Amitkumar Mathurdas Kaneria vs Tax Recovery Officer 1
2021 Latest Caselaw 4662 Guj

         C/SCA/4249/2021                                         JUDGMENT




            IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

             R/SPECIAL CIVIL APPLICATION NO. 4249 of 2021


FOR APPROVAL AND SIGNATURE:


HONOURABLE THE CHIEF JUSTICE MR. JUSTICE VIKRAM NATH

and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA

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1     Whether Reporters of Local Papers may be allowed to
      see the judgment ?

2     To be referred to the Reporter or not ?

3     Whether their Lordships wish to see the fair copy of the
      judgment ?

4     Whether this case involves a substantial question of law
      as to the interpretation of the Constitution of India or any
      order made thereunder ?

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                      AMITKUMAR MATHURDAS KANERIA
                                 Versus
                         TAX RECOVERY OFFICER 1
==========================================================
Appearance:
MR MANISH J SHAH(1320) for the Petitioner(s) No. 1
MRS KALPANAK RAVAL(1046) with MR NIKUNT RAVAL for the
Respondent(s) No. 1,2
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    CORAM: HONOURABLE THE CHIEF JUSTICE MR. JUSTICE VIKRAM
           NATH
           and
           HONOURABLE MR. JUSTICE BHARGAV D. KARIA

                               Date : 24/03/2021

                               ORAL JUDGMENT

C/SCA/4249/2021 JUDGMENT

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Rule returnable forthwith. Learned advocate Mr. Nikunt Raval waives service of notice of rule on behalf of the respondents.

2. Having regard to the controversy arising in the present petition which is in a very narrow compass, with the consent of the learned advocates for the respective parties, the matter is taken up for final hearing.

3. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs :

"A) this Hon'ble Court be pleased to call for the records of the proceedings, look into them and be pleased to issue a writ of mandamus or certiorari or any other appropriate writ, order or direction, directing Respondent No.1 to lift the attachment on the commercial property located at World Trade Centre being Officer No.407, Udhna Darwaja, Ring Road, Surat and further direct Respondent No.1 to suitably modify the order of attachment of immovable property dated 25.09.2014 at Annexure­C in view of aforesaid direction.

B) this Hon'ble Court be pleased to issue a writ of certiorari or mandamus or any other appropriate writ, order or direction asking the Respondent No.1 to lift attachment on the following bank accounts:

(i) Account No.10399460072 with State Bank of

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India, Commercial Branch,Surat.

(ii) Account No. 10399460061 with State Bank of India, Commercial Branch,Surat.

(iii) Account No. 34220100000121 With Bank of Baroda, Kharel Branch, Kharel.

(iv) Account No. 617035003388 with Valsad District Central Co­op. Bank Ltd. Kharel Branch.

(v) Account No. 50100226108350 with HDFC BANK, Parlepoint Branch,Surat.

C) Pending the hearing and final disposal of this application, this Hon'ble Court be pleased to allow the petitioner to operate the aforesaid bank accounts and to further allow the petitioner, to receive and utilized any payments/credits therein without remitting the same to the Income Tax Department as per order of attachment passed u/s. 226(3), dated 09.12.2016 at Annexure­D­coll.

D) This Hon'ble Court be pleased to grant any further or other relief as this Hon'ble Court deems just and proper in the interest of justice,and

E) This Hon'ble Court be pleased to allow this application with costs against the respondent."

4. Short facts giving rise to this petition are that the petitioner is an individual assessed to tax under the provisions of the Income Tax Act, 1961 (here­in­after referred to as "the Act, 1961"). For the assessment years 2009­2010 to 2011­2012, assessment orders and penalty orders are passed in case of the petitioner and the same are carried in appeal and some orders are still pending adjudication before the appellate

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forum including this Court. After passing of the assessment orders and penalty orders for AY 2009­2010 to 2011­2012, demands have been raised against the petitioner by issuing notice under section 156 of the Act, 1961. According to the petitioner, outstanding demand as per the portal of the income­tax department as on 9.2.2021 is as under :

Asst.Year    Section       Date of       Outstanding Authority who had raised
              under       demand          demand          the demand
              which                         (Rs.)
            order has
              been
             passed
2003-04      220(2)      20.02.2018         19,817               CPC
2004-05      220(2)      20.02.2018           174                CPC
2009-10        155       30.11.2015       16,39,936    Jurisdictional Assessing
                                                                 Officer
2010-11     271(1)(c)    30.03.2017       65,40,420    Jurisdictional Assessing
                                                                 Officer
2011-12        250       26.09.2015       16,14,532         Jurisdictional
                                                          Assessing Officer
2011-12     271(1)(c)    28.03.2017       10,42,517    Jurisdictional Assessing
                                                                 Officer
                          TOTAL          1,08,56,836

5. The Tax Recovery Officer under section 222 read with Rule 48 of the Second Schedule to the Act, 1961 attached the following properties of the petitioner by passing order dated 25.9.2014 for attachment :

"(i) Officer No.4027,World Trade Centre, Ring Road, Surat.

     (ii)       64,      Himgiri          Bunglows,       Behind          Rajhans




    C/SCA/4249/2021                                             JUDGMENT



  Cinema, Dhumas Road,Surat.

Respondent No.1 further attached the following bank accounts of the petitioner by passing orders dated 09.12.2016 u/s.226(3) of the Act (ANNEXURE­D­coll.):

(i) Account No.10399460072 with State Bank of India, Commercial Branch,Surat.

(ii) Account No.10399460061 with State Bank of India, Commercial Branch, Surat.

(iii) Account No.34220100000121 with Bank of Baroda, Kharel Branch,Kharel.

(iv) Account No. 617035003388 with Valsad District Central Co­op. Bank Ltd., Kharel Branch.

(v) Account No. 50100226108350 with HDFC Bank , Parlepoint Branch, Surat."

Accordingly against total demand of Rs.1,08,36,845/­ one residential property, one commercial property and five bank accounts are attached.

6. According to the petitioner, fair market value of residential property attached is estimated at Rs.3,71,20,000/­ being 50% of the value as per the report dated 21.12.2018 of the Government Approved Valuer and fair market value of the commercial property attached by the department is Rs.81,40,000/­ as per the report dated 21.12.2018 of the Government Approved Valuer.

  The    petitioner        therefore,            made    an     application
  before       respondent         no.2­        Income      Tax        Officer,






     C/SCA/4249/2021                                                JUDGMENT

Ward­1(1)(3),Surat dated 12.2.2021 for release of attachment on the commercial property in view of the attachment over the property worth Rs. 4.52 crores as against outstanding demand of Rs. 1.08 crores.

7. It is the case of the petitioner that the petitioner has filed an application under Direct Tax Vivad Se Vishwas Act, 2020 for M/s. Rahul Textile Industries Private Limited wherein the petitioner is a director and to make the payment of tax under the said Scheme, the petitioner is in need of fund and therefore, if the attachment on the commercial property is lifted, the petitioner can sell the commercial property in order to deposit the amount as required under the Scheme. Respondents did not release the attachment on commercial property and therefore, the petitioner is before this Court with the aforesaid prayers.

8. Learned advocate Mr. Manish Shah for the petitioner submitted that the attachment orders passed by respondent no.1 attaching the immovable properties and the bank accounts are excessive and disproportionate compared to the outstanding demand and therefore, the petitioner has preferred this petition with a prayer to direct respondent no.1 to lift the attachment on commercial property situated at World Trade Centre being Office No. 407, Udhna Darwaja, Ring

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road, Surat.

9. Learned advocate Mr. Shah would further submit that the value of the attached residential and commercial property in the year 2018 was about Rs. 4.52 crores as against outstanding demand of Rs. 1.08 crores as per the portal of the income tax department as on 9.2.2021 and as such, the attachment is disproportionate to the outstanding demand against the petitioner. According to learned advocate Mr. Shah, effective outstanding demand is only of Rs.42,96,425/­ in view of orders passed by the Tribunal. However, it was submitted that assuming that the outstanding demand is of Rs.1.08 crores as per the income­tax portal as on 9.2.2021, then also the attachment of property worth Rs. 4.52 crores along with five bank accounts is highly excessive in nature.

10. Learned advocate Mr. Shah submitted that due to Covid­19 pandemic, the petitioner is facing financial liquidity crunch and does not have sufficient amount of liquid asset to discharge the liabilities and in one of his private limited companies wherein the petitioner is a director, the petitioner has opted for resolution scheme under the Direct Tax Vivad Se Vishwas Act, 2020 to settle the tax dispute with the Income tax department with regard to the tax liabilities of the said company and the

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last date for making payment under the said Scheme is 31.3.2021. It was therefore, prayed that the commercial property be released from the attachment and the possession of the same be handed over to the buyers who are ready to purchase such property by executing conveyance deed and thereby payment can be received from the buyers which is pending as Sub­Registrar is not releasing the documents of the property due to attachment of the commercial property by the Income­tax department.

11. On the other hand, learned advocate Mr. Nikunt Raval with learned Standing Counsel Ms. Kalpana Rvaval submitted that the total outstanding demand pending in case of the petitioner is Rs. 1.08 crores and the petitioner has not paid the same by challenging the assessment orders before the appellate forum. It was submitted that the petitioner cannot pray for release of the attachment of property in order to pay up the demand raised under the resolution Scheme in one of the companies wherein the petitioner is a director. It was submitted that case of M/s. Rahul Textiles Industries Private Ltd. and case of the petitioner are different and payment for Direct Tax Vivad Se Vishwas Act, 2020 Scheme in case of company cannot be permitted by lifting the attachment on the commercial property belonging to the petitioner. As the petitioner has not

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paid the demand along with interest under section 220(2) of the Act, 1961, the petitioner is in default and hence respondent no.1 is justified by attaching the property of the petitioner along with the bank accounts. It was submitted that respondent no.1 has acted as per the TRO manual and therefore, no interference may be made by the Court in the facts of the case. It was submitted that in case of the petitioner, outstanding demand is from financial year 2013­2014 which is not paid by the petitioner till date which shows casual approach of the petitioner towards payment of Government dues which is unacceptable. It was therefore, prayed that considering the conduct of the petitioner, no relief may be granted to the petitioner.

12. Having heard the learned advocates for the respective parties and having gone through the materials on record, prima facie, it emerges that the Income­tax department is fully secured with attachment over the residential property of the petitioner together with five bank accounts with regard to the outstanding dues which is reflected in the portal of income­tax department being Rs. 1.08 crores as on 9.2.2021. It is not disputed by the respondents that the valuation report dated 21.12.2018 of the Government Approved Valuer placed on record are not true and correct. Therefore, taking into

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consideration the value of the residential property which is valued at Rs.7,42,40,000/­, 50% thereof belonging to the petitioner is about Rs. 3.71 crores which is much more than the outstanding demand of Rs. 1.08 crores as reflected in the portal of the income­tax department.

13. The petitioner has made an application for release of attachment over the commercial property in order to pay the amount of tax to the income­tax department in case of M/s. Rahul Textiles Industries Private Ltd wherein the petitioner is one of the directors and as the said company has applied under the resolution scheme of Direct Tax Vivad Se Vishwas Act, 2020, we are of the opinion that if the attachment placed by the respondents on commercial property situated at World Trade Centre being Office No. 407, Udhna Darwaja, Ring road, Surat, is lifted, there would not be any prejudice to the respondents income­tax department as it is fully secured by continuing the attachment over the residential property and five bank accounts. On the other hand, if the attachment is lifted, the petitioner would be in a position to pay the tax payable under the resolution scheme to the department. In order to achieve the real purpose and purport of the resolution scheme, it would be in the interest of justice to direct the respondents to lift the attachment on the

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commercial property forthwith so as to enable the petitioner to realise the amount of sale consideration on sale of commercial property and pay the amount of tax with the department for the said company of which the petitioner is a director to avail the benefit of the resolution scheme.

14. The contention raised on behalf of the respondents that the attachment cannot be lifted to permit the petitioner to pay the tax under the Direct Tax Vivad Se Vishwas Act, 2020 scheme in case of the company in which the petitioner is director, cannot be accepted because the petitioner is requesting to lift the attachment on the ground that there is sufficient security as against the outstanding demand and the reason for lifting the attachment is in addition to the prayer of the petitioner to lift the attachment to show his bona fide. In such circumstances, it cannot be said that the petitioner is not entitled to the prayer for lifting the attachment in order to pay the tax payable under the Direct Tax Vivad Se Vishwas Act, 2020 Scheme.

15. In view of the foregoing reasons, the petition succeed and is allowed accordingly. Respondent no.1 is hereby directed to pass necessary orders on or before 30th March, 2021 for lifting the attachment and releasing the

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attachment of commercial property situated at World Trade Centre being Office No. 407, Udhna Darwaja, Ring road, Surat forthwith so as to enable the petitioner to deposit the amount of tax payable under the resolution scheme of Direct Tax Vivad Se Vishwas Act, 2020 for the company in which the petitioner is a director.

16. Rule is made absolute to the aforesaid extent. No order as to costs.

Direct service is permitted.

(VIKRAM NATH, CJ)

(BHARGAV D. KARIA, J) RAGHUNATH R NAIR