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2016 Supreme(Online)(KER) 849
HIGH COURT OF KERALA
A.M.SHAFFIQUE, J
M/S HEERA CONSTRUCTION COMPANY PVT LTD – Appellant
Versus
THE ASSISTANT COMMISSIONER OF INCOME TAX (TDS – Respondent
WRIT PETITION (CIVIL) 37338/2016
Enforcement actions by the tax authority require a clear determination of tax liability to uphold due process rights of the taxpayer.
Headnote:
Taxation - Income Tax - Income Tax Act - Sections related to Tax Collection and Attachment
Fact of the Case:
The petitioner challenged orders from the Income Tax Department that attached the petitioner's bank account for failure to reconcile tax figures, claiming the actual amount owed was significantly lower than demanded.
Finding of the Court:
The court ordered the Assistant Commissioner to review the petitioner's figures and determine the final tax amount, suspending the attachment orders provided the petitioner pays the admitted amount.
Issues: Whether the attachment of the petitioner's bank account by the Income Tax Department was justified without a final tax amount being reconciled.
Ratio Decidendi: The court held that before enforcement actions such as account attachment, a final determination of tax liability must be made, ensuring due process for the petitioner.
Final Decision: Attachment orders were suspended pending the resolution of the tax amount, contingent upon the petitioner paying the admitted figure.
JUDGMENT
Petitioner has approached this Court when proceedings had been initiated by the Income Tax Department, attaching the bank account of the petitioner by issuance of Exts.P2 and P3. By Exts.P2 and P3, the Banks are directed to pay an amount of Rs.2,30,32,871/- to the Income Tax Department. According to the petitioner, demand had been made as per Ext.P1 and the petitioner was called upon to appear on 8.11.2016 and submit their objection as to why the demand could not be made final. Petitioner submitted Ext.P5 reply inter alia stating that the figures shown by the Department does not reconcile with the accounts available with the petitioner. According to them, during the various financial years, petitioner has deposited various amounts and the net amount payable is only Rs.16,14,180/-. According to the petitioner, they require reconciling of the accounts in order to arrive at a final figure and until such time, it was not proper on the part of the Income Tax Department to have stopped the banking operation to the petitioners in terms of Exts.P2 and P3.
2. Learned Standing Counsel appearing on behalf of the respondent however supports the aforesaid action on behalf of the Department. It is stated that the entire accounts were available with the department and whatever amounts had been paid is duly credited. Since substantial amount is payable, the attachment orders had been issued.
Having heard the learned counsel on either side and having perused the records, I am of the view that it will be appropriate to direct the Assistant Commissioner of the Income Tax viz; the first respondent herein to consider Ext.P5 and arrive at a final amount regarding the amount to be paid by the petitioner, after hearing the petitioner. Until such time, there will be a direction to keep in abeyance Exts.P2 and P3 on condition that the petitioner remits the admitted amount of Rs.16,14,180/- (Rupees Sixteen Lakh Fourteen Thousand One Eighty Only) within a period of one month from the date of receipt of a copy of this judgment.
