By TIOL News Service

MUMBAI, APRIL 10, 2017: THE ISSUE IS - Whether in case an assessee has not been able to discharge its duties with regard to payment of pending demand due to public holidays, can the Revenue officer take coercive action against such assessee. NO is the verdict.

Facts of the case:

The assessee is a company. Counsel appearing for assessee tenders a draft amendment which seeks to bring on record events subsequent to the filing of the petition. Counsel for the Revenue had no objection to the proposed amendment. Accordingly, amendment is allowed. Amendment to be carried out within one week from today. Re-verification is dispensed with. This petition under Article 226 of the Constitution of India challenges the Notices dated 24th March, 2017 issued by the AO u/s 226(3) as well as the action of Revenue in collecting an amount of Rs.3.80 crores from the bank accounts of the petitioner on 27th March, 2017. The genesis of this petition was an earlier writ petition being Writ Petition No.1515 of 2017 filed by assessee challenging the order dated 15th January, 2017 passed by DGIT (Investigation) relating to AYs 2008-09 to 2014-15. The above order dated 15th January, 2017 had rejected assessee's application for not being treated as an assessee for default in respect of the assessment orders for the subject AYs which were pending in appeal before CIT(A). The aforesaid petition was disposed of by order dated 8th February, 2017 of HC while recording the fact that the order dated 15th January, 2017 impugned therein, had granted stay of recovery of Rs.141.76 crores subject to asssesee's depositing the amount of 15% of the aforesaid amount i.e. Rs.21 crores.

On appeal, the HC held that,

++ it is seen that the HC by its order dated 8th February, 2017 in Writ Petition No.1515 of 2017 directed the petitioner to pay / deposit in terms of the order dated 15th January, 2017, an amount of Rs.1.75 crores per month till the decision of the CIT(A) or 31st March, 2017 whichever is earlier. Thus, the petitioner was directed to pay / deposit the first of the three installments on or before 25th January, 2017 (extended till the Revenue works out the refund available consequent to orders of Tribunal for adjustment with the confirmed demands and one week thereafter), 2nd installment on or before 25th February, 2016 and the 3rd installment on or before 25th March, 2017. The compliance with the deposit of the first installment has been admittedly made. So far as 2nd installment is concerned, admittedly the petitioner had failed to make the complete deposit on 25th February, 2016 and even thereafter. However, the petitioner had kept demand drafts ready on 24th March, 2017 for the entire amount of 2nd and 3rd installments payable, to be handed over to the Revenue. It is the case of the petitioner that when they offered the same to the Revenue on 24th March, 2017, they were directed by the Officers of the Revenue to deposit it in the State Bank of India;

++ however, before the petitioner could deposit the demand drafts in the State bank of India on 27th March, 2017 (25th and 26th March, 2017 being holidays i.e. Saturday and Sunday), the Revenue not only attached the petitioner's Bank Account but also collected an amount of Rs.3.80 crores from the Bank. The above action and the threat of the Revenue seeking to recover all its dues, in view of the petitioner's failure to comply with the order of this Court dated 8th February, 2017, has led to the filing of this petition. The Counsel for the Revenue upon instructions from Mr. V.M. Bhosale, AO, Deputy CIT Central Circle 2(2), Pune and Senior Counsel for the petitioner, on instructions of Mr. C.J. Nawathe, Director (Finance), consented to an order, being passed. It is further clarified that the aforesaid consent directions would operate till such time as the CIT(A) passes final orders in respect of the petitioner's appeals from the orders of AO for AYs 2008-09 to 2014-15. No further installment after the 25th April, 2017 will be payable by the petitioner till the disposal of its appeals by the CIT(A). It is also made clear that in case the petitioner does not pay the amount of Rs.1.45 crores on or before 25th April, 2017 to Revenue, the protection of this order would not be available to it.

(See 2017-TIOL-678-HC-MUM-IT)