Pyramid Saimira: HC asks I-T Dept to restrict attachment of

The Madras High Court has asked the Commissioner of Income-tax, Chennai, who had attached receivables worth Rs 249.39 crore of the city-based theatre owners Pyramid Saimira Theatre Ltd, reported against tax liability of the company, to “restrict the orders of attachment to the actual amount of tax” dues. Mr Justice V. Ramasubramanian, who was disposing of a writ petition by the company against the order of attachment of the Department, directed the Commissioner to consider the company’s representation dated March 9, 2009, and pass appropriate orders within 3 weeks. Since the Commissioner had already taken up the representation for hearing on March 24, 2009, he should make a fair assessment of the receivables and depending upon “his best of judgment”, restrict the orders of attachment to the actual amount of tax as reflected according to the original return of income, without prejudice to the rights of the petitioner on the revised return filed by them. According to the petitioner, they filed a return of income on September 30, 2008 for financial year ending March 31, 2008 declaring a total income of Rs 79,07,54,470 and a tax liability of Rs 29,54,97,940. Out of the tax liability, the petitioner paid a tax of Rs 4,11,76,102. Following the decision of the board of directors to write off Rs 76,94,22,500 as prior period losses, the income for previous year 2007-08 was re-worked and a revised return was filed. The total income shown was Rs 2,13,31,972, and the book profit was shown as Rs 17,25,48,875. The tax payable was shown at Rs 1,95,49,789. Since the petitioner had already made payment of tax, they sought a net refund of Rs 2,16,26,310. However, the respondents (CIT, Deputy Commissioner of Income Tax and Tax Recovery Officer – X) had attached receivables for the tax liability on the basis of the original return, without passing the order of assessment. The petitioner submitted that till the Commissioner passed orders on the representation, some relief should be given to them to carry on the day-to-day operations. They requested that the respondents should be directed to confine the order of attachment only to the claim that they had according to the original return. The respondents contended that they were forced to issue notices to all theatre-owners who owed money to the company as they (respondents) were not sure about the extent to which the amounts disclosed in the books were realisable. The Judge noted that the petitioner had not challenged the order of attachment issued by the Department. He was not testing their correctness in the petition, though, prima facie, it was not known whether the Department could order attachment without an order of assessment, without a notice of demand and without complying with the pre-conditionsfor ordering attachment. – www.thehindubusinessline.com