HPCL Mittal Energy Limited V. Assistant Commissioner of Income Tax, Bathinda and State Bank of India

CWP/1722/2016

AI Insights

HPCL Mittal Energy Limited filed a writ petition against the Assistant Commissioner of Income Tax, Bathinda, and State Bank of India, challenging a recovery notice issued under Section 226(3) of the Income Tax Act, 1961. The petitioner sought to quash the notice, obtain a refund of Rs.10.50 crores, and prevent the State Bank of India from taking coercive recovery steps until the appeal before the Income Tax Appellate Tribunal was resolved. The case centered on the alleged violation of an interim order by the Tribunal which stayed the recovery of the disputed tax demand. The High Court found that the recovery action taken by the respondents was based on a misunderstanding of the duration of the stay order and did not constitute willful disobedience.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 814174 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 21-07-2016
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: URVASHI DHUGGA; MADHU DAYAL
• Assessee Lawyers: AJAY VOHRA; ROHIT JAIN
• Keywords: Coercive Steps; Income tax appellate tribunal; Interim order; Penalty; Quashing notice; Refund; Stay Application; Tax demand; Writ of Mandamus
• Section: 271(1)(c); 226(3)

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Writ Petition No.1722 of 2016(O&M) DATE OF DECISION: 21.07.2016 HPCL Mittal Energy Limited …..Petitioner versus Assistant Commissioner of Income Tax, Bathinda and another .....Respondents CORAM:- HON'BLE MR.JUSTICE S.J.VAZIFDAR, ACTING CHIEF JUSTICE HON’BLE MR. JUSTICE DEEPAK SIBAL Present: Mr. Ajay Vohra, Senior Advocate with Mr. Rohit Jain, Advocate for the petitioner Mrs. Urvashi Dhugga, Advocate for the Revenue Mrs. Madhu Dayal, Advocate for respondent-Bank .. S.J. VAZIFDAR, ACTINGCHIEF JUSTICE: The petitioner seeks an order quashing a notice dated 04.01.2016 issued under Section 226(3) of the Income Tax Act, 1961, a writ of mandamus directing the respondents to refund an amount of Rs.10.50 crores, a writ restraining respondent No.2-State Bank of India from taking coercive steps for recovery of the tax demand till disposal of its appeal before the Income Tax Appellate Tribunal for the Assessment Year 2008-09 and a writ of mandamus directing the Tribunal to dispose of the appeal in a time-bound manner. The petition is based essentially on the ground that the recovery of the penalty was made contrary to and in violation of an interim order granted by the Tribunal. It is not necessary to refer to the facts in detail. It is sufficient to note only a few facts. PARKASH CHAND 2016.07.27 15:45 I attest to the accuracy and integrity of this document CWP-1722-2016 - 2 - 2. On 18.02.2014, the Assessing Officer passed an order under Section 271(1)(c) imposing a penalty which was affirmed by the order of the CIT (Appeals) dated 02.07.2014. The appellant filed an appeal before the Tribunal which, by an order dated 30.09.2014, allowed the stay application filed by the petitioner. We are informed that the petitioner sought a stay of 180 days. The order, therefore, was limited to 180 days. On 25.03.2015, the petitioner filed another application for stay which, by an order dated 05.06.2015, was adjourned sine die and the Tribunal directed that no coercive measures be taken for recovery of the disputed demand in the meantime and directed status-quo to continue. There was no time limit of the stay order. The appeal was heard on 26.08.2015. As there was a difference between the members, a reference was made on 06.01.2016 to the President of the Tribunal for placing the appeal before a third member. By an order dated 03.02.2016, the third member noted that the Judicial Member and the Accountant Member, who had differed with each other, had agreed that the stay order was required to be extended as the delay in deciding the appeal was not attributable to the petitioner. Accordingly, the third member, by the order dated 03.02.2016, extended the stay by 180 days. 3. The petitioner’s grievance is that despite the stay granted on 05.06.2015 and on 03.02.2016, the respondents issued the said recovery notice under Section 226(3) and proceeded to recover the amount lying to the credit of the petitioner in the respondent No.2-Bank. 4. We will assume that the order dated 05.06.2015 was not limited in time and that, therefore, recovery of the penalty was contrary to the order. In our view, however, there was no wilful PARKASH CHAND 2016.07.27 15:45 I attest to the accuracy and integrity of this document CWP-1722-2016 - 3 - disobedience on the part of the respondents in having recovered the amount. They were under the impression that the order dated 05.06.2015 was operative only for 180 days, which is the period stipulated in the Act. Even assuming that the order dated 05.06.2015 was in existence, this would, at the highest, be only a bona fide error in perception on the part of the officer. There is no question of contempt. In any event, an affidavit has been filed by the officer apologizing for the same. Even assuming that the action was contrary to the order, the apology ought, in the circumstances, to be accepted. 5. It is not necessary to consider the effect of the order dated 05.06.2015 for ultimately by the order dated 03.02.2016, the final stay order was passed which was restricted to only 180 days. This period would come to an end on 02.08.2016. 6. In the circumstances, the ends of justice would be met by following order:- In the event of the stay being extended by the Tribunal for any period, the respondents shall refund the amount recovered, but subject to any conditions imposed by the Tribunal. 7. The petition is accordingly disposed of (S.J. VAZIFDAR) ACTING CHIEF JUSTICE 21.07.2016 (DEEPAK SIBAL) parkash* JUDGE PARKASH CHAND 2016.07.27 15:45 I attest to the accuracy and integrity of this document "