Facts of the Case

The present writ petition was filed challenging the attachment and creation of charge on a residential property situated at Navi Mumbai. The petitioner also sought damages on account of arbitrary action and non-passing of appeal effect orders leading to continued tax demand and harassment.

A search and seizure operation was conducted under Section 132 of the Income Tax Act, 1961, followed by issuance of notices under Section 153A for six assessment years. Appeals were filed, and all additions were deleted by the Commissioner of Income Tax (Appeals). Subsequently, the Revenue’s appeal before the Income Tax Appellate Tribunal was dismissed on 31st July 2017.

Despite this, a charge on the property had been created earlier in 2014, which continued even after the tax demand ceased to exist.

Issues Involved

  1. Whether attachment of property can continue when no outstanding tax demand exists.
  2. Whether failure to pass appeal effect orders amounts to arbitrary administrative action.
  3. Whether the writ petition is maintainable for directing authorities to cancel unlawful attachment.
  4. Jurisdiction of the Delhi High Court when the assessee is assessed in Delhi.

Petitioner’s Arguments

  • The attachment of property is illegal and arbitrary, as all additions were deleted and Revenue’s appeal was dismissed.
  • No outstanding demand survives; therefore, continuation of charge on property is unjustified.
  • Authorities failed to act on representations and reminders seeking cancellation of demand.
  • Non-passing of appeal effect orders caused unnecessary harassment.
  • Jurisdiction lies with Delhi High Court since assessment was carried out in Delhi.

Respondent’s Arguments

  • The Revenue accepted notice and sought time to respond.
  • No substantive counter-arguments were recorded at this stage of proceedings.

Court’s Findings / Order

The Delhi High Court, after hearing both parties, issued the following directions:

  • The writ petition was treated as a representation to the respondent authorities.
  • The concerned authority was directed to decide the representation by a reasoned order within four weeks in accordance with law.
  • The petition was accordingly disposed of with directions.

The Court did not directly adjudicate on merits but ensured administrative accountability and timely decision-making.

Important Clarifications

  • Even where no demand survives, administrative inaction can be challenged through writ jurisdiction.
  • Courts may convert writ petitions into representations to ensure expeditious disposal.
  • Attachment orders must have a valid subsisting demand, failing which they may be challenged as arbitrary.
  • The case emphasizes the duty of tax authorities to pass appeal effect orders promptly.

Sections Involved

  • Section 132, Income Tax Act, 1961 – Search and Seizure
  • Section 153A, Income Tax Act, 1961 – Assessment in case of search or requisition
  • Article 226, Constitution of India – Writ Jurisdiction

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:4111-DB/MMH10122021CW140522021_145637.pdf

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