MARINANJAPPA SHIVANANDA V. THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL)

WP/1560/2023

AI Insights

The case involves Marinanjappa Shivananda, the petitioner, who challenged the orders and notices issued by the Income Tax authorities concerning assessment orders for the years 2013-14 to 2018-19 under Section 153A of the Income Tax Act, 1961. The petitioner, represented by his advocate, argued that the stay applications were rejected without proper consideration of his financial difficulties and health issues, which were exacerbated by the COVID-19 pandemic. The court found that the petitioner's circumstances and the report from the Assessing Officer were not adequately considered in the decision-making process regarding the stay application.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 690146 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 10-02-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: DILIP M
• Assessee Lawyers: ANNAMALAI
• Keywords: Assessment Order; Covid-19; Financial hardship; Income Tax; Stay Application; Writ petition
• Section: 153A; 226(3)

Judgement Text

"- 1 - WP No. 1560 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF FEBRUARY, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 1560 OF 2023 (T-IT) BETWEEN: MARINANJAPPA SHIVANANDA SON OF LATE SRI MARINANJAPPA AGED ABOUT 63 YEARS NANJUNDESHWARA KRUPA 5TH CROSS ASHOKA NAGAR OPP SHARADAMBA COLLEGE TUMKUR-572101 REPRESENTED BY HIS GPA HOLDER SRI MANOJ S N AGED ABOUT 31 YEARS. …PETITIONER (BY SRI. ANNAMALAI.S, ADVOCATE FOR SRI.MADHUSUDHAN U A.,ADVOCATE) AND: 1. THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) BENGALURU CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU-560001. 2. THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 2(3) CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU-560001. Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA - 2 - WP No. 1560 of 2023 3. THE COMMISSIONER OF INCOMET TAX (APPEALS)-11 CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU-560001. …RESPONDENTS (BY SRI.DILIP M.,ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLE 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER PASSED BY THE RESPONDENT NO.1 VIDE DIN NO.ITBA/COM/M/17/2022- 23/1046958274(1) DATED 26/10/2022 HEREIN ENCLOSED AND MARKED AS ANNEXURE-A; QUASH THE NOTICE ISSUED UNDER SECTION 226(3) OF THE ACT BY THE RESPONDENT NO.2 VIDE DIN NO. ITBA/COM/F/17/2022-23/1048419511(1) DATED 03/01/2023 HEREIN ENCLOSED AND MARKED AS ANNEXURE-B1 AND ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner, who has filed the statutory appeal before the Commissioner of Income Tax [Appeals] – 11 [the third respondent], has filed this petition impugning the first respondent’s Order dated - 3 - WP No. 1560 of 2023 26.10.2022 [Annexure-A] and the subsequent Notices under Section 226[3] of the Income Tax Act, 1961 [for short, ‘IT Act’] [Annexures-B1 to B5] to the petitioner's different bankers with a request for direction to the first and second respondents not to take coercive measures to recover the disputed demand until disposal of the appeals. These appeals are filed against assessment orders under Section 153 A of the I.T. Act for the Assessment Years 2013- 14 to 2018-19. 2. The petitioner’s case is that appropriate stay applications have been filed with the second respondent, contending, amongst others, that the petitioner can demonstrate that disallowances in the Assessment Order under Section 153(A) of the IT Act would be unsustainable, and because he has undergone a spinal cord surgery and is bedridden which has restricted his movement, he would not be in a position to deposit 20% of the demands in terms of the impugned assessment orders. The petitioner - 4 - WP No. 1560 of 2023 has also contended that he will find it difficult to deposit 20% of the demands because of the financial hardship brought about by his own circumstances and the onset of Covid-19 that has affected his business. 3. Sri A Shankar, the learned Senior Counsel for the petitioner, who was heard on the previous occasion, had submitted that application for stay is rejected without due opportunity and that the first respondent has rejected the application for stay relying upon a report from the Assessing Officer without even furnishing a copy thereof to the petitioner. Today, Sri Annamalai S., the learned counsel on record for the petitioner, reiterates the same, while Sri Dilip M., the learned standing counsel for the respondents and who appears on behalf of Sri K. V. Aravind, submits that the petitioner cannot be aggrieved by the report called for from the Assessing Officer by the first respondent - 5 - WP No. 1560 of 2023 inasmuch as only the petitioner’s financial accounts are called for. Sri Dilip M. also submits that the petitioner has failed to furnish proof of his financial hardship, and this remains indisputable. 4. When queried, Sri Dilip M. submits that the petitioner’s circumstances, as set forth in the writ petition viz. the financial difficulties because of the onset of Covid-19 and the surgery he has undergone, could also be considered as one of the circumstances to be decided on merits of the application of stay and it is obvious from the impugned order that the same are not considered. Even otherwise, the petitioner should have been extended an opportunity to explain any inference that could be drawn from his financial difficulty either to deposit of 20% or merits of disallowance. The failure to consider the petitioner’s circumstance as aforesaid, and the failure to furnish a copy of the report from the Assessing Officer, in this Court’s considered view undermines the merits of the - 6 - WP No. 1560 of 2023 impugned order and the petitioner’s stay application must be reconsidered. 5. This Court on 03.02.2023, has directed that there shall be no action/precipitation until the next date of hearing, and both Sri Annamalai S. and Sri. Dilip M are heard in the premise that this interim arrangement must prevail for the period during which the first respondent reconsiders the merits of the petitioner’s stay application. However, Sri Dilip M submits that the assessment is for the years 2013 to 2014 to 2019-2020, and no tax is paid. This must be one of the circumstances that must be considered by this Court while providing for interim arrangement. 6. Sri Dilip M. also submits that copies of the report would be furnished within a week from today without waiting for the certified copy of this order and ensuring that the application is considered within a reasonable time after due opportunity to the petitioner. Sri Annamalai, in response, submits that - 7 - WP No. 1560 of 2023 all the circumstances that the petitioner’s plea must be considered without any predisposition, and he also seeks leave to place on record further documents to demonstrate the petitioner’s case in support of the stay application. In the light of the afore, the following: ORDER The petition is allowed, and the impugned order dated 26.10.2022 is quashed. However, insofar as the impugned notices issued under Section 226(3) of the IT Act as per Annexures-B1 to B5, the parties are directed to maintain status-quo which would mean that no amount will be drawn from the petitioner’s account [as mentioned in the notice] either by the petitioner or by the authorities until the first respondent considers the petitioner’s stay application as aforesaid, and the same - 8 - WP No. 1560 of 2023 shall be subject to the first respondent’s decision on this remand. SD/- JUDGE AN/-,SA ct:sr "