No recovery of tax is to be made unless the time limit for filing an appeal has expired or till the disposal of a stay application
The Court while adjudicating the above issue relied upon UTI Mutual Fund vs. ITO [345 ITR 71] which had prescribed the guidelines to be followed in such circumstances. As was laid down in the said case, no recovery of tax is to be made unless the time limit for filing an appeal has expired or till the disposal of a stay application, if any, moved by the Assessee and for a reasonable period thereafter to enable the Assessee to move before the higher forum. The coercive steps may, however, be adopted by the Revenue where it has reasons to believe that the Assessee may defeat the demand and the action is supported by brief reasons.
While disposing of the application, referred as above, it has to be seen if the Assessing Officer has taken a contrary view to what was held in the preceding previous years without there being any material change in facts or law. Where a bank account of the Asseessee has been attached, it is to be ensured that prior to withdrawal of amount, a reasonable prior notice should be furnished to the Assessee to enabling Assessee to make a representation or seek recourse to a remedy in law. The Income Tax Officer is expected to not act as a mere tax gatherer but as a quasi judicial authority vested with the public duty of protecting the interest of the Revenue and at the same time balancing the need to mitigate hardship to the Assessee. He must hence objectively decide the application for stay considering that an appeal lies against his order.
In the instant case, the Revenue acted contrary to the guidelines mentioned above and its action of effecting recovery when the appeal was yet to be heard was held to be conducted in undue haste and accordingly, it was held that it is primary obligation of the officers of the State to follow the law laid down by the Courts in letter and spirit before taking any coercive action.
[The Director of Income Tax (Exemption), Mumbai vs. ITAT, Mumbai Branch ‘B’ and Anr.]
(Bombay HC, 04.02.2014)