TaxTMI 
TaxTMI 
2017 (4) TMI 1195
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndent to refund a sum of Rs. 2,07,89,510/- withdrawn from the petitioner's Bank account maintained with the second respondent. 3. Through the said impugned proceedings, the first respondent called upon the respective second respondent bank to make payment out of the money which is due from the second respondent bank to the respective petitioner. The claim of the first respondent as against the petitioner in W.P.No.7937 of 2017 is Rs. 34,63,21,380/- and Rs. 4,68,76,060/- against the petitioner in W.P.No.7990 of 2017. 4. The case of the petitioner in W.P.No.7937 of 2017 is as follows: The petitioner is a registered Cooperative Society and carrying on business of banking under the license granted by the Reserve Bank of India. In respect of the Assessment Years 2009-10, 2010-11 and 2013-14, the petitioner filed return of income. In respect of those Assessment Years, orders of assessment under Section 143 (3) read with Section 147 of the Income Tax Act, 1961, were made on 26.03.2016, raising a demand of Rs. 6,19,08,220/-; Rs. 7,88,09,230/- and Rs. 20,56,03,930/- respectively, thus totaling a sum of Rs. 34,63,21,380/-. Challenging such orders of assessment, the petitioner pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nicated to the petitioner on 31.03.2017. When the petitioner was preparing to file further appeal and seek stay before the Income Tax Appellate Tribunal, as provided under Section 253(3) of the Income Tax Act, 1961, the first respondent issued the impugned proceedings and recovered a sum of Rs. 2,07,89,510/- from the account maintained by the petitioner with the second respondent bank. The issuance of impugned notice and the recovery were made on one and the same day. Therefore, the petitioner is totally denied the right of filing an appeal and getting interim relief before the Tribunal. 6. The first respondent filed a counter in W.P.No.7937 of 2017, wherein it is stated as follows: Though the petitioner has paid 15% of the tax demand for the Assessment Years 2009-10, 2010-11, 2013-14, has however not paid even such 15% of the tax in respect of the Assessment Year 2014-15, when they filed the appeal before the First Appellate Authority in respect of such assessment year. As per the manual of office procedure, the Assessing Officer is responsible for the collection of tax. The Assessing Officer was indeed directed by the higher authorities to collect the demand immediately. An....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dent bank and issued the impugned attachment orders and insisted for immediate payment of the balance available in the accounts maintained by the respective petitioner. By 05.30 p.m., another batch of officials including the Enforcement Officer himself from the Department of the first respondent entered the second respondent bank and threatened and intimidated the officials with dire consequences to make the payment immediately. The second respondent bank is not an individual but they are a cooperative institution. Because of the short fall, the maintenance of CRR and SLR by the petitioners' bank will attract penalty provisions by the RBI, which will be reflected as black mole in their balance sheets. Due to pressure given by the first respondent, the second respondent bank was constrained to debit the account and paid the amounts. 9. Mr.S.Prabakaran, learned Senior Counsel appearing for the petitioner in W.P.No.7937 of 2017 submitted as follows: The petitioner has already paid 15% of the demand in respect of the Assessment Years 2009-10 and 2010-11, while preferring the appeal before the First Appellate Authority. Likewise, the petitioner paid 25% of the demand in respec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the amount maintained with the second respondent bank, the impugned orders of attachment were lifted on 31.03.2017 itself. Therefore, the petitioner cannot have any grievance. 11. Mr.K.Ravi, learned counsel appearing for the petitioner in W.P.No.7990 of 2017 submitted as follows: As against the order of assessment, the petitioner preferred appeals before the First Appellate Authority. Those appeals were dismissed on 27.03.2017 and such dismissal was communicated to the petitioner only on 31.03.2017. On the very same day, the impugned order of attachment was passed followed by withdrawal of the sum of Rs. 2,07,89,510/- on that day itself. The petitioner is having a statutory appellate remedy to challenge the order of the Commissioner appeals before the Income Tax Appellate Tribunal. The Appellate Tribunal is empowered to deal with and decide the stay petitions filed pending disposal of appeals. When statute provides 60 days time limit for filing such appeal before the Tribunal, the first respondent, without even waiting for one day, passed the impugned order and recovered the money. It is nothing but an arbitrary and unreasonable action. In this connection, the following decis....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the other petitioner, while preferring the first appeal. It is also not in dispute that in both the cases, the First Appellate Authority rejected the appeals and confirmed the orders of assessment and consequential demand. In the case of the petitioner in W.P.No.7937 of 2017, the First Appellate Authority dismissed the appeal on 24.03.2017 and such dismissal was communicated to the petitioner on 30.03.2017, by the first respondent herein. Likewise, in the case of the petitioner in W.P.No.7990 of 2017, the First Appellate Authority passed the order in the appeal on 27.03.2017 and it is claimed that the said order was received by the petitioner only on 31.03.2017, around 12.30 p.m. 17. It is not in dispute that in both the cases, the respective petitioners are entitled to file further appeal before the Income Tax Appellate Tribunal, as provided under Section 253 of the Income Tax Act, within a period of 60 days from the date of communication of the order sought to be appealed against. There is no dispute to the fact that proviso to sub clause 2(A) of Section 254 of the said Act, empowers the Appellate Tribunal to consider the application for stay. There is no dispute to the fa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....amount is paid : (3) Without prejudice to the provisions contained in sub-section (2), on an application made by the assessee before the expiry of the due date under sub-section (1), the Assessing Officer may extend the time for payment or allow payment by instalments, subject to such conditions as he may think fit to impose in the circumstances of the case. (4) If the amount is not paid within the time limited under sub-section (1) or extended under sub-section (3), as the case may be, at the place and to the person mentioned in the said notice the assessee shall be deemed to be in default. (5) If, in a case where payment by installments is allowed under sub-section (3), the assessee commits defaults in paying any one of the installments within the time fixed under that sub-section, the assessee shall be deemed to be in default as to the whole of the amount then outstanding, and the other installment or installments shall be deemed to have been due on the same date as the installment actually in default." 20. Perusal of the above provision of law would show that any amount, otherwise than by way of advance tax, specified in a notice of demand issued u....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... intimation of the fact of such reduction to the assessee, and where a certificate has been issued to the Tax Recovery Officer for the recovery of such amount, also to that officer; (2) For the removal of doubts it is hereby declared that no fresh notice of demand shall be necessary in any case where the amount of Government dues is not varied as a result of any order passed in any appeal or other proceedings under any scheduled Act." 23. Sub section (2) of Section 3 of the Taxation Laws (Continuation & Validation of Recovery Proceedings) Act, 1964, contemplates that no fresh notice of demand shall be necessary in any case where the amount of Government dues is not varied as a result of any order passed in any appeal or other proceeding under any scheduled Act. However, it is made clear in the above said provision that if such Government dues are enhanced in such appeal, another notice of demand only in respect of the amount so enhanced shall have to be issued. On the other hand, if the Government dues are reduced in such appeal or proceedings, it shall not be necessary for the Taxing Authority to serve upon the assessee a fresh notice of demand. 24. What would be th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....certificate by the Tax Recovery officer and thereafter to recover the dues from the assessee by one or more of the methods mentioned under the above said provision, viz., attachment sale of assessee's movable property; attachment and sale of the assesee's immovable property; arrest of the assessee and his detention in prison and appointment of a receiver for the management of the assessee's movable and immovable properties. Apart from the above said procedures contemplated under Sections 222 to 225, other modes of recovery are dealt with under section 226, out of which, relevant sub sections are extracted hereunder: "Other modes of recovery: 226. (1) Where no certificate has been drawn up under section 222, the Assessing Officer may recover the tax by any one or more of the modes provided in this section. (1A)... (2).... (3) (i) The Assessing Officer or Tax Recovery Officer may, at any time or from time to time, by notice in writing require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee to pay to the Assessing Officer....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Thus, it is clear that if a person on receipt of notice under Section 226(3) fails to make payment, proceedings are to be initiated for recovery of such amount from such person only by resorting to the procedures contemplated under Sections 222 to 225 and not otherwise. 29. Keeping the above statutory position in mind, let me consider the facts and circumstances of the present case. In both the cases, the respective assessees were assessed in respect of the relevant Assessment Years and consequently, the orders of assessment were passed for each year fixing the tax liability payable by the respective assessee, followed by issuance of notice under Section 156. Therefore, the liability to pay the amount so determined by the Assessing Authority starts from the date of the assessment, followed by issuance of notice of demand under section 156 of the said Act. No doubt, these assessees have filed their appeals before the First Appellate Authority challenging the orders of assessment. However, those appeals are dismissed by confirming the order of the Assessing Authority. After the dismissal of the appeals, there is no necessity for issuing a fresh notice of demand under Section 156....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s to the credit of the first respondent on the same day. 32. No doubt, it is alleged by the second respondent that such transfer was made under the threat and pressure exerted by the officials of the Income Tax Department. At this juncture, it is to be noted that the second respondent has not questioned the impugned proceedings by contending that there is no due from them payable to the respective petitioner. Therefore, this court has to see as to whether such recovery is liable to be interfered with. I have already pointed out that on the date of issuance of the notice under Section 226(3), there is no legal impediment or bar for the first respondent to recover such dues. Section 226(3) of the Act also enables and empowers the Assessing Officer or the Tax Recovery Officer to seek such payment from the person to whom such notice was issued either forthwith or within the time specified in the notice. In other words, it is the discretion of such authority to specify the time for such payment in the said notice. In this case, the first respondent directed the second respondent to make the payment forthwith. Therefore, legally, the first respondent is not barred from seeking such pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r against such action of the first respondent. I have already pointed out that the impugned action is only an improper action and not an illegal action in toto. An illegal action can never be condoned, whereas, an improper action, though not appreciable, still can be condoned, depending upon the facts and circumstances of each case. It is not that all improper actions would automatically become illegal or unlawful or void. Certainly such test has to be made only based and on appreciation of all the facts and circumstances of a particular case. Therefore, considering the above stated facts and circumstances, I find that the impugned action of the first respondent cannot be termed as illegal, merely because the recovery was made on the same day of issuance of notice, especially when the liability of the petitioners exists. On the other hand, it only exhibits the over enthusiastic act of the first respondent to see that a target goal is achieved on that day, being the end of the financial year. Apart from the above, it is an admitted fact that the impugned proceedings are already lifted on the same day after recovery and as such those proceedings are not in force as on today. 35. I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder the purview of either section 237 or section 240. I have already pointed out that both the provisions, in this case, would not come into operation as of now, as such situation has not arisen so far. Therefore, the refund claim made by the petitioners cannot be sustained. Of course, in the case of the petitioner in W.P.No.7937 of 2017, it is contended that the amount paid before the First Appellate Authority has not been given credit to. But at the same time, it is seen that in respect of the subsequent Assessment Year viz., 2014-15, the said assessee has not even paid the 15% of the tax demand before the First Appellate Authority, while preferring such appeal. The said claim of the revenue is not disputed by the petitioner. However, their contention is that the first respondent is not entitled to club that amount as well to justify the recovery. 39. True, the amount referred to in 226(3) notice, in the case of the petitioner in W.P.No.7937 of 2017 matches with the total demand in respect of the Assessment Years 2009-10, 2010-11, 2013-14. It is also true that the said assessee has made some part payment, while preferring the appeal before the First Appellate Authority. But t....