State Bank of Bikaner and Jaipur v. Commissioner of Income-tax
[Citation -2015-LL-0116-3]

Citation 2015-LL-0116-3
Appellant Name State Bank of Bikaner and Jaipur
Respondent Name Commissioner of Income-tax
Court HIGH COURT OF PATNA
Relevant Act Income-tax
Date of Order 16/01/2015
Judgment View Judgment
Keyword Tags income from house property • reserve bank • fair rent
Bot Summary: All the writ petitioners are aggrieved and they seek quashing of the show- cause notices all dated July 28, 2014, issued by the Tax Recovery Officer, Patna, by which the respective petitioners have been called upon to show cause as to why they should not be treated as assessee in default under section 226(3)(ix) of the Income-tax Act, 1961. The short facts of the present cases are that all the three petitioners are public sector banks, being Government of India undertakings, who are tenants of premises located on Fraser Road, Patna, of which the present owner is M/s. Sabicon Estates Pvt. Ltd. It is not in dispute that the petitioners were regularly paying rent to the said landlord and after the premises were taken over by the Income-tax Department by issuing notices dated July 28, 2014, under section 26(3) of the Act they have been paying rent to the Tax Recovery Officer. The simple submission of learned counsel for the petitioners is that the Tax Recovery Officer has no jurisdiction under the law of the land to unilaterally enhance the rent being paid by the petitioners and any such revision/enhancement/determination of rent can be made in accordance with the procedure prescribed by law. It is urged by learned counsel for the petitioners that in the present matters there is no agreement between the petitioners and the original landlord or the Income-tax Department regarding the enhancement of rent and, thus, it was not open to the Tax Recovery Officer to fix higher rent or rate of rent and realise the same by invoking his coercive powers under the provisions of the Income-tax Act. Learned counsel for the Income-tax Department, on the other hand, submits that there have been a series of correspondences between the landlord of the premises and the tenants banks for renewal of the lease as also for enhancement of the rent of the premises but the petitioners not having come forward in the matter, the Tax Recovery Officer has been compelled to take action in the matter by applying the provisions of section 23(1)(a) of the Income- tax Act under which the Tax Recovery Officer has powers of the landlord for the purpose of enhancement of rent. Any such fixation of fair rent or higher rent can only be either on the basis of agreement between the parties or by the exercise of powers in areas covered by the provisions of the Bihar Buildings Control Act, 1982, by the competent authorities therein and not unilaterally by the Tax Recovery Officer or any other officer of the Income-tax Department. Any amount, which may have been recovered from the accounts of the petitioners, shall be refunded to the petitioners forthwith.


JUDGMENT judgment of court was delivered by Ramesh Kumar Datta J.-Heard learned counsels for petitioners and learned counsel for Income-tax Department. All three writ applications raise common issues and, accordingly, they have been heard together and are being disposed of by this common order. All writ petitioners are aggrieved and they seek quashing of show- cause notices all dated July 28, 2014, issued by Tax Recovery Officer, Patna, by which respective petitioners have been called upon to show cause as to why they should not be treated as "assessee in default" under section 226(3)(ix) of Income-tax Act, 1961. They have further challenged orders dated September 29/30, 2014, passed by Tax Recovery Officer, by which he has enhanced rent of premises of which they are tenants. They further seek quashing of notices dated October 31, 2014, under section 26(3) of Act issued by Reserve Bank of India by which directions have been issued by Tax Recovery Officer to Manager, Reserve Bank of India, to make payment of Rs. 1,41,50,196, Rs. 98,13,588 and Rs. 1,19,12,963, respectively, with respect to three petitioners and consequential letters dated October 31, 2014, issued by respondent No. 2, Reserve Bank of India. short facts of present cases are that all three petitioners are public sector banks, being Government of India undertakings, who are tenants of premises located on Fraser Road, Patna, of which present owner is M/s. Sabicon Estates Pvt. Ltd. It is not in dispute that petitioners were regularly paying rent to said landlord and after premises were taken over by Income-tax Department by issuing notices dated July 28, 2014, under section 26(3) of Act they have been paying rent to Tax Recovery Officer. By aforesaid action, Tax Recovery Officer has sought to unilaterally enhance rent payable by petitioners manifold and to recover same from respective accounts of petitioners maintained by Reserve Bank of India, pursuant to which aforesaid notices were issued and action taken. simple submission of learned counsel for petitioners is that Tax Recovery Officer has no jurisdiction under law of land to unilaterally enhance rent being paid by petitioners and any such revision/enhancement/determination of rent can be made in accordance with procedure prescribed by law. It is urged by learned counsel for petitioners that in present matters there is no agreement between petitioners and original landlord or Income-tax Department regarding enhancement of rent and, thus, it was not open to Tax Recovery Officer to fix higher rent or rate of rent and realise same by invoking his coercive powers under provisions of Income-tax Act. Learned counsel for Income-tax Department, on other hand, submits that there have been series of correspondences between landlord of premises and tenants banks for renewal of lease as also for enhancement of rent of premises but petitioners not having come forward in matter, Tax Recovery Officer has been compelled to take action in matter by applying provisions of section 23(1)(a) of Income- tax Act under which Tax Recovery Officer has powers of landlord for purpose of enhancement of rent. On consideration of rival submissions of learned counsels for parties, this court does not find any force in submission of learned counsel for Income-tax Department. provisions of section 23(1)(a) of Act relied upon by learned counsel relate to determination of income from house property for purpose of filing of income-tax returns and assessment thereof and same has no relevance at all so far as fixation of rent payable by tenant to landlord is concerned. Any such fixation of fair rent or higher rent can only be either on basis of agreement between parties or by exercise of powers in areas covered by provisions of Bihar Buildings (Lease, Rent and Eviction) Control Act, 1982, by competent authorities therein and not unilaterally by Tax Recovery Officer or any other officer of Income-tax Department. In light of aforesaid discussions, we find that entire action of Tax Recovery Officer and consequential action taken by respondent No. 2, Reserve Bank of India, are de hors powers conferred upon them by law of land and they are, accordingly, quashed. Any amount, which may have been recovered from accounts of petitioners, shall be refunded to petitioners forthwith. writ applications are, accordingly, allowed with aforesaid observations and directions. *** State Bank of Bikaner and Jaipur v. Commissioner of Income-tax
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