Abul Kalam v. Asst. Commissioner of Income-tax, Circle-8(1), Kolkata & Ors
[Citation -2020-LL-0127-259]

Citation 2020-LL-0127-259
Appellant Name Abul Kalam
Respondent Name Asst. Commissioner of Income-tax, Circle-8(1), Kolkata & Ors.
Court HIGH COURT OF CALCUTTA
Relevant Act Income-tax
Date of Order 27/01/2020
Assessment Year 2017-18
Judgment View Judgment
Keyword Tags provisional attachment • attachment order • coercive steps • demand notice • stay petition
Bot Summary: The petitioner is aggrieved by an assessment order dated December 29, 2019 passed by the income tax department and subsequent demand notice under Section 156 of the Income Tax Act, 1961. The writ petitioner is also aggrieved by an attachment notice that was issued under Section 281B of the Act prior to passing of the assessment order. In the meantime an order for provisional attachment was issued under 3 Section 281B of the Act on December 26, 2019 attaching the bank account of the petitioner. Whether such jurisdiction has been exercised incorrectly and/or there is an error in such exercise is a different issue to be tested under the statutory appeal available under the Act. The Bombay High Court in Vodafone Idea Ltd. vs. Commissioner of Income Tax bearing Writ Petition No. 2036 of 2019 reported in 2019 SCC OnLine Bom 1786 while examining a similar case of attachment under Section 281B of the Act, held as follows: 16. Under sub-section of section 281B of the Act thus, where during the pendency of any proceedings for assessment or reassessment, the assessing officer is of the opinion that for the purposes of protecting the interest of revenue, it is necessary so to do, he may with the previous approval of the higher authority pass an order in writing provisionally attaching the property belonging to the assessee. The Income Tax officer has himself changed the goal post by first charging the amount under Section 28(iv), and thereafter, under Section 28(ii)(a).


ORDER SHEET WP 25 of 2020 IN HIGH COURT AT CALCUTTA Constitutional Writ Jurisdiction ORIGINAL SIDE ABUL KALAM Versus ASST. COMMISSIONER OF INCOME TAX, CIRCLE 8(1) KOLKATA & ORS. BEFORE: Hon'ble JUSTICE SHEKHAR B. SARAF Date : 27th January, 2020. Appearance: Mr. Ratnanko Banerji, Sr. Adv. Mr. Dhruba Ghosh, Sr. Adv. Mr. Asim Chowdhury, Adv. Ms. Nikita Jhunjhunwala, Adv. Mr. Anurag Mitra, Adv. Mr. Soham Sen, Adv. Mr. Dhiraj Trivedi, Adv. Mr. Radha Mohan Ray, Adv. Court: 1. This is application under Article 226 of Constitution of India. petitioner is aggrieved by assessment order dated December 29, 2019 passed by income tax department and subsequent demand notice under Section 156 of Income Tax Act, 1961 (in short Act ). writ petitioner is also aggrieved by attachment notice that was issued under Section 281B of Act prior to passing of assessment order. 2. Mr. Ratnanko Banerji, Senior Advocate appearing on behalf of petitioner, submits that notice for assessment under Section 143(3) of 2 Act was issued on August 13, 2018 for Assessment Year 2017- 18. During assessment hearings, several queries were raised upon assessee petitioner wherein assessee furnished its reply on December 5, 2019. Upon perusal of response of assessee, notice was issued under Section 142(1) on December 12, 2019. To said notice, assessee furnished reply on December 19, 2019. On basis of said reply, show-cause notice was issued on assessee on 25th December, 2019. It is to be noted that in earlier show-cause notice, taxability of sum of Rs.75.4 crore had been raised under Section 28(iv) of Act. Subsequently, notice issued on December 25, 2019 stated that amount of Rs.75.4 crore was taxable under Section 28(ii)(a) of Act. To this show-cause notice, assessee responded on December 28, 2019. Hearing was granted to assessee and after perusal of records and on consideration of judgments relied upon by assessee, assessment was completed under Section 143(3) of Act on December 29, 2019 holding total assessed income to be Rs.77,61,50,670/-. Subsequent to same, computation was completed and computation order was also issued on same date seeking demand of Rs.35,95,82,634/-. Notice under Section 156 was also issued for above sum and petitioner was directed to deposit said sum of money within 30 days from date of notice. In meantime order for provisional attachment was issued under 3 Section 281B of Act on December 26, 2019 attaching bank account of petitioner. 3. Mr. Ratnanko Banerji, Senior Advocate has relied upon several judgments being Commissioner of Income Tax vs. Kay Arr Enterprises reported in (2008) 299 ITR 348 (Madras); Commissioner of Income Tax-II, Jalandhar vs. Ashwani Chopra reported in (2013) 352 ITR 620 (P&H); Commissioner of Income Tax vs. AL. Ramanathan reported in (2000) 245 ITR 494 (Madras) and Commissioner of Income Tax, Mumbai vs. Sachin P. Ambulkar reported in (2014) 221 Taxman 67 (Bombay) (MAG.) to buttress his argument that amounts received on account of family arrangement/re-arrangement are capital receipts and are not taxable in any manner whatsoever. He further submits that neither is capital gains payable on sum nor can sum be taxable under Section 28(ii)(a) of Act. Mr. Banerji further relies upon Assistant Commissioner of Income-tax vs. Balmiki Prasad Singh reported in (2018) 259 Taxman 372 (SC) to support his argument that assessment order can be challenged in writ proceedings in spite of fact that there may be alternative and efficacious remedy. 4. With regard to attachment, Mr. Banerji has submitted that provisional attachment made under Section 281B of Act is completely unjustified as assessee cooperated with Income Tax Officer at all times and assessee not being fly by night operator there was no need for any attachment whatsoever. He 4 submits that not only is attachment completely untenable and without jurisdiction, but attachment is absolutely unknown to law and contrary to principles established in law. Mr. Trivedi, Advocate appearing for Revenue submits that attachment was done as amount that would become due was very large sum of money. 5. Mr. Dhiraj Trivedi, Advocate appearing on behalf of Revenue, relying on assessment order passed, has placed B.A. Mohota Textiles Traders (P.) Ltd. vs. Deputy Commissioner of Income-tax, Special Range-2 reported in (2017) 248 Taxman 490 (Bombay) and Padmanabha Udupa vs. Income-tax Officer, Ward-3, Division-II, Ernakulam reported in (2010) 189 Taxman 408 (Kerala) to submit that assessee cannot lift corporate veil as and when he wants to for his own benefit. He submits that entire transaction in present case is that of petitioner loosing his control over company as he was one of main managers and/or director of company. 6. Considered above arguments placed on behalf of Counsels. 7. Having perused assessment order, I am of view that I should not interfere with same at this stage. Without going into merits of said order, I find that officer has dealt with contentions raised by petitioner and come to particular finding. Interfering with same at this stage may not be correct course of action. Hon ble Supreme Court in several judgments including 5 judgment in Union of India vs. Guwahati Carbon Ltd reported in 2012 (278) ELT 26(SC) and Commissioner of Income Tax vs. Chhabil Dass Agarwal reported in (2014) 1 SCC 603 has held that in event statutory appeal is available, writ court should not interfere unless order is passed completely without jurisdiction. In present case, I am of prima facie view that income tax officer has not acted without jurisdiction. Whether such jurisdiction has been exercised incorrectly and/or there is error in such exercise is different issue to be tested under statutory appeal available under Act. Supreme Court in Balmiki Prasad Singh (supra) upheld order of High Court setting aside assessment order on grounds of violation of principles of natural justice. In present case, there is no such violation of principles of natural justice, and therefore, judgment has no precedential value in present case. extra ordinary jurisdiction under Article 226 of Constitution is required to be sparingly used only when Court finds that action of State is completed without jurisdiction, in violation of principles of natural justice and/or order passed is palpably illegal. In my view, none of above conditions are applicable in present case. Accordingly, I do not find any reason to interfere with assessment order. 8. With regard to provisional attachment, reasons recorded by officer and explanation given by Mr. Trivedi are not acceptable to me as this is provision to be used only in rare situations where 6 bona fide of assessee is in question or there has been clear case of evasion of tax. Bombay High Court in Vodafone Idea Ltd. vs. Commissioner of Income Tax bearing Writ Petition No. 2036 of 2019 reported in 2019 SCC OnLine Bom 1786 while examining similar case of attachment under Section 281B of Act, held as follows: 16. Under sub-section (1) of section 281B of Act thus, where during pendency of any proceedings for assessment or reassessment, assessing officer is of opinion that for purposes of protecting interest of revenue, it is necessary so to do, he may with previous approval of higher authority pass order in writing provisionally attaching property belonging to assessee. These are drastic powers permitting assessing officer to attach any property of assessee even before completion of assessment or reassessment. These powers are thus in nature of attachment before judgment. They have provisional applicability and in terms of sub-section (2) of section 281B of Act, limited life. Such powers must, therefore, be exercised in appropriate cases for proper reasons. Such powers cannot be exercised merely by repeating phraseology used in section and recording opinion of officer passing such order that he was satisfied for purpose of protecting interest of revenue, it was necessary so to do. 9. In present factual matrix, it is crystal clear that taxability of Rs. 74.5 crores is debatable issue. Income Tax officer has himself changed goal post by first charging amount under Section 28(iv), and thereafter, under Section 28(ii)(a). In situation wherein officer is himself not certain of taxability, use of drastic provision such as Section 281B is not tenable. Moreover, no reasons have been provided in attachment notice. Submission of Mr. Trivedi that amount of tax being large, and therefore, provisional attachment was resorted to, is not good enough reason and is rejected by this Court. If above reason were accepted then 7 in all cases of high demands, provisional attachment would become norm. I am unable to accept logic, and therefore, attachment order is quashed and set aside. 10. With above directions, this writ petition is disposed of with liberty given to petitioner to file appeal and stay petition before Commissioner of Income Tax (Appeals) within period of 30 days from date. Commissioner of Income Tax (Appeals) is directed to grant opportunity of hearing and thereafter pass reasoned order in respect to stay petition forthwith. Commissioner of Income Tax (Appeals) is also request to hear out appeal at earliest, preferably within period of two months from date. income tax authorities are directed not to take any coercive steps against petitioner till disposal of said stay petition by CIT (Appeals). In event, petitioner does not file appeal and stay petition within aforesaid one month, department shall be at liberty to act in accordance with law. 11. Accordingly, WP 25 of 2020 is disposed of. 12. Since no affidavit has been called for, allegations in application are deemed not to have been admitted. 13. It is made clear that I have not gone into merits of case and authorities below should not take notice of any of comments made hereinabove in relation to merits of case. (SHEKHAR B. SARAF, J.) R.Bhar Abul Kalam v. Asst. Commissioner of Income-tax, Circle-8(1), Kolkata & Or
Report Error