SHREE PARTH CORPORATION V. PRINCIPAL COMMISSIONER OF INCOME TAX 3

SCA/4398/2018

AI Insights

The case involves Shree Parth Corporation challenging the actions of the Commissioner of Income-tax and the Revenue authorities, who dismissed the petitioner's appeal without a hearing and directed the recovery of Rs. 2,14,50,000 from the petitioner's bank account. The petitioner had initially contested the assessment of their income for AY 2013-2014, which was significantly higher than what they had declared. The Assessing Officer had allowed a stay on the recovery of tax dues, conditional on partial payments, which the petitioner complied with. However, the Appellate Commissioner dismissed the appeal without notice, leading to an ex parte decision. Concurrently, the Revenue authorities executed a recovery from the petitioner's bank account. The High Court found procedural improprieties in the handling of the petitioner's appeal and the recovery process, leading to the orders mentioned above.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 693646 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 18-04-2018
• Assessment Year: misc
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: NIKUNT RAVAL
• Assessee Lawyers: TUSHAR HEMANI
• Keywords: Appeal; Assessment; Bank Account; Ex-parte; Income Tax; Pre-deposit condition; Recovery; Stay

Judgement Text

"C/SCA/4398/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION No. 4398 of 2018 ============================================================= SHREE PARTH CORPORATION Versus PRINCIPAL COMMISSIONER OF INCOME TAX 3 ============================================================= Appearance : Mr TUSHAR HEMANI for Ms. VAIBHAVI K PARIKH, Advocates for the PETITIONER Mr NIKUNT RAVAL for Mrs KALPANAK RAVAL, Advocates for the RESPONDENT-1 NOTICE SERVED BY DS(5) for the RESPONDENT(s) No. 2 ============================================================= CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI and HONOURABLE Mr. JUSTICE B.N. KARIA 18th April 2018 ORAL ORDER (PER : HONOURABLE Mr. JUSTICE AKIL KURESHI) Petitioner has challenged action of the Commissioner of Income-tax in dismissing the petitioner’s appeal without hearing the petitioner, as also the action of the Revenue authorities in directing recovery of a sum of Rs. 2,14,50,000/= from the petitioner’s bank account in Bank of India, Surat. For AY 2013-2014, the petitioner’s return was assessed by the Assessing Officer. The order of assessment was passed on 29th March 2016 assessing total income at Rs. 10.69 Crores [rounded off] against the returned income of Rs. 5.17 Crores [rounded off]. Against such order of assessment, the petitioner had preferred appeal before the Appellate Commissioner. Pending such appeal, Page 1 of 4 C/SCA/4398/2018 ORDER the petitioner had also prayed for stay against the recovery of tax dues. It is not in dispute that the Assessing Officer had granted such relief to the petitioner on condition that 15% of the disputed tax would be deposited in the following installments. Instal. No. Amount Rs. Date 1 7,00,000/= 15th June 2016 2 5,00,000/= 15th July 2016 3 5,00,000/= 15th August 2016 4 5,00,000/= 15th Sept. 2016 5 5,00,000/= 15th October 2016 6 5,00,000/= 15th November 2016 7 5,12,527/= 15th December 2016 TOTAL Rs. 37,12,527/= It is also not in dispute that the petitioner had deposited an amount Rs. 32 lakhs, out of Rs. 37,12,527/= demanded by the Assessing Officer within the time frame. The remaining amount of RS. 5,12,527/= was also deposited, but on 27th February 2018. In the meantime, the Appellate Commissioner dismissed the petitioner’s appeal on 21st December 2017 without service of notice of hearing of the appeal on the petitioner. Thus, the appellate order was passed ex parte. The petitioner applied to the Commissioner for rectification of the order, since the same was passed ex parte. Not to miss the period of limitation, petitioner also preferred appeal before the Tribunal against the very same order. Page 2 of 4 C/SCA/4398/2018 ORDER When these proceedings were thus pending, the Revenue authorities on 27th February 2018 directly wrote to the petitioner’s Bank and withdrew whatever the bank balance was there in the account. In the process, they recovered a further sum of Rs. 2.14 Crores [rounded off] in this fashion. In this background, the petitioner has approached this Court. First of all, we had ascertained from the counsel for the Revenue whether the petitioner’s contention regarding the appeal being disposed of by the Appellate Commissioner without service of notice was correct. He was unable to dispute this fact. Under the circumstances, the appellate order must be set-aside. The appeal must be placed back before the Appellate Commissioner for fresh disposal in accordance with law, after hearing the petitioner. Ordered accordingly. The petitioner shall appear before the Appellate Commissioner on 1st May 2018. This is only to obviate the requirement of service of notice to the petitioner. It would be open for the Appellate Commissioner to re-adjust the date of hearing thereafter, as per his convenience. The manner in which the Department had by unilateral action withdrawn the amount from the petitioner’s Bank account is most disturbing. Even if the Department has such powers, it must Page 3 of 4 C/SCA/4398/2018 ORDER be realized that the powers are drastic and would result into extremely harsh consequences to the assessee. Such drastic powers are always coupled with duty to exercise such powers in appropriate cases with due circumspection. Merely because the statute authorizes the Government agency to carry out coercive recovery, would not permit such an authority to access individual’s bank account, even without his knowledge. If the concerned authorities are concerned about assessee withdrawing the amount and making recovery impossible or even difficult, the power of attachment of the Bank accounts and other immovable properties can always be exercised. Withdrawal of the amount must be rare and exceptional. However, we would enter into this issue at length in an appropriate case. In the facts of the present case, when we have reversed the appellate order and revived the appeal as already fulfilled the pre-deposit condition to enjoy stay pending such appeal, the amount already recovered from the petitioner's bank account must be returned forthwith. The same shall be done latest by 30th April 2018. Petition stands disposed of accordingly. [Akil Kureshi, J.] [B.N Karia, J.] Prakash Page 4 of 4 "