Income Tax Ordinance, 2001 (XXIX of 2001) - Sections 137, 138, 139 & 140 - General Clauses Act, 1897 - Section 24-A - Recovery of Tax from persons holding money on behalf of Taxpayer - Adoption of Coercive measures by recovery of Tax from Bank of Taxpayer without consent - Validity - Whether practice of making recovery u/s 140 without issuance of notice cannot be supported by any stretch of interpretation of provisions of Income Tax ordinance, 2001 - Held yes - Whether Section 24-A of General Clauses Act, 1887 needs to be read as part of every Federal Statute - Held yes - Whether sub-section (2) of section 24- A of General Clauses Act obliges Authority with duty to give reasons and inform person likely to eject prejudicially - Held yes - Whether it cannot be agreed that action of attaching account u/s 140 of Income Tax ordinance is not coercive measure - Held yes - Whether Deptt. was restrained from taking any action u/s 140 i.e. from recovering amount after attachment of account without prior notice till decision by Commissioner (Appeal) in main cases - Held yes.

The practice of making recovery u/s 140 without issuance of notice cannot be supported by any stretch of interpretation of the provisions of Income Tax Ordinance, 2001 Section 24-A of General Clauses Act, 1897 needs to be read as part of every Federal Statute. Its sub-section(2) obliges an authority with a duty to give reasons and inform the person likely to effect prejudicially. Even before insertion of Section 24-A in General Clauses Act 1897, Apex Court of the country has held in number of cases that "audi alteram partem" should be read as part of every Statute."

We are not in agreement with the submission by DR that action of attaching account u/s 140 is not a coercive measure. It is indeed a coercive measure when you recover an amount from the bank of a taxpayer without his consent/permission. Under the circumstances this application is allowed. Department is restrained from taking any action u/s 140 i.e. from recovering amount after attachment of account without prior notice till the decision by Commissioner (Appeals) in main cases.

JUDGMENT


[The Order was passed by Shahid Jamil Khan, Judicial Member.] - Abdul Hafeez, ITP appearing on behalf of the appellant submits that department is making recovery of demand through attachment of accounts without any notice.

3. He has apprised that main appeal is pending adjudication before Commissioner (Appeals), before whom application for grant of stay against impugned recovery was made, the same was rejected by Commissioner (Appeals) with following observation:-

"Taking into consideration the facts of the case find that the appellant has not submitted any recovery notice or any proof regarding coercive measures taking by the department and hence the application for stay against the recovery proceedings, being devoid of merit is hereby rejected. However, acceding to the request regarding early hearing of the appeal, the case is fixed for hearing for 25-07-20 12. This order contain 02 (Two) pages and bears my initial and seal.".

Learned AR stated on bar that department is expected to attach the accounts for recovery of impugned amount as the assessing officer himself informed him. DR was asked to explain whether any recovery can be made without issuance of notice u/s 138/139. DR, defending the departmental stance submits that an action taken u/s 140 is not construed as coercive measure by the department because the department had already issued demand notice u/s 137 which is the notice to taxpayer against the action u/s 140.

3. Learned AR, in reply, has also informed that main appeal is fixed for hearing on 25th of July, 2012 when this case is expected to be decided.

4. Heard both the parties and record perused. The practice of making recovery u/s 140 without issuance of notice cannot be supported by any stretch of interpretation of the provisions of Income Tax Ordinance, 2001 Section 24-A of General Clauses Act, 1897 needs to be read as part of every Federal Statute. Its sub-section(2) obliges an authority with a duty to give reasons and inform the person likely to effect prejudicially. Even before insertion of Section 24-A in General Clauses Act 1897, Apex Court of the country has held in number of cases that audi alteram partem should be read as part of every Statute."

We are not in agreement with the submission by DR that action of attaching account u/s 140 is not a coercive measure. It is indeed a coercive measure when you recover an amount from the bank of a taxpayer without his consent/permission. Under the circumstances this application is allowed. Department is restrained from taking any action u/s 140 i.e. from recovering amount alter attachment of account without prior notice till the decision by Commissioner (Appeals) in main cases.


Disposed of.