Nike India Private Limited V. Additional/Joint/Deputy/Assistant Commissioner of Income Tax National E-Assessment Centre and Deputy Commissioner of Income Tax Circle-3(1) and Principal Commissioner of Income Tax-2

WP/9031/2022

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Nike India Private Limited filed a writ petition against the Additional/Joint/Deputy/Assistant Commissioner of Income Tax and others, challenging a penalty and demand notice issued under Section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2015-16. The petitioner argued that the penalty was imposed erroneously on the basis that their appeal had been dismissed, whereas it was still pending. The court found merit in the petitioner's argument, noting that the respondents had not considered the current status of the appeal, leading to the quashing of the penalty and demand notice.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 689936 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 12-08-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: TANMAYEE RAJKUMAR
• Keywords: Appeal; Assessment Order; Demand notice; Dispute Resolution Panel; Income Tax; Penalty
• Section: 271(1)(c); 274; 156; 226; 227

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 12TH DAY OF AUGUST, 2022 BEFORE THE HON'BLE MR.JUSTICE S.R.KRISHNA KUMAR WRIT PETITION No. 9031 OF 2022 (T-IT) BETWEEN: NIKE INDIA PRIVATE LIMITED NO.66/1,GROUND AND 1ST FLOOR OLYMPIA BUILDING, BAGMANE TECH PARK CV RAMAN NAGAR, BANGALORE RPERESENTED HEREIN BY ITS SENIOR TAX MANAGER MR NAGARAJ S …PETITIONER (BY SMT.TANMAYEE RAJKUMAR., ADVOCATE) AND: 1. ADDITIONAL/JOIN/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX NATIONAL E- ASSESSMENT CENTRE ROOM NO. 401, 2ND FLOOR, E-RAMP JAWAHARLAL NEGRU STADIUM DELHI – 110 003. 2. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-3(1) (1) BMTC BUILDING,80 FEET ROAD., KORAMANGALA BENGALURU – 560 095. 3. PRINCIPAL COMMISSIONER OF INCOME TAX-2 BMTC BUILDING, 80 FEET ROAD KORAMANGALA BENGALURU – 560 095. …RESPONDENTS (BY SRI. E.I.SANMATHI., ADVOCATE) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DTD: 01.04.2022 PASSED BY THE R-1 UNDER SECTION 271(1) (C) OF THE ACT FOR THE ASSESSMENT YEAR 2015-16 AND ETC. THIS W.P. COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:- 2 ORDER In this petition, the petitioner has sought for the following reliefs: a) Stay the operation of the demand notice dated 31.03.2022 bearing No.ITBA/PNL/S/156/2022- 23/1042390118(1) (Annexure-K) issued by the 1st Respondent under Section 156 of the IT Act for the assessment year 2015-16 during the pendency of this writ petition. b) Pass an exparte order in terms of VI.1(a) above; and c) Pass such other or further orders as this Hon’ble Court may deem fit in the facts and circumstances of the case, in the interests of justice and equity. 2. Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record. 3. The material on record discloses that aggrieved by the draft Assessment Order dated 18.10.2019, passed by the Assessing Officer, petitioner filed its objections before the Dispute Resolution Panel (DRP) which confirmed the additions made by the Assessing Officer on 05.02.2021, pursuant to which, respondent No.1 passed the Final Assessment Order and 3 issued a notice proposing to levy penalty under Section 274 r/w. 271(1)(c) of the Income Tax Act, 1961 (for short “the I.T. Act”). 4. The petitioner preferred an appeal before the Income Tax Appellate Tribunal (ITAT) on 25.05.2021. Subsequently, respondent No.1 issued a notice on 05.07.2021 calling upon the petitioner to inform the status of the appeal and to provide reasons as to why penalty should not be levied. In response thereto, petitioner sent its reply dated 12.07.2021 requesting the respondents to drop the penalty proceedings or atleast keep the same in abeyance till disposal of the appeal. It is the grievance of the petitioner that despite the aforesaid facts and circumstances, respondent No.1 has proceeded to issue show-cause notice and demand notice dated 31.03.2022 followed by the impugned order dated 01.04.2022 levying penalty upon the petitioner on the erroneous premise/basis that the appeal filed by the petitioner had been disposed of without appreciating that the appeal was still pending adjudication, despite which the respondents are proceeding 4 to enforce and implement the impugned order and demand notice and as such, petitioner is before this Court by way of the present petition. 5. Per contra, learned counsel for the respondents submits that there is no merit in the petition and that the same is liable to be dismissed. 6. As rightly contended by the learned counsel for the petitioner, respondent No.1 has proceeded to pass the impugned order dated 01.04.2022 and imposed penalty upon the petitioner under Sec.271(1)(c) of the I.T. Act on the erroneous premise/ground that the appeal preferred by the petitioner had been dismissed without appreciating the material on record including the latest status of the appeal, which clearly establishes that the appeal is still pending adjudication as on today and consequently, the impugned order and notice passed/issued by respondent No.1 deserves to be quashed and the same are to be directed to be kept in abeyance till disposal of the appeal. 7. In the result, I pass the following:- 5 ORDER (i) Petition is hereby allowed. (ii) The impugned penalty order at Annexure-J dated 01.04.2022 and the impugned demand notice at Annexure- K dated 31.03.2022 are hereby quashed. (iii) The respondents are directed to keep the penalty proceedings in abeyance till the disposal of the appeal preferred by the petitioner before the appellate authority and the same attaining finality in accordance with law. Sd/- JUDGE Srl/Bmc "