R.K. Agrawal, J. - (1.) By means of the present writ petition filed under Article 226 of the Constitution of India, the petitioner, Farrukhabad Gramin Bank, through its Chairman, Sri S.R. Potdar, seeks the following reliefs : "A. issue a writ, order or direction in the nature of certiorari quashing the notice dt. 5th April, 2005 (collecting) marked as Annex. 6 to the writ petition, issued by respondent No. 1, under Section 226(3) of the Act. B. issue a writ order or direction in the nature of mandamus directing Addl. CIT Range II Farrukhabad (respondent No. 1), to refund the amount of Rs. 94,14,605.70 to petitioner with interest. (i) issue a writ, order or direction in the nature of mandamus directing the CIT(A), Ghaziabad, to dispose of the appeal of the petitioner for asst. yr. 2002-03 pending before him (Annex. 5) expeditiously, out of turn and if possible within one month. (ii) issue a writ, order or direction in the nature of mandamus directing the CIT(A) Ghaziabad, to dispose of the stay application of the petitioner refunding the amount recovered by the respondent No. 1. (iii) issue a writ, order or direction in the nature of mandamus restraining the respondent No. 1 to recover the balance amount of Rs. 34,17,663.30 from the petitioner till the disposal of the first appeal. (iv) any other or further writ, order or direction which this Hon'ble Court may deem fit and proper in the circumstances of the case. (v) award cost to the petitioner."
(2.) Briefly stated, the facts giving rise to the present petition are as follows : According to the petitioner, the bank has been established under the Regional Rural Banks Act, 1976. 50 per cent of its shares are being held by the Government of India, 35 per cent shares by the Bank of India, which is a nationalised bank and remaining 15 per cent shares are held by the Government of Uttar Pradesh. Its business is regulated by the provisions of the Banking Regulations Act, 1949 and the Regional Rural Banks Act, 1976. It is engaged in banking activities and provides credit facilities to its members. According to the petitioner, whole of the amount of profit and gains of business, attributable to any one or more such activities, is exempt under Section 80P(2)(a)(i) of the IT Act, 1961 (hereinafter referred to as "the Act"). For the asst. yr. 2002-03, the petitioner filed its return of income on 30th Oct., 2002 in the prescribed form. It was processed under the provisions of Section 143(1) of the Act and the excess amount of income-tax paid by it was refunded. Subsequently, the case was taken under scrutiny and after due hearing, a regular assessment order under Section 143(3) of the Act was passed by the Addl. CIT, Range II, Farrukhabad, respondent No. 1, on 29th March, 2005. While passing the regular assessment under Section 143(3) of the Act, the respondent No. 1 disallowed the claim of exemption under Section 80P(2)(a)(i) of the Act. He assessed the income at Rs. 3,00,85,000. A notice of demand dt. 29th March, 2005, calling upon the petitioner to pay a sum of Rs. 1,28,32,270 was also issued. In the said notice, the petitioner was required to deposit the aforesaid amount within one day of the service of the notice. Immediately on receipt of the assessment order and the notice of demand, the petitioner moved an application on 30th March, 2005, before the CIT, Aligarh, purporting to be under Section 226(3) of the Act for stay of demand which was rejected by the Addl. CIT, respondent No. 1, on the same day by assigning the following reasons : "In this context, it is to inform you that no stay is granted since the facts and 'law' are different from the cases cited as precedent. Hence, your application for stay of demand is rejected." A period of 30 days is provided for filing an appeal before the CIT(A). The petitioner immediately filed an appeal before the CIT(A), Ghaziabad on 4th April, 2005, i.e., within 5 days of the passing of the assessment order. In the memo of appeal, the petitioner had challenged the assessment order specifically on the ground that it is entitled to exemption under Section 80P(2)(a)(i) of the Act. Along with the memo of appeal, the petitioner also filed an application ' for stay of demand pending decision in appeal. The CIT(A), respondent No. 2, however, did not pass any order on the petitioner's application for grant of stay and as it was apprehending the attachment of its bank accounts lying with the State Bank of India, Fatehgarh and Farrukhabad branches, it filed an application dt. 5th April, 2005, under Section 220(6) of the Act before the respondent No. 1 on 6th April, 2005, seeking stay of the demand during the pendency of the first appeal filed by it before the CIT(A), Ghaziabad. Instead of disposing of the application dt. 5th April, 2005, the respondent No. 1 issued notices on 6th April, 2005, under Section 226(3) of the Act to the Branch Manager, clearing account, State Bank of India, Farrukhabad and the current account in the State Bank of India, Fatehgarh Branch. On receipt of the aforesaid notices, the State Bank of India Clearing Account, Farrukhabad Branch, remitted a sum of Rs. 84,33,218.70 paise and the State Bank of India, Fatehgarh branch remitted a sum of Rs. 9,81,388. The aforesaid two amounts, totalling Rs. 94,14,608.70 paise, were realised by the respondent No. 1 on 7th April, 2005, i.e., within 24 hours of the issuance of notice dt. 6th April, 2005. According to the petitioner, no notice under Section 226(3) of the Act was issued or served to the petitioner prior to the recovery of the two amounts from the State Bank of India, Farrukhabad and Fatehgarh and the notice was served upon the petitioner only on 11th April, 2005. As coercive measures were being initiated to recover the balance amount of Rs. 34,17,663.30 paise from the petitioner, it had to rush to this Court seeking protection from the highhanded and arbitrary action of the Addl. CIT, respondent No. 1. It has also been stated by the petitioner that by the attachment of the clearing account of the petitioner in the State Bank of India, the day-to-day work of the banking business has been hampered and the interest of the depositors and other customers is in jeopardy.
(3.) In the affidavit filed by Sri Rakesh Kumar Srivastava, Inspector in the office of the respondent No. 1, in support of the application for vacating interim order, it has been stated that the notice of demand has been duly served upon the petitioner. The proviso to Section 220 of the Act empowers the assessing authority to reduce the time from 30 days after seeking approval of the Jt. CIT and as the respondent No. 1 himself is the authority provided therein, he had reduced the period to one day in the interest of the Revenue. Certain directions issued by the Ministry of Finance for recovering the amount from the assessees has also been referred to. According to the affidavit, the interest of the petitioner is duly secured by virtue of the provisions of Section 244A of the Act and it is not in any manner adversely effected by the recovery proceeding initiated on the basis of the demand. The plea of seeking parallel remedy was also raised on the ground that the petitioner had already availed of the alternative remedy by way of filing an appeal before the appellate authority. It has also been stated in the said affidavit that the respondent No. 1 has recorded reasons while reducing the period as mentioned in the notice of demand and being the authority thereafter pursuing the same as provided under the Act, also approved the same and there is no infirmity or irregularity in issuing the demand notice. As the affidavit of Sri Rakesh Kumar Srivastava did not deal with the averments made in the various paragraphs of the writ petition, a counter-affidavit has been filed by Sri Nizamuddin, ITO, posted in the office of the respondent No. 1, in which it has been denied that the petitioner bank is a co-operative society. Exemption under Section 80P(2)(a)(i) of the Act is not admissible. The application for stay was rejected by the respondent No. 1 bearing in mind that the assessee was not short of fund and it had no desire to pay and that no hardship would have been caused to it in paying the demand of Rs. 1,28,32,270 which is 0.1 per cent of the total fund at its disposal, out of the huge easily realisable asset of Rs. 273 crores. It has further been stated that there is no bar on the AO to proceed with the recovery only after all avenues have been exhausted or legal remedy availed of. The attachment of the bank accounts can only be lifted after the entire amount is realised.;