Just a moment...

Report
FeedbackReport
×

By creating an account you can:

Logo TaxTMI
>
Feedback/Report an Error
Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
TMI Blog
Home / RSS

2019 (8) TMI 1060

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....r direction, quashing and setting aside the impugned orders of attachment dated 01.03.2012 and 19.12.2018, order setting proclamation dated 29.10.2018 and 19.12.2018 and proclamation of sale dated 21.12.2018 as being bad, illegal, unjust, unreasonable, arbitrary, violative of the principles of natural justice and contrary to the law. (B) YOUR LORDSHIPS may be pleased to stay the implementation, operation and execution of Proclamation of Sale dated 21.12.2018 (Annexure- "E") issued by the Respondent pending the admission, hearing and final disposal of this Petition. (C ) YOUR LORDSHIPS may be pleased to grant such other and further reliefs as may be deemed fit by this Hon'ble Court, in the interest of justice." 5. The writ applicant seeks to challenge the following orders: (i) The order of attachment (ITCP-16) of the Plot No.7, Vibrant Villa, Opp. Sanskardham, Bopal-Sanand Road, Manipur, Ahmedabad dated 01.03.2012 and 19.12.2018 respectively issued under the Rule 48 of the Second Schedule to the Income Tax Act, 1961. (ii) The notice for setting a sale proclamation (ITCP-17) dated 29.10.2018 and 20.12.2018 respectively in connection with the three properties includi....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s name were attached, in which properties Vibrant Villa, Village-Manipur, TA- Sanand (Plot No.7,45,48 &n 70) and Meghanshwood (Plot No.4 to 11), Village-Chekhla, TA- Sanand also included. 7. 12/09/12 Notice u/s. 226(3) of the I.T Act, 1961 were issued upon various debtors and banks of assessee company. 8. 28.09.2012 Order u/s. 221(1) of the Act was passed on 28.09.2012 levying penalty of Rs. 1 Crore due to non-payment of self-assessment tax. 9. 15.02.2013 A proclamation of sale notice for open plots in Vibrant Villa, Village-Manipur & Meghanswood, Village-Chekhla, TA- Sanand was published in daily newspapers on 17.02.2013 for auction of the immovable properties and I.T. C.P 17 issued to Shri Gaurav H. Dave & Smt. Amiben G. Dave, they refused to accept the said notice, therefore, notice was affixed and signature of two witnesses were taken. 10. 25.02.2013 A letter from M/s Metroglobal Limited was received through its company Secretary Shri Nitin S. Shah objecting the auction proposed for above mentioned open plots. 11. 18.03.2013 Order u/s. 143(3) of the I.T. Act, 1961 was passed on 18.03.2013 for A.Y. 2010-11 and as a result demand of Rs. 1654.01 Lakhs was raised. (P....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ant Villa, Village Manipur, Ta-Sanand. 25. 29.01.2018 Information to Draw Recovery Certificate in Form 57 in the case of M/s Shivam Water Treaters Pvt. Ltd for recovery of outstanding demand of Rs. 1453.99 Lacs for A.Y. 2010-11 to 2014 received from the A.O 26. 21.02.2018 A recovery survey action conducted on 21.02.2018 at the 201 to 204, Shital Varsha Arcade, C.G. Road, Navrangpura, Ahmedabad. Two bank accounts were found and the same were attached, resultant Rs. 1.87 Lakhs was recovered from the banks. During the course of survey proceeding it was stated that books of accounts were with Auditor and same would furnished on 26.02.2018. 27. 22.02.2018 Request for giving installments against payment of IT Dues for Self Assessment Tax for the A.Y. 2010-11 & other years filed by the assessee before the Addl. CIT, Range- 4(1), Ahmedabad & DCIT, Circle-4(1)(1), Ahmedabad. 28. 26.02.2018 Summons under Rules 83 of the Second Schedule to the Income Tax Act, issued but no one attended in the time given. 29. 22.02.2018 & 27.02.2018 Notice u/s. 226(3) were issued to all the debtors and bank account details gathered during the survey proceedings. 31. 20.03.2018 Summons under R....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....were attached by this office. 35. 27.04.2018 Summons under Rule 83 of the Second Schedule to the Income Tax Act, 1961 were issued to Shri Gaurav H. Dave & Amiben G. Dave on 27.04.2018 to attend office on 01.05.2018 at 12:00 PM & 11:00 AM respectively but no one from them attended in given time. 36. 27.04.2018 A summons was issued to Shri Naren Jhadkia, Chief Manager, Punjab National Bank, Navrangpura Branch, Ahmedabad and his statement was recorded on oath on 27/4/2018. On being asked the following questions i.e. Mode of receipt of the said letter, name and identity of person delivering the letter, identity of the employee of the bank who received the letter, the details of other such letters received by the bank if any. In answer to the above questions Shri Naren Jhadkia, Chief Manager, Punjab National Bank, Navrangpura Branch, Ahmedabad has stated that on 24/4/2018, Mr. Gaurav Dave, authorised signatory of M/s. Shivam Water Treaters Pvt. Ltd. has sent him a WhatsApp message at 11.23 am from his mobile No.9824052338. The message was containing a photocopy of letter dated 16/04/2018 issued by Pr. Chief Commissioner of Income tax, Ahmedabad, addressed to M/s. Shivam Water Tr....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e proclamation for plot No.7,45,48 of Vibrant Villa, Village Manipur, TA Sanand issued and served upon the assessee 30.10.2018 through affixure and E-mail. 45. 02/11/18 Letter received from Hema Shah Insolvency Resolution Professional regarding Initiation of CIRP in respect of Shivam Water Treaters Pvt. Ltd. 46 20.11.2018 I.T.C.P. 17 issued on 20.11.2018 for Plot No. 4 to 9, Meghansh Woods, Village Chekhla, TA Sanand. 47. 20.11.2018 ITCP 17 Notice for setting a sale proclamation was issued on 20.11.2018 and served upon the assessee on 05.12.2018 by affixture and E-mail. 48. 28.11.2018 Advertisement for proclamation for sale of immovable property i.e. Vibrant Villa, Village Manipur, TA Sanand published in daily news papers on 30.11.2018 and auction proposed on 20.12.2018. 49. 30.11.2018 Form F (regarding submission of claim/proof of claim by creditors) was submitted before the Interim Resolution Professional (C.A. Hema Manoj Shah, Insolvency Resolution Professional) 50. 04/12/18 I.T.C.P.-17 Notice for setting a sale proclamation for Plot No.10 & 11, Meghanshwood, Village Chekhla, TA Sanand. 51. 04/12/18 ITCP-1/Form 57 dated 04.12.2018 for a sum of Rs. 3,70,86,48....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....pearing for the writ applicant vehemently submitted that the time limit for sale of the attached immovable property having been elapsed, the property should be released from attachment. To fortify his submission, Mr. Bhati has placed reliance on Rule 68B of the Second Schedule to the Act, 1961. According to Mr. Bhati, no sale of immovable property is permissible after the expiry of three years from the end of the financial year, in which, the order, giving rise to a demand of any tax, has become conclusive in terms of the provisions of Chapter- XX. According to Mr. Bhati, the notice under Section 143(1) of the Act which came to be issued upon the writ applicant should be construed as an order for the purpose of Rule 68B, giving rise to a demand of tax and the same having become conclusive in terms of the provisions of Chapter-XX, it is not open now or rather permissible in law for the department to put the attached immovable properties for sale. The second submission of Mr. Bhati is that the order passed under Section 143(1) of the Act should be construed as the order for the purpose of Rule 68B, giving rise to a demand of any tax having become conclusive in terms of the provisions....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....7,25,920/-, the above Assessment Order was also not challenged by the assessee company as provided under Chapter XX to the Act and hence 'final'during the F.Yr.2010-11. (c) Order u/s 220(2) dated 16.10.2018 [Page No. 173 to 176] quantifying consequential 'Interest' in respect of order issued u/s 143(1) dated 11.04.2011 as mentioned In original ITCP-1 dated 14.10.2011 & 29.11.2011. Word 'order' has not been defined In the Income Tax Act, 1961. As per Black's Law Dictionary 'order' means a command, direction or Instruction. Here Impugned Intimation was a command to the assessee company to pay Rs. 8.71 crores. Moreover, an Intimation is an order u/s 246 and 246A of the Income Tax Act, 1961. Further, recently Hon'ble DeIhI High Court in the case of Epcos Electronic Components S.A. v/s Union of India [2019] 107 taxmann.com 227 (Del) after distinguishing judgement of the Hon'bIe Supreme Court In the case of Rajesh Jhaveri Stock Brokers Private Limited has held that an 'intimation' is subject to 'revision' u/s 264 which is also part of Chapter XX of the Income Tax Act, 1961. 2. Thus, no sale of the above property shall be made after 31.03.2015 and the above attachment....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... and disallowances. The demand which came to be raised through the said order should only be with regard to the 10 additions and disallowances made therein. Further, kind attention is drawn to Section 3(1)(a) of The Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964 [enclosed herewith] wherein, It is clearly laid down that in any proceedings, if the government dues are enhanced, the taxing authority shall serve upon the assessee another notice of demand only in respect of the amount by which such government dues are enhanced. Further, Section 3(3) of the above Act also states that this section shall have effect notwithstanding any judgement, decree or order of any court, tribunal or other authority. A plain reading of this clearly lays down the fact that the demand notice issued pursuant to the order u/s 143(3) of the IT Act, 1961 should only raise the demand which was enhanced by the said order i.e. only the demand which arose out of the additions and disallowances made in the order. The demand notice issued pursuant to the order u/s 143(3) consisting of the amount of Rs. 8.73 crores is illegal and nullity. Therefore, the demand of Rs. 8.73 crores stood ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ds as "Appealable orders before Commissioner (Appeals)". The section further classifies the intimation u/s 143(1) of the IT Act to be an 'order' an appeal against which would lie before the Commissioner (Appeals). 11. In pursuance to Para 8; the contention of the respondent that the time limit of three years has not even started would destroy principle of equity. On one hand, the respondent has already attempted and failed twice in auctioning off the properties of the petitioner in pursuance to the demand raised vide order u/s 143(1) of the IT Act and on the other hand it Is claiming before the Court that the Limitation period of three years has not even commenced. When an auction to recover the tax dues has been Initiated pursuant to some order raising demand, under no circumstances can It be said that the limitation period has not commenced. The purpose of the Limitation Act or in this case insertion of Rule 68B is to bring an end to litigation after a particular time so that a sword is not kept hanging over a litigant's head. The contention of the respondent if accepted, would defeat the purpose of Rule 68B. 12. In pursuance to Para 9; section 179 is not an appealable ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....emand notice and challan came to be issued. 14. The scrutiny assessment under Section 143(3) came to be challenged before the CIT(A). 15. In the interregnum i.e. between the acknowledgment under Section 143(1) and passing of the scrutiny assessment under Section 143(3), to protect the interest of the revenue, attachment order came to be passed, which as such is nothing but an attachment under Section 281B r/w Rule 48 of the second schedule. 16. It is submitted that in view of the decision of the Supreme Court in the case of Rajesh Jhaveri stock brokers (P) Ltd reported in 291 ITR 500 as affirmed/followed in Zuari Estate Development & Investment Co. Ltd (373 ITR 661), the acknowledgement under Section 143(1) cannot be treated to be an order. 17. The decision relied upon by the writ applicant in the case of EPCO Electronic Components SA v. Union of India [(2019) 107 Taxmann. Com 227(Delhi)] is not applicable. That was a case where against an intimation under Section 143(1)(a), the Commissioner refused to exercise his revisionary powers under Section 264 of the Act. It is in that context that the Delhi High Court in paras 13 to 17 held that the revision petition under Section ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....the purpose of the applicability of Rule 68B in the Second Schedule of the Act? (ii) Whether an intimation under Section 143(1) of the Act is deemed to be a notice of demand of tax under Section 156 of the Act? (iii) Whether an intimation under Section 143(1) (a) of the Act can be equated with an assessment framed under Section 143(3) of the Act? (iv) Whether the phrase "order giving rise to a demand" in Rule 68B of the Second Schedule in the Act should be construed as a final assessment order under Section 143(3) of the Act? 26. Before adverting to the rival submissions canvassed on either side, we must look into Rule 68B of the Second Schedule to the Act. Rule 68B reads as under: "Time limit for sale of attached immovable property. 68B (1) No sale of immovable property shall be made under this Part after the expiry of three years from the end of the financial year in which the order giving rise to a demand of any tax, interest, fine, penalty or any other sum, for the recovery of which the immovable property has been attached, has become conclusive under the provisions of section 245-I or, as the case may be, final in terms of the provisions of Chapter XX. Prov....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....within the prescribed period therein, the attachment if any levied on the property is liable to be vacated. 28. Rule 68B was introduced in the Second Schedule to the I.T. Act by Finance Act, 1992 specifically with a view to prescribe the time limit of three years for sale of the attached immovable properties. The proviso to Rule 68B (1) provides for extension of one more year in certain cases where the sale falls through. In other words, if the sale held within the period of three years could not be completed for some reason set out therein, then, under the proviso to rule 68B(1) extension of one more year is available for effecting the sale. Rule 68B(2) provides for exclusion of the period during which the demand is stayed by any Court. 29. The period of limitation under Rule 68B(1) for sale of the attached property commences from the date on which the demand of any tax interest, fine, penalty or any other sum for the recovery of which the immovable property has been attached has become conclusive under the provisions of section 245 I or under the provisions of Chapter XX of the I.T. Act. 30. We find it extremely difficult to take the view that the intimation or an acknowled....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d above, the intimation under Section 143(1)(a) cannot be treated to be an order of assessment. The distinction is also well brought out by the statutory provisions as they stood at different points of time. Under Section 143(1)(a) as it stood prior to 1-4- 1989, the assessing officer had to pass an assessment order if he decided to accept the return, but under the amended provision, the requirement of passing of an assessment order has been dispensed with and instead an intimation is required to be sent. Various circulars sent by the Central Board of Direct Taxes spell out the intent of the legislature i.e. to minimise the departmental work to scrutinise each and every return and to concentrate on selective scrutiny of returns. These aspects were highlighted by one of us (D.K. Jain, J.) in Apogee International Ltd. v. Union of India, (1996) 220 ITR 248. It may be noted above that under the first proviso to the newly substituted Section 143(1), with effect from 1-6-1999, except as provided in the provision itself, the acknowledgment of the return shall be deemed to be an intimation under Section 143(1) where (a) either no sum is payable by the assessee, or (b) no refund is due to h....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....tice of demand shall become applicable even to that intimation even though no regular recovery notice of demand in the prescribed form under s. 156 is served on an assessee, which otherwise is mandatory to enforce any recovery of tax or interest on an assessee." 36. We are of the view that the phrase "order giving rise to a demand" in Rule 68B should be construed as the final assessment order, determining the tax liability of the assessee with interest, fine, penalty or any other sum. With the commencement of the proceedings under Section 143(2) of the Act, the intimation under Section 143(1)(a) of the Act, which in the absence of the proceedings under Section 143(2) read with Section 143(3) would have taken the shape of regular assessment. But once the proceedings commenced under Section 143(3), the intimation under Section 143(1)(a) remains an intimation only of self-assessment with prima facie adjustments, if any, made by the Assessing Officer and becomes adjustable as per the regular assessment. The initial intimation under Section 143(1) of the Act, which according to the learned counsel appearing for the assessee, should be understood as an order giving rise to a demand for....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....authority should pass an order under Section 143(3). Shri Nema also urged that because the intimation is deemed to be a notice of demand of tax under Section 156 of the Act, the proceedings for assessment should be taken as complete in all respects, subject of course to the assessment being reopened in terms of Section 147. This contention also is devoid of any substance. The intimation under Section 143(1)(a)(i) is only fictionally taken as a notice of demand under Section 156. Like all other fictions, to understand the meaning of this fiction so created here, one must look to its purpose. It is only thereafter that the court has to assume all facts and consequences which are incidental or an inevitable corollary to the giving effect to the fiction. One must be cautious to see that the fiction is not extended beyond the purpose for which it is created. See CIT v. Vadilal Lallubhai [ 1972] 86 ITR 2 (SC). The apparent purpose of the fiction so created here to treat the intimation as a notice of demand under Section 156 is to make the machinery provision of recovery of tax applicable to the recovery of tax assessed in terms of Section 143(1)(a)(i) and nothing more. A notice of dem....