SUNIL KUMAR SHARMA V. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE

WP/25867/2022

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The case involves Sunil Kumar Sharma, the petitioner, challenging notices issued by the Assistant Commissioner of Income Tax and the Principal Commissioner of Income Tax, which demanded payment for outstanding tax dues for the assessment years 2015-16 to 2018-19. The notices were contested under Articles 226 and 227 of the Constitution of India, primarily on the grounds that they were issued following a stay on a related court order by a Division Bench. The court had previously stayed the operation of the impugned notices but later upheld the maintainability objection raised by the respondents, leading to the dismissal of the writ petition. The court, however, directed the first respondent to consider the petitioner's submissions regarding the appropriation of seized cash against the tax demand.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 690385 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 16-02-2023
• Assessment Year: misc
• Other Referred Cases: W.P.No.9939/2022, W.P.No.9945/2022, W.A.No.830/2022, R.P No.697/2022
• Laws Referred To: Income Tax Act, 1961, Constitution of India
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: BALBIR SINGH; K V ARAVIND; M DILIP
• Assessee Lawyers: KIRAN JAVALI
• Keywords: Assessment years; Income Tax; Interim Stay; Maintainability; Notice Quash; Writ petition
• Section: 153C; 221(1); 226(3)

Judgement Text

" - 1 - WP No. 25867 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH DAY OF FEBRUARY, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 25867 OF 2022 (T-IT) BETWEEN: SUNIL KUMAR SHARMA SON OF SRI D P SHARMA, AGED ABOUT 47 YEARS, NO.328, TIPPU SULTAN PALACE ROAD, KALASIPALYAM, BENGALURU 560002. …PETITIONER (BY SRI. KIRAN S. JAVALI, SENIOR ADVOCATE FOR SRI. SHREEHARI, ADVOCATE) AND: 1. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1(4), BENGALURU THE ASSESSING OFFICER UNDER THE INCOME TAX ACT,1961 CENTRAL REVENUE BUILDING, QUEENS ROAD, BENGALURU-560001. 2. PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, BENGALURU, AN AUTHORITY UNDER THE INCOME TAX ACT, 1961 CENTRAL REVENUE BUILDING, Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA - 2 - WP No. 25867 of 2022 QUEENS ROAD, BENGALURU-560001. …RESPONDENTS (BY SRI. BALBIR SINGH, ASG A/W SRI. K.V.ARAVIND, ADVOCATE AND SRI. M.DILIP, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE NOTICE ISSUED BY THE R1 FOR THE ASSESSMENT YEARS 2015-16 TO 2017-18 DATED 29/11/2022 BEARING DIN- ITBA/ RCV/ F/ 17/2022-23/1047703404(1) ENCLOSED AS ANNEXURE D; QUASH THE NOTICE ISSUED BY THE R1 FOR THE ASSESSMENT YEAR 2018-19 DATED 30.11.2022 BEARING DIN. ITBA/RCV/F/ 17/2022- 23/1047724928(1) ENCLOSED AS ANNEXURE D1. THIS PETITION, COMING ON FOR FINAL HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has impugned the Notices/Communications dated 29.11.2022 and 30.11.2022 (Annexures-D and D1) issued by the first respondent for the Assessment Years 2015-16 to 2017-18 calling upon the petitioner to pay 'outstanding demand' and putting the petitioner on notice that if there is failure to comply, the penal and coercive recovery proceedings respectively under Section 221(1) and Section 226(3) of the Income Tax Act, - 3 - WP No. 25867 of 2022 1961 (for short, ‘the IT Act’) along with other enforcement measures under the IT Act. This Court on 27.12.2022, has granted stay of the operation of the impugned notices until further orders. 2. This Court by the order dated 12.08.2022 has allowed the petitions in W.P.No.9939/2022 and other connected petitions quashing the notices dated 21.08.2019 issued to the petitioner under Section 153C of the IT Act for the relevant assessment years. Insofar as the one of the assessment years [i.e., in W.P.No.9945/2022], this Court has quashed the order dated 03.05.2022 in Appeal No.CIT(A)-11/BNG- 10701/2019-20. This Court’s order dated 12.08.2022 is called in question in the intra Court appeal in W.A.No.830/2022. The respondents have filed an application for vacating of the interim order dated 27.12.2022 in this writ petition inter alia contending that the writ petition is not maintainability because of the proceedings in - 4 - WP No. 25867 of 2022 W.A.No.830/2022. On 13.02.2023, Sri. Kiran S. Javali, the learned Senior counsel for the petitioner, and Sri. Balbir Singh, the learned Additional Solicitor General for the respondents, were heard for disposal of this petition on such ground. 3. Sri. Balbir Singh argued that the impugned Notices/Communications are issued after the Division Bench granted stay of this Court’s orders in W.P.No.9939/2022 and other connected petitions in W.A.No.830/2022. After the interim order is granted by the Division Bench on 15.09.2022 staying the operation of this Court’s aforesaid order, the petitioner has filed the review petition in R.P No.697/2022. The respondents have placed even these details before the Division Bench in W.A.No.830/2022, and upon consideration of all the circumstances, the Division Bench has extended the interim stay until further orders on 27.12.2022. - 5 - WP No. 25867 of 2022 4. Sri. Balbir Singh argues that if this Court’s order dated 12.08.2022 is stayed until further orders by the Division Bench on 27.10.2022, there cannot be any impediment for commencement of proceedings for recovery of demand, and as such, the impugned Communications are issued. If the petitioner could have had any grievance with the issuance of impugned communication, in the circumstances of the case, the petitioner ought to have moved necessary application before the Division Bench but could not have filed this petition. Therefore, the petition, which is an abuse of due process, must be dismissed as not maintainable. 5. Sri. Kiran S. Javali after being heard on 13.02.2023 for some time on the maintainability of the writ petition in the light of the aforesaid submission, had submitted that if this Court is inclined to dispose of the petition on the ground of maintainability, this Court could consider directing - 6 - WP No. 25867 of 2022 the first respondent – the Assistant Commissioner of Income Tax - to consider the petitioner’s responses [as per Annexures-E and E1], subject to further orders of the Division Bench. He submits that these responses are filed by the petitioner consequent to the impugned Communication. 6. Sri. Kiran S. Javali, in continuation of these submissions for directions to the first respondent to consider the petitioner’s response as per Annexures-E and E1, today submits that the first respondent must consider whether the petitioner would be liable to pay any amount if cash seized is appropriated, and he submits that the consideration of this aspect would not touch upon the merits of the proceedings pending before the Division Bench. He argues that therefore, this Court must consider disposing of this petition with suitable directions. 7. Sri. Balbir Singh, responding to the aforesaid submissions, states that the first - 7 - WP No. 25867 of 2022 respondent would consider the petitioner’s request for appropriation as now contended strictly in accordance with law, and the petitioner would also be extended an opportunity as sought for in the response in Annexures- E and E1, but the petitioner must avail such opportunity within definite timeline. 8. On the maintainability of the petition, it would suffice for this Court to observe that, in the facts and circumstances of the case, the merits of demand, which emanates from the impugned communication, subject to what could be opined in the review petition, should only be canvassed in W.A.No.830/2022 as all questions would ultimately be decided in these proceedings, and definitely no view can be expressed in the present petition. Significantly, the Division Bench has granted stay of this Court’s order dated 12.08.2022 until further orders, and that must be for some purpose. - 8 - WP No. 25867 of 2022 9. However, insofar as the petitioner’s grievance about the lack of opportunity and the consideration of its responses [as per Annexures-E and E1], it is now stated that the first respondent would consider the same in the light of the petitioner’s case that even if the demand is upheld, the petitioner would not be liable to pay any amount if the cash seized, which is the reason for the controversy, is appropriated. This Court is of the considered opinion that if the first respondent considers the aforesaid facet, and if such consideration is made subject to the orders in the writ appeal, not only that the petitioner’s grievance would be addressed but there would also be complete and effective adjudication in the said appeal. Further, it is submitted in unison that such consideration would not in any way touch upon the questions that are pending in the writ appeal. On the timelines for the opportunity of hearing (including the opportunity to file further details), this Court must - 9 - WP No. 25867 of 2022 provide for a reasonable opportunity. Hence, the following: ORDER a) The petition stands disposed of upholding the respondents’ objections on the maintainability of the petition, but in the light of the further submissions, the first respondent – the Assistant Commissioner of Income Tax – is directed to consider the petitioner’s response as per Annexures – E and E1 in the light of submissions made on behalf of the petitioner. b) The petitioner is extended an opportunity of filing further response, if any, before 10.05.2023, and the first respondent shall extend the benefit of personal hearing as may be convenient thereafter. c) It is clarified that the first respondent’s consideration of the petitioner’s objections - 10 - WP No. 25867 of 2022 as aforesaid could be subject to the orders of the Division Bench in the pending writ appeal. SD/- JUDGE RB "