Meghalaya High Court Orders Expedited Disposal Of Tax Appeals | Directs De-Freezing Of Accounts If Not Resolved In Four Weeks
Sanchayita Lahkar
The High Court of Meghalaya Division Bench of Justice H.S. Thangkhiew and Justice B. Bhattacharjee directed the concerned income tax authorities to expedite the hearing and final disposal of statutory appeals filed by a petitioner businessman within a period of four weeks. The Court held that interim protection previously granted shall remain in force and added that, "if no orders are forthcoming in the appeals within the period allowed, the respondents shall issue appropriate instructions to de-freeze the Bank Accounts of the petitioner." The writ petitions were accordingly disposed of.
The petitioner, a businessman belonging to the Khasi Scheduled Tribe community, filed two writ petitions under Article 226 of the Constitution of India seeking a mandamus against coercive recovery proceedings initiated by income tax authorities. The petitioner prayed for directions to stay the recovery of tax demands issued under Section 156 of the Income Tax Act, 1961, and to prevent the freezing of bank accounts and attachment of assets until final disposal of statutory appeals under Section 246A.
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In WP(C) No. 52 of 2025, the petitioner had not filed income tax returns for the assessment year 2016-17 on the understanding that income earned by a Scheduled Tribe member residing in a specified area is exempted under Section 10(26) of the Act. However, the department-initiated reassessment proceedings under Section 148A(d) questioning deposits in bank accounts. In response, the petitioner filed returns declaring income of Rs. 70,53,500 while asserting that it was exempt under law. Subsequently, on 26.02.2024, an assessment order under Sections 147, 144 and 144B was issued treating certain deposits as unexplained income under Section 69A, followed by a demand notice under Section 156 for Rs. 14.17 Crores.
In WP(C) No. 65 of 2025, the petitioner filed income tax returns for AY 2022-23 on 22.07.2023 declaring income of Rs. 4,90,010, claiming exemption under Section 10(26). The case was selected for scrutiny. The Assessing Officer issued notices under Sections 143(2) and 142(1) regarding the source of deposits, which were replied to along with supporting documents. Despite this, an assessment order dated 15.02.2024 was issued under Section 143(3) read with 144B treating deposits as unexplained income under Section 69A. A demand notice of Rs. 13.46 Crores followed.
The petitioner contended that delays in filing appeals were due to inadequate advice from a Chartered Accountant. Appeals, along with applications for condonation of delay and stay of demand under Section 220(6), were eventually filed before the Commissioner of Income Tax (Appeals). Meanwhile, bank accounts were frozen and amounts therein were poised to be transferred to the Department. With appeals pending and no fixed hearing dates, the petitioner approached the High Court.
Counsel for the petitioner argued that the invocation of Article 226 jurisdiction was justified as coercive recovery actions were being pursued while statutory appeals were still awaiting admission. Relief was sought limited to a stay on coercive action and for de-freezing of bank accounts to allow business continuity.
The respondent authorities, represented by counsel, opposed the petitions citing maintainability issues. It was argued that similar reliefs were already prayed for in the pending statutory appeals. Relying on AIR 1970 SC 1 Shankar Ramchandra Abhyankar v. Krishnaji Dattatraya Bapat and AIR 1977 SC 898 Jai Singh v. Union of India, they contended that parallel proceedings for the same cause are not permissible.
It was further submitted that an alternate remedy being available, the writ petitions should not be entertained. Reliance was also placed on a 2024 decision of the Gauhati High Court in WP(C) No. 209 of 2022 which declined to interfere where the appeal was filed prior to the writ petition. Additionally, it was argued that mere filing of an appeal does not automatically stay the tax demand, and the frozen bank balances did not even constitute 20% of the total demand, justifying protective measures.
In response, the petitioner’s counsel submitted that the writ petitions had a limited scope and were necessitated solely due to the freezing of all business bank accounts, thereby affecting ability to pay wages and meet expenses. It was pointed out that interim relief against coercive action had been granted by the Court, though the accounts remained frozen.
The Division Bench observed, "the fact that these instant writ petitions are limited only to prayers for stay of the recovery proceedings, and not for issuance of a writ of certiorari against the Assessment Orders are very clear."
The Court considered the core issue: "whether the petitioner will be entitled to the prayers made herein" despite the availability and pendency of a statutory appeal. It acknowledged the settled legal position that "one cannot pursue two remedies in respect of the same matter" and that the writ petitions were "liable to be not entertained at the threshold itself."
Nevertheless, the Court noted, "on consideration of the fact that specific prayers and submissions had been made, that the appeals that had been filed were yet to be taken up as the delay was yet to be condoned, and that the petitioner admittedly belonged to the Khasi Scheduled Tribe and as such, was exempted under Section 10(26) of the Income Tax Act, 1961," interim protection had been granted.
The Bench further recorded, "These matters being situated thus, and as the appeals are pending before the Appellate authority, without further discussion, these writ petitions are disposed of with the directions..."
The Court directed that, "the appeals be taken up by the Commissioner of Taxes (Appeals) for consideration most expeditiously and orders passed thereon, or be finally disposed of within a period of 4(four) weeks from today."
Additionally, it ordered, "It is further provided that till such time the interim orders of this Court shall be in operation, and if no orders are forthcoming in the appeals within the period allowed, the respondents shall issue appropriate instructions to de-freeze the Bank Accounts of the petitioner."
Concluding, the Bench stated, "As ordered above, these writ petitions stand closed and are accordingly disposed of."
Advocates Representing the Parties:
For the Petitioners: Ms. M.L. Gope, Advocate; Ms. N. Hawelia, Advocate; Ms. H. Jain, Advocate; Mr. D. Das, Advocate
For the Respondents: Mr. S. Chetia, Advocate (for Respondents 2 to 4)
Case Title: Shri Mitchell Wankhar v. Union of India & Others
Neutral Citation: 2025:MLHC:517-DB
Case Number: WP(C) No. 52 of 2025 with WP(C) No. 65 of 2025
Bench: Justice H.S. Thangkhiew and Justice B. Bhattacharjee
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