Wp/15511/2023 Of Rajeswara Reddy Basireddy v. The Income Tax Officer

INTHEHIGHCOURTOFANDHRAPRADESH::AMARAVATI(SpecialOriginalJurisdiction) FRIDAY.THETWENTYFIRSTDAYOFJULYTWOTHOUSANDANDTWENTYTHREEPRESENT THEHON’BLESRIJUSTICEU.DURGAPRASADRAOANDTHEHON’BLESMTJUSTICEVENKATAJYOTHIRMAIPRATAPA WRITPETITIONNO:15511OF2023 Between: RajeswaraReddyBasireddy,S/o.VeeraReddy,Hindu,aged.62years,Occ:business,R/o.D.No.10-240-1,.SriSaiRajeswariColony,KothapalliPanchayath,ProdduturMandal,KadapaDistrict,AndhraPradesh. ...PETITIONER AND 1.TheIncomeTaxOfficer.Ward-1.Proddaturu.24-578.Vasanthapet.Proddatur.--KadapaDistrict.AndhraPradesh516360. 2.NationalFacelessAppealCentre.Delhi,throughPrincipalChiefCommissionerofIncomeTax(NaFAC).Delhi,situatedatNorthBlock.NewDelhi-110001.CommissionerofIncomeTax(NaFAC).Delhi,situatedatNorthBlock.NewDelhi-110001. 3.TheJointCommissionerofIncomeTax.NelloreRange.IncomeTaxOffice.24-2-438.FirstFloor,G.T.Road.Nellore.NelloreDistrict.AndhraPradesh-524001.24-2-438.FirstFloor,G.T.Road.Nellore.NelloreDistrict.AndhraPradesh-524001.4.TheUnionofIndia.Rep.byitsSecretary(Finance).MinistryofFinance,NorthBlock,NewDelhi-110001.Block,NewDelhi-110001.5.TheStateBankofIndia,Proddatur,MainBranch,GandhiRoad,Proddatur,--AndhraPradesh516360,Rep.byitsBranchManager.6.TheAxisBankLtd.,D.No.22473,GandhiRoad,Proddatur,AndhraPradesh,Rep.byitsBranchManager.Rep.byitsBranchManager. ...RESPONDENTS PetitionunderArticle226oftheConstitutionofIndiaprayingthatinthecircumstancesstatedintheaffidavitfiledtherewith,theHighCourtmaybepleasedtoissueanappropriateWrit,OrderorDirection,moreparticularlyinthenatureofMANDAMUSdeclaringthattheimpugnedactionoftheFirstRespondentinissuingGarnisheeNotices,dated09-01-2023,u/S.226(3)oftheIncomeTaxAct,1961,tothe5*^and6*^RespondentBanksinwhichthePetitionerishavingAccounts,forrecoveryofRs.44,00,000/-i.e.,20%ofthepenaltyu/s.271DoftheIncomeTaxAct,1961,imposedbytheThirdRespondentvideOrderdated29-09-2022relatingtotheAsst.Year2018-19,againstwhichAppealispendingbeforetheSecondRespondent,aswithoutauthority,withoutjurisdiction,withoutjustification,contrarytolawandillegalandconsequentlysetasidethesaidtwoGarnisheeNoticesandgrantinterimstayofcollectionofthesaiddisputedpenaltyof Rs.2,20,00,000/-pendingdisposaloftheAppealbytheSecondRespondent. lANO:1OF2023 PetitionunderSection151CPCprayingthatinthecircumstancesstatedintheaffidavitfiledinsupportofthewritpetition,theHighCourtmaybepleasedtograntstayofoperationoftheGarnisheeNotices,dated09-01-2023,issuedbytheFirstRespondentu/S.226(3)oftheIncomeTaxAct,1961,tothe5**’and6*'’RespondentBanksrelatingtotheAsst.Year2018-19. CounselforthePetitioner:SRIG.NARENDRACHETTY CounselfortheRespondentNos.1to3:SMT.M.KIRANMAYEE,SCFORINCOMETAXCounselfortheRespondentNo.4:SRIN.HARINATH,DEPUTYSOLICITORGENERALOFINDIACounselfortheRespondentNos.5&6:---------- TheCourtmadethefollowing:ORDER HON’BLESRIJUSTICEU.DURGAPRASADRAOANDHON’BLESMT.JUSTICEVENKATAJYOTHIRMAIPRATAPA WRITPETITIONNo.15511of2023 ORDER;(perUDPR,J) HeardSriG.NarendraChetty,learnedcounselforthepetitioneraswellaslearnedSmt.M.Kiranmayee,learnedStandingCounselappearingfortherespondentsandthesameisdisposedof,atthestageofadmissionitself,withtheconsentofboththecounsels. 2.Thewritpetitionerfiledthepresentwritpetitionseekingthefollowingreliefs:followingreliefs: (i)DeclaringtheactionoftherespondentinissuingGarnisheeNotices,dated09.01.2023,underSection226(3)oftheIncomeTaxAct,1961,tothe5*^&6‘^respondent-Banks,in-whichthepetitionerishavingaccounts,forrecoveryofRs.44,00,000/-i.e.,20%ofthepenaltyunderSection27IDoftheAct,imposedbythe3'^respondent,videOrder,dated29.09.2022relatingtotheAssessmentYear2018-19,against-whichappealispendingbeforethe2'^respondent,isillegal&arbitraryandforaconsequentialdirectiontosetasidethepenaltyproceedings; (ii)StayofoperationoftheGarnisheeNotices,dated09.01.2023issuedbytherespondent,underSection226(3)of theIncomeTaxAct,1961,tothe5‘^andd'*respondent-Banks,relatingtotheAssessmentyear2018-19. 3.(a)Whilereferringtothepenaltyorder,dated29.09.2022 2.Thewritpetitionerfiledthepresentwritpetitionseekingthefollowingreliefs:followingreliefs: (i)DeclaringtheactionoftherespondentinissuingGarnisheeNotices,dated09.01.2023,underSection226(3)oftheIncomeTaxAct,1961,tothe5*^&6‘^respondent-Banks,in-whichthepetitionerishavingaccounts,forrecoveryofRs.44,00,000/-i.e.,20%ofthepenaltyunderSection27IDoftheAct,imposedbythe3'^respondent,videOrder,dated29.09.2022relatingtotheAssessmentYear2018-19,against-whichappealispendingbeforethe2'^respondent,isillegal&arbitraryandforaconsequentialdirectiontosetasidethepenaltyproceedings; (ii)StayofoperationoftheGarnisheeNotices,dated09.01.2023issuedbytherespondent,underSection226(3)of theIncomeTaxAct,1961,tothe5‘^andd'*respondent-Banks,relatingtotheAssessmentyear2018-19. 3.(a)Whilereferringtothepenaltyorder,dated29.09.2022 issuedbythe3"*respondent,learnedcounselforthepetitionersubmitsthatinthesaidorder.itisallegedthatthepetitioner/assesseeacceptedincashRs.1,20,00,000/-and Rs.1,00,00,000/-respectivelyduringthefinancialyear2017-18i.e.,theAssessmentyear2018-19andnotestablishedhisclaimfornon-borrowalofthesamefromthemandhence,heisliabletopaypenaltytotheextentheacceptedincashandaccordingly,imposedpenaltyofRs.2,20,00,000/-underSection27IDoftheIncome.TaxAct,1961(forshort‘theAct’). (b)Learnedcounselwouldsubmitthatinrespectoftheallegedcashtransactions,thepersonsbynamesParimalaJanapatiandRamaGopalJanapatihavefiledsuitsinO.S.Nos.l3of2020and14of2020onthefileoftheIIAdditionalDistrictJudge, Kadapa,againstthepresentpetitioner,asifthepetitionerborrowedthoseamountsfromthosepersonsandthepetitionerdeniedborrowingthoseamountsandcontestingthosetwosuitsandhefiledwrittenstatementsandthosemattersarependingtrial.Inthat view,hewouldargue,itisunjustonthepartofthe3"*respondenttounilaterallyholdthatthepetitionerreceivedanamountofRs.2,20,00,000/-incashfromthosetwopersonsandimposing100%penaltyonthoseallegedamounts. 4.Learnedcounselforthepetitionerfurthersubmitsthatchallengingthepenaltyorder,thepetitionerfiledappealbeforethe2"'’respondent-Appellateauthorityoh21.11.2022andthesameischallengingthepenaltyorder,thepetitionerfiledappealbeforethe2"'’respondent-Appellateauthorityoh21.11.2022andthesameis pending.Learnedcounselforthepetitionerfurthersubmitsthatpendingaforesaid'appeal,theI’*respondentissuedGarnisheeNotices,underSection226(3)oftheActto5***&6*respondent-Banks,withwhomthepetitionermaintainshisaccounts.Hethus.tosetasidetheorder.prayspenalty 5.'‘Learnedstandingcounselopposedwritpetitionandprayed thatthepetitionermaybedirectedtodepositsomepartofthepenaltyamount. 6.PerusedthecopiesofwrittenstatementsfiledbythepetitionerinO.S.No.l3of2020and14of2020,whichwouldmanifestthatthepetitionerhereinhasstaunchlydeniedborrowingtherespectiveamountsfromtheplaintiffsinthosetwosuits.HealsoquestionedthecapacityoftheplaintiffstolendsuchhugepetitionerinO.S.No.l3of2020and14of2020,whichwouldmanifestthatthepetitionerhereinhasstaunchlydeniedborrowingtherespectiveamountsfromtheplaintiffsinthosetwosuits.Healsoquestionedthecapacityoftheplaintiffstolendsuchhuge amountstothedefendant/petitioner.Themattersaresaidtobependingfortrial.Inthesecircumstances,asthemattersaresudjudicebeforethecompetentCivilCourt,wedeemitfittoconsidertheprayerofthepetitionertostayfurtherproceedings,pursuanttotheimpugnedpenaltyorderincludingtheGarnishee Notices. 7. Inthatviewofthematter,thewritpetitionisallowedandtheimpugnedpenaltyorder,dated29.09.2022’“passedbythe3'respondentaswellasconsequentialGarnisheeNotices,dated09.01.2023issuedbythe1”respondentarestayedtilldisposaloftheappealfiledbythepetitionerbeforethe 2“'respondent. Asasequel,interlocutoryapplicationspending,ifany,inthiscaseshallstandclosed. SD/-K.SRINIVASARAJUASSISTANTREGISTRAR-^ //TRUECOPY// amountstothedefendant/petitioner.Themattersaresaidtobependingfortrial.Inthesecircumstances,asthemattersaresudjudicebeforethecompetentCivilCourt,wedeemitfittoconsidertheprayerofthepetitionertostayfurtherproceedings,pursuanttotheimpugnedpenaltyorderincludingtheGarnishee Notices. 7. Inthatviewofthematter,thewritpetitionisallowedandtheimpugnedpenaltyorder,dated29.09.2022’“passedbythe3'respondentaswellasconsequentialGarnisheeNotices,dated09.01.2023issuedbythe1”respondentarestayedtilldisposaloftheappealfiledbythepetitionerbeforethe 2“'respondent. Asasequel,interlocutoryapplicationspending,ifany,inthiscaseshallstandclosed. SD/-K.SRINIVASARAJUASSISTANTREGISTRAR-^ //TRUECOPY// To,SECTONOFFICER1.Na«o’’’lProddatur,1.Na«o’’’lProddatur,2.Commrssron?^oniC?,meTax7lSFAC)''S“®^^--Delhi110001(NaFAC),Delhi,situatedatNorthBlockNew*•Range.InconteTaxOffice,524001.■'^®"ore.NelloreDistrict,AndhraPradesh-’524001.■'^®"ore.NelloreDistrict,AndhraPradesh-’NewDelhi-rioooi^^^^ofFinance,NorthBlock,6Th^RGandhi■AndhmN°.'22473,GandhiRoad,Proddatur,■AndhmN°.'22473,GandhiRoad,Proddatur, SECTONOFFICER 8OneCOtoChetty,Advocate 9.One§CSSriNHa^SoS'^ax -10.TwoC.D.Copies’SolicitorGeneralofIndia(OPUC)9.One§CSSriNHa^SoS'^ax -10.TwoC.D.Copies’SolicitorGeneralofIndia(OPUC)r^Cnr highcourt DATED:21/O7/2O23 ORDER WP.No.15511of2023 ALLOWINGTHEWPWITHOUTCOSTS a®5AUGag3-SSr*"****>»j