Dismissed

Shri Amit Jhaveri v. Union of India and 2 Others

Bombay HC2 Jul 2014WP/1288/2013

Case brief

AI extract

What is this about?

The petitioner, in arrears of tax, sought writ relief for credit of funds held by Bank of Baroda and exemption from interest/penalty. The Court dismissed the petition, holding that the valid notice under Section 226(3) subsisted and that the relief sought would amount to varying a stay granted in a prior related writ petition.

What did the court decide?

Petition dismissed with no order as to costs.

Shri Amit Jhaveri Vs Union of India and 2 Others — Writ and Judicial Review | Bombay HC (2014)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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WRIT PETITION NO.1288 OF 2013

Amit Jhaveri.

...Petitioner.

vs.

Union of India and ors.

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...Respondents.

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Mr. Amit Jhaveri Petitioner in person. Mr. A.R.Malhotra for the Respondent.

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CORAM : M. S. SANKLECHA AND G.S. KULKARNI, JJ. DATE : 02 July 2014

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PC:

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This petition under Article 226 of the Constitution of India seeks following directions to the Commissioner of Income Tax (respondent No.2) and the Tax Recovery Officer (respondent No. 3).

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(i) to credit the account of the petitioner with an amount of Rs.3.94 crores being a part of the alleged arrears of tax along with interest payable by the petitioner; and

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(ii) not to charge any interest and/or impose penalty upon the petitioner in respect of the demand of Rs.3.94 crores with effect from 22 August 2006 when a notice under Section 226(3) of the Income Tax Act, 1961 (“the Act”) was issued to Bank of Baroda.

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The petitioner is in arrears of payment of tax and penalty during the period 1993-94 to 1997-98 to the extent over Rs.7.00 crores including interest as on 20 August 2007. As the petitioner had failed to discharge his tax obligation, and as the Bank of Baroda held amounts of the petitioner with it, the Income Tax Department by a notice dated 22 August 2006 to the Bank of Baroda under Section 226(3) of the Act called upon it to remit the amount of the petitioner lying with it. The aforesaid notice was not responded to by the Bank of Baroda. Therefore, the Bank of Baroda became assessee in default under Section 226(3)(x) of the Act and in consequence thereof, by notice dated 28 August 2007 the Income Tax Department attached the account of Bank of Baroda with Reserve Bank of India. Thereafter, on the assurance of the Bank of Baroda that it would pay the dues payable by the petitioner to the Income Tax Department, the attachment notice dated 28 August 2007 under Section 226(3) of the Act served upon the Reserve Bank of India was withdrawn on 29 August 2007.

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However, the notice dated 22 August 2006 under Section 226(3) of the Act issued to Bank of Baroda continued to subsist, an order dated 30 November 2007 was passed by the Tax Recovery officer directing the Bank of Baroda to pay over to the Income Tax Department a sum of Rs.7.04 crores. Thereafter, Bank of Baroda filed a writ petition in this Court challenging the order dated 30 November 2007 and the notice dated 22 August 2006 in Writ Petition No.395 of 2008. On 6 Feb.2008, the Writ Petition No.395 of 2008 was admitted and the Tax Recovery Officer was restrained from taking any recovery proceedings against the Bank of Baroda

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in respect of tax due from the petitioner.

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Mr. Amit Jhaveri the petitioner appearing in person submits that an amount of Rs.3.94 crores had been deposited by him with Bank of Baroda in the year 1993-94. Thereafter, certain disputes arose between Bank of Baroda and the petitioner, with the result, the Bank of Baroda was making a claim with respect to the amounts of the petitioner lying with them. When Bank of Baroda was issued a notice under Section 226(3) of the Act, it was obliged to remit the amount of Rs.3.95 crores to the Income Tax Department. It is the petitioner's contention that Bank of Baroda did not honour the notice of the Income Tax Department and became a deemed defaulter resulting in attachment of Bank of Baroda's account with Reserve Bank of India on 20 August 2007. Thereafter, Income Tax Department withdrew the attachment of Bank of Baroda amount with Reserve Bank of Baroda on 28 August 2007 merely on an oral assurance by Bank of Baroda that they would pay the amount to the Income Tax Department. It is the petitioner's case that if the aforesaid amount of Rs.3.94 crores was handed over by Bank of Baroda to the Income Tax Department the addition of interest and the penal proceedings would have come to an end to the above extent. However, it is submitted that the Income Tax Department by its negligence allowed not only the withdrawal of the attachment notice to Reserve Bank of India but also permitted the Bank of Baroda to file a writ petition being Writ Petition No.395 of 2008 in this Court and obtain a stay of the notice dated 28 August 2006 and order dated 30 November 2007 under Section 226(3) of the Act. It is submitted that in view of the Income Tax Department acting in an

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arbitrary manner and allowing Bank of Baroda to obtain a stay of the demand on it, immense prejudice is being caused to the petitioner. In the above circumstances, he submits that amount of Rs.3.94 crores which are admittedly with Bank of Baroda belonging to the petitioner should be taken and paid over to the Income Tax Department and that credit for the same be given to the petitioner.

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We find that the petitioner has failed to pay his income tax dues for Assessment Year 1993-94 to1997-98. The grievance of the petitioner is that the Income Tax Department without any basis revoked the notice issued under Section 226(3) of the Act to the Reserve Bank of India attaching Bank of Baroda's account with it. We find that, in terms of Section-226(3)(vii) of the Act, it is open to the Assessing officer or Tax Recovery Officer to revoke the notice issued under Section 226(3) of the Act. Thus, no fault can be found with the withdrawal of notice to Reserve Bank of India. However, the Income Tax Department has not withdrawn the notice dated 22 August 2006 issued under Section 226(3) of the Act on Bank of Baroda seeking to attach the amount belonging to the petitioner lying with Bank of Baroda. Thus, the attachment of the account continues. The petitioner in effect is seeking to vary the order admitting and granting stay by this Court in Writ Petition No.395 of 2008 filed by Bank of Baroda. This cannot be done by filing another petition but application for variation of the order granted in Writ Petition No.395 of 2008 has to be done in proceeding in that petition, if the grounds for variation at all exist. However, prima facie, it appears to us that all facts which are being urged before us today would have been considered

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when the order dated 6 Feb. 2008 was passed in Writ Petition No.395 of 2008 as all the facts now urged were in existence even on 6 Feb. 2008 when this Court passed the order.

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Accordingly, the petition is dismissed with no order as to costs.

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( G. S. KULKARNI, J.) (M.S. SANKLECHA, J.)

Shri Amit Jhaveri v. Union of India and 2 Others

Case brief

What is this about?

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Shri Amit Jhaveri v. Union of India and 2 Others

Case brief

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