Income Tax Recovery Officer should Lift Attachment once ITAT Order Attains Finality: Madras HC [Read Order]
The Madras High Court however clarified that the department may pursue recovery if it later succeeds in further proceedings.
Income Tax Recovery - ITAT - Madras HC - taxscan
Income Tax Recovery - ITAT - Madras HC - taxscan
The Madras High Court recently affirmed that an Income Tax Recovery Officer (TRO) is obliged to lift attachment orders over the property of an assessee once the subject-matter issue has attained finality at the appellate level.
The decision was given by the High Court against a writ petition filed by M/s Sritharani Infraa Developers Pvt. Ltd., impugning an attachment order dated July 15, 2022 passed by the respondent Tax Recovery Officer, TRO Central 2, Chennai, contending the same to be unreasonable, illegal, improper and in gross violation of principles of natural justice and consequently.
The petition was subjected to search operations from 8 - 13 December, 2016, which led to the passing of assessment orders for assessment years (A.Y.) 2012–13 to 2017–18 on February 6, 2020.
While the assessments for 2012–13 to 2014–15 recorded nil additions, the Assessing (AO) Officer made new additions for AYs 2015–16 to 2017–18. The petitioner challenged those additions before the Commissioner of Income Tax (Appeals) ( CIT(A) ), who partly allowed the appeal and set aside the new additions made by the AO.
The Department appealed to the Income Tax Appellate Tribunal (ITAT), which confirmed the CIT(A) order. Despite the confirmation from the appellate authority, the TRO sustained the attachment proceedings, leading to the present petition.
S.R. Rajagopal, appearing for the petitioner on behalf of Vaibhav R. Venkatesh, argued that once the factual conclusions made by the ITAT were rendered and given effect to, the TRO is bound to lift the attachment.
The counsel further relied on earlier Madras High Court decisions including Sri Lakshmi Brick Industries vs. Tax Recovery Officer and others (2013) and Coromandel Oils P. Ltd., vs. Tax Recovery Officer and others (2017) to contend that the matter is no more res integra and settled by the very same High Court earlier.
A.P. Srinivas and A.N.R. Jayaprathap, appearing for the respondents contended that finality had not been attained because the Department intended to file a further appeal and was in the process of the same; however the counsel accepted the legal position as per the law laid
down in Sri Lakshmi Brick Industries (supra) and Coromandel Oils (supra).
Justice Krishnan Ramasamy examined the statutory scheme, including the decision in Coromandel Oils (supra) to reiterate that where an appellate forum (ITAT) has adjudicated on facts and the order has been given effect to, the TRO must amend or cancel the recovery certificate and lift the attachment. Accordingly, the Madras High Court, maintaining precedence with its earlier ruling directed that the Tax Recovery Officer lift the attachment of property within a period of 4 weeks.
The Court however maintained that the Department remains at liberty to pursue recovery if it subsequently succeeds in further proceedings.
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