M/S.s.p.mani & Mohan Dairy v. The Assistant Commissioner Of Income Tax Circle - 1 Erode - 638 001

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 06.04.2018 CORAM W.P.No.8113 of 2018 & W.M.P. Nos.10088 to 10090 of 2018 M/s.S.P.Mani & Mohan DairyRepresented by its Managing Partner84, Jeevanantham StreetKollampalayamErode - 638 002PAN No.AAKFS5133J...Petitionerv. 1.The Assistant Commissioner of Income Tax Circle - 1 Erode - 638 001 2.The Chief Manager Canara Bank Cutchery Road V.H. Road Erode - 638 001 3.The Manager (Finance) M/s.S.P. Mani & Mohan Dairy India (P) Ltd. S.F.No.1770/1, 2, 1781/1, 1786/7 Kulur Road Kathakinaru Village Aval Poondurai Road Erode - 638 004 ...Respondents Writ Petition filed under Article 226 of the Constitution ofIndia to issue a Writ of Certiorarified Mandamus to call forthe records on the file of the 1st respondent herein in PANNo.AAKFS5133J and quash the proceedings dated 26.03.2018 passedtherein and issued to the 2nd respondent further direct the 1strespondent to lift the order of bank attachment issued to the2nd respondent and further direct the 1st respondent towithdraw the garnishee proceedings issued to the 3rd respondentdated 26.3.2018. Mr.A.P.Srinivas, learned Standing Counsel accepts notice forthe 1st respondent. By consent, the writ petition itself istaken up for final disposal. 2. The petitioner is before this court challenging thenotice issued under section 226(3) of the Income Tax Act, 1961addressed to the petitioner's bankers, viz., Canara Bank,Cutchery Road, V.H. Road, Erode, stating that the thepetitioner is due and payable a sum of Rs.6,82,18,782/-.Earlier, a notice was issued to the petitioner dated 26.03.2018,wherein, a payment of Rs.4,61,50,180/- was made. It appearsthat this amount had increased to Rs.6,82,18,782/- on accountof the tax payable by the petitioner in respect of otherassessment years other than the assessment year, viz., 2014-15. 3.The case of the petitioner is that as against the orderpassed by the Commissioner of Income Tax (Appeals)-III,Coimbatore, dated 14.02.2018, the petitioner has 30 days timefrom the date of receipt of the copy of the order to prefer anappeal before the Income Tax Appellate Tribunal (ITAT). Thepetitioner states that the order passed by the Commissioner ofIncome Tax (Appeals)-III, Coimbatore was served on thepetitioner on 01.03.2018 and the last date for filing of anappeal before the Tribunal is 30.04.2018 and before the expiryof the said date, the 1st respondent/Assessing Officer couldnot have initiated the recovery proceeding by issuing animpugned notice under section 226(3) of the Income Tax Act,1961. In support of the said contention, reliance is placed onthe judgment of this court in the case of M/s.Rapid CareTranscription P. Ltd., Chennai v. The Income tax Officer,Chennai in W.P.No.33765 of 2017, dated 22.12.2017. Therefore,it is submitted that the impugned notice is liable to be setaside. 4. The Standing Counsel appearing for the 1st respondentsought to sustain the impugned notice by submitting that afterthe order passed by the Tribunal, the petitioner was informed inthe meeting held on 08.03.2018 that only if an appeal ispreferred to the Tribunal, then the Assessing Officer can https://hcservices.ecourts.gov.in/hcservices/ consider the prayer for stay and as long as appeal has notbeen filed, the Assessing Officer is entitled to issue a demandby giving effect to the order passed by the Commissioner ofIncome Tax (Appeals). It is pointed out that after such acommunication was sent to the petitioner on 13.03.2018, thepetitioner filed a petition for rectification under section 154of the Income Tax Act, 1961 on 22.03.2018, after giving effectto the order dated 07.03.2018. Therefore, it is submitted thatthere is no error in the impugned notice. https://hcservices.ecourts.gov.in/hcservices/ consider the prayer for stay and as long as appeal has notbeen filed, the Assessing Officer is entitled to issue a demandby giving effect to the order passed by the Commissioner ofIncome Tax (Appeals). It is pointed out that after such acommunication was sent to the petitioner on 13.03.2018, thepetitioner filed a petition for rectification under section 154of the Income Tax Act, 1961 on 22.03.2018, after giving effectto the order dated 07.03.2018. Therefore, it is submitted thatthere is no error in the impugned notice. 5. Heard Mr.R.L.Ramani, learned Senior Counsel, appearingfor the petitioner and Mr.A.P.Srinivas, learned StandingCounsel appearing for the 1st respondent.6. The issue raised for consideration in this writ petitionis whether the 1st respondent was justified in issuing noticeunder section 226(3) of the Income Tax Act, 1961? 7. Admittedly, on the date when the notice was issued, thepetitioner has not preferred an appeal to the Income TaxAppellate Tribunal (ITAT) against the order passed by theCommissioner of Income Tax (Appeals)-III, Coimbatore, dated14.02.2018. The limitation for filing the appeal expires onlyon 30.04.2018. Therefore, the 1st respondent would not havedirected the petitioner to remit the entire tax well beforethe expiry of the limitation period for filing an appeal.However, this may not be very broad proposition, as in certaincases, the concerned individual may not even file an appeal andwould be willing to accept the order passed by the AppellateAuthority. However, in the instant case, the petitioner is inthe position of filing an appeal and they seek to set asidethe finding rendered by the Commissioner of Income Tax(Appeals)-III, Coimbatore only on one issue, viz., with regardto the disallowance of additional depreciation, totallingRs.66,35,246/- on building, plant and machinery in respect oftwo milk chilling plant commissioned at Aayilpatti and Karur andthe Assessing officer disallowed the same observing that theassets were not put to use during the year. Thus, followingthe factual position, this court is inclined to grant interimprotection to the petitioner till they approach Income TaxAppellate Tribunal (ITAT) by way of an appeal and such interimprotection shall be subject to a condition. 8. Accordingly, the impugned notice shall remain stayedsubject to the condition that the petitioner pays 20% of thethe disputed tax on the additional depreciation claimed undersection 32(1)(iia) of the Act on the sum of Rs.66,35,246/- andsuch payment shall be made, within one week from the date ofreceipt of a copy of this order. Subject to compliance of thesaid condition, attachment of the the petitioner's bank accountshall stand lifted. The petitioner is at liberty to file an appeal before the Income Tax Appellate Tribunal (ITAT) and seekfor an appropriate prayer. In the event the petitioner failsto comply with the condition imposed in this order, the benefitof this order will not enure to the petitioner. It is madeclear that the Income Tax Appellate Tribunal (ITAT) shalldecide the stay petition to be filed by the petitioner inaccordance with law and while deciding the stay petition, shalltake note of the payment which has been directed to be remittedby the petitioner. The writ petition is disposed of accordingly. No costs.Consequently, connected miscellaneous petitions are closed. Sd/- Assistant Registrar(CS VII) //True Copy// Sub Assistant RegistrarrjTo1.The Assistant Commissioner of Income Tax Circle - 1 Erode - 638 0012.The Registrar Income Tax Appellate Tribunal, Chennai.+1cc to Mr.A.P.Srinivas, Advocate, S.R.No.25708 +1cc to Mr.B.Raveendran, Advocate, S.R.No.25535 W.P.No.8113 of 2018 &W.M.P. Nos.10088 to 10090 of 2018 AK(CO)RRK(11/04/2018) https://hcservices.ecourts.gov.in/hcservices/