DIVINE CHEMTEC LIMITED V. Income Tax Department,

WP/5175/2024

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Divine Chemtec Limited challenged a penalty order dated 24/01/2024 under Section 271(1)(c) of the Income Tax Act, 1961, claiming it was illegal, arbitrary, and violative of natural justice. The company had previously faced similar penalties for other assessment years, which were set aside by a co-ordinate bench of the High Court on 14/06/2023, provided they deposited 25% of the penalty amount and were given a personal hearing. In the current case, the petitioner did not comply with this condition, leading the court to dismiss their complaint about not being afforded a personal hearing.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 771484 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 28-02-2024
• Assessment Year: misc
• Other Referred Cases: W.P.No. 11923 of 2022, W.P. Nos. 11604, 11593, 11818, 11596 of 2022
• Laws Referred To: Income Tax Act, 1961, Constitution of India
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: ISWARYA
• Assessee Lawyers: JAVVAJI CHANDRA
• Keywords: Faceless assessment; Judicial discipline; Natural Justice; Penalty order; Personal hearing
• Section: 271(1)(c); 156(1); 456(1); 75(1A)

Judgement Text

"«>■ IN THE HIGH COURT OF ANDHRA PRADESH :: AMARAVATI (Special Origin^Jurisdiction) WEDNESDAY ,THE TWENTY EIGHTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE RAVI NATH TILHARI AND THE HONOURABLE SRI JUSTICE HARINATH.N WRIT PETITION NO: 5175 OF 2024 Between: Divine Chemtec Limited, (A company incorporated and registered under the provisions of Companies Act, 2013) having its registered office at- Plot No. H, r- K, L, Phase-II, Duvvada, Visakhapatnam - 530049, Andhra Pradesh. Rep. by its Director, Sri. Moturi Srinivas Prasad ...Petitioner AND 1. Income Tax Department, National Faceless Assessment Center Delhi 4th Floor, Mayur Bhawan, Connaught Circus, New Delhi - 110001 2. The Chairman, Central Board of Direct Taxes, Ministry of Finance, Government of India, North Block, New Delhi - 110001. ...Respondents Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ, order or directions, more in the nature of mandamus. To quash the impugned penalty order dated 24/01/2024 passed under section 271 (1)( c) of Income Tax Act, 1961 for the Assesment Year 2016-47 and resultant Demand Notice dt.24/01/2024 issued U/s 456(1) of Income Tax Act, 1961 as being illegal, arbitrary, non est and violative of principles of natural justice, besides being barred by time as per Sec.^75 (lA) of the Income Tax Act, 1961.And consequentially to set aside the -penalty order dated 24/01/2024 passed under section 271 (1)( c) of Income Tax Act, 1961 for the Assesment Year 201‘6-17 and resultant Demand Notice dt.24/01/2024 issued U/s 156(1) of Income Tax Act,Hl961.-^ ■ : iA NOTI OF 2024 ■' y- Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay all further proceedings pursuant to penalty order passed dated 24/01/2024 including recovery of the penalty imposed. : Sri Javvaji Sarath Chandra Counsel for the Respondents: Ms.lswarya, Junior Standing Counsel Counsel for the Petitioner The Court made the following: e- IN THE HIGH COURT OF ANDHRA PRADESH :: AMARAVATI (Special Original Jurisdiction) WEDNESDAY ,THE TWENTY EIGHTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY FOUR PRESENT APHCO10096672024 [3464] THE HONOURABLE SRI JUSTICE RAVI NATH TILHARI THE HONOURABLE SRI JUSTICE HARINATH.N WRIT PETITION NO; 5175 OF 2024 Between: DIVINE CHEMTEC LIMITED PETITIONER(S) • •• AND INCOME TAX DEPARTMENT AND OTHERS ...RESPONDENT(S) Counsel for the Petitioner(s):SRI. JAWAJI SARATH CHANDRA Counsel for the Respondents: The Court made the following: ORDER: foer Ravi Nath Tilhari,J) Heard Sri Sarath Chandra, learned counsel for the petitioner and Ms.Iswaiya, learned Junior Standing Counsel for respondent Nos.l and 2. The petitioner challenges the impugned order, dated 24.01.2024 passed under Section 271(1)(C) of the Income Tax Act, 1961. This is the order for imposition of penalty for the assessment years (AY) 2016- 2017. The amount of penalty imposed for this AY is Rs.5,213/-. 2. 3. The challenge is on the ground of violation of the principles of natural justice. Learned counsel for the petitioner submits that any opportunity of personal homing was not afforded. Previously, also for the same AY 2016-17 penalty was imposed of Rs.5,213/- vide order dated 21.03.2022 against which the petitioner filed W.P.No. 11923 of 2022. The petitioner had also filed W.P. Nos. 11604, 11593, 11818 and 11596 of 2022 against the previous orders of penalty dated 16.03.2022 & 21.03.2022 for the AY(s) 2012- 2013, 2013-2014, 2014-2015, 2015-2016 as well. Those writ petitions were allowed by a Co-ordinate Bench of this Court, setting aside the penalty orders dated 16.03.2022 and 21.03.2022 impugned in those petitions vide common judgment dated 14.06.2023. The matter remitted back to the respondent No.l Income Tax Department, National faceless Assessment Center Delhi, with a direction to consider the petitioner’s reply notices dated 26.05.2021 and 31.05.2021 and after affording an opportunity of personal hearing to the petitioner and pass appropriate orders in accordance with governing law and rules expeditiously on the condition of petitioner depositing 25% of the penalty amount in each case within six (06) weeks from the date of receipt of copy of that order, failing which the said order dated 14.06.2023 shall stand cancelled. 4. was 5. TJie operative portion of the judgment dated 14.06.2023, in para- 17 is reproduced as under; “17. Accordingly, the writ petitions are allowed setting aside the impugned penalty orders dated 16.03.2022 and 21.03.2022 passed by the 1st respondent and matters are remitted back to the 1st respondent with a direction to consider the reply notices dated 26.05.2021 and 31.05.2021 submitted by the petitioner and after affording an opportunity of personal hearing to the petitioner, pass appropriate orders in accordance with governing law and rules expeditiously on the condition of petitioner depositing 25% of the penalty amount in each case within six (6) weeks from the date of receipt of copy of this order, failing which this order shall stand cancelled. No costs. ” The penalty as was imposed by the penalty orders impugned 6. in Writ Petition Nos. 11604, 11593, 11818, 11596 and 11923 of 2022 which finds mention at internal page 5 of the common judgment dated 14.06.2023, is as under; Penalty levied under Sec.271(l)c of the Act on the basis of return filed under Sec. 139 (Earlier Return) in (RS) Depreciation claimed Loss claimed in the return filed under Sec.l53A of the Act Tax Liability Determi ned in W.P Assessment Year S.No. No. (Rs.) Rs. Rs.2,95,29,796/- 11593 /2022 11818 12022 11596 /2022 11604 Rs.95,80,943/- 1. 2012-13 Rs.8,89,23,021/- NlL Rs.2,49,75,258/- Rs.81,03,222/- Rs. 17,25,82,489/- 2. 2013-14 NIL Rs.2,13,37,907/- Rs.7,78,64,975/- Rs.69,23,083/- 3. 2014-15 NIL Rs. 1,80,99,062/- Rs.58,72,241/- 4. 2015-16 Rs.5,50,06,514/- NIL /2022 11923 Rs.16,871/- Rs.5,213/- 5. 2016-17 Rs.2,19,34,189/- NIL /2022 On a specific enquiry made by us to the learned counsel for the 7. petitioner, he submits that the petitioner did not make payment of any •■'v. amount towards 25% deposit condition imposed by the judgment dated 14.06.2023. He submits that the petitioner filed review petition being I.A.No.l of 2023 in W.P.No. 11923 of 2022. He submits that in the rest of the writ petitions decided by the common judgment dated 14.06.2023, also, review petitions are filed which are pending and in view thereof the condition of deposit of 25% was not complied by the petitioner in any of the cases for the AY(s) as aforesaid. He submits that for, the rest of the AYs, other than the one involved in this petition, penalty orders have also been passed and filing of the writ petitions challenging those orders is under process. Learned counsel for the petitioner submits that, in the review 8. petitions there is no stay on the common judgment dated 14.06.2023. On consideration of the aforesaid submission, we are of the 9. considered view that the submission advanced for not depositing 25% of the penalty amount as was ordered by the Co-ordinate Bench in the writ petition Nos. 11923 of 2022 85 batch vide common judgment dated 14.06.2023 is unsustainable. Even if review is pendirig, mere pendency of the review petition cannot be a ground not to comply with the condition in the judgment. In our view the opportunity of personal hearing to the petitioner was directed to be provided biit there was condition imposed of deposit of 25% as aforesaid, but the petitions did not comply with the condition subject to which the opportunity was granted. Consequently, the petitioner cannot now complain of the N violation of the principle of natural justice of not affording opportunity of personal hearing and the impugned order contrary to the directions of this Court in No. 11923 of 2023 85 batch. The submission of the learned counsel for the petitioner that the condition of deposit of 25% imposed vide judgment dated could not be imposed, is a submission which is not open for the petitioner to raise in this wnt petition nor for us to consider the The reason is that in the present writ petition, we have not to enter into such aspect, being bound by judicial discipline and judicial propriety, the judgment dated 14.06.2023 being of a Co-ordinate Bench. now passed, to be previous writ petition 10. 14.06.2023 same. The petitioner, in order to claim the benefit of the judgment dated. 14.06.2023, ought to have complied with the condition imposed' m the judgment. The petitioner having failed to comply with the condition of the judgment subject to which personal hearing was to be afforded, even if the same has not been afforded in passing the order impugned in the present writ petition, we are not inclined to interfere with the impugned order. In the facts and circumstances of the present case, the plea of violation of the principles of natural justice cannot be sustained. The Writ Petition is dismissed. It is open for the authority to proceed further as per law. 11. 12. 13. The petitioner if files any other writ petition or avails any other remedy under the statute against the order(s) of penalty imposed for 14. the AY(s) which were subject matter of writ petition Nos. 11923 of 2023 85 batch decided vide judgment, dated 14.06.2023, he shall along with such petition annex copy of this judgment. No order as to costs. As a sequel thereto, miscellaneous petitions, if any pending, shall also stand closed. SD/- V. DIWAKAR DEPUTY REGISTRAR ^EenOTl OFFICER //TRUE COPY// To / 1. One CC to Sri Javvaji Sarath Chandra, Advocate [OPUC] 2. One CC to Sri Vijay Kumar Punna, Standing Counsel [OPUC] 3. One CC to Ms. Iswarya, Advocate [OPUC] 4. Two CD Copies J cvss HIGH COURT DATED:28/02/2024 ■ >r: ■5FA^SD?^ ORDER o 2 9 JUL 202^1 m X C9 o WP.No.5175 of 2024 'k i’fSPATC'i^S JrtW*'-**'’ ... J. • DISMISSING THE W.P. WITHOUT COSTS "