Income Tax Department can not recover outstanding dues under MPID Act as it cannot be treated like the claim of investors
ABCAUS Case Law Citation:
ABCAUS 3208 (2019) (12) AC
In the instant case, the Income Tax Department (ITD/Revenue)had filed a Miscellaneous Application before the designated Sessions Court seeking direction to Competent Authority appointed under the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (MPID Act) to hand over proceeds received from auction of attached properties of a business Group to the Income Tax Department towards the arrears of its statutory dues.
According to the Revenue there were are outstanding against the accused company and hence it was necessary to hand over proceeds received from auction of attached properties to the Income Tax Department.
It was urged that all the properties of accused were attached by the Competent Authority appointed under MPID Act and therefore the claim of the Income Tax Department be registered with the Competent Authority for payment of it’s outstanding dues and refund the same.
On the other hand, The State Public Prosecutor urged that the prayer made by Income Tax Department was not tenable in law. It was submitted that the applicant Revenue had to proceed in accordance with the provisions of Income Tax Act in order to recover its outstanding dues against the accused company and it could not take recourse to the MPID Act.
The Special Judge opined that the application filed by the ITD was not tenable in law.
The Hon’ble Judge was of the view that The MPID Act had been enacted for protecting the interest of the depositors who have suffered fraudulent default committed by Financial Establishments. It does not provide any mechanism for recovery of outstanding dues of statutory bodies like the ITD.
The Hon’ble Judge further stated that if there were any outstanding dues of the Income Tax Department payable by the accused, the ITD had to take recourse to appropriate remedy under the Income Tax Act. The claim of applicant cannot be treated like the claim of investors.
The Hon’ble Judge further noted that it was also not the case of the ITD that it had a charge over any property of the accused which was attached by the Competent Authority.
Accordingly the Special Court rejected the application of the ITD.
Download Full Judgment Click Here >>
- Reassessment notice issued under old section 148 after 31.03.2021 invalid – High Court
- CGST (9th Amendment) Rules 2021. Amendment to FORM GST DRC-03
- Prosecution for late deposit of TDS. For non-deposit, necessary consequences shall follow -SC
- CBDT Guidelines on TDS provisions u/s 194O, 194Q & 206C
- Faceless Assessment quashed, no password sent to join video conferencing
