RAMACHANDRAN V. THE DEPUTY COMMISSIONER OF INCOME TAX

WP(C)/21162/2022

AI Insights

The case involves Ramachandran, the petitioner, who contested a penalty imposed by the Deputy Commissioner of Income Tax following a search that revealed undisclosed income. The penalty was assessed through an ex parte order (Ext.P4) while an appeal against it was pending. The petitioner argued that the penalty under Section 271AAB of the Income Tax Act is not automatic and could be dropped based on the circumstances. The court decided to stay the recovery proceedings of the penalty amount, contingent upon the petitioner paying 10% of the penalty in installments, and directed the appellate authority to expedite the review of the petitioner's appeal against the penalty.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 768594 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 25-08-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: T M SREEDHARAN; V P NARAYANAN
• Keywords: Ex parte order; Penalty; Search and seizure; Statutory Appeal; Undisclosed income
• Section: 271AAB

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. THURSDAY, THE 25TH DAY OF AUGUST 2022 / 3RD BHADRA, 1944 WP(C) NO. 21162 OF 2022 PETITIONER: RAMACHANDRAN, AGED 49 YEARS, 54, T.C.37/150, PADMA NAGAR, EAST FORT, THIRUVANANTHAPURAM-695 023, REPRESENTED BY MR. RAMANCHANDRAN BALACHANDRAN, MANAGING PARTNER. BY ADVS. T.M.SREEDHARAN (SR.) V.P.NARAYANAN RESPONDENTS: 1 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, THIRUVANANTHAPURAM-695 003. 2 THE COMMISSIONER OF INCOME TAX (APPEALS), NATIONAL FACELESS APPEAL CENTRE, INCOME TAX DEPARTMENT MINISTRY OF FINANCE, JAWAHARLAL STADIUM, NEW DELHI - 110 001. BY SRI. JOSE JOSEPH (SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 25.08.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 21162 OF 2022 2 JUDGMENT The petitioner has approached this Court being aggrieved by proceedings initiated for recovery of amount of penalty assessed in terms of Ext.P4 order at a time when statutory appeal is pending against the order imposing penalty. It is the contention of the learned counsel for the petitioner that Ext.P4 is an ex parte order and the penalty was imposed without even considering the contentions of the petitioner. 2. The learned Standing Counsel for the respondent Department points out that a search was conducted in the premises of the petitioner. It is submitted that following the search, huge undisclosed income was detected and the petitioner voluntarily filed the return of income accepting that there was undisclosed income and discharged the liability for tax in respect of the amount of undisclosed income. It is submitted that penalty under Section 271AAB of the Income Tax Act is almost automatic and no fault can be found with Ext.P4 order. The learned counsel for the petitioner in reply states that the penalty under Section 271AAB of the Income Tax Act is not automatic and considering the facts and circumstances of the case, it is always open to the authorities to drop the WP(C) NO. 21162 OF 2022 3 proceedings for penalty. 3. Having regard to the facts and circumstances of the case, considering the contentions raised by either side and also considering the fact that an appeal against Ext.P4 order imposing penalty is pending before the 2nd respondent, this writ petition is disposed of directing the 2nd respondent to consider and pass orders on the appeal filed by the petitioner against Ext.P4 order. Any proceedings for recovery of amounts due under Ext.P4 shall be kept in abeyance on condition that the petitioner remits the sum equivalent to 10% of the amount of penalty in four monthly instalments commencing from 16.09.2022. The first instalment shall be paid on or before 16.09.2022 and subsequent instalments shall be paid on or before the 16th day of the succeeding months. The writ petition is disposed of as above. Sd/- GOPINATH P. JUDGE DK WP(C) NO. 21162 OF 2022 4 APPENDIX OF WP(C) 21162/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ASSESSMENT ORDER DATED 29.9.2021 ISSUED BY THE 1ST RESPONDENT Exhibit P2 TRUE COPY OF THE NOTICE DATED 23.3.2022 FOR INITIATING PENALTY PROCEEDINGS FOR THE ASSESSMENT YEAR 2019-20. Exhibit P3 TRUE COPY OF THE REPLY DATED 23.3.2022 ALONG WITH ACKNOWLEDGMENT BY THE DEPARTMENT. Exhibit P4 TRUE COPY OF THE PENALTY ORDER DATED 27.3.2022 ISSUED BY THE 1ST RESPONDENT. "