JSR Mulbagal Tollways Private Limited V. National Faceless Assessment Centre

WP/8007/2022

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The case involves JSR Mulbagal Tollways Private Limited, which challenged the notices and penalty orders issued by the National Faceless Assessment Centre under the Income-Tax Act, 1961 for the Assessment Year 2017-18. The petitioner contested the initiation of penalty proceedings, arguing that the notice did not specify the reasons for the penalty. The court found that the petitioner was not given a proper opportunity for a personal hearing due to a medical adjournment request, which was not adequately considered by the respondent. Consequently, the court quashed the penalty order and the notice of demand, restoring the proceedings for a fresh assessment.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 689988 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 13-04-2022
• Assessment Year: misc
• Laws Referred To: Income-Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: ANNAMALAI
• Keywords: Assessment Year; Demand; Notice; Penalty proceedings; Personal hearing
• Section: 143(3); 274; 271D; 156; 226; 227

Judgement Text

"IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF APRIL, 2022 BEFORE THE HON’BLE MR. JUSTICE B. M. SHYAM PRASAD WRIT PETITION NO.8007/2022 (T-IT) BETWEEN : JSR MULBAGAL TOLLWAYS PRIVATE LIMITED, A PRIVATE COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956, REPRESENTED BY ITS MANAGING DIRECTOR, SRI. JAKKA BHAKTHAVATSAL REDDY, S/O JAKKA SREENIVASULU REDDY, AGED ABOUT 50 YEARS, NO.318, SRI SOUDHA, 100 FEET ROAD, INDIRANAGAR, BANGALORE – 560 038. ... PETITIONER (BY SRI.ANNAMALAI.S., ADVOCATE) AND : NATIONAL FACELESS ASSESSMENT CENTRE, REP. BY ADDITIONAL/JOINT/DEPUTY/ ASSISTANT COMMISSIONER OF INCOME-TAX/ INCOME-TAX OFFICER, INCOME-TAX DEPARTMENT, MINISTRY OF FINANCE, ROOM NO.401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI – 110 003. ... RESPONDENT (BY SRI.K.V.ARAVIND, ADVOCATE) 2 THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE NOTICE ISSUED BY THE RESPONDENT UNDER SECTION 274 READ WITH SECTION 271D OF THE INCOME-TAX ACT, 1961 DATED 30.12.2019 FOR THE ASSESSMENT YEAR 2017-2018 HEREIN MARKED AS ANNEXURE-A, ETC. THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING:- O R D E R The petitioner has impugned the following: (a) the notice issued by the Respondent under Section 274 read with Section 271D of the Income-Tax Act, 1961 dated 30.12.2019 for the Assessment Year 2017-18 bearing DIN No.ITBA / PNL / S / 271D / 2019-20 /1023422621(1) herein marked as Annexure-A. (b) the penalty order passed by the Respondent under Section 271D of the Income-Tax Act, 1961 dated 16.03.2022 for the Assessment Year 2017-18 bearing DIN No.ITBA/PNL/F/271D/2021-22/ 3 1040852265(1) herein marked as Annexure-B. (c) the consequential notice of demand under Section 156 of the Income-Tax Act, 1961 dated 11.03.2022 digitally signed on 16.03.2022 for the Assessment Year 2017- 18 bearing DIN No.ITBA / PNL / S / 156 / 2021-22 / 1040837279(1) herein marked as Annexure-C. 2. The undisputed facts are that with the issuance of the notice under Section 274 read with Section 271D of the Income Tax Act, 1961 (for short, ‘the IT Act’) on 30.12.2019, the petitioner has sought adjournment by three weeks. Thereafter, the subsequent notice is issued informing the petitioner that if there is a request for keeping the penalty proceedings in abeyance, a copy of the request could be uploaded. The petitioner has responded to these notices stating inter alia that the petitioner has requested for keeping the demand and penalty 4 proceedings in abeyance and that the petitioner has filed an appeal before the Commissioner of Income Tax (Appeals) as against the Assessment Order dated 29.12.2019 under Section 143(3) of the Act. The petitioner is ultimately issued with the letter of intimation dated 28.02.2022 informing the date of personal hearing. The petitioner has responded seeking rescheduling of personal hearing to a date beyond 07.03.2022 for medical reasons. It is after these communications from the respondent, the penalty proceedings are completed by the order dated 16.03.2022. 3. Sri.Annamalai S., the learned counsel for the petitioner, submits that the very commencement of penalty proceedings must be quashed because the notice does not indicate the reason for initiation of the penalty proceedings, but the learned counsel does not controvert that it was open to the petitioner, if only the 5 petitioner had availed opportunity extended by the respondent, to raise all grounds including the ground that the notice does not contain the necessary details. Therefore, the question that is to be considered for final disposal of this petition is: Whether the petitioner was granted with the requisite opportunity before the penalty order dated 16.03.2022 and the consequential proceedings. 4. It is undisputed that with the issuance of the letter informing the petitioner of the date of personal hearing, the petitioner had to appear before the second respondent on 04.03.2022 and the petitioner for medical reasons, has sought for adjournment. The respondent has proceeded to pass orders without even adverting to the opportunity that was extended and the adjournment requested by the petitioner on medical grounds. The petitioner was not seeking for adjournment for more than three weeks. This Court is 6 of the considered view that the petitioner has had no real opportunity to avail the benefit of personal hearing extended by the respondent. Therefore, the respondent must hear the petitioner again on merits. Hence, the following order: ORDER (i) The petition is allowed in part; (ii) The impugned penalty order dated 16.03.2022 as per Annexure ‘B’ and notice of demand under Section 156 of the Act as per Annexure ‘C’ are quashed; (iii) The penalty proceedings are restored to the respondent for re-consideration; (iv) The petitioner in availing such opportunity shall also be at liberty to produce further documents, if any, to justify its case against the commencement of the penalty proceedings, and the respondent shall 7 extend all opportunity to the petitioner in accordance with law. Sd/- JUDGE RK/- Ct: SN "