Revenue Officers should remember we live in a State governed by Rule of Law - HC
THIS story is a classic example of the atrocities committed by Revenue in the name of tax recovery. For a change, it is the Income Tax Department which is hogging the limelight.
The assessee is the Maharashtra Housing and Area Development Authority (MHADA) - a statutory corporation established under the Maharashtra Area Housing and Development Act, 1976, and engaged in the activity of constructing and providing accommodations to economically weaker sections of the society.
On 18 March 2013, the Assessing Officer passed an assessment order and on the same day issued a demand notice for Rs. 199.82 Crores. Commissioner of Income Tax (Appeals) passed an order dismissing the appeal on 29 October 2013. On 11 November 2013, the Assessing Officer issued a recovery notice to the assessee calling upon to pay, by 15 November 2013, the outstanding demand. The assessee, by its letter to the Assessing Officer, pointed out that they have not yet received the order of the CIT(A) and they would be filing an appeal and stay application to the Tribunal. A certified copy of the order dated 29 October 2013 of CIT(A) was served upon the assessee only on 16 November 2013 (Saturday). The assessee preferred an appeal and stay application to the Tribunal on 18 November 2013 (within two days). The hearing of the above stay application was fixed on 22 November 2013 by the Tribunal. Immediately on filing of the above appeal and the stay application, the Assessing Officer was served with copies of the appeal and stay application and was also requested to refrain from taking any coercive action pending disposal of the stay application fixed on 22 November 2013 by the Tribunal.
But the AO would not wait. On 18 November 2013, the Assessing Officer commenced the recovery proceeding from the assessee under Section 226(3) of the Act by attaching the bank account of the assessee for a sum of Rs.159.84 crores. On the same day, the aforesaid attached amount of Rs.159.84 crores was also withdrawn by the revenue.
The Tribunal by its order dated 25 November 2013 [] directed the revenue to refund the entire amount of Rs.159.84 crores to the assessee within 10 days from the receipt of the order.
Revenue did not like this order of the Tribunal and approached the High Court by filing a Writ petition.
The High Court was not impressed and observed -
++ The action of the revenue, in particular, the Assessing Officer was in defiance of the directions of this Court in UTI Mutual Funds vs. ITO wherein this Court had inter alia directed the revenue that no recovery of tax should be made before expiry of the time limit for filing an appeal before the higher forum.
++ The law declared by the High Court is binding on all authorities functioning within the State over which the High Court has jurisdiction.
++ The action on the part of the Assessing Officer was against the elementary principles of rule of law. The State is expected to act fairly. The undue haste on the part of the Assessing Officer in recovering a sum of Rs.159.84 crores was not only contrary to the binding decisions of this Court but also shocking to the judicial conscience.
++ No appellate authority and much less the Tribunal can be a silent spectator to the arbitrary and illegal actions on the part of the Assessing Officer so as to frustrate the legal process provided under the Act.
++ The petitioner revenue and the Assessing Officer would do well to remember that we live in State, which is governed by Rule of law. It is primary obligation of the officers of the State that it follows the law laid down by the Courts in letter and spirit before taking any coercive action.
If this is the plight of a Corporation of the State Government, imagine what can happen to an ordinary citizen.
The problem is that there is no punishment for any amount of illegal harassment of an assessee - Officers are protected; citizens are not.
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