RAJESWARA REDDY BASIREDDY V. THE INCOME TAX OFFICER

WP/15511/2023

AI Insights

The case revolves around a writ petition filed by Rajeswara Reddy Basireddy against the Income Tax Officer and other respondents, challenging the Garnishee Notices issued for the recovery of a penalty under Section 271D of the Income Tax Act, 1961. The petitioner contested the penalty imposed for alleged cash transactions during the Assessment Year 2018-19, which he denied and claimed were under litigation in civil suits. The High Court's decision to stay the Garnishee Notices was based on the ongoing civil litigation and the pending appeal against the penalty order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 751078 (HC-AMARAVATI)
• Appeal Type: Others
• Pronouncement Date: 21-07-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, Article 226 of the Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M KIRANMAYEE; N HARINATH
• Assessee Lawyers: G NARENDRA CHETTY
• Keywords: Appeal Pending; Garnishee notices; Income Tax; Mandamus; Penalty
• Section: 271D; 226(3)

Judgement Text

"WRIT PETITION NO: 15511 OF 2023 Between: ...PETITIONER 4. 5. 6. THE HON’BLE SRI JUSTICE U.DURGA PRASAD RAO AND THE HON’BLE SMT JUSTICE VENKATA JYOTHIRMAI PRATAPA IN THE HIGH COURT OF ANDHRA PRADESH :: AMARAVATI (Special Original Jurisdiction) FRIDAY. THE TWENTY FIRST DAY OF JULY TWO THOUSAND AND TWENTY THREE PRESENT AND 1. The Income Tax Officer. Ward-1. Proddaturu. 24-578. Vasanthapet. Proddatur. Kadapa District. Andhra Pradesh - 516360. 2. National Faceless Appeal Centre. Delhi, through Principal Chief Commissioner of Income Tax (NaFAC). Delhi, situated at North Block. New Delhi-110001. 3. The Joint Commissioner of Income Tax. Nellore Range. Income Tax Office. 24-2-438. First Floor, G.T. Road. Nellore. Nellore District. Andhra Pradesh- 524001. The Union of India. Rep. by its Secretary (Finance). Ministry of Finance, North Block, New Delhi -110001. The State Bank of India, Proddatur, Main Branch, Gandhi Road, Proddatur, Andhra Pradesh - 516360, Rep. by its Branch Manager. The Axis Bank Ltd., D. No. 22473, Gandhi Road, Proddatur, Andhra Pradesh, Rep. by its Branch Manager. Rajeswara Reddy Basireddy, S/o. Veera Reddy, Hindu, aged . 62 years, Occ: business, R/o. D.No. 10-240-1,. Sri Sai Rajeswari Colony, Kothapalli Panchayath, Proddutur Mandal, Kadapa District, Andhra Pradesh. ...RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate Writ, Order or Direction, more particularly in the nature of MANDAMUS declaring that the impugned action of the First Respondent in issuing Garnishee Notices, dated 09-01-2023, u/S. 226(3) of the Income Tax Act, 1961, to the 5*^ and 6*^ Respondent Banks in which the Petitioner is having Accounts, for recovery of Rs. 44,00,000/- i.e., 20% of the penalty u/s. 271D of the Income Tax Act, 1961, imposed by the Third Respondent vide Order dated 29-09- 2022 relating to the Asst. Year 2018-19, against which Appeal is pending before the Second Respondent, as without authority, without jurisdiction, without justification, contrary to law and illegal and consequently set aside the said two Garnishee Notices and grant interim stay of collection of the said disputed penalty of Rs. 2,20,00,000/- pending disposal of the Appeal by the Second Respondent. lA NO: 1 OF 2023 Counsel for the Petitioner : SRI G. NARENDRA CHETTY The Court made the following: ORDER Counsel for the Respondent Nos.1 to 3 : SMT. M. KIRANMAYEE, SC FOR INCOME TAX Counsel for the Respondent No.4 : SRI N. HARINATH, DEPUTY SOLICITOR GENERAL OF INDIA Counsel for the Respondent Nos.5 & 6 :---------- Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the writ petition, the High Court may be pleased to grant stay of operation of the Garnishee Notices, dated 09-01-2023, issued by the First Respondent u/S. 226(3) of the Income Tax Act, 1961, to the 5**’ and 6*'’ Respondent Banks relating to the Asst. Year 2018-19. ! WRIT PETITION No.15511 of 2023 ORDER; (per UDPR, J) Heard Sri G.Narendra Chetty, learned counsel for the petitioner as well as learned Smt.M.Kiranmayee, learned Standing Counsel appearing for the respondents and the same is disposed of, at the stage of admission itself, with the consent of both the counsels. 2. The writ petitioner filed the present writ petition seeking the following reliefs : HON’BLE SRI JUSTICE U.DURGA PRASAD RAO AND HON’BLE SMT. JUSTICE VENKATA JYOTHIRMAIPRATAPA (ii) Stay of operation of the Garnishee Notices, dated 09.01.2023 issued by the respondent, under Section 226 (3) of (i) Declaring the action of the respondent in issuing Garnishee Notices, dated 09.01.2023, under Section 226(3) of the Income Tax Act, 1961, to the 5*^ & 6‘^ respondent-Banks, in -which the petitioner is having accounts, for recovery of Rs.44,00,000/- i.e., 20% of the penalty under Section 27ID of the Act, imposed by the 3'^ respondent, vide Order, dated 29.09.2022 relating to the Assessment Year 2018-19, against -which appeal is pending before the 2'^ respondent, is illegal & arbitrary and for a consequential direction to set aside the penalty proceedings; 2 3. (a) alleged that the Rs. 1,00,00,000/- respectively during the financial year 2017-18 i.e., the Assessment year 2018-19 and not established his claim for non-borrowal of the same from them and hence, he is liable to pay penalty to the extent he accepted in cash and accordingly, imposed penalty of Rs.2,20,00,000/- under Section 27ID of the Income . Tax Act, 1961 (for short ‘the Act’). (b) Learned counsel would submit that in respect of the Kadapa, against the present petitioner, as if the petitioner borrowed those amounts from those persons and the petitioner denied borrowing those amounts and contesting those two suits and he filed written statements and those matters are pending trial. In that petitioner/assessee accepted in alleged cash transactions, the persons by names Parimala Janapati and Rama Gopal Janapati have filed suits in O.S.Nos.l3 of 2020 and 14 of 2020 on the file of the II Additional District Judge, it is the Income Tax Act, 1961, to the 5‘^ and d'* respondent-Banks, relating to the Assessment year 2018-19. While referring to the penalty order, dated 29.09.2022 issued by the 3\"* respondent, learned counsel for the petitioner submits that in the said order. cash Rs. 1,20,00,000/- and I 3 view, he would argue, it is unjust on the part of the 3\"* respondent to unilaterally hold that the petitioner received an amount of Rs.2,20,00,000/- in cash from those two persons and imposing 100 % penalty on those alleged amounts. 4. pending. Learned counsel for the petitioner further submits that pending aforesaid'appeal, the I’* respondent issued Garnishee Notices, under Section 226 (3) of the Act to 5*** & 6* respondent- Banks, with whom the petitioner maintains his accounts. He thus. prays to set aside the penalty order. that the petitioner may be directed to deposit some part of the penalty amount. 6. Perused the copies of written statements filed by the petitioner in O.S.No.l3 of 2020 and 14 of 2020, which would manifest that the petitioner herein has staunchly denied borrowing the respective amounts from the plaintiffs in those two suits. He also questioned the capacity of the plaintiffs to lend such huge • V Learned counsel for the petitioner further submits that challenging the penalty order, the petitioner filed appeal before the 2\"'’ respondent- Appellate authority oh 21.11.2022 and the same is 5. ' ‘ Learned standing counsel opposed writ petition and prayed 4 Notices. 7. //TRUE COPY// 2. In that view of the matter, the writ petition is allowed and the impugned penalty order, dated 29.09.2022 respondent as well To, 1. As a sequel, interlocutory applications pending, if any, in this case shall stand closed. SD/- K. SRINIVASA RAJU ASSISTANT REGISTRAR-^ amounts to the defendant/petitioner. pending for trial. passed by the 3'’“ as consequential Garnishee Notices, dated 09.01.2023 issued by the 1” respondent are stayed till disposal of the appeal filed by the petitioner before the 2“' respondent. SECT ON OFFICER Na«o’’’l Proddatur, Commrssron?^oniC?,meTax7lSFAC)''S“®^^ Delhi - 110001 (NaFAC), Delhi, situated at North Block New *• Range. Inconte Tax Office, 524001. ■ '^®\"ore. Nellore District, Andhra Pradesh- New Delhi - rioooi^^^^’ of Finance, North Block, 6 Th^R Gandhi ■ Andhm N°.'22473, Gandhi Road, Proddatur, 8 One CO to Chetty, Advocate [OPUC] 9. One §C S Sri N Ha^S oS' ^ax [OPUC] -10. Two C.D. Copies ’ Solicitor General of India (OPUC) r^Cnr The matters are said to be In these circumstances, as the matters are sud judice before the competent Civil Court, we deem it fit to consider the prayer of the petitioner to stay further proceedings, pursuant to the impugned penalty order including the Garnishee hig h c o ur t DATED:21/O7/2O23 ORDER WP.No.15511 of 2023 ALLOWING THE W P WITHOUT COSTS a ®5AUGag3 Sj Sr*\" ****>» - "