TaxTMI 
TaxTMI 
2017 (7) TMI 617
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....reland and the remainder is held by GE Capital Aviation Funding, Ireland. The Petitioner is stated to be engaged in the business of providing marketing support, liaising and administrative services in connection with leasing of aircrafts in India to its parent company. 3. The Assessee filed its return of income for Assessment Year ('AY') 2014-15 declaring an income of Rs. 21,37,610. The return of income was picked up for scrutiny. By an order dated 19th December, 2016 the Income Tax Officer, Ward 11(3) [(hereinafter Assessing Officer ('AO')] framed the assessment under Section 143 (3) of the Act making an addition of Rs. 2,14,78,118.90 to the Assessee's income thereby raising a tax demand of Rs. 94,51,390. 4. The Assessee states that it received a copy of the aforementioned assessment order on 24th December, 2016. On 23rd January, 2017, the Assessee electronically filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. According to the Assessee, the AO was electronically intimated about the filing of the appeal before the CIT (A). 5. It is stated that on 25th March, 2017, the Assessee received a notice dated 27th February, 2017 issued under Section 226 (3....
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....Rs. 94,51,390/-. The banker issued a Cheque/Pay Order of the aforesaid amount which was received at the DAK Counter of the Ward on 15.03.2017, and was put up before the AO on 16.03.2017. 18.03.2017 (Saturday) and 19.03.2017 (Sunday) were holidays. On 21.03.2017 copy of the notice (dated 27.02.217), was sent to the Speed Post Department by the Assessing Officer and was, thereafter, finally booked/sent by the Speed Post Department on 22.02.2017 to the Petitioner/Assessee. The aforesaid copy of the notice sent by speed post was received by the Petitioner/Assessee on 25.03.2017." Submissions on behalf of the Assessee 11. Mr. Sachit Jolly, the learned counsel appearing for the Assessee, submitted that it was incumbent upon the Department to have issued notice to the Assessee, if not prior to the sending a notice to the Bank, at least simultaneously and should have allowed the Assessee an opportunity of showing why it should not be treated as an Assessee in default. He relied on the CBDT Instruction No. 1914 dated 2nd December, 1993 partially modified by Office Memorandum ('OM') dated 29th February, 2016 which states that the Department should not recover more than 15% of the total....
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....of India (supra), the learned Single Judge of the Calcutta High Court had failed to notice an earlier judgment of the another Single Judge of the same High Court in Golam Momen v. Asstt. Commissioner of Income Tax (2003) 263 ITR 69 (Cal) which held to the contrary. This anomaly was noticed in a subsequent judgment of another learned Single Judge of the Calcutta High Court in Anil Kumar Banerjee v. Union of India (2014) 44 taxmann.com 465 (Cal). Therefore, as far as the Calcutta High Court is concerned, the two judgments of the learned Single Judge held that it was not mandatory under Section 226 (3) (iii) of the Act for a notice to be issued to the Assessee prior to attachment of its bank account towards recovery of the tax demand. 16. Mr. Chaudhary submitted that Section 226 (3) (iii) of the Act only required a copy of the notice to be "forwarded to the assessee" and not served upon the Assessee prior to or simultaneously with the issuance of notice to the bank under Section 226 (3) (i) of the Act. In support of this proposition, he placed reliance on the decision in P.P. Kanniah Chetty v. Income Tax Officer & Anr. (1976) 105 ITR 622 (Mad.) and Third ITO v. Damodar Bhat, (1969)....
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....CIT(A), the assessing officer shall grant stay of demand till disposal of first appeal on payment of 15% of the disputed demand, unless the case fails in the category discussed in para (B) hereunder. (B) In a situation where, (a) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of lump sum amount higher than 15% is warranted (e.g. in a case where addition on the same issue has been confirmed by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of Revenue or addition is based on credible evidence collected in a search or survey operation, etc.) or, (b) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount lower than 15% is warranted (e.g. in a case where addition on the same issue has been deleted by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of the assessee, etc.), the assessing officer shall refer the matter to the administrative Pr.CIT/CIT, who after considering all relevant fa....
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....stion of the mandatory nature of the requirement of prior service of notice upon the Assessee under Section 226 (3) (iii) of the Act reflects the correct position in law. 25. Turning to the decision of in UTI Mutual Fund v. Income Tax Officer (supra), it is plain from the facts of the case that there was an application for stay moved by the Petitioner before the AO immediately on the receipt of the demand. Thereafter, the Petitioner moved the CIT seeking his intervention apprehending that the AO may not entertain the application for stay. The application for stay was disposed of by the AO thereafter. Within 3 days of the disposal of the stay application, the AO took action under Section 226 (3) of the Act calling upon the bankers of the Petitioner to pay to the Revenue the demanded amount. It was in the above context that the Division Bench of the Bombay High Court held that "when a bank account has been attached, before withdrawing the amount, reasonable prior notice should be furnished to the assessee to enable the assessee to make a representation or seek recourse to a remedy in law." All of the guidelines issued by the Division Bench of the Bombay High Court in UTI Mutual Fu....