Facts of the Case

The petitioner filed an appeal against the assessment order dated 21 December 2019 before the Commissioner of Income Tax (Appeals) on 20 January 2020. However, before the appeal could be adjudicated, the Assessing Officer issued a notice under Section 226 of the Income Tax Act, 1961 to the petitioner’s banks, resulting in the freezing of her bank accounts and recovery of approximately ₹20 lakhs.

Subsequently, under the Faceless Appeal Scheme, 2020, the appeal was transferred to the National Faceless Appeal Centre. Despite the lapse of more than two and a half years, the appeal was neither listed nor decided. The petitioner also made representations seeking early hearing, but no action was taken.

Issues Involved

  1. Whether prolonged non-listing and non-disposal of a statutory appeal violates principles of natural justice.
  2. Whether recovery proceedings under Section 226 can continue when the appeal is pending for an unreasonable period.
  3. Whether the High Court can direct expeditious disposal of pending appeals before the appellate authority.

Petitioner’s Arguments

  • The petitioner argued that despite filing the appeal within time, the same had not been listed for hearing for over two and a half years.
  • The bank accounts were frozen and substantial recovery was made under Section 226, causing financial hardship.
  • The delay in disposal of appeal defeats the purpose of appellate remedy and violates fairness.
  • Requests for early hearing were ignored by the authorities.

Respondent’s Arguments

  • The Revenue submitted that if the petitioner files an application for early hearing, the same would be considered expeditiously.

Court’s Findings / Order

  • The Delhi High Court disposed of the writ petition with directions.
  • The petitioner was directed to file an application for early hearing before the National Faceless Appeal Centre.
  • Upon such application being filed within two weeks, the appellate authority was directed to decide the same in accordance with law within four weeks thereafter.

Important Clarification

  • The Court did not adjudicate on the merits of the assessment or recovery.
  • It emphasized procedural fairness and timely disposal of appeals.
  • The judgment reinforces that taxpayers must actively seek early earing through proper application before invoking writ jurisdiction.

Sections Involved

  • Section 226 of the Income Tax Act, 1961 (Recovery of tax – attachment/freezing of bank accounts)

 Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:2558-DB/MMH11072022CW103292022_172248.pdf

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