as a revision and to refuse immediate interlocutory relief is binding in the context of this order (procedural ratio); it is not a determination on the merits of entitlement to interim stay. Conclusions: The petitioner was not granted an immediate stay or defreeze by the Court; relief is left to decision on merits by the PCIT on revision, with liberty to revive the writ if dissatisfied with the PCIT's order. Issue 4 - Adequacy of revision remedy before PCIT and permission to treat writ as revision Legal framework: Administrative remedies of revision to supervisory tax authorities are part of the statutory scheme; the availability of an alternate adequate remedy is a relevant consideration for judicial interference by writ. Precedent Treatment: Not addressed; no judicial rule on adequacy of remedy was applied or distinguished. Interpretation and reasoning: The Court accepted the Revenue's position that revision to the PCIT is available and that the PCIT had granted approval. The petitioner was permitted to file the copy of the writ petition as a revision petition before the PCIT. The PCIT was directed to hear and decide the revision in accordance with law and all contentions were expressly kept open for consideration by the PCIT. Ratio vs. Obiter: The Court's procedural direction permitting conversion of the writ into a revision petition and requiring the PCIT to decide it is a dispositive procedural ruling (ratio) for the present proceedings. Conclusions: The revision remedy before the PCIT is treated as an adequate and efficacious remedy for addressing the petitioner's grievances in the first instance; the Court allowed the writ petition to be placed before the PCIT as a revision and retained no final adjudication, preserving the petitioner's right to revive the writ if aggrieved by the PCIT's decision. Ancillary and procedural conclusions 1. The PCIT is directed to hear the revision petition and decide it in accordance with law; all legal and factual contentions, including those relating to notice and statutory/circular approval, are kept open for consideration by the PCIT. 2. If aggrieved by the PCIT's decision on revision, the petitioner has liberty to seek revival of the writ petition before the Court. 3. The pending application before the Court is disposed of as infructuous in view of the course directed; the writ petition itself is disposed of by permitting the conversion to revision and leaving substantive adjudication to the PCIT.