Gecas Services India Pvt. Ltd. Vs Income Tax Officer & Ors. (Delhi High Court):-

Appeal Number : W.P.(C) 3127/2017:-

Date of Judgement/Order : 11/07/2017

:- In the present case there was no illegality committed by the Department in not issuing to the Assessee a notice under Section 226 (3) (iii) of the Act simultaneously with or prior to the notice issued to its bank under Section 226 (3) (i) of the Act for recovery of the tax demand from its account. The Court accepts the submission of the Revenue that requirement under Section 226 (3) (iii) is only that a copy of the notice should be “forwarded to the assessee” and not that a copy should be served on the Assessee in advance or simultaneously.                                                                                                                Analysis and reasons

17. The above submissions have been considered. Under Section 156 of the Act, it is incumbent on the AO to serve upon the Assessee a notice of demand of tax, interest, penalty, fine or any other sum specifying the same to be payable. In the present case, it is not in dispute that such a notice was in fact issued to the Assessee by the AO on 19thDecember, 2016 and was served on the Assessee on 24th December, 2016.

18. Under Section 221 (1) read with Section 220 (4) of the Act, the Assessee is deemed to be an Assessee in default if it fails to make the payment of the demand within 30 days of the service of notice under Section 156 of the Act. In the present case, the Assessee acknowledges that it was served with a notice of demand under Section 156 of the Act on 24th December, 2016. Therefore, the Assessee was aware that under Section 221 (1) read with Section 220 (4) of the Act, it would be deemed to be an Assessee in default upon its failure to pay tax within 30 days. The Assessee is unable to explain why it did not file an application for stay of recovery of demand along with its appeal filed on 23rd January, 2017 before the CIT(A). In fact, it has not filed any such stay application till date.

19. With the Assessee not having paid the amount within 30 days of the service of notice under Section 156 of the Act, the Department was justified in proceeding to treat it as an Assessee in default and in proceeding to take the necessary action to recover the demanded amount.                                                                                                                          27. In other words, the Court respectfully follows the view expressed by the Supreme Court in Third ITO v. Damodar Bhat (supra) and concurs the view of the Madras High Court in P. Kanniah Chetty v. Income Tax Officer (supra).

28. In the present case there was no illegality committed by the Department in not issuing to the Assessee a notice under Section 226 (3) (iii) of the Act simultaneously with or prior to the notice issued to its bank under Section 226 (3) (i) of the Act for recovery of the tax demand from its account. The Court accepts the submission of the Revenue that requirement under Section 226 (3) (iii) is only that a copy of the notice should be “forwarded to the assessee” and not that a copy should be served on the Assessee in advance or simultaneously.