P R Combines V. Assistant Commissioner of Income Tax, Central Circle 2 and Commissioner of Income Tax (Appeals) and Assistant Commissioner of Income Tax, Central Circle 1 and Vijaya Bank, after merger - Bank of Baroda and Punjab National Bank

WA/1653/2023

AI Insights

The case involves M/S P R Combines, which appealed against a judgment that required them to deposit 20% of the assessed tax amount as a condition to lift garnishee orders on their bank accounts. These orders were part of recovery steps for unpaid taxes for the years 2015-2019. The appellant argued that the bank accounts were frozen, preventing them from making the required deposit. The court initially required the deposit to proceed with the appeals but later allowed the use of fixed deposits as security, facilitating the appellant's access to other funds.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 797989 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 21-09-2023
• Assessment Year: misc
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: BEPIN VIJAYAN; NAVANEETH NATH
• Assessee Lawyers: R JAIKRISHNA
• Keywords: Appeal against assessment order; Garnishee proceedings; Income tax recovery; Fixed deposit as security

Judgement Text

"W.A.No.1653/2023 -:1:- IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE DR. JUSTICE KAUSER EDAPPAGATH THURSDAY, THE 21ST DAY OF SEPTEMBER 2023 / 30TH BHADRA, 1945 WA NO. 1653 OF 2023 AGAINST THE JUDGMENT DATED 5.9.2023 IN WP(C) 28145/2023 OF HIGH COURT OF KERALA APPELLANT/PETITIONER: M/ M/S.P R COMBINES, 19/1780, NARAYANA, P V SAMY ROAD CHALAPURAM, KOZHIKODE, REPRESENTED BY ITS PARTNER - K N GOPALAKRISHNAN, PIN - 673002 BY ADV R.JAIKRISHNA RESPONDENTS: 1 ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2, OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX, AAYAKAR BHAVAN, NORTH BLOCK, NEW ANNEXE BUILDING, MANANCHIRA, KOZHIKODE, PIN - 673001 2 COMMISSIONER OF INCOME TAX (APPEALS), OFFICE OF COMMISSIONER OF INCOME TAX (APPEALS,CR BUILDING, I S PRESS ROAD, KOCHI-682 018 3 ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX, AAYAKAR BHAVAN, NORTH BLOCK, NEW ANNEXE BUILDING, MANANCHIRA, KOZHIKODE, PIN - 673001 W.A.No.1653/2023 -:2:- 4 VIJAYA BANK, AFTER MERGER - BANK OF BARODA, KALLAI ROAD JUNCTION CHALLAPURAM, INDUS AVENUE BUILDING KOZHIKODE - 673002 REPRESENTED BY ITS - BRANCH MANAGER 5 PUNJAB NATIONAL BANK, SHATADBHI BHAVAN, SERVICE BLOCK MINI BYE PASS ROAD, GOVINDAPURAM KOZHIKODE REPRESENTED BY ITS - BRANCH MANAGER, PIN - 673007 BY ADV BEPIN VIJAYAN ADV NAVANEETH N NATH SC IT THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 21.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.A.No.1653/2023 -:3:- J U D G M E N T Dr. A.K.Jayasankaran Nambiar, J This appeal impugns the judgment dated 5.9.2023 in W.P. (C).No. 28145 of 2023. 2. The brief facts necessary for the disposal of the writ appeal are as follows: The appellant had approached the writ court through the writ petition aforementioned aggrieved by the recovery steps pursued by the 3rd respondent for realisation of the disputed income and interest pertaining to the assessment years 2015-2016, 2016-2017, 2017-2018 and 2018-2019. It would appear that, as part of the recovery steps initiated by the 3rd respondent, garnishee proceedings were initiated against the bank accounts maintained by the appellant with the 4th and 5th respondent banks. Inasmuch as the appellant was prevented from operating the said bank accounts, it approached the writ court with a prayer for lifting the garnishee proceedings, pending disposal of the statutory appeals preferred by it against the order of the 3rd respondent. 3. The learned Single Judge who considered the matter recorded the submission of the learned counsel for the appellant that W.A.No.1653/2023 -:4:- it was willing to deposit 20% of the assessed tax amount subject to the final outcome of the appeals and as a condition for refraining from enforcing the garnishee orders. The writ petition was therefore disposed of with a direction to the appellant to deposit 20% of the assessed amount in Exts. P1 to P4 assessment orders, within a period of one month, making it clear that on such deposit, the appellate authority could proceed with the hearing of the applications for condoning delay and the appeals expeditiously and decide the same in accordance with law. It was also made clear that till disposal of the appeals, Exts. P5 to P8 demand notices and Exts.P17 and P18 recovery-cum-garnishee orders would be kept in abeyance. 4. In the appeal before us, the submission of the learned counsel for the appellant Sri. Jaikrishna R. is that while the appellant has a month's time to make the deposit of 20% of the assessed amount, the 4th and 5th respondent banks have not lifted the attachment over the bank accounts pursuant to the garnishee orders received by them and hence, the appellant is unable to operate those bank accounts during the one month that it has to make the payments directed by the learned Single Judge. 5. On a consideration of the said submission of the learned counsel for the appellant, we find that the stand taken by the 4th and W.A.No.1653/2023 -:5:- 5th respondent cannot be said to be unreasonable since there is always a danger that if the appellant is permitted to operate the bank account during the period of one month granted to him to make the deposit of 20% of the assessed tax, he may deplete the said accounts and thereby render the whole exercise of tax recovery futile. Confronted with the said situation, the learned counsel for the appellant sought time to get instructions as to whether alternative security could be offered to the Income Tax Department, through the 4th and 5th respondent banks, to secure the amounts demanded by the Department. When the matter was taken up today, it is brought to our notice by the learned counsel for the appellant that there are three fixed deposit accounts in the name of Sri.K.N. Gopalakrishnan, the partner of the appellant firm, and the amounts in those deposits are as follows: Punjab National Bank (5th Respondent)-Fixed Deposit Details FD Account No. Amount 427400P200000203 Rs 22,55,000/- 427400P200001411 Rs 3,00,000/- 427400P00001952 Rs 2,70,000/- TOTAL Rs 28,25,000/- W.A.No.1653/2023 -:6:- 6. Finding that the total amount of ₹28,25,000/- covered by the three fixed deposit accounts aforementioned would approximate to the 20% of assessed tax amount directed to be deposited by the learned Single Judge, we dispose of this writ appeal with the following directions: 1) The appellant shall intimate the 5th respondent bank with a copy to the 4th respondent bank and the 3rd respondent, that the fixed deposit accounts standing in the name of its partner with the 5th respondent bank shall not be operated by the account holder pending disposal of the appeals of the appellant by the 2nd respondent. The said intimation letter issued by the appellant shall be counter signed by Sri.K.N. Gopalakrishnan, its partner in whose personal name the fixed deposits aforementioned stand. The said Sri.K.N. Gopalakrishnan shall also ensure that the fixed deposit accounts aforementioned are kept alive during the pendency of the appeals aforementioned. 2) On receipt of the said intimation from the appellant/Sri.K.N. Gopalakrishnan, the 4th and 5th respondent banks, as also the 3rd respondent Assistant Commissioner of Income Tax, shall treat the amount covered by the aforementioned fixed deposit W.A.No.1653/2023 -:7:- accounts as the security directed to be deposited by the learned Single Judge in the judgment impugned in this writ appeal. 3) On the appellant complying with the condition '1' above, it shall be free to operate all other bank accounts standing in its name with the 4th and 5th respondents. The 2nd respondent shall thereafter proceed to consider the appeals preferred by the appellant on merits, after condoning the delay of 433 days occasioned in filing the same. 4) The fate of the garnishee orders issued by the 3rd respondent shall be determined by the outcome of the appeals aforementioned. sd/- DR. A.K.JAYASANKARAN NAMBIAR JUDGE sd/- DR. KAUSER EDAPPAGATH JUDGE kp "