Pramod Singh V. Union Of India through Its Secretary Ministry Of Finance, Department Of (Revenue) and Income Tax Officer Ward Mahasamund and Joint Commissioner Of Income Tax National Faceless Assessment Center and State Bank Of India

WPT/45/2024

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The case involves Pramod Singh, the petitioner, who challenged a demand notice issued by the Income Tax Officer, Mahasamund, despite having an ongoing appeal against the assessment order with the Joint Commissioner of Income Tax, National Faceless Assessment Center, Delhi. The petitioner argued that the freezing of his bank account and the recovery of Rs. 67,84,407 were illegal as the appeal was still pending. The respondents, represented by Mr. Ajay Kumarani, Advocate, cited the Central Board of Direct Taxes (CBDT) circulars which provide guidelines for stay of demand at the first appeal stage, specifically highlighting the need for the petitioner to pay 20% of the disputed demand to obtain a stay.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 695538 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 04-04-2024
• Assessment Year: misc
• Laws Referred To: Central Board of Direct Taxes Circular dated 03.3.2016, Central Board of Direct Taxes Circular dated 31.7.2017
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: AJAY KUMARANI; P R PATANKAR
• Assessee Lawyers: NEERAJ CHOUBEY
• Keywords: Bank account freeze; Demand notice; Stay of demand; Recovery of disputed amount
• Section: 1914

Judgement Text

"1 NAFR HIGH COURT OF CHHATTISGARH, BILASPUR WP (T) No. 45 of 2024 • Pramod Singh S/o Shankar Dayal Singh Aged About 45 Years R/o Village - Jhalap, P.S. Pithora, District Mahasamund (C. G.) ---- Petitioner Versus 1. Union Of India through Its Secretory Ministry Of Finance, Department Of (Revenue), No. 137 North Block, New Delhi 110001 2. Income Tax Officer Ward Mahasamund, Income Tax Office, Trimurti Colony, Raipur Road, Mahasamund, C.G. 3. Joint Commissioner Of Income Tax National Faceless Assessment Center Delhi, 4. State Bank Of India Through Branch Manager- Pithora, Mahasamund (C.G.) ---- Respondents ---------------------------------------------------------------------------------------------- For Petitioner : Mr. Neeraj Choubey, Advocate For Respondent No.1 : None present For Respondents 2 & 3 : Mr. Ajay Kumarani, Advocate on behalf Mr. Amit Choudhary, Sr. Standing counsel For Respondent No.4 : Mr. PR Patankar, Advocate ---------------------------------------------------------------------------------------------- Hon'ble Shri Justice Naresh Kumar Chandravanshi Order On Board 04.4.2024 1. Heard. 2. By this petition, the petitioner has assailed demand notice dated 08.01.2024 (Annexure-P/1) issued by respondent No.2 on the ground that the appeal preferred before respondent No.3 against assessment order is pending consideration, despite that the respondent has freezed his bank account and also recovered amount of Rs.67,84,407/- on 27.3.2024, therefore, respondent No.2 should not have issued demand notice and the recovery made by respondent No.2 is also illegal. 2 3. At this stage, Mr. Ajay Kumrani, Advocate appearing on behalf of Mr. Amit Choudhary, Sr. Standing counsel for respondents 2 & 3 submits that, Central Board of Direct Taxes (for short ‘CBDT’) has issued circular dated 03.3.2016 and modified circular dated 31.7.2017 for revised guidelines for stay of demand at the first appeal stage, therefore, if the petitioner moves an application for grant of stay before the Assessment Officer, the same shall be considered in accordance with Circular dated 31.7.2017 issued by CBDT. 4. The Circular dated 31.7.2017 issued by the CBDT is reproduced hereunder for ready reference : “New Delhi, 31st July, 2017 OFFICE MEMORANDUM Subject : Partial modification of Instruction No.1914 dated 21.3.1996 to provide for guidelines for stay of demand at the first appeal Stage. Reference : Board’s O.M. of even number dated 29.2.2016. Instruction No.1914 dated 21.3.1996 contains guidelines issued by the Board regarding procedure to be followed for recovery of outstanding demand, including procedure for grant of stay of demand. Vide O.M. No.404/72/93-ITCC dated 29.2.2016, revised guidelines were issued in partial modification of Instruction No.1914, wherein, inter alia, vide para 4 (A) it had been laid down that in a case where the outstanding demand is disputed before CIT(A), the Assessing Officer shall grant stay of demand till disposal of first appeal on payment of 15% of the disputed demand, unless the case falls in the category 3 discussed in para (B) there under. Similar references to the standard rate of 15% have also been made in succeeding paragraphs therein. The matter has been reviewed by the Board in the light of feedback received from field authorities. In view of the Board’s efforts to contain over pitched assessments through several measures resulting in fairer and more reasonable assessment orders, the standard rate of 15% of the disputed demand is found to be on the lower side. Accordingly, it has been decided that the standard rate prescribed in O.M. dated 29.2.2016 be revised to 20% of the disputed demand, where the demand is contested before CIT(A). Thus, all references to 15% of the disputed demand in the aforesaid O.M. dated 29.2.2016 hereby stand modified to 20% of the disputed demand. Other guidelines contained in the O.M. dated 29.2.2016 shall remain unchanged. These modifications may be immediately brought to the notice of all officers working in your jurisdiction for proper compliance.” 5. It appears that the Assessment Officer has been empowered to consider the prayer for grant of stay of demand notice or recovery of the disputed amount of tax assessed against the assessee on payment of 20% of the disputed demand. If the assessee is still aggrieved, he has been granted liberty to approach jurisdictional administrative Principal Commissioner or Commissioner for a review of the decision of the Assessing Officer. Thus, there appears sufficient safeguard for the assessee to seek stay of recovery of disputed amount before the Assessment Officer or before the Principal Commissioner or Commissioner by way of review. 4 6. For the foregoing, the writ petition is disposed of granting liberty to the petitioner to move an application for stay and also for releasing of freezed bank account before the Assessment Officer, within a period of 15 days from today. The Assessment Officer shall consider and decide the application for stay within an outer limit of four weeks from the date of submission of application by the petitioner. 7. It is expected that the appellate authority shall also decide the pending appeal of the petitioner within an outer limit of eight weeks from today. Sd/- (Naresh Kumar Chandravanshi) JUDGE Bini "