Mumbai ITAT worked from home and lifted attachment u/s 226(3) from Bank and debtors of COVID quarantine facilities constructor
1. The taxpayer sought an urgent hearing in respect of the recovery of the Income-tax demand of Rs. 2.91 Crores for the Assessment Year 2010-11. The total income tax demand was Rs. 6.47 crores out of which taxpayer already paid Rs. 3.56 Crores whereas tax component in total demand was Rs. 3.48 Crores.
2. The taxpayer sought for relief from garnishee proceedings.
3. The assessee taxpayer is a private limited company and a civil contractor, builder, and developer for the last 25 years and was granted several contracts by the statutory authorities under Prime Minister Awas Yojna.
4. ITR was filed showing income of Rs. 16.09 Crores which was accepted in regular assessment under section 143(3). The case was further reopened under section 148 and the addition of Rs. 33.93 crores were made for bogus purchases.
5. Before CIT(A) partial relief of Rs. 5.09 Crores was allowed to the taxpayer. The effect of the appeal order was pending from the Assessing Officer. The assessee filed a further appeal before ITAT Mumbai.
6. The AO and Pr. Commissioner of Income Tax denied the stay of tax demands and banks and debtors were attached under garnishee proceedings under section 226(3) which halted the business of the assessee. The assessee filed a writ before High Court who suggested to approach the ITAT first. A stay petition was before ITAT Mumbai.
7. The assessee was directed by the area Collector to make available his partially completed building for providing quarantine facilities to the COVID 19 patients.
8. The ITAT observed that the Ministry of Labour & Employment Circulars dated 20/03/2020 and 23/03/2020 ruled as taken cognizance of disruption created by the COVID 19 pandemic situation. The stay was granted subject to the following:
(a) Any amount available to the assessee, as a result of this stay order and as a result of garnishee proceedings being lifted, will be first used for making payments of overdue and current wages payable to the laborer working with the assessee, and for making payment of overdue and current salaries to its employees. The amount available, after this exercise, will be used for the purpose of carrying out construction activity as necessary for providing quarantine facilities, as directed by the Collector. Any surplus amount thereafter will be used for the construction activities of the business. The assessee will give an undertaking to this effect in writing.
(b) The assessee will file a statement showing utilization of funds, so available to the assessee on account of the garnishee proceedings being lifted, within 15 days from the date of this order.
(c) The assessee will fully cooperate in expeditious disposal of this appeal on out of turn basis, on 8th June 2020, and will not seek any adjournment. All the requisite paper books etc will be filed sufficiently in advance.