SMT. PRABHAVATI ADIVESH KARCHI V. THE INCOME TAX OFFICER

WP/138777/2020

AI Insights

The case involves Smt. Prabhavati Adivesh Karchi, a 75-year-old petitioner, who challenged the assessment order and subsequent demand notice issued by the Income Tax Department for the assessment year 2017-2018. The petitioner initially filed a stay application under Section 220(6) of the Income Tax Act, 1961, which was partially rejected by the Principal Commissioner of Income Tax, requiring a 20% deposit of the disputed demand. Aggrieved by this decision, the petitioner filed a writ petition under Articles 226 and 227 of the Constitution of India, arguing that the rejection of her stay application was in violation of the principles of natural justice and ignored relevant circulars and instructions that guide such decisions. The court found that the first respondent had not provided an opportunity for the petitioner to present her case before issuing the impugned order, thus violating the principles of natural justice.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 758562 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 09-02-2021
• Assessment Year: misc
• Other Referred Cases: Flipkart India Pvt. Ltd Vs. Assistant Commissioner of Income Tax (2017) 396 ITR 551
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: Y V RAVIRAJ
• Assessee Lawyers: SANGRAM KULKARNI
• Keywords: Assessment Order; Genuine hardship; High-pitched assessment; Natural Justice; Stay Application; Writ of Certiorari
• Section: 143(3); 220(6)

Judgement Text

"IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 9TH DAY OF FEBRUARY, 2021 BEFORE THE HON’BLE MR.JUSTICE ASHOK S. KINAGI W.P.NO.138777/2020 (T-IT) BETWEEN SMT. PRABHAVATI ADIVESH KARCHI, AGE: 75 YEARS, OCC: AGRICULTURE AND HOUSEHOLD, R/O: KARCHI GALLI, AINAPUR, TALUKA ATHANI, DISTRICT BELAGAVI .....PETITIONER (BY SRI SANGRAM S KULKARNI, ADV.) AND 1. THE INCOME TAX OFFICER, WARD NO.4, BELAGAVI FEROJ KHIMJIBAI COMPLEX, OPP.CIVIL HOSPITAL, DR.AMBEDKAR ROAD, BELAGAVI KARNATAKA-590001 2. THE PRINCIPAL COMMISSIONER OF INCOME TAX(APPEALS), BELAGAVI, FEROJ KHIMJIBAI COMPLEX, OPP CIVIL HOSPITAL, DR AMBEDKAR ROAD, BELAGAVI KARNATAKA 590001 …..RESPONDENTS (BY SRI Y V RAVIRAJ, ADV.) - 2 - THIS PETITION FILED UNDER ARTICLE 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO ISSUE WRIT OF CERTIORARI AND QUASH THE IMPUGNED ASSESSMENT ORDER ITBA/AST/S/143(3)/2019-20/1022979806(1) DATED 24.12.2019 VIDE ANNEXURE-C AND DEMAND NOTICE ANNEXURE-D ORDER ITBA/AST/S/156/2019-20/1022979889(1) AND ALSO QUASH THEIMPUGNED ORDER ITBA/COM/F/17/2019-20/1024294776(1) DATED 27.01.2020 VIDE ANNEXURE-F PASED BYTHE RESPONDENT No.1. THE INCOME TAX OFFICER, WARD-4, BELAGAVI AND ETC. THIS PETITION COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner aggrieved by the assessment order filed an appeal before the learned Commissioner for Income Tax (Appeal), Hubballi for the assessment year 2017-2018. The petitioner filed a stay application under Section 220(6) of Income Tax Act, 1961 (‘the Act’, for short) before the second respondent on 24.01.2019 for the assessment year 2017-2018. The second respondent has issued a letter directing the petitioner to pay 20% of the total demand for the assessment year 2017-18. The petitioner aggrieved by the letter issued by the second respondent, filed an application before the first respondent requesting for stay of entire demand for the assessment year 2017-2018. The first respondent rejected the stay application filed by the petitioner. Hence, the petitioner has - 3 - filed the writ petition challenging the assessment order dated 23.12.2019 vide Annexure-D and also the letter issued by the first respondent dated 27.01.2020 vide Annexure-F. 2. The petitioner’s grievance is that the Principal Commissioner of Income Tax has rejected the petitioner’s application for stay ignoring the instruction No.1914 and subsequent official memorandum/circular dated 29.02.2016. 3. Learned counsel for petitioner submits that the in the light of the instruction No.1914 and subsequent memorandum/circular dated 29.02.2016 while considering the application for stay, Principal Commissioner of Income Tax had to consider whether the assessment made by the Assessment Officer is unreasonably high pitched assessment or whether the petitioner is put to genuine hardship because of the said assessment. Learned counsel relied upon the judgment of this Court in Flipkart India Pvt. Ltd Vs. Assistant Commissioner of Income Tax reported in (2017) 396 ITR 551 in this regard. He submits that the first respondent without providing an opportunity to the petitioner has issued the impugned letter - 4 - at Annexure-A. Thus, the impugned letter issued by the first respondent is in violation of principles of natural justice. Hence, he prays to allow the writ petition. 4. Learned counsel for respondents fairly concedes that the first respondent before issuing the impugned letter at Annexure-F, no opportunity was given to the petitioner. Hence, he submits that the matter may be remanded to the first respondent to reconsider and pass appropriate order in accordance with law. 5. His submission is placed on record. 6. This Court in the case of Flipkart stated supra, while considering the official memorandum/circular dated 29.02.2016 has issued super session instruction No.1914 whether the assessment officer/Principal Commissioner Income Tax should consider the request for stay in the light of instruction No.1914 and subsequent memorandum/circular dated 29.02.2016 has held as under: - 5 - (a) Circular No.1914 deals with collection and recovery of income tax, however it does not standardize the quantum of lumpsum payment required to be made by Assessee as a pre-condition of stay of disputed demand before Commissioner (Appeals). (b) Circular dated 29.02.2016 is a partial modification of Circular No.1914 as it merely prescribes the percentage of the disputed demand that needs to be deposited by Assessee. (c) Although process for granting stay was streamlined, and standardized by Circular dated 29.02.2016, it could not mean that Instruction No.2-B(iii) contained in Circular No.1914 dealing with situation of genuine hardship caused to Assessee was erased by Circular dated 29.02.2016. (d) Where Principal Commissioner failed to consider whether assessment orders suffer from being unreasonably high pitched or whether any genuine hardship would be caused to Assessee in case Assessee was required to deposit 20 per cent of disputed demand amount, impugned order requiring Assessee to deposit 20 per cent of disputed demand amount was legally unsustainable. - 6 - 7. The first respondent is to decide on the application of stay considering the two questions whether the assessment is unreasonably high pitched and whether the petitioner to put to genuine hardship because of such assessment. However, the first respondent without providing an opportunity to the petitioner has passed the impugned order without considering the contentions raised by the petitioner in the memorandum of appeal. Thus, the impugned order is in contravention of principles of natural justice. Hence, the impugned order is liable to be set aside. 8. In view of the above observation, the writ petition is allowed. Impugned letter dated 27.01.2020 issued by the first respondent vide Annexure-F is set aside. Matter is remitted to the first respondent to reconsider the stay application in accordance with the observation made by this Court in Flipkart’s case. Petitioner is directed to appear before the first respondent on 03.03.2021 without awaiting any further notice. The first - 7 - respondent shall consider the application and pass appropriate orders in accordance with law. Sd/- JUDGE Naa "