COVENANT STONES PRIVATE LIMITED V. COMMISSIONER OF INCOME TAX (APPEALS)

WA/661/2024

AI Insights

Covenant Stones Private Limited appealed against the conditional stay order requiring them to pay 20% of the total tax demand for the assessment years 2014-2015 to 2019-2020, as directed by the 1st respondent-Appellate Authority. The appellant argued that the financial strain and the lack of reasons for the payment directive warranted interference by the court. The High Court found no unreasonable action by the learned Single Judge in not interfering with the Appellate Authority's order but granted additional time for payment in installments due to the appellant's financial difficulties and the cessation of business operations since 01.04.2018.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 747448 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 21-05-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: NAVANEETH NATH
• Assessee Lawyers: ASWIN GOPAKUMAR; ANWIN GOPAKUMAR; ADITYA VENUGOPALAN; MAHESH CHANDRAN; SARANYA BABU; ANGITA MENON; ABHISHEK
• Keywords: Assessment years; Instalments; Tax demand; Conditional stay order; Financial straits
• Section: 147; 148; 143(3); 153A; 68

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. TUESDAY, THE 21ST DAY OF MAY 2024 / 31ST VAISAKHA, 1946 WA NO. 661 OF 2024 AGAINST THE ORDER/JUDGMENT DATED IN WP(C) NO.40710 OF 2023 OF HIGH COURT OF KERALA APPELLANT COVENANT STONES PRIVATE LIMITED HAVING ITS REGISTERED OFFICE AT SHOP NO. 237(416B), MUKHOLA, VATTIYURKAVU, NETTAYAM P.O, THIRUVANANTHAPURAM, REPRESENTED BY ITS GENERAL MANAGER SUDHEER. V, PIN - 695013 BY ADVS. ASWIN GOPAKUMAR ANWIN GOPAKUMAR ADITYA VENUGOPALAN MAHESH CHANDRAN SARANYA BABU ANGITA T. MENON ABHISHEK S. RESPONDENTS 1 COMMISSIONER OF INCOME TAX (APPEALS) CENTRAL CIRCLE, COCHIN, POORNIMA BUILDING, MANORAMA JUNCTION, PANAMPILLY NAGAR, COCHIN, PIN – 682036 2 COMMISSIONER OF INCOME TAX (APPEALS)-3 4TH FLOOR, CENTRAL REVENUE BUILDING, I.S. PRESS ROAD, COCHIN, PIN – 682018 W.A.No.661 of 2024 2 3 ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, INCOME TAX OFFICE, PUBLIC LIBRARY BUILDING, SHASTRI ROAD, KOTTAYAM, PIN – 686001 BY ADV NAVANEETH.N.NATH THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 21.05.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.A.No.661 of 2024 3 J U D G M E N T ============ Dated this the 21st day of May, 2024 Dr. A. K.Jayasankaran Nambiar, J. This writ appeal has been preferred impugning the judgment dated 19.12.2023 of a learned Single Judge in W.P(C) No.40710 of 2023. 2. Briefly stated the facts necessary for disposal of this writ appeal are that the appellant had approached this Court through the writ petition aforementioned impugning the conditional stay order passed by the 1st respondent-Appellate Authority, whereby the appellant was directed to pay 20% of the total tax demand raised in the assessment orders for the assessment years 2014-2015, 2015-2016, 2016-2017, 2017- 2018 and 2019-2020 under the Income Tax Act, 1961. Although various contentions were raised in the writ petition W.A.No.661 of 2024 4 impugning the conditional stay order passed by the 1st respondent-Appellate Authority, the learned Single Judge found that there was no warrant for interfering with the conditional order of stay passed by the 1st respondent, especially since the 1st respondent had directed payment of only 20% of the total demand raised for the various assessment years and had also given the appellant a facility of payment of that 20% in seven equal instalments. 3. The learned Single therefore, dismissed the writ petition and granted the appellant time to pay the first instalment on or before 30.12.2023 by extending the time limit granted by the 1st respondent (25.09.2023). The appellant was also directed to ensure that the last instalment of the seven instalments granted was paid on or before 30.06.2024. 4. In the appeal before us, it is the submission of Sri. Aswin Gopakumar, the learned counsel for the appellant that the learned Single Judge ought to have interfered with the conditional order of stay passed by the 1st respondent more so when the conditional stay order did not furnish reasons for the W.A.No.661 of 2024 5 direction to pay 20% of the disputed demand pending disposal of the appeals. It is also his case that the appellant is in dire financial straits and hence, the direction to pay 20% of the demand pending disposal of the appeal would cause great prejudice to the appellant. 5. We have also heard Sri.Navaneeth N Nath, the learned Standing Counsel for the Income Tax Department. 6. On a consideration of the rival submissions, we are of the view that in as much as the 1st respondent-Appellate Authority has directed the appellant to pay only 20% of the total tax demand raised for the various assessment years and had also granted instalments to effect the said payment of 20% of the said tax amount, the non interference with the said order by the learned Single Judge does not appear to us to be unreasonable. It is also significant that the appellant did not prefer this writ appeal for a good four months after the direction of the learned Single Judge, and the writ appeal was preferred only after the respondents initiated recovery proceedings for non compliance with the directions of the 1st W.A.No.661 of 2024 6 respondent in Ext.P5 order, as aforementioned by the learned Single Judge in the impugned judgment. 7. That said, we take note of the submission of the learned counsel for the appellant that the appellant is facing financial difficulties, more so when the company has ceased to function with effect from 01.04.2018. Taking note of the said submission of the learned counsel for the appellant, we feel that in the interests of justice, the appellant can be granted some time to discharge the liability of 20% of the total tax demand for the various assessment years as directed by the 1st respondent in Ext.P5 order that was impugned in the writ petition. 8. Accordingly, the impugned judgment of the learned Single Judge, as also the direction in Ext.P5 order that was impugned in the writ petition, are modified to the limited extent of permitting the appellant herein to discharge the liability of payment of 20% of the total tax demand as directed by the 1st respondent in Ext.P5 order, in seven equal successive monthly instalments commencing from 15.06.2024. W.A.No.661 of 2024 7 It is made clear that if the appellant commits default in any single instalment, he will lose the benefit of this judgment, as also the benefit of the stay order granted by the 1st respondent-Appellate Authority, and the entire amount of tax and interest confirmed against the appellant by the assesment orders in question will then become immediately payable. The writ appeal is disposed as above. Sd/- DR. A.K.JAYASANKARAN NAMBIAR JUDGE Sd/- SYAM KUMAR V.M. JUDGE smm W.A.No.661 of 2024 8 APPENDIX OF WA 661/2024 PETITIONER ANNEXURES ANNEXURE A1 COPY OF THE DEMAND NOTICE BEARING NO.DIN ITBA/COM/F/17/2024- 25/1064355284(1) DATED 25/04/2024 ANNEXURE A2 COPY OF THE COUNTERFOILS EVIDENCING PAYMENTS MADE BY THE APPLICANT HEREIN FOR ASSESSMENT YEARS FROM 2014-15 TO 2019-20 Annexure A3 A TRUE COPY OF THE NOTICE BEARING DIN NO. ITBA/COM/F/17/2024-25/1064913451(1) DATED 16.05.2024 ISSUED BY THE TAX RECOVERY OFFICER TO THE MANAGER OF STATE BANK OF INDIA, MARINE DRIVE BRANCH, KOCHI Annexure A4 A TRUE COPY OF THE EMAIL ISSUED BY THE BANK MANAGER, FEDERAL BANK VEMBAYAM BRANCH TO THE APPELLANT DATED 16.05.2024 "