UCO BANK - REGIONAL OFFICE Vs. UNION OF INDIA

JUDGEMENT

(1.) THE Special Civil Application No. 17941 of 2007 was preferred by the UCO Bank against the Income Come Tax Department, Union of India seeking a writ of certiorari to quash and set aside notice dated 05. 07. 2007 issued by the Tax Recovery Officer-5, Range-5, Baroda to the bank directing it to deposit amount of Rs. 14. 60 lacs the value realized by sale of property which was under the attachment with the Income Tax Department. When the matter came up for admission before a learned Judge, learned Single Judge without issuing notice to the Income Tax Department disposed of the Special Civil Application on 08. 08. 2007 holding that the remedy open to the Bank is to approach the High Power Committee since the dispute is between two departments. Reference was made to few decisions of the Apex Court viz. [1] M/s. Oil and Natural Gas Commission And Another Vs. Collector of Central Excise - JT 1991 (4) S. C. 158, [2] Oil and Natural Gas Commission And Another Vs. Collector of Central Excise - 1992 Supp. (2) SCC 432, [3] Chief Conservator of Forests, Govt. of A. P. Vs. Collector and Others - (2003) 3 SCC 472. Later, UCO bank filed Misc. Civil Application to recall the earlier order dated 08. 08. 2007 in view of the Government of India Memorandum dated 22. 01. 2004 and sought a decision on merits. Learned Single Judge rejected the said application by his order dated 17. 12. 2007. Aggrieved by the same, the Letters Patent Appeal has been preferred by the UCO Bank. When the matter came up for admission, we issued notice to the Income Tax Department.

(2.) LEARNED counsel appearing for the UCO Bank submitted that the learned Single Judge was not justified in referring the matter to the High Power Committee relying on the decisions of the Apex Court. Learned Counsel for the UCO Bank submitted that the dispute between the Bank and the Income Come Tax Department is not an issue to be resolved by the Committee as per the principles laid down by the Apex Court in the above mentioned cases. We also fully agree with the Counsel for the Bank. After hearing learned counsel on either side, we thought we may examine the legality of the impugned notice issued by the Income Tax Department to the UCO Bank, for which it is necessary to examine the facts.

(3.) AVINASH Govind Sharma, the 2nd respondent, assessee, filed his return of income with the Assessing Officer, Income Tax Ward V, Vadodara for the year 2002-03. Return of income was completed under Section 144 of the Income Tax Act, 1961 on 31. 03. 2005 determined the total income of Rs. 45,54,254/- as against the returned income of Rs. 1,12,047/ -. Copy of the assessment order dated 31. 3. 2005 passed by the Assessing Officer has been produced by the Income Tax Department. Second respondent failed to make payment of outstanding tax dues to the respondent No. 1 and therefore, notice of demand under Section 156 of the Income Tax Act dated 31. 03. 2005 was issued by the Income Tax Department demanding tax amounting to Rs. 18,18,400/ -. Notice of demand was served on the assessee - second respondent on 31. 03. 2005. Income Tax Department has also passed order of provisional attachment dated 30. 03. 2005 under Section 281b of the Income Tax Act, and attached the immovable properties of second respondent situated at A-1, Shilp Apartment, 14-15, Haribhakti Society, Race Course Circle, Baroda along with movable property being Motor Car - Palio belonging to second respondent and the same was served on the second respondent on 31. 03. 2005. Copy of the provisional attachment order passed by the Income Tax Department was also sent to Sub Registrar Office, Baroda, the City Survey Superintendent No. 1, Kothi, Baroda and the District Collector, Baroda etc. . Income Tax Department issued notice of demand to the defaulter assessee vide order dated 26. 07. 2005 under Rule 2 of the Second Schedule to the Income Tax Act, calling upon the respondent No. 2 to make the payment of amount mentioned in the said notice. Inspite of service of notice of demand, assessee - second respondent failed to discharge that tax liability. Income Tax Department, therefore, passed an order of attachment of the properties, movable and immovable belonging the second respondent - assessee on 14. 09. 2005 invoking Rule 48 of the Second Schedule of the Income Tax Act and issued order of attachment in Form No. I. T. C. P.-16. Order of attachment was duly served upon the assessee. Income Tax Department also drawn Panchnama of immovable property of the second respondent and carried out inventary in the presence of the witnesses.