M/S.shantiniketan Ashraya v. Principal Commissioner Of Income Tax - 10

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 21.02.2019 CORAM :THE HONOURABLE DR. JUSTICE ANITA SUMANTHW.P. No.562 of 2019and W.M.P.No.570 & 571 of 2019 M/s.Shantiniketan Ashraya,Represented by Prabhat Kamal Gupta,Partner,No.1, City Link Road,Adambakkam,Chennai 600 088. ... Petitioner Vs. 1.Principal Commissioner of Income Tax - 10 121, M.G.Road, Nungambakkam,Chennai 600 034. 2.Assistant Commissioner of Income Tax,Non-Corporate Circle - 14 (1)Room No.606, 6th Floor, Annex Building,121, M.G.Road,Nungambakkam, Chennai 600 034. ... Respondents PRAYER:- Writ Petition filed under Article 226 of theConstitution of India praying to issue a Writ of Certioraricalling for the records of the Second Respondent contained inits order bearing NCC-14(1)/ACIT/281B/2018-19 issued underSection 281B of the Income Tax Act, 1961, for PAN: ,for assessment year 2016-17, dated 28.12.2018 and allproceedings in furtherance thereof, and to quash the same. For Petitioner : Mr.Suhrith Parthasarathy For Respondents: Mr.J.Narayanasamy, Senior standing counsel O R D E R This Writ Petition is taken up for final hearing even at thestage of admission, on the joint request of Mr.SuhrithParthasarathy, learned counsel appearing for the petitioner andMr.J.Narayanasamy, learned senior standing counsel for theRevenue. 2. The Writ Petitioner is a partnership firm engaged in thebusiness of development of Real Estate. In respect of assessmentyear 2016-2017, the petitioner filed a return of income andthereafter, revised return of income claiming deduction underSection 40(a)(i a) of the Income Tax Act, 1961 (in short the'Act'). The return was taken up for detailed scrutiny and afterexchange of notices and explanations, the assessment wascompleted by order dated 28.12.2018, passed under Section 143(3)of Income Tax Act, 1961 by the 2[nd] respondent. The assessmentraises a demand of Rs.1,63,37,841/- towards tax Rs.19,60,541/-towards surcharge; Rs.5,48,951/- towards Cess; Rs.58,46,907/-towards interest on the default in payment of advance paymentunder section 234B and Rs.32,895/- towards interest undersection 234D and has been challenged by way of appeal filed on25.01.19 before the Commissioner of Income Tax (Appeals). 3. While this is so, the petitioner is in receipt of anorder under Section 281 B of the Act also dated 28.12.2018,attaching immovable property admeasuring (1)10454 sq.ft. inS.No.269 (2)34373 sq.ft. in S.No.274/1(part), (3)37991 sq. ft.in S.No.271/2(part), (4)9148 sq. ft. in S.No.317, (5)8278 sq.ft. in S.No.318/1, (6)4356 sq. ft. in S.No.318/2A and (7)30928sq. ft. in S.No.318/2B in all totaling 135528 sq.ft at ThaiyurVillage, Chengalpet Taluk, Kancheepuram District, at No.1, CityLink Road, Adambakkam, Chennai 600 028 for a period of sixmonths from 28.12.2018 to 27.06.2019. The petitioner is abuilder and the property attached comprises its stock-in-trade.The attachment of the building project has, according to thepetitioner, caused it severe hardship and prejudice and thus thepetitioner has approached this Court praying for issuance of aWrit of Certiorari calling for the records of the SecondRespondent contained in its order bearing NCC-14(1)/ACIT/281B/2018-19 issued under Section 281B of the Income TaxAct, 1961, for PAN: , for assessment year 2016-17,dated 28.12.2018 and all proceedings in furtherance thereof, andto quash the same. 4.The learned counsel for the petitioner has assailed theimpugned order on various grounds. He submits that theingredients of Section 281 B require a notice to be issued tothe assessee prior to the attachment. In any event, theprovision is itself liable to be invoked only in a case wherethe department is able to establish that the assessee will 4.The learned counsel for the petitioner has assailed theimpugned order on various grounds. He submits that theingredients of Section 281 B require a notice to be issued tothe assessee prior to the attachment. In any event, theprovision is itself liable to be invoked only in a case wherethe department is able to establish that the assessee will thwart the collection of the demand. In the present case, thereis absolutely no material available with the department toindicate or to lead them to such a conclusion. In suchcircumstances, the impugned order of attachment is contrary tolaw and liable to be reversed immediately. He relies, in thisconnection, on a decision of the Division Bench of the BombayHigh Court in the case of Gandhi Trading Vs. AssistantCommissioner of Income Tax and others ((1999) 239 ITR 337). 5. The Revenue has filed a brief counter affidavit dated19.01.2019 to the effect that the Writ Petition is misconceivedand only in the event of the petitioner paying the entire duescan the provisional attachment be raised, as the assessee doesnot have any other asset or valuables to recover the dues of theRevenue. 6. Thus, according to the department, the provisionalattachment has been made to protect the interests of the revenueand, as such, would have to continue till such time thepetitioner has made good the disputed income tax demand.Moreover, the petitioner has itself filed letter dated25.01.2019 before the Assessing Officer requesting that theimpugned attachment be lifted to facilitate its businessoperations and undertaking to deposit a sum of Rs.49,47,745/-,being 20% of the disputed tax demand within a period threeworking days. 7. Learned standing counsel for the revenue points outspecifically that the petitioner has stated in the letter thatit has issued instructions to their Advocate to withdraw thepresent Writ Petition notwithstanding which, the petitioner isbefore this Court pursuing the same. 8. Heard learned counsel for both parties. Section 281 B ofthe Act is a provision that is intended to protect the interestsof the Income tax Department and is to be invoked in the courseof assessment proceedings. In the present case, both theimpugned order under section 281 B as well as the order ofassessment itself, are dated 28.12.2018. Mr.Narayanaswamystates, in this regard, that the impugned order was passed a fewhours prior to the finalization of the order of assessment, onthe same day. I let that rest, at that. 9. In the present case, the demand raised pursuant to theorder of assessment dated 28.12.2018 is challenged in appealbefore the Commissioner of income tax (Appeals) vide appealfiled on 25.01.2019. The petitioner has also filed a letter on25.01.2019 before the assessing officer the contents of whichare as follows: 'With reference to the above, we hereby request fora stay on payment of taxes demanded vide assessment order https://hcservices.ecourts.gov.in/hcservices/ u/s 143(3) dated 28/12/2018 for the above assessment yearand for the provisional attachment order as referred toabove. 1. We bring to you notice and place on record thatdue to the provisional attachment u/s 281B our businesshas come to a standstill and we are under severe pressurefrom apartment owners who are demanding registration ofthe property. Besides we are unable to sell any space topotential buyers due to inability to grant registrationof UDS. As it is we are battling recessionary conditionsand this handicap will strangle our business. We requestyou to take a sympathetic view and grant a stay ofrecovery proceedings. 2. We shall be filing the appeal against the saidorder of assessment before the Commissioner of Income Tax– Appeals, Chennai on 25.01.2019. Our attempt to filethe same got delayed due to system error, however the Feeof Rs.1,000/- has been paid (filed on 25/1/19). 1. We bring to you notice and place on record thatdue to the provisional attachment u/s 281B our businesshas come to a standstill and we are under severe pressurefrom apartment owners who are demanding registration ofthe property. Besides we are unable to sell any space topotential buyers due to inability to grant registrationof UDS. As it is we are battling recessionary conditionsand this handicap will strangle our business. We requestyou to take a sympathetic view and grant a stay ofrecovery proceedings. 2. We shall be filing the appeal against the saidorder of assessment before the Commissioner of Income Tax– Appeals, Chennai on 25.01.2019. Our attempt to filethe same got delayed due to system error, however the Feeof Rs.1,000/- has been paid (filed on 25/1/19). 3. We have issued instructions to our advocates towithdraw the Writ Petition filed in High Court of Madras,copy enclosed. 4. We are arranging to deposit a sum of Rs.49,47,745being 20 per cent of the total tax demand within 3working days. We request you to consider our petition for stayfavourably and also lift the attachment of the Land videorder under Sec.281B dated 28.12.2018, at the earliest.' Both learned counsel concur on the position that thougharguments have been raised on behalf of the petitioner as wellas the respondent on the legality or otherwise of the impugnedorder under section 281, a quietus may be given to the matter bydirecting the petitioner to remit some portion of the disputeddues to sufficiently protect the interests of the revenue,pending disposal of the first appeal filed by the petitionerbefore the Commissioner of Income tax (Appeals). 11. As per the Schedule, the impugned provisional attachmentcovers the property situated at No.1, City Link Road,Adambakkam, Chennai, under the name and style of ‘ShantiniketanAltair’ comprising 414 apartments. 362 apartments have been soldand 52 remained unsold. As against the number of apartmentsremaining unsold, the petitioner has, as on date, confirmed thesales of nine (9) apartments that are pending registration.According to the learned counsel for the Petitioner, the valueof the nine apartments as aforesaid is approximately Rs.1.2 https://hcservices.ecourts.gov.in/hcservices/ crores in total. Each apartment thus is valued at a sum ofapproximately, Rs.13.5 lakhs. Mr.Narayanaswamy does not disputethis valuation. 12. A list of twenty (20) apartments containing details suchas (i) the apartment number (ii) value of the apartment (iii)provision for registration and stamp duty and (iv)area of theapartment has been circulated in respect of the forty three (43)apartments remaining unsold as below: 13. Upon concurrence expressed by both learned counsels underinstructions from their respective clients, and without adverting to the legal contentions raised by the parties, thefollowing directions are issued: (i) The petitioner will deposit a sum of Rs.50,00,000/- (Rupeesfifty lakhs only) to the department.(ii) Upon receipt of the sum of Rs.50,00,000/- as above, theDepartment will restrict the present attachment under section281 B to the flats in S.Nos.1 to 20 of the tabulation set out inparagraph 12 above along with the undivided share of land inrelation thereto. 14.Upon satisfaction of the above conditions, there shall beno further proceedings for recovery undertaken by the income taxdepartment till the disposal of the petitioners’ first appeal. 15.The Writ Petition is disposed of in the above terms. Nocosts. Consequently, connected Miscellaneous Petition is closed. saiTo Sd/- Assistant Registrar(CS III) //True Copy// Sub Assistant Registrar 1.The Principal Commissioner of Income Tax - 10121, M.G.Road, Nungambakkam,Chennai 600 034. 2.The Assistant Commissioner of Income Tax,Non-Corporate Circle - 14 (1)Room No.606, 6th Floor, Annex Building,121, M.G.Road, Nungambakkam,Chennai 600 034. 14.Upon satisfaction of the above conditions, there shall beno further proceedings for recovery undertaken by the income taxdepartment till the disposal of the petitioners’ first appeal. 15.The Writ Petition is disposed of in the above terms. Nocosts. Consequently, connected Miscellaneous Petition is closed. saiTo Sd/- Assistant Registrar(CS III) //True Copy// Sub Assistant Registrar 1.The Principal Commissioner of Income Tax - 10121, M.G.Road, Nungambakkam,Chennai 600 034. 2.The Assistant Commissioner of Income Tax,Non-Corporate Circle - 14 (1)Room No.606, 6th Floor, Annex Building,121, M.G.Road, Nungambakkam,Chennai 600 034. +1cc to Mr.Arun Karthik Mohan, Advocate, S.R.No.16329+1cc to Mr.J.Narayanaswamy, Advocate, S.R.No.17177 W.P. No.562 of 2019 JP(CO) rrs 01/03/2019