Wp/2413/2020 Of Joji Reddy Yeruva v. Principal Chief Commissioner Of Income Tax And 4 Others

HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD(Special Original Jurisdiction) IVONDAY ,THE FIRST DAY OF NOVEMBERTWO THOUSAND AND TWENTY ONE PRESENT THE HONOURABLE SRI JUSTICE UJJAL BHUYANAND THE HONOURABLE DR. JUSTICE CHILLAKUR SUMALATHA WRIT PETITION NO: 2413 OF 2020 Between: Joji Reddy Yeruva, S/o. Balreddy Yeruva, aged about 50 years, 7-2-176C119A, CZECH Colony 2nd Floor, Ananda Nilayam Sanath Nagar,HYDERABAD- 500081 Telangana State AND ...PETITIONER 1. Principal Chief Commissioner of lncome Tax, 1Oth Floor, A- Block, l.TTowers, AC Guards Masab Tank, Hyderabad- 500028, Telangana StateTowers, AC Guards Masab Tank, Hyderabad- 500028, Telangana State 2. Principal Commissioner of lncome Tax-6, 6th Floor, A- Block LT Towers, ACGuards Masab Tank, Hyderabad- 500028, Telangana StateGuards Masab Tank, Hyderabad- 500028, Telangana State 3. The Commissioner of lncome Tax (Appeals)-3, Visakhapatnam, Direct TaxesBuilding, Opp. Raitu Bazaar, Double road, M.V.P.Colony, Visakhapatnam.Building, Opp. Raitu Bazaar, Double road, M.V.P.Colony, Visakhapatnam. 4. Deputy Commissioner of lncome Tax Circle- 6(1), 6th Floor, A- Block l. TTowers, AC Guards, Masab Tank, Hyderabad- 500028, Telangana StateTowers, AC Guards, Masab Tank, Hyderabad- 500028, Telangana State 5. Tax Recovery Officer, O/o. the PCIT-6, 6th Floor, A- Block, l. T Towers, Guards, Masab Tank, Hyderabad- 500028, Telangana StateGuards, Masab Tank, Hyderabad- 500028, Telangana State ...RESPONDENTS Petition under Article 226 of the constitution of lndia praying that in thecircumstances stated in the affidavit filed therewith, the High ['court ]may bepleased to issue writ order or direction one in the nature of mindam us decliringthe action the sth Respondent in issuing the impugned proceedings Notice U/s.226 (3) of the lncome Tax Act, 1961 dated 1211212019 to the following banks tofreeze the petitioners account And attaching proceedings the properties F No TRCss/DCrr/c c.1tvspt13-14 dated. 18103/2014consisting .i""ii""tr""ae "r of the petitioner iirlgrr"r of the petitioner iirlgrr. ; ;;, ; ;' .1i ", u' noDcrl cc. ili{fri:;l,,l'Ji i , vspr [J:,T:',i!;"i, ]rs--ia bur.J "x o+;;;;;;J,;h;r",,t111r"n,. [n: ];i" l,?, .xii [rr. ]"t. " since the rRcss/" Dcrl cc. ili{fri:;l,,l'Ji i , vspr [J:,T:',i!;"i, ]rs--ia bur.J "x o+;;;;;;J,;h;r",,t111r"n,. [n: ];i" l,?, .xii [rr. ]"t. " since the rRcss/" Section 225 of the lncome-tax to the provisionsand arso the attachment or petitioner Act' lsof p..ri,*ti", ;;; i;;;l'':-::"ttarv' .r,iil;1"i,::JT,f;;i accounts IA NO: 10F 2020 Petitton under Sectin tne a ri Ja u i [j,"u' ]suspend the proceeding "- [II,3l:J.i,i:!.,iri: ]oat"o [ifl ][J^;[ ]i Ax ffiil,J:T,3."Jji :stz-li_[ilr;ii# 5; Respondenrn tne a ri Ja u i [j,"u' ]suspend the proceeding "- [II,3l:J.i,i:!.,iri: ]oat"o [ifl ][J^;[ ]i Ax ffiil,J:T,3."Jji :stz-li_[ilr;ii# 5; Respondenr and permit the petttioner to operate the bank accounts, pending disposal ofwrit petition.writ petition. lA NO: 2 OF 2020 Petition under Section 151 CPC praying that in the circumstances statedin the affidavit filed in support of the petition, the High Court may be pleased tosuspend the proceeding No. F. No. TRCSS/DCIT/CC.1/VSP/13-14 dated.1810312014 of the sth Respondent by releasing the attachment of the petitionersproperties, pending disposal of writ petition. Counsel for the Petitionerg:SRl. N PURNACHANDRA RAO Counsel for the Respondents:SRl. K RAJI REDDY, SC FOR lT The Court made the following: HONOURABLE SRI JUSTICE UJJAL BHUYANAND HONOURABLE DR.JUSTICE CHILLAKUR SUMAI.ATHAW.P.No.2413 of 2020 ORDER: (>er llctrt b/t 5i .latri.e t-l1a/ tsbuyan) Fleard Mr. N.Pumachandra Rao, leamed counsel for thepetitioner, and N{r. K. R .ii Reddy, leamed Senior Standing C-ounsel forIncome Tax Department appearing for the respondenm. Counsel for the Petitionerg:SRl. N PURNACHANDRA RAO Counsel for the Respondents:SRl. K RAJI REDDY, SC FOR lT The Court made the following: HONOURABLE SRI JUSTICE UJJAL BHUYANAND HONOURABLE DR.JUSTICE CHILLAKUR SUMAI.ATHAW.P.No.2413 of 2020 ORDER: (>er llctrt b/t 5i .latri.e t-l1a/ tsbuyan) Fleard Mr. N.Pumachandra Rao, leamed counsel for thepetitioner, and N{r. K. R .ii Reddy, leamed Senior Standing C-ounsel forIncome Tax Department appearing for the respondenm. 2. This [lVrit ]Petition has been filed under Anicte 226 of theConstitution of India for declaring the action of respondent No.5/TaxRecovery Officer in issuing norices under Section 226(3) of the IncomeTax Acr, 1961 (briefly'the Act' hereinatter) dxed 12.12.2a19, as illegaland nonest in the ep of iaw. 2.1. Be it stated, by the notice dated 12.12.2019, nine bank accountsof the petitioner have been attached.3. Petitioner further seeks a declaration that notice dated 18.03.2014of respondent No.5/Tax RecoveryOfficer is illegal and void.3.1. Be it stated, by the said notice, properties of the petitionerincluding stock in rrade were attached. 4. Petitioner further seels a direction to respondenr No.5 to allowhim to operate the bank accounts and also to release the propeniesincluding stock- in- trade from attachmenr.5. From the marerials on record, including the counter-affidavit ofthe respondents, it is seen that a search and seizure action under Section132 of the Acr was initiated against M/s Sailakshmi rownship private Limited, Visakhapatnaru or22.08.2008. During the [search ][and ][seizure]action, incriminating materials relating [to ][the petitioner ][were recovered']Thereafter, three assessment orders dated 31.12.2010 [were ][passed ][in]respect of the petitioner under Section 1a3(3) [read ][with ][Section ][153(c)]oi the Act for the assessment [years ][2007-08, 2008-09 ][and ][2009-10]raising variou demands. The assessr.tten$ [were ][made ][by ][the ][then]Deputy C-omn.rissioner of Income Tax, [C-entral ][Grcle-1,]Visakhapatnarn. 6. C-onsequent thereto, Tax Recovery [Gnificates ][were ][drawn ][up ][by]respondent No.5 for the three assessment [years ][on ][04.11'2afi for]various amounts totaling Rs.10,60,65,780.00. [Since ][the ][assessed taxes]were not paid by the petitioner despite [notice ]of [demand, immovable]properties of the petitioner [were aftached. ][Additionally, ][bank ][accounts]of the petitionerwere also attached. 7. Against the three orders of assessment, Petitioner [prefer-red three]before the C-on.rmissioner of [Income ][Tax ][(Appeals)-3,]appeals Visakhapatnam (briefly ['first ]appellate [authority' hereinafter). ][By ][its]orders dated 31.03.2018, the first [appellate ][authority ][panly ][allowed]those appeals. Follou,ing the [said orders, ][the ][outstanding ][demand]against the petitioner stood [revised ][to ][Rs.8,59,96,946.A0.] 8. Against the orders passed by the first [appellate ][authority, ][the]revenue preferred further appeals [before ][the ][Income ][Tax ][Appellate]Tribunal, Visakhapatnam [(for ]shon ['the ][Tribunal), ][which ][are registered]as LT.ANos.32S, 326, and 327 of 2018. [Petitioner ][has ][also filed] cross-objections in those apPeals. It [is ][stated ][that ][those ][appeals ][are]pending before the Tribunal. [Since ][petitioner did not ][paythe ][dues, his]bank accounts were atuched. [Ftrowever, ][only ][an ][amount ][of]Rs.25,128.00 has been recovered from [his account ][maintained ][with ][the]South Indian Bank, Diamond [Point ][Branch, ][Secunderabad.] g. \)fle find that during pendencyof the appeals [and ][cross-ob,iections]before the Tribunal, petitioner [has ][filed ][stay application before ][the]Principal C.ommissioner of Income [Tax-6, ][Hyderabad ][and ][the ][said]authority passed an order on 05.02.2020, [directing the petitioner ][to ][pay]5Oo/o of the demand on or before [28.02.2020 ][for ][considering his ][stay ][till]disposal of the appeals. However, dll date, [petitioner ][has ][not ][complied]with the order dated 05.02.202A. g. \)fle find that during pendencyof the appeals [and ][cross-ob,iections]before the Tribunal, petitioner [has ][filed ][stay application before ][the]Principal C.ommissioner of Income [Tax-6, ][Hyderabad ][and ][the ][said]authority passed an order on 05.02.2020, [directing the petitioner ][to ][pay]5Oo/o of the demand on or before [28.02.2020 ][for ][considering his ][stay ][till]disposal of the appeals. However, dll date, [petitioner ][has ][not ][complied]with the order dated 05.02.202A. 10. We have given due consideration to [the ][submissions made ][by]leamed counsel for the panies. l. Attachment of bank account as well as [property ]of [a ][penon ][is ][a]drastic measure. Of course, such [provisions ][are ][provided ][in ][the ][statute]to ensure recovery of the dues. Nonetheless, in [the ][given ][facs ][and]circumstances of the case, we are of the view that [the ][appeals ][filed by]the revenue and cross-objections filed bythe [petitioner ][should ][be heard]expeditiotu ly bi, the Tribunal. 12. Our attention has also been drawn to the provisions ofSection 254Q.A) of the Act, more paniculariy, to the first [proviso]thereto, as per which, the Tribunal can pass an order of stay subject to the condition that the essessee deposits not less rhan 2ao/o of theamount of tax, interest etr., or furnishes security of equal amount.13. At this stage, leamed counsel for the petitioner submits that as hisproperties including the stock-in-trade have been anached, his businessactivities have been complerely jeopardirc.d, for which reason he isunable to generate any revenue lor pal,rnent of the tax dues.14. In the light o[ the contentions made and taking an o\rer all viewof the matter, we feel that it would meet the ends of justice, if theattachment of tl-re stock-in-trade of the petitioner is withdrawn toenable him to meer the tax dues in terms of the first proviso to Section254 QA) of the Act. In view of the statement made by the revenueitself that not much money could be appropriated through attachmentof bank accounts, attachment of the bank accounts may be withdrawn. 15. Accordingly, and in the light of rhe above, we pass the followingorders: (1) Tribunal is directed to expeditiously hear the threeappeals of the fuvenue and corresponding Cross Objectionsof the petitioner, preferably within a period of six monthsfrom today. (2) Petitioner shall deposit 2Oo/o of the tax duesfollowing the ordcr p,used by rhe first .rppcilatc aurhodry onI 1.01.2018. (l) On such deposit, atrachment of the petitioner'sbank accouns as well a-s the stock-in-tradc shall standwithdrawn fonhwirh. (4) However, we clarify that post-withdrawal ofattachment, if the petitioner deposits any amounr into the bankaccoilnts, the bank authorities shall ensure that 5Oo/o of such deposit is maintained in the accounts till such time as isconsidered necessary.16. With the above direaions, Vrir petition is disposed of. RelatedInterlocutory Applications are also disposed of.17. No costs.\SD/.N.CHANDRA SEKHAR RAOASSISTANT REGISTRAR//TRUE COPY//SECTION OFFICERTo,1. Principal Chief Commissioner of lncome Tax, 1Oth Floor, A- Block, LTTowers, AC Guards Masab Tank, Hyderabad- 5OOO2S, Telangana'State2. Principal commissioner of rncome Tax-6, 6th Froor, A- Btock iT Towers, AC- [Guards ][Masab ][Tank, Hyderabad- ][S0OO28, ][Telangana ][State]3. The commissioner of rncome Tax (Appears)-3, Visakhapatnam, Direct TaxesBuilding, Opp. Raitu Bazaar, Double road, M.V.p.Colony, Visaknapatn"m. [--]4. Deputy Commissioner of lncome Tax Circle_ 6(1), 6th Floor, A_ glock f. i_ [Towers, ] [Guards, Masab ][Tank, Hyderabad_'sii002g, ]Telangana State5. Tax Recovery Officer, O/o. the pClT:6, 6th Ftoor, A_ Btock, f . f ior"i., nC^ [Guards, ][Masab ][Tank, ][Hyderabad- ][5OOO28, ][Telangana ][State]6. One CC to Sri. N [purnachandra ]Rao, Advocate tdpuclI. 9n" !! !o [sri ][K Raji Reddy, SC ][for ][tT ]topucl8. Two CD Copies.9. One Spare Copy.P[/ HIGH COURT DATED:01/1 1/2021 ORDERWP.No.2413 ot 2020 Disposing of the WPWithout costs. 1ErA7't:(eCo11 Nw?ii?lc)l)\ \:l4[to]t