Facts of the Case

  • The petitioner challenged a garnishee order dated 25.07.2022 issued by the Revenue authorities to its banker (ICBC Bank of China).
  • The order directed remittance of ₹317,56,70,954/-.
  • The garnishee order was based on an earlier order dated 20.07.2022, wherein the Assistant Commissioner of Income Tax rejected the petitioner’s application for stay under Section 220(6).
  • The petitioner had already filed a review/revision application before the Principal Commissioner of Income Tax (PCIT).
  • Appeals against assessment orders for AY 2019–20 to 2021–22 were also pending before the Commissioner of Appeals.

Issues Involved

  1. Whether the garnishee order under Section 226(3) could be enforced while a review/revisional application was pending before the PCIT.
  2. Whether coercive recovery proceedings are justified during the pendency of appellate and revisional remedies.

Petitioner’s Arguments

  • The garnishee order was premature and unjustified, as the review/revision application before PCIT was pending.
  • Recovery proceedings should be stayed pending adjudication of statutory remedies.
  • The action of Revenue violated principles of fairness and procedural propriety.

Respondent’s Arguments

  • The Revenue relied on the rejection of the stay application under Section 220(6).
  • It justified the garnishee order as a lawful recovery mechanism under Section 226(3).

Court’s Findings / Order

  • The Court noted that:
    • The petitioner’s review/revisional application was pending before PCIT.
    • Appeals against assessment orders were also pending.
  • In view of this, the Court held that coercive recovery should not proceed at this stage.

Final Directions

  • The operation of the garnishee order dated 25.07.2022 was stayed.
  • The stay will continue until disposal of the review/revisional application by PCIT.
  • If the decision of PCIT is adverse:
    • No coercive action for one week from service of the order.
  • The writ petition was disposed of accordingly.

Important Clarification by the Court

  • The so-called “review” under the Office Memorandum dated 29.02.2016 is in substance a revisional power, especially where the original order is passed by a subordinate authority (ACIT).
  • Courts may intervene to prevent premature recovery when statutory remedies are actively being pursued.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:3040-DB/RAS08082022CW117432022_170714.pdf

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