KAMALAKSHI VIVIDHODDESHA SAHAKARA SANGHA LTD V. COMMISSIONER OF INCOME TAX APPEALS

WP/4407/2022

AI Insights

The case involves Kamalakshi Vividhoddesha Sahakara Sangha Ltd, represented by its manager Ms. Asha Rao, challenging a penalty order under Section 271(1)(c) of the Income Tax Act, 1961. The petitioner argued that the penalty was issued while their appeal was still pending, and they were not given an opportunity for a personal hearing before the penalty was imposed. The respondents contended that the penalty proceedings could continue despite the pending appeal, provided there was no stay on the proceedings. The court found that the petitioner was not given a proper opportunity to be heard and quashed the penalty order, allowing for the possibility of re-initiation of proceedings.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 770912 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 10-03-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JEEVAN NEERALGI
• Assessee Lawyers: MAHESH UPPIN
• Keywords: Faceless Appeal; Income Tax; Penalty order; Personal hearing; Show cause notice
• Section: 271(1)(c); 226; 227

Judgement Text

"IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF MARCH 2022 BEFORE THE HON’BLE MR. JUSTICE B. M. SHYAM PRASAD WRIT PETITION NO. 4407/2022 (T-IT) BETWEEN : KAMALAKSHI VIVIDHODDESHA SAHAKARA SANGHA LTD KRISHNAPURA MUTT BUILDING OPP SANSKRIT COLLEGE UDUPI TALUK AND DISTRICT - 576 101 REP BY ITS MANAGER - MS. ASHA RAO. ... PETITIONER (BY SRI. MAHESH R UPPIN., ADVOCATE) AND : 1. COMMISSIONER OF INCOME TAX (APPEALS) NATIONAL FACELESS APPEAL CENTRE ROOM NO.356, C R BUILDING I P ESTATE, NEW DELHI - 110 002. 2. ADDL. COMMISSIONER OF INCOME TAX NATIONAL FACELESS ASSESSMENT CENTRE DELHI - 110 002. 3. INCOME TAX OFFICER WARD 1 AND TPS AAYAKAR BHAVAN ADI UDUPI MALPE ROAD, UDUPI - 576 103. ... RESPONDENTS (BY SRI. JEEVAN J. NEERALGI, ADVOCATE) 2 THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE PENALTY ORDER DATED 22.01.2022 PASSED BY THE R-2 IN PAN NO.AACAK7829E MARKED AS ANNEXURE-G. THIS WRIT PETITION COMING ON FOR PRLIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING: O R D E R Sri Mahesh R. Uppin, learned counsel for the petitioner and Sri Jeevan J.Neeralgi, learned counsel for the respondents, are heard for final disposal of the petition. The petitioner has impugned Annexure-G, an order under Section 271(1)(c) of the Income Tax Act, 1961. The learned counsel for the petitioner submits, relying upon Annexure-E [which is a show cause notice regarding penalty] that the penalty order is in the premise that the petitioner’s appeal is dismissed but it would be indisputable that the appeal is pending consideration before the appellate authority. If the appeal is pending consideration, there is no cause of 3 action for issuance of show cause notice. Significantly, the learned counsel for the petitioner submits that the petitioner should have been extended an opportunity of personal hearing before the impugned order is passed but such opportunity is not extended. In the circumstances of the case, this Court must intervene. On behalf of the respondents, Sri Jeevan J. Neeralgi, learned counsel, submits that the penalty proceedings need not be deferred because the appeal is filed. It would always be open to the authorities to initiate penalty proceedings if there is no stay. In this case, admittedly the petitioner has not sought for stay before the Assessing Officer. Sri Jeevan J. Neeralgi, also submits that the Assessing Officer grants stay subject to deposit of a certain percentage of the demand, and if there is a case for not depositing even such amount, the appropriate remedy for the petitioner is to approach the jurisdictional Commissioner. Therefore, this Court 4 could keep the impugned order in abeyance for a limited period with liberty to the petitioner to seek stay of the impugned demand that is pending in appeal. There is some controversy on whether there was a request for personal hearing by the petitioner. On consideration of the rival submissions, and because it cannot be said with certainty that the petitioner was granted due opportunity before the impugned order, this Court is of the considered view that there must be interference only on such limited ground. It should be open to the respondents, notwithstanding this Court’s interference with the impugned order on the ground of lack of due opportunity, to initiate fresh proceedings and conclude the proceedings after due opportunity to the petitioner. It would be needless to observe that the petitioner, in the meanwhile, could avail remedy before the Assessing Officer and before the jurisdictional Commissioner if there is reason for such initiation. 5 For the foregoing, the petition is allowed-in-part and the impugned order dated 22.01.2022 by the Additional Commissioner of Income Tax - second respondent at Annexure –G is quashed with liberty to the authorities as aforesaid. Sd/- JUDGE SA/- Ct:sr "