Undue haste in recovery of disputed demands by issue of Section 226(3) garnishee notices

Cleared Secured Services Pvt Ltd Vs DCIT (ITAT Mumbai)

We have noted that the hearing of stay petition was concluded, as per information available to us, on 17^th January 2020, but the order thereon has not been passed as yet since one of the Members constituting coram of the bench has gone on tour to Delhi benches due to unavoidable official exigencies. In the meantime, however, the revenue authorities have already issued garnishee notices, under section 226(3) of the Income Tax Act, 1961, to the bankers of the assessee on 17^th January 2020 itself. Such an undue haste in recovery of the disputed demands, in respect of which the hearing of appeal as also the stay petition is already concluded, is indeed inappropriate. The revenue authorities should have at least waited for the disposal of the stay petition. In these circumstances, we are of the considered view that the garnishee proceedings initiated by the revenue authorities should be placed under suspension till the stay petition is disposed of. As one of the Members constituting coram of the bench which has heard the stay petition is on tour to Delhi as at present and is likely to resume at Mumbai benches only on 27^th January 2020, we deem it appropriate to grant interim stay on the proceedings till 29^th January 2020, till disposal of stay petition, till the disposal of the appeal, or till further orders in this regard- whichever is earlier. In the meantime, operations of all the garnishee notices issued by the revenue authorities on the bankers of the assessee, on or after 17^th January 2020, shall remain suspended. The revenue authorities are further directed not to resort to, or continue with, any other coercive measures also, in the meantime, to recover the disputed outstanding demands impugned in appeal before us. Ordered, accordingly.

FULL TEXT OF THE ITAT JUDGEMENT

1. Upon commencement of proceedings in this bench, and as today this bench was headed by the senior most person at the station i.e. the jurisdictional Vice President, learned counsel for the assessee, sought our permission to make a mention of an urgent matter which deserves to be considered by the bench. The submissions made in the course of mention are broadly the same as set out in the petition filed by the assessee applicant which states as follows:

I, the under signed director of M/s. Clear Secured Services Private Limited (hereafter referred as ‘assessee’) would like to bring to your notice that Hon’ble ‘C’ Bench vide order dated 15/02/2019 in SA No. 54/Mum/2019, had granted stay to the assessee against the recovery proceedings initiated by the department, till the time appeal in case of ITA No. 7302/Mum/2018 was disposed or within 180 days from the date of the stay order, whichever was earlier.

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