|CORAM:||B. R. R. Kumar (AM), Sanjay Garg (JM)|
|CATCH WORDS:||coercive recovery, Recovery of tax, strictures|
|DATE:||December 20, 2017 (Date of pronouncement)|
|DATE:||December 23, 2017 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|Coercive Tax Recovery: The AO wanted to preempt the Tribunal from dealing with the Stay application. The Act and conduct of the Revenue officials is against judicial conscience. Canons of law, justice and ethics have been broken down by the officials of the Department. An effort has been made to render the provisions of the law inoperative, debarring the assessee from availing any remedy from the higher forum|
(i) From the above facts, i t is established beyond doubt that Assessing of f icer has not acted in this case in the manner she was supposed to act being a quasi-judicial of f icer. Taking undue benef it f rom the procedural lacunas, sequence of events had been so managed by the of f icials of the Depar tment during the per iod falling in between the date of pronouncement of the order of CIT(A) and the date of receipt of the copy of the same by the peti tioner/assessee, thereby creating such circumstances, whereby, putt ing the assessee in a helpless condi tion and taking advantage of his helplessness by way of attaching the bank account of the assessee and wi thdrawing the money theref rom, before the assessee could receive the order of Ld. CIT(A) and approach to the higher forum for stay of the operat ion of the said order and thereby foreclosing the remedy avai lable to the assessee under the Act and 12 rendering the assessee helpless and remediless. Even the Department continued to make the coercive act ion even af ter the f i ling of the appeal and the present Stay Applicat ion before this Tribunal and even on a date when the matter was f ixed for hear ing on the Stay Appl ication before this Tribunal. The act of the Assessing of f icer demonstrates that she wanted to preempt the Tribunal f rom deal ing with the Stay appl ication which was scheduled for hearing on November 22, 2017. The Act and conduct of the Revenue of f icials in this case is against the judicial conscience. Canons of law, justice and ethics have been broken down by the off icials of the Depar tment. An ef fort has been made to render the provisions of the law inoperative, debarr ing the pet it ioner f rom avail ing any remedy f rom the higher forum.
(ii) The another shocking fact which emerged dur ing the course of arguments is that when a quest ion was raised to the Department of f icials as to how the Depar tment came into knowledge of the order of the CIT(A) prior to 06.11.2017 when the copy of the same was dispatched to the assessee by the of f ice of CIT(A)? None of the of f icials of the Department could sat isfactori ly explain about it . Even they could not sat isfactori ly inform as to on which date the of f ice of the AO received the copy of the impugned order of the CIT(A) . Under the circumstances it remains unexplained as to how the information regarding the decision of the appeal against the assessee travelled to the Assessing of f icer, prompting her to recover the amount f rom the assessee, that too by way of coercive means and without show causing the assessee or giving i t an opportuni ty to approach to the higher Forum. The content ion of the department that this Tribunal should also bear in mind that the assessee’s appeal pending before CIT(A) for assessment year 2014-15 wi ll be decided in December 2017 raising demand, on simi lar lines as per assessment years 2008-09, 2009-10 and 2013-14 can also be not appreciated, especial ly when the matter for assessment year 2008-09 has already been heard by the Tr ibunal
(iii) Another contention at this stage has been raised that the coercive recovery of Rs5.85 crores and Rs.7.58 Crores towards outstanding demand for AY -2013-14 was made on 20.11. 2017 and 22.11.2017; That the stay application of the assessee was f ixed before the tr ibunal on 17.11.2017, but no order for stay of recovery was passed on the said date and the case was adjourned for 22.11.2017. Hence, when the tr ibunal had not passed any stay order, the department was wi thin i ts r ight to execute the order of the AO which has been further conf irmed by the CIT(A) .
We are not convinced wi th the aforesaid arguments of the Ld. Representat ives of the Depar tment. No doubt , the case was f ixed for hearing for 17.11. 2017 but the matter was adjourned to 22.11.2017 at the request of the Ld. Representat ives of both the part ies. The peti tioner on the said date brought to the knowledge of the Tribunal about the condit ional stay order passed in favour of the assessee by the Hon’ble Punjab & Haryana High Cour t whereby the operation of the impugned order has been stayed subject to the condi tion that the assessee shall abide by the terms and condi tions that may be imposed by the assessing authori ty qua the demand of the amount assessed as has been done in the previous order binding the pet itioner to a schedule. The peti tioner fur ther informed the Tribunal that the Hon’ble High Cour t was approached by way of wri t under the impression that stay has not been granted or vacated by the AO even despi te deposit of 15% of the disputed demand as per CBDT’s circular 14 No.1914 (supra). The Tribunal considering the above facts, on the request of the ld. representatives of both the par ties, adjourned the mat ter to 22.11.2017 enabling the assessee to apprise about the true facts to the Hon’ble High Court and if the assessee so desire, to withdraw the wri t pet it ion. The assessee immediately moved the Hon’ble High court with an application for wi thdrawal of the writ petit ion in view of subsequent developments, which was allowed by the Hon’ble High Court vide order dated 22.11.2017. We may mention here that ti ll 22.11.2017, the direct ions of the Hon’ble high cour t staying the impugned order of the AO were in force. Moreover , i t has not been explained as to why the undue haste has been made when the mat ter was under consideration of the Tribunal as well of the Hon’ble High Court .
(iv) Another argument has been made that the amount recovered on 20.11.2017 and 22.11.2017 was appropr iated towards the outstanding demand for AY 2013-14 and that the order of the Hon’ble High court was for AY 2009-10.
We are again not convinced at this argument also. The Respondent depar tment has the benef it of the order of the Hon’ble High court for ear lier assessment year involving similar facts and circumstances which was decided by the CIT(A) on the same date as for AY 2013-14 and under the circumstances, there was no just if icat ion on the par t of the AO to make haste in coercive recovery for AY 2013-14, that too, on 22.11.2017 itself when the mat ter was f ixed before this tr ibunal for hearing on the stay application. At the most, the AO could have called upon the assessee to make the payments. No just if ication has been of fered as to why the depar tment direct ly adopted the course of coercive recovery without asking 15 the pet it ioner to deposi t the amount or show causing it as to why the coercive recovery be not ef fected? It is pert inent to mention here that the pet it ioner also is a Govt . body and there is no al legation that it has ever defaulted in payment of taxes. There was not any l ikelihood of the pet it ioner of escaping form the tax l iabil it ies. The pet itioner was only avail ing the legal remedies available to i t under the provisions of law.
(vi) Another mer itless argument has been made that since the appeal of the assessee for earl ier assessment year 2008-09 was decided by the CIT(A) against the assessee vide his order dated 30.1.2017, and hence, all / any Stay order granted in favour of the assessee for the assessment year under consideration i.e. assessment years 2009-10 & 2013-14 stood deemed to be vacated. Shockingly, the Stay order in this case was passed by the predecessor of the present Assessing of f icer on 24.3.2017 i.e. af ter passing of the order of the CIT(A) on 30.1.2017 for assessment year 2008-09. However , the assessee had already preferred appeal against the order of CIT(A) for assessment year 2008-09 and the Tribunal had already stayed the recovery of demand for assessment year 2008-09 vide order dated 21.3.2017 which was further extended vide order dated 26.09.2017. The Depar tment has been well represented in the appeal of the assessee for assessment year 2008-09 through DR and the Depar tment was well aware of the Stay granted by the Tribunal for assessment year 2008-09 also. The more shocking fact is that the coercive measure has been made when even the arguments on appeal of the assessee for assessment year 2008-09 have already been heard on and the judgment has been reserved for orders.
(vii) Another argument made by the Depar tment is that , in fact, no Stay order has ever been passed by the Assessing of f icer for the assessment year 16 under consideration; That the copy of the stay order produced on the f i le by the assessee is forged and f ict it ious. When this Tr ibunal, af ter hearing the aforesaid content ion, proposed to refer the mat ter to the police authori ties for ver if ication as to whether the copy of the said order produced by the assessee was forged and f icti tious, the Ld. Principal CIT arose and submi tted that the Stay order eventually has been passed in favour of the assessee, however, that the same was not in force on the date of recovery on 2.11.2017 af ter passing the order on the appeal of the assessee by CIT(A) on 17.10.2017. From the above, i t appears that the depar tment has not come with any def inite stand and the facts have been twisted as per whims and wishes of the Departmental of f icials and coercive recovery has been ef fected in an undue haste, violat ing al l the pr inciples of judicial discipline and natural justice. In the somewhat identical facts in the case of ‘Maharashtra Housing & Area Development Authori ty (MHADA) vs ADIT (Exemptions)’  66 SOT 66 (Mumbai)/ URO / 49 taxman.com 341 (Trib) , wherein coercive measure was made by the Depar tment f rom the account of the assessee (MHADA) af ter the passing of the order of CIT(A) but prior to the hearing of the Stay appl icat ion by the Tr ibunal, the Coordinate Mumbai Bench of the Tr ibunal has observed that ITO being a quasi-judicial authori ty should observe the parameters which are laid down by the High Cour ts in various decisions. The Tribunal while relying upon the decision of the Bombay High Court in the case of ‘UTI Mutual Funds Vs. ITO’ (2012) 19 taxman.com 250/345 ITR 71 (Bom.), of the Coordinate Bench of the Tribunal in the case of ‘RPG Enterpr ises Ltd Vs. DCIT’ (2002) 74 TTJ (Mumbai) 391 as well as in the case of ‘Maharashtra State Electr icity Board Vs. JCIT’ (2002) 81 ITD 299 (Mumbai) has observed that the Assessing of f icer under the circumstances had misused his powers and the act ion of the recovery f rom the bank account of the assessee was gross violat ion of the direct ions and judicial principles as wel l as the basic rule of law and principle of natural justice. The Tr ibunal in these circumstances directed to refund the ent ire demand, coercively recovered f rom the assessee. The Depar tment challenged the aforesaid direct ions of the Tr ibunal before the Hon’ble High Cour t. The Hon’ble Bombay High Cour t vide its order dated 4.2.2014 in ‘DIT vs Income Tax Appel late Tribunal and another ’ repor ted in 361 ITR 469 (Bom) upheld the aforesaid directions of the Tr ibunal observing that the act ion of the coercive recovery on the par t of the Assessing of f icer was against the elementary principal of rule of law. That the state is expected to act fairly. The undue haste on the par t of the Assessing of f icer in recover ing the amount was not only contrary to the binding decision of the Court but also shocking to the judicial conscience. The ent ire act ion was directed at rendering the Tribunal and the assessee helpless so that no rel ief can be granted in favour of the assessee. The Tribunal could not be silent spectator of the arbi trary and illegal act ion on the part of the Assessing of f icer so as to f rustrate the legal process provided under the Act. The grant of refund of the amount that has been coercively recovered by the depar tment was in the exercise of the tribunal’s inherent powers to ensure that the assessee is not left high and dry only on account of illegal and highhanded actions on the part of revenue and the assessing officer .