KHANDELWAL LABORATORIES PVT. LTD. VS. DCIT
(BOMBAY HIGH COURT)
WRIT PETITION
(L) NO. 710 OF 2016
DATED :
28.03.2016
(BOMBAY HIGH COURT)
Summarised
Judgement (Scroll for Complete Judgement)
Citation : S. 220(6): Dept directed to redeposit moneys collected illegally by
attachment of assessee’s bank account during pendency of stay application. A
order passed on a stay application must give reasons for the refusal to stay
the demand.
Facts of the Case : This petition filed under Article 226 of the Constitution of India challenges
the attachment of the petitioners'
bank accounts under Section 226(3) of the Income Tax Act, 1961 (the Act)
in Punjab National Bank, Nariman Point, Mumbai,
Axis Bank, Dadar, Mumbai , HDFC, Fort, Mumbai, Dena Bank Amli, and State Bank of India, Byculla, Mumbai. The
petitioners have also made a grievance that after attachment an amount of
Rs.7,59,185/ from HDFC Bank, Fort, Mumbai and Rs. 34,265/ from State Bank of
India, Byculla, Mumbai have been withdrawn without giving any notice to the
petitioner before withdrawal in defiance of the law laid down by this Court
in UTI Mutual Fund Vs. Income Tax
Officer, 345 ITR 71.
The petitioners state that a communication dated 8th March, 2016 from the
Assessing Officer to the Punjab National Bank indicating the attachment of the
petitioners' bank account under Section 226(3) of the Act was forwarded to it
by Punjab National Bank. It appears that similar communications have been sent
to other bankers also. Thereafter, on
14th March, 2016, the petitioners received a communication dated 10th March, 2016 from the HDFC Bank, FORT, Mumbai
to the effect that the an amount of Rs.7,59,185/ had been withdrawn by the
Revenue from the petitioners'bank accounts.Similarly, the
petitioners have now learnt that an amount of Rs.34,265/ to the credit of its
account with State Bank of India was also withdrawn by the Revenue.
However,
Section 220(6) of the Act provides
that where an
assessee has filed
an appeal against the assessment
order to the Commissioner of Income Tax (Appeals) then, an assessee is entitled
to file an application to the Assessing Officer to treat the assessee as not
being an assessee in default, consequent to the
notice under Section 156 of the Act, till such time as its appeal filed
before the Commissioner of Income Tax (Appeals) is disposed of.This right to
file an application under Section 220(6) of the Act is a statutory right
available to an assessee, if he chooses to so exercise.
Observation of Court : In this case, the petitioners' application for stay dated 14th April
2015 under Section 220(6) is still pending disposal before the Assessing
Officer. This is so as the order dated
20th August, 2015 as reproduced hereinabove of the Assessing Officer has only
dealt with the petitioners' Rectification Application and not with the
petitioners' Application for Stay. Although, Mr. Malhotra learned Counsel for
the Revenue submits that the third paragraph in that order calling upon the
petitioners to pay the entire demand within five days, is a communication
rejecting the stay application filed by the petitioner.
Thus,
any action to recover taxes adopting coercive means is not permissible till the petitioner's application for
stay under Section 220(6) of the Act is disposed of.
Therefore,
the action of AO in attaching the petitioner’s bank account under Section
226(3) of the Act as well as subsequent withdrawal of the attached amounts from
the bank accounts is without
jurisdiction and bad in law. The petitioners
have a statutory right
to its stay
application being heard
and disposed of before the Revenue can adopt any coercive
proceedings on the basis of the
Notice of demand
under Section 156
of the Act issued
to the assessee. This action on the part of the Assessing
Officer, if permitted, would lead Section 220(6) of the Act becoming redundant.
Judgement : In the above view, the Notice under Section 226(3) of the Act issued by
the Assessing Officer to the petitioners' bankers are quashed and set
aside. Further, the Assessing Officer is
directed to deposit the amount of Rs.7,59,185/ in HDFC Bank, Fort, Mumbai and
Rs.34,265/ in State Bank of India, Byculla, Mumbai within a period of one week
from today. The Assessing Officer to dispose of the petitioner’s pending stay
application in accordance with law.
The
Writ Petition is disposed of in the above terms. No order as to costs.
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Complete Judgement
KHANDELWAL LABORATORIES PVT. LTD. VS. DCIT
(BOMBAY HIGH COURT)
WRIT PETITION (L) NO. 710 OF 2016
DATED : 28.03.2016
(BOMBAY HIGH COURT)
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