Shri C.M. Ganapathy V. The Agricultural Income-tax Officer, Madikeri

WP/7773/1992

AI Insights

The case involves Shri C.M. Ganapathy, who filed writ petitions against the penalties levied by the Agricultural Income-tax Officer for the assessment years 1984-85 to 1988-89. The penalties were based on the returns filed under the status of 'HUF' and were contested on the grounds that the officer did not consider the objections submitted in response to the show-cause notices. The petitioner argued that the penalties were imposed mechanically and without proper legal consideration. The court examined the procedural adherence in the imposition of penalties and found significant lapses, leading to the quashing of the penalties.

• Counselvise Citation: [1998] 140 COUNSELVISE.COM (IT) 795318 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 18-06-1998
• Assessment Year: misc
• Other Referred Cases: M.P. Laxman v. Agricultural Income-Tax Officer and Another
• Laws Referred To: Agricultural Income-tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: I C M SHIVAYOGAPPA
• Assessee Lawyers: J A HEMRAJ
• Keywords: Agricultural income-tax; Natural Justice; Penalty; Mechanical Levy of Penalty
• Section: 19(3); 18(2)(1A)(b); 18(2A)(b)

Judgement Text

"IN THE HIGH CCJRT 0 KARNATAKA BANGALORE DATED THIS THE 18TH DAY 0! JUNE 1998 BOHE : THE HON’BLE MR.JUSTICE TIRATH S.THAKUR WRIT EETIT ION Nos.7773—77/1992 BETWEEN :— Shri.C.M.Ganapathy, s/o late O,A.Mandanna, aged about 52 years, Horur )utt & Udaya Estate, “Girl Kunja”, Near Raja Seat, MA.DIKERI — 571 201 Kodagu Diet. .Pitioner. C By SriJ.A.Hemraj, Adv., ) AND The Agricultural Income—tax, Officer, Madikeri — 571 201, ICodagu Diet, ,• .Respondent. C By Sri.IC.M.Shivayogiawemy,HCGP,for Respt. This writ petition filed praying to call for record vjde Arrnexures—C to G dated 7—9—1991 bearing Nos,133/84— 85, 133/85—86, 41/86—87, 41/87—88 and 41/88 passed by the Respondent for the assessment years 1984—85 to 19889; etc., This writ petition coming on for hearing this day, the Court made the following order : —2— 0 RE.R For the assessment years 1984—85 to 1988—89 the petitioner filed returns under the Agricultural Income— tax Act in the status of “HUF”, Assessment on the basis of these returns were completed under Sec.19(3) of the Act. Some time later the Assessing Authority issued notices asking the petitioner to show—cause why a penalty in rms of Sec.18(2)(1A)(b) of the Act be not levied upon him, The petitioner’s oae is that ía res ponse to the Notices he appeared before the Assessing Officer and explained his position but before any final orders could be issued on the basis of the said Notices the Officer concerned was transferred to be succeeded by another incumbent who issued a fresh and composite pro position Notice for the levy of penalty on the 11th of tober, 1990, 2, The petitioner it is not in dispute filed his objections to the said Notice on 20th of tober,1990, Nearly a year later the respondent has passed the im pugned orders levying penalty, aggrieved whereof, the petitioner baa filed the present writ petitions, 3,M,Hemraj, learned Counsel for the petitioner made (/ I —3— a two fold submission in support of the petition, Firstly he contended that the orders under challenge bad been passed without cei6ering the objections which the petitioner bad preferred against the Notices served upon bm and were therefore in violation of a requirements of law and the principles of natural justice. Secondly, be urged the the orders in question were paeed wItbont due regrd to ie provisions contained in Sec,18(2A)(b) and in a mechanical fashion, Reliance in suDport was placed by I,Hemraj, upon a Division Bench decision of this Court in Xfl1LUXflUXXX!flUUXXftUD .P.LAXMkN .v. AGRICULTURAL INCOME-TAX OFFICER AND ANOThER / ITR 157 Page-1/. 4, A reading of the orders under challenge shows that the same proceed on the assumption that the peti tioner had not responded to the show—cause notices served upon him, As a matter of fact the impugned or ders do not even refer to the notice dated the 11th of October, 1990 issued to the petitioner to which the petitioner bd admittedly filed his objections on the 20th of October, 1990. The Respondent has referred to the earlier notices issued to the petitioner and con cluded that since the petitioner bad not submitted any reply to the same be bad possibly no explantion to offer, 0 V he Officer appears to have over—looked the fact that the issue of the previous notices had paled into insig— nifance in the 1 ight of the subsequent not ice served upon the petitioner to which the petitioner had submi tted a reply. He was therefore duty bound to have con sidered the reply submitted by the petitioner to the said subsequent notice. In having failed to do so, the Offi— cer committed an error which renders the orders passed by him unsustainable. tot only that the impugned orders give an impression as though the Officer has levied penalty without having regard to the provisions of Sec.18(2A)(b) of he Act and without considering the question whether such a penalty was at all necessary. The decision of this Court in M.P.LAXMAN’s Case, (Supra) relied upon by Mr Hemraj, supports his submission that the factors or reasons on which the assessment was completed and the liability for payment of a higher tax amount determined may not by themselves be enough to attract the levy of penalty. The assessing Officer is bound to consider the cause shown by the Assessee if any and decide the question of levy of penally without being undully bound by the Assessment made by him. The said assessment is binding upon the Officer only to the extent . . . 5 of the difference in tax levied by him, The power of imposing penalty must be exercised judiciisly having due regard to the facts and circumstances of each case and not mechanically. lxi the instant case apart from the assumption that the petitioner bad not filed any reply to the proposition notice, there is no other consideration discernible from the orders under cha llenge, The petitioner has therefore 3utified in con tending that tb orders are to a large extent made mechanically without a serious consideration of the question whether axy sch penalty was at al-i warranted in the circumstances, 5. In the result these petitions succeed and are hereby allowed, The impugned orders of penalty shall stand quashed, reserving liberty for the Respondent to pass fresh orders in accordance with law keeping in view the decision of this Court in LP,LAXN’s Case and the observations me hereinabove, The petitioner may if so advised file additional objections to the proposi tion notices within six weeks from oday. No costs, Sd/h JUDGE Abid/ ( Jan!— 1k A’) "