M/S. MONARCH V. INCOME TAX OFFICER

WP/4952/2020

AI Insights

The case involves M/s. Monarch, represented by Shri Dawood Mohammed, challenging notices and an order issued by the Income Tax Department, claiming they were illegal and without jurisdiction. The petitioner contested an assessment order that disallowed significant expenditure, which had been previously declared as income. The petitioner sought a stay on the recovery of the disputed demand, which was partially granted by the Assessing Officer. However, the Principal Commissioner of Income Tax did not respond to the petitioner's subsequent stay request. The court refrained from commenting on the merits of the case but emphasized the need for the Principal Commissioner to act on the petitioner's representation in accordance with the law and guidelines.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 754823 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 04-03-2020
• Assessment Year: misc
• Other Referred Cases: Flipkart India Private Limited v. The Assistant Commissioner of Income Tax, M/s. Shriram Finance v. Principal Commissioner of Income Tax (1) and Others
• Laws Referred To: Constitution of India, Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: RAGHURAMAN
• Keywords: Assessment Order; Income Tax; Jurisdiction; Stay of recovery; Violation of Constitutional Rights; Writ petition
• Section: 37(1); 143

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF MARCH 2020 BEFORE THE HON'BLE MR.JUSTICE S. SUNIL DUTT YADAV WRIT PETITION No. 4952/2020 (T-IT) Between: M/s. Monarch No.54, Monarch Plaza, Brigade Road, Bangalore 560 001. Represented by Shri Dawood Mohammed Partner Aged about 69 years S/o. Mohammed Dawood … Petitioner (By Sri Raghuraman V, Adv.) And: 1. Income Tax Officer Ward 1(2)(1), BMTC Building, 80 Feet Road, 6th Block, Near KHB Games Village, Koramangala, Bengaluru 560 095. 2. Deputy Commissioner of Income Tax Circle 1(2)(1), BMTC Building, 80 Feet Road, 6th Block, Near KHB Games Village, 2 Koramangala, Bengaluru 560 095. … Respondents (By Sri. K. V. Aravind, Adv.) This Writ Petition is filed under Articles 226 & 227 of Constitution of India, praying to quash the impugned notice (1) dated 24.09.2018 (2) dated 29.09.2018 (Annexures-A1 and A2) issued by the R-1 as being illegal and without jurisdiction and quash the impugned order (1) dated 13.12.2019 (Annexure-B) passed by R-2 as being violative of Article 14, Article 19, Article 265 and 300A of the Constitution of India and etc. This Writ Petition coming on for preliminary hearing this day, the Court made the following: ORDER The petitioner has challenged the impugned notice issued under Section 143 of the Income Tax Act, 1961, copies of which are produced as Annexures-A1 and A2 and has also challenged the order dated 13.12.2019, copy of which is enclosed as Annexure–B and the demand pursuant to the assessment order at Annexure-C dated 13.12.2019. 2. The petitioner submits that as against the assessment order at Annexure-B, an appeal has been filed before the Commissioner of Income Tax (Appeals). 3 It is further submitted that the petitioner had filed an application for stay and had sought for interim relief and the Assessing Officer as per the order at Annexure-X has ordered that there would be stay of 80% of the disputed demand till disposal of the appeal, subject to payment of Rs.61,17,317/- (20% of the demand) on or before 07.02.2020. 3. It is the contention of learned counsel for the petitioner that subsequent to the order at Annexure-X, the petitioner has approached the Principal Commissioner of Income Tax on 07.02.2020 and had sought for stay of recovery of demand including the direction of Assessing Officer directing the petitioner to deposit Rs.61,17,317/- of the demand. The petitioner has furnished copy of the detailed representation made to the Principal Commissioner of Income Tax detailing various contentions, justifying stay of recovery of demand and making out a case that the demand is high 4 pitched and has also contended that the assessment order has disallowed expenditure of Rs.6,53,34,735/- as allowable under Section 37(1) of the Income Tax Act, 1961, as the said amount was already declared as income during the assessment year 2012–2013. Various other contentions have also been raised. 4. It is further contended that when the application for stay is taken up for consideration by the Assessing Officer, the Assessing Officer should pass an order after due application of mind and that subsequently after the application for stay is disposed off, the petitioner has an opportunity of approaching the Principal Commissioner of Income Tax in light of the Circular bearing No.1914, further amended on 25.01.2017, 29.02.2016 and 31.07.2017 and despite representation there is no consideration by the Principal Commissioner of Income Tax. 5 5. It is also contended that the Principal Commissioner of Income Tax is also to take note of the guidelines as observed in the case of Flipkart India Private Limited v. The Assistant Commissioner of Income Tax (W.P.Nos.1339-1342/2017 decided on 23.02.2017) and apply his mind and pass a considered order. It is contended that the contents of stay application make out a case for consideration of relaxing the condition as sought for. 6. Learned counsel appearing for the Revenue submits that the petition is premature and no doubt, the Principal Commissioner of Income Tax has not passed any order on the representation of the petitioner dated 07.02.2020, but the same would be considered in accordance with law and in accordance with the existing circulars as applicable. 7. In light of the appeal having been filed, the question of intervening as regards to the assessment 6 order at this stage is not appropriate. However, as regards the contention that the consideration of application for stay and further exercise of power of the Principal Commissioner of Income Tax, keeping in mind the circular bearing No.1914 as amended on 21.5.2017, 29.2.2016 and 31.7.2017 request of the petitioner is to be considered in a meaningful manner. In fact, the power of granting stay has been considered by the High Court of Judicature at Madras in the case of M/s. Shriram Finance v. Principal Commissioner of Income Tax (1) and Others (W.P.No.5425/2019 & W.P.Nos.6166 & 6168/2019 decided on 01.03.2019) wherein, certain guidelines have been referred to in para-5 which may be taken note of. So also the manner of exercise of power of the Principal Commissioner of Income Tax is detailed in Flipkart’s case (supra) at paras – 18 and 19, which needs to be kept in mind. This Court refrains from expressing any opinion on the merits of contentions raised but reiterates that the 7 Principal Commissioner of Income Tax is to exercise power conferred upon him as per the circulars in a meaningful manner. 8. The petitioner to be present before the Principal Commissioner of Income Tax on 05.03.2020 at 11.30 a.m. and the request of petitioner as contained in the representation dated 07.02.2020 would be disposed of in light of the observations made above. 9. In light of the submission that there has been attachment of bank account and in light of the direction being passed, the attachment already resorted to would be limited to Rs.61,17,317/-. However, in light of the attachment being restricted to Rs.61,17,317/-, the Principal Commissioner of Income Tax to dispose of the representation of the petitioner within a period not later than one week from the date of appearance of the petitioner as noticed above. All contentions of parties are kept open. It is made clear that if the Principal 8 Commissioner of Income Tax does not decide the matter within a period of one week as stipulated, the attachment would automatically stand vacated. This petition is accordingly disposed off. Sd/- JUDGE VGR "