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2014 (6) TMI 115 - HC - Income TaxAttachment order passed by ACIT u/s 226(3) of the Act Rejection of stay application on the day it was filed - Whether the AO, at the time of passing the garnishee order and rejecting the stay application on February 17, 2014, was aware of the stay application filed by the petitioner on that day Held that:- Section 220(3) requires an application for extension of time to pay the tax demanded or for permission to pay the same in instalments to be filed before the expiry of the due date for payment - the petitioners filed the applications u/s 220(3) before the AO on February 14, 2014, which satisfies the sub-section - February 14, 2014, happened to be a Friday, the next working day was only February 17, 2014, and it was on this day that the AO rejected the applications - he issued the garnishee order u/s 226(3) to the Citi Bank. This is a case in which technically no fault could be found with the AO, there was an element of impropriety in his action in issuing the garnishee order u/s 226(3) on February 17, 2014, the very day on which he rejected the stay application filed by the petitioner u/s 220(3) - It is expected of him, having rejected the stay application, to wait for a reasonable period before he takes coercive steps to recover the amounts since the petitioner, faced with an order rejecting the stay application, may need some time to make arrangements to pay the entire tax demand or come up with proposals for paying the same in instalments the AO is a prospector of the Revenue and he is no doubt expected to protect the interests of the Revenue zealously, but such zeal has to be tempered with the rules of fair play and an anxiety to ensure that an opportunity is not lost to the assessee to make alternative arrangements for clearing the tax dues, once the stay applications filed u/s 220(3) are rejected - The AO had acted in arbitrariness, since the stay applications filed by the petitioners are pending before the Tribunal, the AO is directed to reverse the amount recovered from the bank account in Citi Bank and credit the same in the account of the petitioner Decided in favour of Assessee.
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