Joji Reddy Yeruva V. Principal Chief Commissioner of Income Tax and 4 Others

WP/2413/2020

AI Insights

This writ petition under Article 226 of the Constitution of India challenges the actions of the Tax Recovery Officer (respondent No.5) in issuing notices under Section 226(3) of the Income Tax Act, 1961, which led to the attachment of the petitioner's bank accounts and properties. The petitioner, Joji Reddy Yeruva, contested the legality of these actions, citing ongoing appeals and cross-objections before the Income Tax Appellate Tribunal, Visakhapatnam. The case revolves around the recovery of tax dues amounting to Rs.10,60,65,780.00 for the assessment years 2007-08, 2008-09, and 2009-10, following a search and seizure operation that uncovered incriminating materials related to the petitioner.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 769494 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 01-11-2021
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, Constitution of India
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: K REDDY
• Assessee Lawyers: N RAO
• Keywords: Assessment orders; Attachment of bank accounts; Income Tax; Tax Recovery; Writ petition
• Section: 143(3); 132; 226(3); 153 C; 254Q(A)

Judgement Text

"HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) IVONDAY ,THE FIRST DAY OF NOVEMBER TWO THOUSAND AND TWENTY ONE PRESENT THE HONOURABLE SRI JUSTICE UJJAL BHUYAN AND THE HONOURABLE DR. JUSTICE CHILLAKUR SUMALATHA Between: AND Joji Reddy Yeruva, S/o. Balreddy Yeruva, aged about 50 years, 7-2-176C1 19A, CZECH Colony 2nd Floor, Ananda Nilayam Sanath Nagar, HYDERABAD- 500081 Telangana State ...PETITIONER 1. Principal Chief Commissioner of lncome Tax, 1Oth Floor, A- Block, l.T Towers, AC Guards Masab Tank, Hyderabad- 500028, Telangana State 3. The Commissioner of lncome Tax (Appeals)-3, Visakhapatnam, Direct Taxes Building, Opp. Raitu Bazaar, Double road, M.V.P.Colony, Visakhapatnam. 4. Deputy Commissioner of lncome Tax Circle- 6(1), 6th Floor, A- Block l. T Towers, AC Guards, Masab Tank, Hyderabad- 500028, Telangana State 5. Tax Recovery Officer, O/o. the PCIT-6, 6th Floor, A- Block, l. T Towers, AC Guards, Masab Tank, Hyderabad- 500028, Telangana State ...RESPONDENTS WRIT PETITION NO: 2413 OF 2020 2. Principal Commissioner of lncome Tax-6, 6th Floor, A- Block LT Towers, AC Guards Masab Tank, Hyderabad- 500028, Telangana State Petition under Article 226 of the constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High 'court may be pleased to issue writ order or direction one in the nature of mindam us decliring the action the sth Respondent in issuing the impugned proceedings Notice U/s. 226 (3) of the lncome Tax Act, 1961 dated 1211212019 to the following banks to freeze the petitioners account T :i Nir Name of the Bank lnclLls Ind Ban k tlr ilndian Bank Ltd., AccoLrnt Ncr 480 r ooso I oooo46 Letr er No. s I I ITBA / COM/ F/ t7 /20 t9_ 20/to22,2t137211) '2-20,,9 ITBA/ COM / F Dateci: l2- I I 17 I 201() 20 / ro2,22t6307( 1) Date(l: l2-12-20r9 ITBA/ COM/ F/t7 I 20t9- 20 / 1O2,22t 4936( l) l0't8 r 02000006033 ITBA/ COM/ 1000 I 402252 I Uanjara I Iyderabad Hills, b5l053000000 I I6r 652073000000027 652653000003430 6567530000o3741 6526530000037.1 12 Serilingampall ,.] 8a)5 30o0( )5-1,7.1. t llvderarbad 548653000054734 5486530000547.3s s48653000054736 4t3655000000071 ITBA 20/ 1 12-201q lt I 17 I '2O 1t) 20 / 1o222O.2 {)88( I I '2019 Dared: l2 l2- I'niA (l | 20 / 1o,) oMlF/t7/20ts '2'20377 Bll) _ _tls!.1li l2- I 2,2019 |r'trA, col 4/ rr/l72taq. 20 I la22) IoO 1iJ(l) I)irtr'( I lf l-l 2tJl() Sr.rrrr h Inrliirl llank Lter llctrt b/t 5i .latri.e t-l1a/ tsbuyan) Fleard Mr. N.Pumachandra Rao, leamed counsel for the petitioner, and N{r. K. R .ii Reddy, leamed Senior Standing C-ounsel for Income Tax Department appearing for the respondenm. 2. This lVrit Petition has been filed under Anicte 226 of the Constitution of India for declaring the action of respondent No.5/Tax Recovery Officer in issuing norices under Section 226(3) of the Income Tax Acr, 1961 (briefly'the Act' hereinatter) dxed 12.12.2a19, as illegal and nonest in the ep of iaw. 2.1. Be it stated, by the notice dated 12.12.2019, nine bank accounts of the petitioner have been attached. 3. Petitioner further seeks a declaration that notice dated 18.03.2014 of respondent No.5/Tax RecoveryOfficer is illegal and void. 3.1. Be it stated, by the said notice, properties of the petitioner including stock in rrade were attached. 4. Petitioner further seels a direction to respondenr No.5 to allow him to operate the bank accounts and also to release the propenies including stock- in- trade from attachmenr. 5. From the marerials on record, including the counter-affidavit of the respondents, it is seen that a search and seizure action under Section 132 of the Acr was initiated against M/s Sailakshmi rownship private 2 Limited, Visakhapatnaru or22.08.2008. During the search and seizure action, incriminating materials relating to the petitioner were recovered' Thereafter, three assessment orders dated 31.12.2010 were passed in respect of the petitioner under Section 1a3(3) read with Section 153(c) oi the Act for the assessment years 2007-08, 2008-09 and 2009-10 raising variou demands. The assessr.tten$ were made by the then Deputy C-omn.rissioner of Income Tax, C-entral Grcle-1, Visakhapatnarn. 6. C-onsequent thereto, Tax Recovery Gnificates were drawn up by respondent No.5 for the three assessment years on 04.11'2afi for various amounts totaling Rs.10,60,65,780.00. Since the assessed taxes were not paid by the petitioner despite notice of demand, immovable properties of the petitioner were aftached. Additionally, bank accounts of the petitionerwere also attached. 7. Against the three orders of assessment, Petitioner prefer-red three appeals before the C-on.rmissioner of Income Tax (Appeals)-3, Visakhapatnam (briefly 'first appellate authority' hereinafter). By its orders dated 31.03.2018, the first appellate authority panly allowed those appeals. Follou,ing the said orders, the outstanding demand against the petitioner stood revised to Rs.8,59,96,946.A0. 8. Against the orders passed by the first appellate authority, the revenue preferred further appeals before the Income Tax Appellate Tribunal, Visakhapatnam (for shon 'the Tribunal), which are registered as LT.ANos.32S, 326, and 327 of 2018. Petitioner has also filed b-- 3 cross-objections in those apPeals. It is stated that those appeals are pending before the Tribunal. Since petitioner did not paythe dues, his bank accounts were atuched. Ftrowever, only an amount of Rs.25,128.00 has been recovered from his account maintained with the South Indian Bank, Diamond Point Branch, Secunderabad. g. )fle find that during pendencyof the appeals and cross-ob,iections before the Tribunal, petitioner has filed stay application before the Principal C.ommissioner of Income Tax-6, Hyderabad and the said authority passed an order on 05.02.2020, directing the petitioner to pay 5Oo/o of the demand on or before 28.02.2020 for considering his stay till disposal of the appeals. However, dll date, petitioner has not complied with the order dated 05.02.202A. 10. We have given due consideration to the submissions made by leamed counsel for the panies. l. Attachment of bank account as well as property of a penon is a drastic measure. Of course, such provisions are provided in the statute to ensure recovery of the dues. Nonetheless, in the given facs and circumstances of the case, we are of the view that the appeals filed by the revenue and cross-objections filed bythe petitioner should be heard expeditiotu ly bi, the Tribunal. 12. Our attention has also been drawn to the provisions of Section 254Q.A) of the Act, more paniculariy, to the first proviso thereto, as per which, the Tribunal can pass an order of stay subject to 4 the condition that the essessee deposits not less rhan 2ao/o of the amount of tax, interest etr., or furnishes security of equal amount. 13. At this stage, leamed counsel for the petitioner submits that as his properties including the stock-in-trade have been anached, his business activities have been complerely jeopardirc.d, for which reason he is unable to generate any revenue lor pal,rnent of the tax dues. 14. In the light o[ the contentions made and taking an o rer all view of the matter, we feel that it would meet the ends of justice, if the attachment of tl-re stock-in-trade of the petitioner is withdrawn to enable him to meer the tax dues in terms of the first proviso to Section 254 QA) of the Act. In view of the statement made by the revenue itself that not much money could be appropriated through attachment of bank accounts, attachment of the bank accounts may be withdrawn. 15. Accordingly, and in the light of rhe above, we pass the following orders: (1) Tribunal is directed to expeditiously hear the three appeals of the fuvenue and corresponding Cross Objections of the petitioner, preferably within a period of six months from today. (2) Petitioner shall deposit 2Oo/o of the tax dues following the ordcr p,used by rhe first .rppcilatc aurhodry on I 1.01.2018. (l) On such deposit, atrachment of the petitioner's bank accouns as well a-s the stock-in-tradc shall stand withdrawn fonhwirh. (4) However, we clarify that post-withdrawal of attachment, if the petitioner deposits any amounr into the bank accoilnts, the bank authorities shall ensure that 5Oo/o of such deposit is maintained in the accounts till such time as is considered necessary. 16. With the above direaions, Vrir petition is disposed of. Related Interlocutory Applications are also disposed of. 17. No costs. //TRUE COPY// SD/.N.CHANDRA SEKHAR RAO ASSISTANT REGISTRAR SECTION OFFICER To, P[/ 1. Principal Chief Commissioner of lncome Tax, 1Oth Floor, A- Block, LT Towers, AC Guards Masab Tank, Hyderabad- 5OOO2S, Telangana'State 2. Principal commissioner of rncome Tax-6, 6th Froor, A- Btock iT Towers, AC - Guards Masab Tank, Hyderabad- S0OO28, Telangana State 3. The commissioner of rncome Tax (Appears)-3, Visakhapatnam, Direct Taxes Building, Opp. Raitu Bazaar, Double road, M.V.p.Colony, Visaknapatn\"m. -- 4. Deputy Commissioner of lncome Tax Circle_ 6(1), 6th Floor, A_ glock f. i _ Towers, AC Guards, Masab Tank, Hyderabad_'sii002g, Telangana State 5. Tax Recovery Officer, O/o. the pClT:6, 6th Ftoor, A_ Btock, f . f ior\"i., nC ^ Guards, Masab Tank, Hyderabad- 5OOO28, Telangana State 6. One CC to Sri. N purnachandra Rao, Advocate tdpucl I. 9n\" !! !o sri K Raji Reddy, SC for tT topucl 8. Two CD Copies. 9. One Spare Copy. HIGH COURT DATED:01/1 1/2021 ORDER WP.No.2413 ot 2020 Disposing of the WP Without costs. t 11 Nw?ii?l rA7't: E 1 c) l) e C o l4 to ( : "