Telangana HC Sets Aside Income Tax Garnishee Notices, Directs Decision on Pending Appeals and Stay Application First [Read Order]

The High Court of Telangana, set aside income tax garnishee notices issued, against bank accounts of the assessee observing that the notices were issued despite the pendency of appeals and a stay application.

Unique Engineering Enterprises Pvt.Ltd, petitioner-assessee, challenged the garnishee notices issued on 08.01.2025 by respondent No. 1, attaching its bank accounts held with respondents No. 4, 5, and 6.

These notices were based on an assessment order dated 27.03.2024 for the assessment year 2022–23, followed by a penalty order dated 17.09.2024.

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The petitioner had filed appeals against both orders before respondent No. 3 on 18.04.2024 along with a stay application. However, the appeals and stay request were still pending when the garnishee notices were issued.

The assessee's counsel argued that the garnishee notices caused serious inconvenience to the business and should be set aside. It was pointed out that since appeals had already been filed, the authorities should not have taken coercive steps in the meantime.

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The counsel referred to two recent High Court orders ,decided on 03.01.2022 and decided on 17.01.2022 ,where interim protection was granted in similar situations. In those cases, the Court directed that appeals and stay applications be decided first before issuing garnishee notices.

The division bench comprising P.Sam Koshy(Justice) and Namavarapu Rajeshwar Rao( Justice) noted that the petitioner had promptly filed appeals and a stay application against the assessment and penalty orders. However, even after more than 10 months, there was no decision on either the appeals or the stay request.

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The court observed that the authorities should have first decided the stay application or the appeal before taking any recovery action. Instead, they delayed the appeal and went ahead with coercive steps.

As a result, the bench set aside the garnishee notice dated 08.01.2025 and directed the authorities to decide the appeal and stay application first, and then proceed as per law.

In short,the writ petition was disposed of.

To Read the full text of the Order CLICK HERE

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