Wa/200650/2018 Of Principal Commissioner Of Income Tax And Ors v. Bidar Nirmiti Kendra

IN THE HIGH COURT OF KARNATAKAKALABURAGI BENCH DATED THIS THE 27 DAY OF MAY, 2019 PRESENT THE HON’BLE MR. JUSTICE ARAVIND KUMAR AND THE HON’BLE MR. JUSTICE P.G.M. PATIL WRIT APPEAL No.200650/2018 BETWEEN: 1. THE PRINCIPAL COMMISSIONER OF INCOME TAX KALABURAGI – 585 401. 2.INCOME TAX OFFICERWARD NO.1, BIDAR – 585 401.WARD NO.1, BIDAR – 585 401. 3.THE COMMISSIONEROF INCOME TAX (APPEALS)OF INCOME TAX (APPEALS) KALABURAGI – 585 101. (TRANSPOSED AS PER ORDERDATED:19.09.2018) ...APPELLANTS (BY SRI. AMEET KUMAR DESHPANDE., ADVOCATE) AND: 1.BIDAR NIRMITI KENDRABASAWESHWARA CIRCLENAUBAD, BIDAR – 585 403BASAWESHWARA CIRCLENAUBAD, BIDAR – 585 403 REPRESENTED BY ITS PROJECT MANAGER SRI. SYED ZAFAR ALI. 2.AXIS BANK LTD.,BIDAR BRANCH, BIDARREPRESENTED BY ITSBRANCH MANAGER. ... RESPONDENTS (BY SRI. CHAITANYA KUMAR ON BEHALF OFMS. LAKSHMI MENON., ADVOCATE FOR R-1;SRI. C.K. NANDAKUMAR., SRI. RAGHURAM CADAMBI.,SRI. BHAIRAV KUTTAIAH., ADVOCATES; SRI. A.M. NAGARAL., ADVOCATE FOR C/R-1;V/O DATED:19.09.2018 R-2 IS TRANSFERREDAS APPELLANT NO.3; V/O DATED:31.10.2018 NOTICE TO R-2IS DISPENSED WITH) THIS WRIT APPEAL IS FILED UNDER SECTION 4OF THE KARNATAKA HIGH COURT ACT, BY THEADVOCATE FOR APPELLANT PRAYING THAT THISHON’BLE COURT TO, ALLOW THIS APPEAL AND SETASIDE THE FINAL ORDER DATED:07.08.2018 PASSED BY THE LEARNED SINGLE JUDGE INW.P.NO.201260/2018 & 201288/2018, 201300/2018 (T-IT), AND TO PASS ANY OTHER APPROPRIATE ORDERSAS THIS HON’BLE COURT MAY DEEM FIT TO GRANT INTHE CIRCUMSTANCES OF THE CASE, IN THE INTERESTOF JUSTICE. THIS WRIT APPEAL HAVING BEEN HEARD ANDRESERVED, COMING ON FOR PRONOUNCEMENT OFJUDGMENT THIS DAY, ARAVIND KUMAR J.,DELIVERED THE FOLLOWING: JUDGMENT This intra-Court appeal is directed against theorder dated 7.8.2018 passed in W.P.201260/2018,201288/2018 & 201300/2018 (T-IT) whereunderappellant herein has been directed to refund a sum ofRs.15,82,41,007/- and it has been made clear thatrefund is subject to recovery of Rs.74,03,763/-. 2.The parties are referred to as per theirrank in the writ petition for the sake of convenience. BRIEF BACKGROUND OF THE CASE: 3.The petitioner - assessee is incorporatedas a Society under the Karnataka SocietiesRegistration Act, 1960 and as a Nodal Agencyfacilitate implementation of certain welfare projectson behalf of the State. The funds provided by theState Government are routed through petitionersociety to carry out certain construction activities onbehalf of local authorities which includes low costhousing, Government offices, Hospitals, schools, busstands, drains, roads, bridges, etc. for being implemented on behalf of Panchayats, Local Bodies,etc. It is governed by a Board that is comprised ofGovernment Officials including the DeputyCommissioner, Bidar District as its Chairman.Undisputedly, petitioner had not filed its return ofincome. 4.Third respondent passed assessmentorders for the assessment years 2010-11, 2011-12,2012-13 & 2013-14 under Section 143(3) r/w Section147 & 264 of the Income Tax Act, 1961 (‘Act’ forshort) on 22.02.2016 and 07.03.2016 respectivelydetermining the tax liability of the petitioner and atotal demand for Rs.27.31 Crores came to be raised.Subsequently, by order dated 29.12.2016 thirdrespondent passed assessment orders for theassessment years 2009-10 and 2014-15. However,during the interregnum period, third respondentpassed an order under Section 281(b) of the Act forthe assessment year 2010-11 to 2014-15 attachingthe Bank accounts of the petitioner for a period of six months i.e., up to 30.03.2016 by order dated19.10.2015 to an extent of Rs.7 Crores videAnnexure-G. 4.Third respondent passed assessmentorders for the assessment years 2010-11, 2011-12,2012-13 & 2013-14 under Section 143(3) r/w Section147 & 264 of the Income Tax Act, 1961 (‘Act’ forshort) on 22.02.2016 and 07.03.2016 respectivelydetermining the tax liability of the petitioner and atotal demand for Rs.27.31 Crores came to be raised.Subsequently, by order dated 29.12.2016 thirdrespondent passed assessment orders for theassessment years 2009-10 and 2014-15. However,during the interregnum period, third respondentpassed an order under Section 281(b) of the Act forthe assessment year 2010-11 to 2014-15 attachingthe Bank accounts of the petitioner for a period of six months i.e., up to 30.03.2016 by order dated19.10.2015 to an extent of Rs.7 Crores videAnnexure-G. 5.Petitioner - assessee preferred a revisionpetition under Section 264 of the Act against theassessment orders passed under Section 144 readwith Section 147 dated 22.2.2016 and 7.3.2016 forthe assessment years 2010-11, 2011-12, 2012-13 &2013-14. Said revision petition came to be preferredon 21.03.2016 before the first respondent and it wasallowed on 29.12.2016 by setting aside theassessment orders dated 22.02.2016 & 07.03.2016respectively. 6.In the meanwhile, for the said period,third respondent had recovered a sum of Rs.12.61Crores on different dates pursuant to the assessmentorders and on the basis of demands raisedthereunder. For the purposes of convenience, thefollowing tabular column is extracted which wouldthrow a light on the sequential events and dates. 7.After the first respondent set aside theassessment orders dated 22.2.2016 and 07.03.2016vide Annexures-F to F4 and remitted the matter backto third respondent for passing assessment orderafresh, assessment orders for the period 2010-11 to2013-14 came to be passed on 21.12.2017 and19.12.2017 respectively under Section 143(3) readwith Section 264 of the Act. Likewise, for theassessment year 2015-16, revised assessment ordercame to be passed under Section 143(3) of the Act bythe third respondent on 28.12.2017 vide Annexure-Hto H4 by determining the taxable income and demandfor tax came to be raised thereunder. Notice dated 08.02.2018 under Section 226(3) of the Act came tobe issued to the petitioner’s banker namely, 4[th]respondent to pay an amount of Rs.4,38,06,092/-due from petitioner for the assessment years 2011-12to 2015-16 vide Annexure-M and said amount cameto be recovered through the assessee’s bank by thirdrespondent on 17.2.2018 pursuant to the noticedated 08.02.2018 – Annexure-M. Petitioner filed anapplication under Section 220(6) of the Act for stay ofthe demand for the assessment years 2010-11 to2015-16, which came to be considered by thirdrespondent and stayed the demand on 19.02.2018and also intimated that a sum of Rs.4,38,06,092/-has been recovered. 8.Being aggrieved by the above saidassessment orders, assessee had preferred firstappeal before the CIT (Appeals) on 23.01.2018 andsaid appeals came to be dismissed on 19.03.2018. 9.Assessee filed writ petition for quashing ofletters dated 28.03.2018 and 07.04.2018 (Annexures- A and B), notice issued under Section 226(3) of theI.T.Act by the second appellant herein and also for awrit of mandamus to the appellants herein to refundthe amount recovered in excess of 20%, contendinginteralia that statutory prescribed limit for pre-deposit require to be paid by the assessee in terms ofthe Board’s Modified Circular bearing FNo.404/72/93-IT CC dated 31.07.2017 and also for afurther direction to the appellants not to attach,freeze or initiate any coercive steps for recovery of thebalance due. 10.The learned Single Judge by order dated7.8.2000 has allowed the writ petition in part byarriving at a conclusion that second appellant hereinhad acted upon beyond the scope of the Act andrecovered the amount in excess of prescribedminimum limit which is required to be deposited bythe assessee (writ petitioner) while challenging theorder of CIT (Appeals). It has been further held thatsecond appellant herein is statutorily prevented from 10.The learned Single Judge by order dated7.8.2000 has allowed the writ petition in part byarriving at a conclusion that second appellant hereinhad acted upon beyond the scope of the Act andrecovered the amount in excess of prescribedminimum limit which is required to be deposited bythe assessee (writ petitioner) while challenging theorder of CIT (Appeals). It has been further held thatsecond appellant herein is statutorily prevented from recovering the amount and a sum ofRs.15,82,41,007/- recovered by second appellant asin excess came to be ordered for being refunded.Hence, this appeal is preferred by respondents – 1and 3 in the writ petition challenging the correctnessand legality of the order dated 07.08.2018 passed inW.P.Nos 201260/2018, 201288/2018 and201300/2018 (T-IT). 11.We have heard the arguments of Sri AmitKumar Deshpande, learned Advocate appearing forappellant and Ms. Lakshmi Menon, appearing onbehalf of Sri C.K.Nandakumar for respondent-1. Byorder dated 19.09.2018 & 31.10.2018 notice torespondents-2 and 3 came to be dispensed with. It is the contention of Sri Amit KumarDeshpande, learned Advocate appearing for appellantthat the writ petition itself was not maintainable,since the order of assessment came to be passedunder the provisions of Income Tax Act, 1961 and assuch, the petitioner ought to have availed alternate remedy of appeal before the Income Tax AppellateTribunal. He would further contended that certainobservations made by learned Single Judge was notcalled for and the order of stay granted by theappellant No.2 against the demand raised by firstappellant was effective only till the appeal came to bedisposed of before the CIT (Appeals) on 19.03.2018and as such, the demand raised became effective. Onthis ground, he sought to defend the impugnednotices issued under Section 226(3) of IT Act. 12.He would also contend that appellant hasa statutory duty under Chapter XVII-D of the IT Actto recover the assessed tax and no provision underthe IT Act restrains the IT Authority from recoveringthe tax demand raised, merely on the ground thatappellate remedy is available to the assessee. Hewould elaborate his submission by contending thatthe grievance of the writ petitioner is with regard torecovery made subsequent to the dismissal of theappeal by CIT (Appeals) on 19.03.2018 and there being no impediment under the statute for recoveringthe said amount, he contends that writ issued forrefund of the amount is erroneous. 13.Insofar as the Circulars issued by theDepartment is concerned, he would submit that thestay of demand of tax raised in assessment orderwould prescribe the appellate authority to insist for20% of the demand made and it would be applicableonly insofar as first appeal is concerned. 14.He would also contend that the learnedSingle Judge had erred in not considering Section226 and other provisions of Chapter XVII – D whichenables the second respondent to recover the demandupon dismissal of the appeal before the first appellateauthority. His further contention is, the order forrefund is not in consonance with the Income Taxbusiness application module for issuing refund as theDepartment is functioning on an Online system forfiling of returns and issuing refund. He wouldsubmit that until and unless the appellate Tribunal which is ceased of the matter concludes the taxliability of writ petitioner, refund of the amount wouldnot arise. Hence, he has prayed for allowing theappeal and dismissing the writ petition by settingaside the order of learned Single Judge dated07.08.2018. 15.Per contra, Ms.Lakshmi Menon, learnedAdvocate appearing for respondent-1 (writ petitioner)would support the order under challenge bycontending that it is a body of Government Officialsand without considering the financial hardship whichthe writ petitioner would be put to, appellants haveproceeded to take coercive steps. which is ceased of the matter concludes the taxliability of writ petitioner, refund of the amount wouldnot arise. Hence, he has prayed for allowing theappeal and dismissing the writ petition by settingaside the order of learned Single Judge dated07.08.2018. 15.Per contra, Ms.Lakshmi Menon, learnedAdvocate appearing for respondent-1 (writ petitioner)would support the order under challenge bycontending that it is a body of Government Officialsand without considering the financial hardship whichthe writ petitioner would be put to, appellants haveproceeded to take coercive steps. 16.She would contend that the originalassessment orders passed having been set aside on29.12.2016 by the first appellant under Section 264of the IT Act, the amount recovered or tax collected ina sum of Rs.12,61,42,777/- ought to have beenrefunded and it was not done and even after therevised assessment orders came to be passed on 21.12.2017 and 19.12.2017 for the assessment years2010-11 to 2013-14 and for the assessment year2015-16 on 28.12.2017, the amounts alreadyrecovered was not repaid but on the other hand,second appellant proceeded to recover between17.02.2018 to 12.04.2018 the balance tax payable byattaching the accounts of the petitioner. Thoughpetitioner had filed an appeal on 23.01.2018 and anapplication under Section 220 (6) of the Act for stayof the demand for the assessment years 2010-11 to2015-16 which came to be granted on 19.02.2018whereunder the tax demanded from petitioner cameto be stayed. Hence, she would contend that whenthe statute provides for filing an appeal within theprescribed period namely, within 30 days, the secondappellant could not have recovered the amount beforethe expiry of period of limitation and as such, theamount so recovered has been rightly ordered to berefunded by the learned Single Judge which wouldnot call for interference. Hence, she prays fordismissal of the appeal. 17.Having heard the learned Advocatesappearing for the parties and on perusal of therecords, the first contention raised with regard tomaintainability of writ petition requires to be dealtwith. 18.In the instant case, the writ petitioner hasinvoked the extraordinary jurisdiction vested underArticle 226 of the Constitution of India alleging thatfundamental right vested with the petitioner has beenviolated namely, the right to file an appeal against anorder of assessment being a right statutorily carvedout and even before availing the said statutory rightof appeal, the authorities are not entitled to takecoercive steps for recovery of the amount. 19.There cannot be any dispute to theproposition of law that exercise of extraordinaryjurisdiction under Article 226 of Constitution of Indiais of wide amplitude and exercise of such powerwould be under four exceptions. Violation of fundamental rights; Violation of principles of natural justice; Order made without jurisdiction; and Vires of statute is under challenge. However, where the injustice is sought to beperpetrated, the right vested under Article 226 ofConstitution of India can be exercised and it is aquestion of discretion. Even in case of availability ofalternate remedy would not be an absolute bar forexercise of extraordinary jurisdiction and exercise ofjurisdiction even in such circumstances would be oneof discretion depending upon facts andcircumstances obtained in a given case. Hon’bleApex Court in the case of WHIRLPOOLCORPORATION vs REGISTRAR OF TRADEMARKS, MUMBAI & OTHERS reported in (1998)8SCC 1 has held that availability of alternate remedyis no bar for exercise of extraordinary jurisdictionvested under Article 226 of Constitution of India andthe bar would be under the three contingencies asnoticed herein above. It has been held: However, where the injustice is sought to beperpetrated, the right vested under Article 226 ofConstitution of India can be exercised and it is aquestion of discretion. Even in case of availability ofalternate remedy would not be an absolute bar forexercise of extraordinary jurisdiction and exercise ofjurisdiction even in such circumstances would be oneof discretion depending upon facts andcircumstances obtained in a given case. Hon’bleApex Court in the case of WHIRLPOOLCORPORATION vs REGISTRAR OF TRADEMARKS, MUMBAI & OTHERS reported in (1998)8SCC 1 has held that availability of alternate remedyis no bar for exercise of extraordinary jurisdictionvested under Article 226 of Constitution of India andthe bar would be under the three contingencies asnoticed herein above. It has been held: “15.Under Article 226 of theConstitution, the High Court, havingregard to the facts of the case, has adiscretion to entertain or not toentertain a writ petition. But the HighCourt has imposed upon itself certainrestrictions one of which is that if andeffective and efficacious remedy isavailable, the High Court would notnormally exercise its jurisdiction. Butthe alternative remedy as beenconsistently held by this Court not tooperate as a bar in at least threecontingencies, namely, where the writpetition has been filed for theenforcement of any of the FundamentalRights or where there has been aviolation of the principle of naturaljustice or where the order orproceedings are wholly withoutjurisdiction or the vires of an Act ischallenged. There is a plethora of case-law on this point but to cut down thiscircle of forensic whirlpool, we wouldrely on some old decisions of theevolutionary era of the constitutionallaw as they still hold the field.” 20.Hon’ble Apex Court in COMMISSIONER OF INCOME TAX vs CHHABIL DAS AGARWAL reported in (2014)1 SCC 603 has recognized the exceptions to the rule of alternate remedy and held: “15.Thus, while it can be said thatthis Court has recognized some exceptionsto the rule of alternative remedy i.e. wherethe statutory authority has not acted inaccordance with the provisions of the enactment in question, or in defiance ofthe fundamental principles of judicialprocedure, or has resorted to invoke theprovisions which are repealed, or when anorder has passed in total violation of theprinciples of natural justice, theproposition laid down in ThansinghNathmal case, Titaghur Paper Mills caseand other similar judgments that the HighCourt will not entertain a petition underArticle 226 of the Constitution if aneffective alternative remedy is available tothe aggrieved person or the statute underwhich the action complained of has beentaken itself contains a mechanism forredressal of grievance still holds the field.Therefore, when a statutory forum iscreated by law for redressal of grievances,a writ petition should not be entertainedignoring the statutory dispensation.” 21.In the light of aforestated position of law,when the facts on hand are examined, it wouldclearly indicate that the petitioner which is a societyregistered under the Karnataka Societies Act, fundedexclusively by the State Government and acting as aNodal agency for facilitating implementation ofcertain welfare projects had approached the learnedSingle Judge by invoking Article 226 & 227 ofConstitution of India interalia contending that evenbefore the statutory remedy of appeal being available 21.In the light of aforestated position of law,when the facts on hand are examined, it wouldclearly indicate that the petitioner which is a societyregistered under the Karnataka Societies Act, fundedexclusively by the State Government and acting as aNodal agency for facilitating implementation ofcertain welfare projects had approached the learnedSingle Judge by invoking Article 226 & 227 ofConstitution of India interalia contending that evenbefore the statutory remedy of appeal being available to challenge the order of assessment expired, therecoveries have been made and it has relied upon theBoard’s Instruction/Circular dated 31.07.2017(Annexure-L) which was issued in partial modificationof the Circular/Instruction No.1914 dated21.03.2016 contending that the Department canraise a demand only to the extent of 20% of the taxdemand raised and not beyond it and in the instantcase, the recovery has been made beyond 20%. Inother words, contending that recovery being withoutjurisdiction. It is in this premise, learned SingleJudge had entertained the writ petition and we do notfind any error in law for having entertained the saidwrit petition. 22.The incidental relief which has also beensought by the petitioner is for refund of the amountcollected in excess of 20% of the tax demanded,contending that a first appeal was preferred beforeCIT (Appeals) on 23.01.2018 and an order of staycame to be passed on 19.03.2018 and during the interregnum period i.e., between 19/21.12.2017 to19.02.2018 the second appellant could not haverecovered the amount and same is bad in law. In thisbackground, we are of the considered view thatcontention raised with regard to maintainabilitycannot be accepted and it stands rejected. 23.The main thrust of the argumentsadvanced and grounds urged in the writ petition as it may emerge is to the effect that:- (a)After the original order of assessmentcame to be passed duringFebruary/March, 2016, tax demandraised therein was partiallycollected/recovered and said orderscame to be set aside on the revisionpetition filed under Section 264 of theAct came to be allowed by setting asidethe assessment orders with a directionto complete the re-assessment afreshby remanding the matter back to theassessing officer. Accordingly, freshassessment order came to be passedwith a total demand of tax to the tuneof RS.21,90,30,460/- and on revisionbeing allowed, the tax collected on theoriginal assessment orders to the tuneof Rs.12,61,42,777/- was not refunded.(b)After fresh assessment order waspassed raising a tax demand ofRs.21,90,30,460/-, by assessmentorders dated 19.12.2017 (for the AY –2011-12, 2012-13 & 2013-14), 21.12.2017 (for the AY – 2010-11) anddated 28.12.2017 (for the AY – 2015-16), appeals came to be filed on23.01.2018 along with an applicationunder Section 226(3) of the Act for stayof the demand, which came to begranted on 19.02.2018 and during thisinterregnum period, a sum ofRs.4,38,06,092/- had been recovered,which was in excess of 20% of theamount prescribed under the Board’sCircular bearing No.F.NO.404/72/93-IT CC dated 31.07.2017 (Annexure-L).(c)On dismissal of the First Appeals on19.09.2013, assessee wascontemplating of filing second appealsbefore the Income Tax AppellateTribunal and even before the expiry of60 days period, the Bank account ofassessee was attached on 28.03.2018and an amount of Rs.5.73 crore wasrecovered on 12.04.2018. (d)Thus, even before the petitioner wasmade aware or could go through thecontents/effect of the orders dated19.03.2018 (dismissal of First Appeals)and received on 27.03.2018 to enable itto take steps to file necessary appealsbefore the Tribunal, coercive measuresto forcefully recover the balancedemand have been initiated andthereby, crippling the activity ofpetitioner and total recovery made ismore than 70% of the total demand. In the background of above stated facts, it requires tobe noticed that a notice of demand under section 156of the Act is required to be served upon the assessee,by the assessing officer, specifying the sum so (d)Thus, even before the petitioner wasmade aware or could go through thecontents/effect of the orders dated19.03.2018 (dismissal of First Appeals)and received on 27.03.2018 to enable itto take steps to file necessary appealsbefore the Tribunal, coercive measuresto forcefully recover the balancedemand have been initiated andthereby, crippling the activity ofpetitioner and total recovery made ismore than 70% of the total demand. In the background of above stated facts, it requires tobe noticed that a notice of demand under section 156of the Act is required to be served upon the assessee,by the assessing officer, specifying the sum so payable. Chapter XVII-D of the Act provides forcollection and recovery of the sum due by theassessee. Sub-section (1) of Section 220 mandatesthat any amount, otherwise than by way of advancetax, which has been specified in the demand noticeissued under section 156 would be payable within 30days of service of notice and proviso thereto enablesthe assessing officer for his reason to believe that itwill be detrimental to revenue if full period of 30 daysis allowed, he may with the previous approval of theJoint Commissioner, direct that the sum specified inthe notice of demand would be paid within suchperiod being less than 30 days, as specified by him inthe notice of demand. A notice of demand servedupon the assessee shall be deemed to be valid till thedisposal of the appeal, in the event of any appeal orother proceeding is initiated in respect of the amountso specified in the notice of demand. Sub-section (2)of Section 220 enables the revenue to levy simpleinterest @ 1% for every month or part of a month onthe amount so due. Sub-section (3) of Section 220 empowers the assessing officer to extend the time forpayment or allow payment by installments subject tosuch conditions as he may think fit to impose in thecircumstances of the case. 24.Under Section 226(3)(i), the assessingofficer is empowered to issue notice in writing torequire any person from whom money is due or maybecome due to the assessee or any person who holdsor may subsequently hold money for or on account ofthe assessee, to pay to the assessing officer eitherforthwith or upon the money becoming due or beingheld or at or within the time specified in the notice,so much of the money as is sufficient to pay theamount due by the assessee as the case may be. 25.A plain reading of Section 240 wouldindicate that as a result of any order passed in appealor other proceeding under the Act, refund of anyamount becomes due to the assessee, the assessingofficer is required to refund the amount to theassessee without the necessity of assessee making a claim. First proviso to said section would indicatethat in the event of assessment set aside or cancelledand an order of fresh assessment is directed to bemade, the refund, if any, shall become due only on the making of such fresh assessment. Secondproviso would disclose that in the event ofassessment is annulled, the refund would becomedue only of the amount, if any, of the tax paid inexcess of the tax chargeable on the total incomereturned by the assessee. 26.Chapter XX of the Act provides for appealsand revisions. The orders which are appealable tothe Deputy Commissioner, Appeals is providedunder Section 246(1) and (1A). Sub-section (2) ofSection 246 would indicate that orders which areappealable to the Commissioner (Appeals). Sub-section (3) of Section 246 provides for transferringany appeal by the authorities to such otherauthorities as specified thereunder. Section 246Aenables the assessee to file appeal/s before Commissioner (Appeals) against the orders specified in clause (a) to clause (r) of sub-section (1). 27.Sub-section (2) of Section 249 prescribesthe time limit of 30 days of the date as specified inclause (a) to (c) as indicated thereunder. Sub-section(3) enables the appellate authority to condone thedelay after the expiration of the period on sufficientcause being shown. Commissioner (Appeals) against the orders specified in clause (a) to clause (r) of sub-section (1). 27.Sub-section (2) of Section 249 prescribesthe time limit of 30 days of the date as specified inclause (a) to (c) as indicated thereunder. Sub-section(3) enables the appellate authority to condone thedelay after the expiration of the period on sufficientcause being shown. 28.Section 281B of the Act enables theassessing officer to attach provisionally any propertybelonging to the assessee in the manner provided inthe second schedule by previous approval of theauthorities specified thereunder. Sub-section (2)would indicate that such attachment would cease tohave the effect after the expiry of period of 6 monthsfrom the date of order made under sub-section (1),provided for the reasons to be recorded in writingsaid period is extended, which extension shall notexceed two years. 29.Where a statute provides right of appeal,such statutory right cannot be scuttled by resortingto coercive recovery, that too, even before theprescribed appeal period is over. The over zealousofficers of the Revenue in order to achieve the targetsfixed are tempted to resort to such recovery, ignoringthe principles of law and also crossing theirjurisdictional limits and in utter disregard to theextant circulars governing such mode of recovery. Incases where the Bank guarantees are offered by theassessees, same cannot be encashed or attempt toencash would be highly improper that too, before theexpiry of the statutory period prescribed under theenactment for filing an appeal. 30.Hon’ble High Court of Mumbai in thematter of UTI MUTUAL FUND vs INCOME TAXOFFICER reported in (2012) 345 ITR 71 has held thatadministrative directions for fulfilling recovery targetsfor the collection of revenue should not be at theexpenses of foreclosing remedies which are available to assessee for challenging the correctness of ademand. The sanctity of rule of law must bepreserved. The remedies which are legitimately openin law to an assessee to challenge a demand cannotbe allowed to be foreclosed by hasty recourse tocoercive powers and noticing the guidelines in regardto the manner in which the application for stay shouldbe disposed of as observed in KEC INTERNATIONALLIMITED vs B.R.BALAKRISHNA reported in (2001) 251ITR 158, the Divison Bench has directed the revenueauthorities to follow the guidelines as prescribedthereunder. It reads: “1.No recovery of tax should bemade pendingmade pending (a)Expiry of the time limit for filing anappeal;appeal; (b)Disposal of a stay application, ifany, moved by the assessee and fora reasonable period thereafter toenable the assessee to move ahigher forum, if so advised.Coercive steps may, however, beadopted where the authority hasreason to believe that the assesseemay defeat the demand, in whichcase brief reasons may be indicated.any, moved by the assessee and fora reasonable period thereafter toenable the assessee to move ahigher forum, if so advised.Coercive steps may, however, beadopted where the authority hasreason to believe that the assesseemay defeat the demand, in whichcase brief reasons may be indicated. 2.The stay application, if any,moved by the assessee should bedisposed of after hearing the assesseeand bearing in mind the guidelines inKEC International; 3.If the Assessing Officer has takena view contrary to what has been heldin the preceding previous years withoutthere being a material change in factsor law, that is a relevant considerationin deciding the application for stay; 2.The stay application, if any,moved by the assessee should bedisposed of after hearing the assesseeand bearing in mind the guidelines inKEC International; 3.If the Assessing Officer has takena view contrary to what has been heldin the preceding previous years withoutthere being a material change in factsor law, that is a relevant considerationin deciding the application for stay; 4.When a bank account has beenattached, before withdrawing theamount, reasonable prior notice shouldbe furnished to the assessee to enablethe assessee to make a representationor seek recourse to a remedy in law;5.In exercising the powers of stay,the Income Tax Officer should not actas a mere tax gatherer but as a quasijudicial authority vested with thepublic duty of protecting the interest ofthe Revenue while at the same timebalancing the need to mitigatehardship to the assessee. Though theassessing officer has made anassessment, he must objectively decidethe application for stay consideringthat an appeal lies against his order:the matter must be considered from allits facets, balancing the interest of theassessee with the protection of theRevenue.” In the background of above analysis of law, the Office Memorandum and extant circulars issued by the Department by way of instructions to the authoritiesrequires to be noticed. 31.As per Office Memorandum dated21.02.2016 (Annexure-E), the procedure to befollowed for recovering outstanding demand,including procedure for grant of stay of demand hasbeen prescribed. A perusal of the same woulddisclose that under clause - 4, the assessing officer isempowered to grant stay of the demand till disposalof first appeal on payment of 15% of the disputeddemand. However, it does not preclude the assessingauthority to call upon the assessee to deposit inexcess of the said 15% if he is of the view that thenature of addition resulting in the disputed demandis warranted on account of same issue having beenconfirmed by the appellate authorities in the earlieryears or the decision of the Supreme Court orjurisdictional High Court is in favour of the revenueor addition is based on credible evidence collected insearch or survey operation, etc.,. The assessing officer if he is of the view that nature of additionresulting in disputed demand is such that payment ofa lumpsum amount should be lower than 15% onaccount of same reasons as assigned herein above,he may refer the same to the administrative PrincipalChief Commissioner of Income Tax or Commissionerof Income Tax, who after considering all the relevantfacts, would decide the quantum/proportion of thedemand to be paid by the assessee as lump sumpayment for granting a stay of the balanced demand.This Office Memorandum came to be modifiedsubsequently by O.M. dated 31.07.2017 (Annexure-L)whereunder the rate prescribed at 15% is revised to20% of the disputed demand, where the demand iscontested before CIT (A). However, it requires to benoticed at this juncture itself that these two O.Ms arereferable to original O.M. issued on 2.12.1993whereunder it has been specifically brought to thenotice of the assessing officer steps to be taken forrecovery of the tax demand and comprehensiveinstructions have been issued in order to streamline recovery procedures. Apart from indicating several instructions to be followed, it has beenindicated/prescribed specifically the following instructions: “2.The Board is of the view that, asa matter of principle, every demand should berecovered as soon as it becomes due. Demandmay be kept in abeyance for valid reasonsonly in accordance with the guidelines givenbelow: A. xxx B. xxx C.Guidelines for staying demand: i. A demand will be stayed only if thereare valid reasons for doing so. Mere filing anappeal against the assessment order will notbe a sufficient reason to stay the recovery ofdemand . A few illustrative situations wherestay could be granted are: recovery procedures. Apart from indicating several instructions to be followed, it has beenindicated/prescribed specifically the following instructions: “2.The Board is of the view that, asa matter of principle, every demand should berecovered as soon as it becomes due. Demandmay be kept in abeyance for valid reasonsonly in accordance with the guidelines givenbelow: A. xxx B. xxx C.Guidelines for staying demand: i. A demand will be stayed only if thereare valid reasons for doing so. Mere filing anappeal against the assessment order will notbe a sufficient reason to stay the recovery ofdemand . A few illustrative situations wherestay could be granted are: It is clarified that in these situations also,stay may be granted only in respect of theamount attributable to such disputedpoints. Further where it is subsequentlyfound that the assessee has not co-operatedin the early disposal of appeal or where asubsequent pronouncement by a higherappellate authority or court alters the abovesituation, the stay order may be reviewedand modified. The above illustrations are, ofcourse, not exhaustive. ii.In granting stay, the Assessing Officermay impose such conditions as he maythink fit. Thus he may - a. require theassessee to offer suitable security to safeguard the interest of revenue; b. requirethe assessee to pay towards the disputedtaxes a reasonable amount in lump sum orin instalments; c. require an undertakingfrom the assessee that he will co-operate inthe early disposal of appeal failing which thestay order will be cancelled. d. reserve theright to review the order passed after expiryof a reasonable period, say up to 6 months,or if the assessee has not co-operated in theearly disposal of appeal, or where asubsequent pronouncement by a higherappellate authority or court alters the abovesituations; e. reserve a right to adjustrefunds arising, if any, against the demand. iii.Payment by installments may beliberally allowed so as to collect the entiredemand within a reasonable period notexceeding 18 months. iv.Since the phrase “stay of demand” doesnot occur in section 220(6) if the Income-taxAct, the Assessing Office should always usein any order passed under section 220(6) [orunder section 220(3) or section 220(7)], theexpression that occurs in the section viz.,that he agrees to treat the assessee as notbeing default in respect of the amountspecified, subject to such conditions as hedeems fit to impose. v.While considering an application undersection 220(6), the Assessing Officer shouldconsider all relevant factors having abearing on the demand raised andcommunicate his decision in the form of aspeaking order.” 32.From the above, it would emerge that, it isthe declared policy of the Department not to initiaterecovery proceedings during the period prescribedunder the Act for filing an appeal would expire,unless the situation so warrants that the assessingofficer has reason to believe that it will be detrimentalto the interest of the revenue, can proceed to recoverthe sum specified in the notice of demand within ashorter period. 33.Turning back our attention to the facts onhand, it requires to be noticed that in the firstinstance, for the assessment year 2010-11 to 2013-14, assessment order came to be passed underSection 144 read with Section 147 of the Act on22.02.2016 and 07.03.2016 (Annexure-C to C3).Being aggrieved by the same, petitioner – assesseefiled revision petitions before the PrincipalCommissioner of Income Tax under Section 264 ofthe Act on 21.03.2016 and said revision petitionscame to be allowed by order dated 29.12.2016 vide 33.Turning back our attention to the facts onhand, it requires to be noticed that in the firstinstance, for the assessment year 2010-11 to 2013-14, assessment order came to be passed underSection 144 read with Section 147 of the Act on22.02.2016 and 07.03.2016 (Annexure-C to C3).Being aggrieved by the same, petitioner – assesseefiled revision petitions before the PrincipalCommissioner of Income Tax under Section 264 ofthe Act on 21.03.2016 and said revision petitionscame to be allowed by order dated 29.12.2016 vide Annexures-F to F3. However, even prior to theoriginal assessment order came to be passed duringFebruary/March 2016, the jurisdictional Income TaxOfficer passed an order under Section 281B of theAct attaching an amount of Rs.7 crores in theassessee’s account at the Banks specified in the orderdated 19.10.2015 (Annexure-G). It is true thatsubsequent to the original order of assessment beingset aside on 21.03.2016 in the revision petitions bythe Principal Commissioner of Income Tax, there wasno order for refund of the tax already collected. Atthis juncture, it would be appropriate to refer to theprovision governing refund namely, proviso (a) toSection 240 of the Act. It reads: “240. Where, as a result of any order passedin appeal or other proceeding under this Act”,refund of any amount becomes dues to theassessee, the Assessing Officer shall exceptas otherwise provided in this Act, refund theamount to the assessee without his having tomake any claim in that behalf: Provided that where, by the orderaforesaid, - (a)an assessment is set aside or cancelledand an order of fresh assessment isdirected to be made, the refund, if any,shall become due only on the making ofsuch fresh assessment.”and an order of fresh assessment isdirected to be made, the refund, if any,shall become due only on the making ofsuch fresh assessment.” Thus, refund in case of assessment order being setaside with a direction to pass fresh order ofassessment would not be automatic and it wouldbecome due only on fresh assessment being passed.Thus, the first ground raised in the writ petitioncannot be sustained and this aspect having not beengone into by learned Single Judge, we are of theconsidered view that refund would not be automaticin case of order of assessment being set aside inappeal or other proceeding under the Act and itwould be subject to Section 240 of the Act. It wouldbe apt and appropriate to note at this juncture thatfor the assessment years 2010-11 to 2013-14,assessment orders came to be passed on 22.02.2016(AY – 2010-11) and on 07.03.2016 (AY – 2011-12 to2013-14). The demand raised under Section 156 has not been recovered or collected within 30 days. But,on the expiry of 30 days and for immediate referenceon the dates on which the tax collected or recoveredcan be noticed from Tabular A already extractedherein above, in order to avoid repetition. 34.On such order in revision petitions beingpassed on 21.03.2016 by the Principal Commissionerof Income Tax, in exercise of the power vested underSection 264 of the Act, jurisdictional assessing officerpassed a revised assessment orders under Section143(3) read with Section 264 of the Act on21.12.2017 (for the AY – 2010-11), on 19.12.2017 (forthe AY-2011-12 to 2013-14) and on 28.12.2017 (forthe AY – 2015-16) vide Annexures-H to H4. Aperusal of the said orders would disclose that ademand has been raised and set off has been given tothe recoveries already made as tax paid/prepaidtaxes. For immediate reference, the details thereof isextracted herein below: 34.On such order in revision petitions beingpassed on 21.03.2016 by the Principal Commissionerof Income Tax, in exercise of the power vested underSection 264 of the Act, jurisdictional assessing officerpassed a revised assessment orders under Section143(3) read with Section 264 of the Act on21.12.2017 (for the AY – 2010-11), on 19.12.2017 (forthe AY-2011-12 to 2013-14) and on 28.12.2017 (forthe AY – 2015-16) vide Annexures-H to H4. Aperusal of the said orders would disclose that ademand has been raised and set off has been given tothe recoveries already made as tax paid/prepaidtaxes. For immediate reference, the details thereof isextracted herein below: 35.It is at this juncture, the extant circularsor O.M referred to herein above requires to berecapitulated. The Department is clear that as amatter of principle, every demand should berecovered as soon as it becomes due. Section 156 ofthe Act would indicate that the assessing officer is toserve upon the assessee a notice of demand andinformation provided thereunder would be deemed tobe a notice of demand for the purposes of saidsection. Section 220 of the Act mandates that anyamount, otherwise than by way of advance tax,specified as payable in a notice of demand underSection 156 is to be paid within 30 days of the notice.Proviso to the said section as noticed already herein above would enable the assessing officer to reducethe period of 30 days, if he has reason to believe thatit will be detrimental to the revenue if the full periodof 30 days is allowed, which reduction of period canbe subject to previous approval of the JointCommissioner. 36.In the instant case, as noticed hereinabove and at the cost of repetition, there is nodispute with regard to the recovery made immediatelyafter the first assessment orders came to be passedduring February/March, 2016. In other words,recovery so made was beyond the period of 30 daysfrom the notice of demand. However, on revisedassessment orders being passed during December,2017 i.e., on 19.12.2017, 21.12.2017 & 28.12.2017recovery has been made in a sum of Rs.4,38,06,092/-on 17.02.2018. The order of fresh assessment havingbeen passed during December, 2017, the assesseehad right of appeal being filed within 30 days fromthe date of intimation of the order and undisputedly, assessee filed first appeals before CIT(A), Kalaburagion 23.01.2018 and order of stay came to be passedon 19.02.2018, by which time the sum of Rs.4.38Crores for the period 2011-12 to 2015-16 had alreadybeen recovered on 17.02.2018. In fact, the balanceamount of tax as per the fresh assessment orderswhich remained unpaid for the years 2010-11 to2015-16 was to the tune of Rs.21,90,30,460/- and20% of the same would be Rs.4,38,06,092/-. Thus,on facts, there is no infraction of either the statutoryprovisions namely, the amounts having beenrecovered even prior to the period prescribed for filingthe appeal having expired or the Department havingrecovered in excess of 20% as prescribed under theO.M. dated 31.07.2017 (Annexure-L). 37.The third limb of the argument canvassedon behalf of the petitioner – assessee is that evenbefore it could go through the order dated 19.03.2018passed by CIT (Appeals) which is said to have beenreceived on 27.03.2018, a sum of Rs.5.73 crores has 37.The third limb of the argument canvassedon behalf of the petitioner – assessee is that evenbefore it could go through the order dated 19.03.2018passed by CIT (Appeals) which is said to have beenreceived on 27.03.2018, a sum of Rs.5.73 crores has been forcefully recovered on 07.04.2018 (factuallyrecovered on 12.04.2018 in a sum ofRs.3,56,71,288/- + Rs.2,16,55,498/-) and thereby ithad crippled the activities of the assessee. In orderto buttress the above urged ground, O.M.FNo.404/72/93-ITCC dated 29.02.2016 (Annexure-E)as well as O.M. dated 31.07.2017 (Annexure-L) havebeen relied upon. In fact, the Central Board of DirectTaxes (for short ‘Board’) by Instruction for recovery ofoutstanding tax amounts had issued instructionNo.1914 F. No.404/72/93 ITCC dated 02.12.1993 forstreamlining the recovery procedures and clause 2and sub-clause – C(i) to (v) has already beenextracted herein above, whereunder it is clarified thatevery demand should be recovered as soon as itbecomes due and such demand can be kept inabey