Chennai Central Cooperative Bank Ltd. , Rep. By General Manager G. Balakrishnan vs Assistant Commissioner of Income Tax, Chennai

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2017 Supreme(Mad) 881

IN THE HIGH COURT OF JUDICATURE AT MADRAS
K. RAVICHANDRABAABU, J.
The Chennai Central Cooperative Bank Ltd., Rep. By General Manager G. Balakrishnan and Ors. - Petitioner
Vs.
The Assistant Commissioner of Income Tax, Chennai and Ors. – Respondents
W.P. Nos. 7937 and 7990 of 2017 and WMP Nos.8687 to 8690 and 8730 and 8731 of 2017
Decided On : 26-04-2017

Advocates Appeared:
For the Petitioner: Mr. S. Prabakaran, Mr. A. Ramesh Babu, Mr. K. Ravi
For the Respondent: Mr. M. Swaminathan, Mr. L.P. Shanmugasundaran

Headnote:
Constitution of India – Article 226 – Income Tax Act – Section 226 (3) – W.P. is filed challenging – W.P. is filed challenging the proceedings of the first respondent, issued of the Income Tax Act and for consequential direction to the first respondent to refund a sum of withdrawn from the petitioners Bank account maintained with the second respondent – Through the said impugned proceedings, the first respondent called upon the respective second respondent bank to make payment out of the money which is due from the second respondent bank to the respective petitioner – Claim of the first respondent as against the petitioner in W.P. and Rs against the petitioner –Held, It is true that in the said case, the Division Bench of the Bombay High Court pointed out that the action of the Assessing Officer in sending the garnishee notice and recovering the money from the garnishee bank shocked the Courts judicial conscience – Careful perusal of the facts and circumstances of the said case would show that such observation was made by the Court, since the Income Tax Official has proceeded to issue the garnishee notice and recovered the money from the garnishee, without even waiting for the assessee to reply to the show cause notice issued to them –Therefore, the Division Bench pointed out that the action of the department is ab initio void – But the facts and circumstances of the present case are totally different – Here, the assessment is already over – Notice of demand was also given already – Appeal filed by the petitioners also got dismissed – Therefore, court find the above decision of the Bombay High Court is not applicable to the present facts and circumstances of the case – Tribunal – In that case, the Bombay High Court has pointed out that the Tribunal is empowered to grant stay against any demand in terms of the proviso and consequently the order passed by the Tribunal restoring the status quo ante by ordering the refund of the amount recovered need not be interfered – Writ petitions are dismissed.

ORDER :

W.P.No.7937 of 2017 is filed challenging the proceedings of the first respondent dated 31.03.2017, issued under Section 226 (3) of the Income Tax Act, 1961 and for consequential direction to the first respondent to refund a sum of Rs.34,63,21,380/- withdrawn from the petitioner's Bank Account No.201305380 PAN:AAAAC0982C maintained with the second respondent bank.

2. W.P.No.7990 of 2017 is filed challenging the proceedings of the first respondent dated 31.03.2017, issued under Section 226(3) of the Income Tax Act and for consequential direction to the first respondent to refund a sum of Rs.2,07,89,510/- withdrawn from the petitioner's Bank account maintained with the second respondent.

3. Through the said impugned proceedings, the first respondent called upon the respective second respondent bank to make payment out of the money which is due from the second respondent bank to the respective petitioner. The claim of the first respondent as against the petitioner in W.P.No.7937 of 2017 is Rs.34,63,21,380/- and Rs.4,68,76,060/- against the petitioner in W.P.No.7990 of 2017.

4. The case of the petitioner in W.P.No.7937 of 2017 is as follows:

The petitioner is a registered Cooperative Society and carrying on business of banking under the license granted by the Reserve Bank of India. In respect of the Assessment Years 2009-10, 2010-11 and 2013-14, the petitioner filed return of income. In respect of those Assessment Years, orders of assessment under Section 143 (3) read with Section 147 of the Income Tax Act, 1961, were made on 26.03.2016, raising a demand of Rs.6,19,08,220/-; Rs.7,88,09,230/- and Rs.20,56,03,930/- respectively, thus totaling a sum of Rs.34,63,21,380/-. Challenging such orders of assessment, the petitioner preferred appeals before the First Appellate Authority and paid 15% of demand each in respect of the Assessment Years 2009-2010 and 2010-11. In respect of the Assessment Years 2013-14, the petitioner paid 25% of the demand, while preferring the appeal before the First Appellate Authority. Thus, the total sum paid by the petitioner at the time of filing the first appeal in respect of all the three assessment years comes to Rs.7,25,08,598/-, as against the total demand of Rs.34,63,21,380/-. The First Appellate Authority by an order dated 24.03.2017, which was served on the petitioner on 30.03.2017, dismissed all the appeals. The petitioner filed a rectification application under section 154 before the Appellate Authority on 31.03.2017 and such application is still pending. However, the first respondent issued the impugned proceedings on the very same date i.e., 31.03.2017 and recovered a sum of Rs.34,63,21,380/- from the second respondent Bank on the very same day. The action of the first respondent in recovering such sum without even allowing the petitioner to file statutory appeal before the appellate Tribunal and seeking interim relief therein, is highly arbitrary and unreasonable. When the total demand itself is Rs.34,63,21,380/- and admittedly, the petitioner had paid Rs.7,25,08,598/- during the pendency of the first appeal, the action of the first respondent in recovering the amount as shown in the demand is illegal.

5. The case of the petitioner in W.P.No.7990 of 2017 is as follows:

The petitioner is a cooperative society carrying on the business of bank under the license granted by the Reserve Bank of India. In respect of the Assessment Years 2009-10, 2010-11, 2013-14 and 2014-15, orders of assessment were passed on 26.12.2016, 26.12.2016, 23.3.2016 and 27.12.2016 respectively under Section 143(3) read with Section 147 of the Income Tax Act. The demand raised in respect of the Assessment Year 2009-10 is Rs.35,69,360/-; for the Assessment Year 2010-11 is Rs.67,66,510/-; for the Assessment Year 2013-14 is Rs.2,26,79,210/- and for the Assessment Year 2014-15 is Rs.1,38,60,980/. Thus, the total demand made for the above said four assessment years, is Rs.4,68,76,060/-. The petitioner challenged the above said ord

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