Allahabad High Court
Sahara Credit Cooperative ... vs Commissioner Of Income Tax-I, ... on 25 April, 2014
Bench: Shri Narayan Shukla, Vishnu Chandra Gupta
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
Court No.3 A.F.R
Reserved
Case :- MISC. BENCH No. - 2442 of 2014
Petitioner :- Sahara Credit Cooperative Society Ltd., Thru. Its Director
Respondent :- Commissioner Of Income Tax-I, Lucknow & Anr.
Counsel for Petitioner :- Waseeq Uddin Ahmed
Counsel for Respondent :- Ghanshyam Chaudhary
Hon'ble Shri Narayan Shukla,J
Hon'ble Vishnu Chandra Gupta,J.
(Delivered by Hon'ble Vishnu Chnadra Gupta,J.)
By means of this writ petition, Sahara Credit Cooperative Society Limited (hereinafter referred to as "the petitioner"), challenged the order passed by the Joint Commissioner, Income Tax Lucknow dated 5.3.2014, under Section 281B (1) of the Income Tax Act 1961 (hereinafter referred to as "the Act"), by which the provisional attachment of the bank accounts of the petitioner's society were made during the course of proceeding of assessment of assessment year 2011-2012.
Brief facts for deciding this writ petition are that the petitioner is a Multi-State Cooperative Society, which came into existence on 1.10.2009. The aforesaid society was registered under the Multi-State Cooperative Societies Act, 2002 on 5.3.2010. The business of the petitioner's society is to run the scheme for members of the society and to facilitate the investment for the assessment year 2011-2012, the income tax return was filed by the petitioner on 29.9.2011 declaring the loss of Rs. 22,31,02,195/-, which was revised on 30.3.2013 wherein the returned loss was enhanced to Rs.22,37,09,412/-.
During the course of proceedings of assessment, certain queries were made from the assessee by the Assessing Officer regarding the creditworthiness, genuineness and identity of the investors of the aforesaid society. The petitioner/assessee was not cooperating in furnishing the requisite information. Malpractice was said to have been adopted by the petitioner. In regular assessment approximate total income of the petitioner was likely to be assessed at Rs.1100 crores and tentative tax liability was of Rs. 445 crores. Therefore,
Joint Commissioner of Income Tax Range-3,Lucknow vide its letter dated 27.2.2014 sought prior approval for provisional attachment of bank accounts of petitioner. His action was approved by the Commissioner of Income Tax-1 Lucknow vide its letter dated 28.2.2014. Consequently, the bank accounts of the petitioner in Punjab National Bank, Cooperative Bank, Union Bank of India, Allahabad Bank, ICICI Bank Ltd., UCO Bank and Central Bank of India were attached. Aggrieved by the action of the Assessing Officer, this writ petition has been filed.
Counter affidavit has been filed on behalf of the opposite parties. The letter dated 27.2.2014 is enclosed therewith as Annexure No. 1 to the counter affidavit, whereby the Joint Commissioner, Income Tax, Range-3, Lucknow sought prior approval for provisional attachment under Section 281B (1) of the Act. The reason assigned in this letter reads as under:-
"The scrutiny assessment in the case of M/s Shara Credit Cooperative Society Ltd. Shara India Bhawan, Kapoorthala complex, Aliganj, Lucknow 226024 for A.Y. 2011-12 is pending with the undersigned.
The scrutiny assessment in this case is likely to be completed at total income of Rs. 1100 crores approximately. The demand in regular assessment in this case shall be completed to Rs. 445 crores approximately . Since the assessee is not cooperating in the assessment proceeding, it is necessary for the purpose of protecting the interests of the revenue to provisionally attach the bank accounts of the assessee, M/s Shara Credit Cooperative Society Ltd. Shara India Bhawan, Kapoorthala complex, Aliganj, Lucknow, 226024". The details of bank accounts of the above named assessee are given below"-
S.No.
Name & address of bank
Account numbers Under same ID
1.
Punjab National Bank, Mahanagar, Lucknow
758002100139486
2.
Corporation Bank, Aliganj,Lucknow
.........
3.
United Bank of India,Aliganj, Lucknow
........
4.
Allahabad Bank,Aliganj, Lucknow
........
5.
ICIC Bank Ltd. Arohi Complex, Block-2,Kapoorthala, Aliganj, Luckow
........
6.
UCO Bank, IT College, Branch, 9A,Raidas Mandir Crossing, Nirala Nagar, Lucknow.
........
7.
Central Bank of India, Bhatia Complex Mandir Marg, Mahanagar, Lucknow
........
8.
Canara Bank, C-10,33/34,Sec-B,Mahanagar,Lucknow
........
9.
The Karur Vyasya Bank Ltd, P.B. No. 1414,Kamamwala Chamber ,P.M. road, Fort,Mumbai-400001
.......
10.
Insusing Bank Ltd., 701, Solitaire Corporate Bark, 2167,Guru Har Govindgj Marg, Andheri-E,Mambai-400093.
....
The Commissioner of Income Tax, Lucknow, vide its letter dated 28.2.2014 approved the action and permitted the Assessing Officer to pass the order of provisional attachment. The Assessing Officer in compliance thereof passed attachment order on 5.3.2014.
In the counter affidavit it is stated that investment made in the society by the members and the Directors do not appear to be genuine. The identity and creditworthiness of the members who contributed huge amount in the fund of the petitioner's society are not coming-forth. The requisite information sought by the Assessing Officer has not been furnished by the petitioner, as such he was compelled to pass an order for attachment of bank accounts of the assessee to protect the interest of revenue because the huge amount of tax liability is likely to occur.
The rejoinder affidavit has been filed by the petitioner whereby he tried to meet out the allegation made in the counter affidavit reformed certain documents which were filed during the course of assessment.
During the pendency of this writ petition assessment was completed for assessment year 2011-2012 by the Joint Commissioner of Income Tax, wherein the net liability of tax was assessed at Rs. 8,40,11,21,730.00. A copy of assessment order was placed before this Court by the learned counsel for the Revenue during the course of
hearing. He also placed a copy showing the total amount found in the aforesaid bank accounts. There is only of Rs. 22,89,70,019/-.
We heard Sri J.N. Mathur, Senior Advocate assisted by Sri Waseeq Uddin, learned counsel for the petitioner and Sri Ghanshyam Chaudhary, learned counsel for the respondents.
Learned counsel for the petitioner relying upon the judgment in Sahara India (Firm) Lucknow Vs. Commissioner of Income Tax,Central-1and another, (2008) 14 SCC 151 has submitted that by means of attachment of all the accounts of the petitioner, the business has come to standstill. According to him the action contemplated under Section 281B of the Act, is causing serious adverse consequences to the petitioner and in view of the ratio laid down by the Apex Court. In the aforesaid judgement reasonable opportunity of being heard, should have been provided to whom the order is proposed, even if the statutory provision excludes the application of pre-decisional hearing. He also relied upon a judgment of Apex Court in C.B. Gautam Vs. Union of India and others (1993) 11 SCC 78, wherein their Lordships while dealing with the provision of Section 269UD of the Act, almost similar view was propounded. He also relied upon the judgement of the jurisdictional court reported in (2006) 201 CTR Allahabad, 268 Raghuram Grah Pvt. Ltd. and others Vs. Income Tax Officer and others and submitted that the order under Section 281 B should be passed on sound basis and opinion formed by the assessing officer should be on the basis of material available on record. It may not be based on gossip or on hearsay.
Learned counsel for the Revenue relying upon the judgment of Punjab and Haryana High Court rendered in Civil Writ Petition No.24380 of 2011 (Nirmal Singh. Vs. Union of India) has submitted that reasons assigned by learned Commissioner in this case are well founded, which is also reflected from the order dated 27.2.2014 of the Joint Commissioner, Income Tax. After satisfying with the opinion of
the assessing officer, the Commissioner accorded permission to proceed under Section 281B of the Act. Therefore, there is no illegality in passing the impugned order.
For ready reference, the provisions of Section 281B are reproduced hereinbelow:-
"281-B. (1) Where, during the pendency of any proceedings for the assessment of any income for the assessment or reassessment of any income which has escaped assessment, the Assessing Officer is of the opinion that for the purpose of protecting the interests of the revenue it is necessary so to do , he may, with the previous approval of the Chief Commissioner, Commissioner, Director General or director by order in writing, attach provisionally any property belonging to the assessee in the manner provided in the Second Schedule.
Explanation.- For the purposes of this sub section, proceedings under sub-section (5) of section 132 shall be deemed to be proceedings for the assessment of any income or for the assessment or reassessment of any income which has escaped assessment]
(2) every such provisional attachment shall cease to have effect after the expiry of a period of six months from the date of the order made under sub-section (1):
Provided that the [Chief Commissioner, Commissioner, Director General or Director] may, for reasons t be record in writing, extend the aforesaid period by such further period or periods as he thinks fit, so, however, that the total period of extension shall not in any case exceed two years;
Provided further that where an application for settlement under section 245 C is made, the period commencing from the date on which such application is made and ending with the date on which an order under sub-section (1) of section 245D is made shall be excluded from the period specified in the proceedings proviso"]
Provided also that the period during which the proceedings for assessment or reassessment are stayed by an order or injunction of any court shall be excluded from the period specified in the first proviso."
The perusal of scheme of this section provides that legislation
has introduced this provision to protect the interest of revenue in appropriate cases. A safeguard has been provided in exercise of jurisdiction by the Assessing Officer that before implementing its opinion, he must have sought prior approval of his own action.
Section 281B is virtually a provision lite attachment before the judgment as provided in Order 38 Rule 5 of the CPC and the aim of introducing this provision is virtually to protect the interest of revenue. The provision clearly speaks that this power can be exercised by the Assessing Officer during the course of assessment of any income of assessee either during the course of original proceeding or assessment or re-assessment of any income which has been escaped assessment. The next requirement is that assessing officer is of the opinion that for the purpose of protecting the interest of revenue, it is necessary to do so and to check the arbitrariness of the assessing officer, a rider has been imposed that previous approval of Chief Commissioner, Commissioner, Director General or Director would be necessary. This previous approval would not be oral but shall be in writing. The provisional attachment shall cease to have effect after the expiry of a period of six month from the date of the order or the order for extended period as provided under this Section, manner in which this provisional attachment is to be made as given in Schedule-II.
We have considered the submissions of the learned counsel for the parties.
We are of the view that this writ petition lacks merits for the reasons assigned hereinbelow:-
(1)The statutory provision of Section 281B does not contain the requirement of hearing before passing the order under this section to the assessee.
(2)The judgments cited by the petitioner, are not related to the provisions contained in Section 281B but they are related to Section 142 (2A) of the Act and Chapter XX-C of the Act having section 269-UD.
(3) So far as Section 142 (2A) is concerned, the provisions contained therein have been substantially amended and proviso has been added to Section 142 (2A) with effect from 1.6.2007 which provide that no direction for special audit shall be issued without affording reasonable opportunity of hearing to the assessee.
(4)So far as Chapter XX-C is concerned, it has also been substantially amended and sub-section (1A) of section 269UD provides that appropriate authority shall give reasonable opportunity of being heard to the transferer, the person in occupation of the immovable property before passing the order of pre-emptive purchase. But so far as provision of section 281B is concerned, statute has not yet decided to make provisions of giving reasonable opportunity to the assessee before passing an order under Section 281B of the Act.
(5) If the argument of the learned counsel for the petitioner is accepted that the attachment of the bank accounts would cause serious adverse consequences to the assessee then in each and every cases, the pre-decisional hearing shall amount of adding the provisions in the statute book, for which legislature has not yet decided to add. The courts are not supposed to make law but they are supposed to interpret.
So far as the judgement reported by this Court in Raghuram Grah's case (supra) is concerned, it is not applicable in the facts of the case because in the said case no reason was forthcoming either from the order, counter affidavit or supplementary affidavit filed during the course of hearing of the writ petition but this is not the situation in the case in hand. The reasons for forming opinion have been given in letter dated 27.2.2014 written by the Joint Commissioner (AO) to the Commissioner, who on his turn granted
approval for action proposed by the Joint Commissioner, Income Tax.
The assessment now, has been completed and the liability of Rs. 840 and odd crores has been fastened against the petitioner regarding tax during the relevant assessment year though in fact, the amount attached in the Banks is only of Rs. 22 crores and odd, which is very meagre amount. So far as the tax liability of the petitioner is concerned, we are of the view that we should to make any comment on the material placed by the petitioner before the assessing authority as stated in the rejoinder affidavit because the final assessment is subject to appeal.
In view of the above, we are of the view that petition sans merit . However, the amount under attachment shall not be appropriated against the demand raised till the period of preferring appeal against the assessment order is expired. In case of appeal, the amount under attachment shall be subject to appropriation in terms of the order passed by the appellate court but at the same time the amount under attachment shall not be allowed to be withdrawn by the petitioner.
We are of the firm view that the assessing officer has duly discharged its obligation under the statute while passing the order under Section 281B of the Act which has been validly approved by the Commissioner.
Consequently, the writ petition is dismissed.
Order Date :-25.4.2014
GSY
