THE ASSISTANT COMMISSIONER OF INCOME TAX, V. SHETTY CONSTRUCTION,

WA/10042/2011

AI Insights

The case involves an appeal by the Assistant Commissioner of Income Tax, Circle-I, against Shetty Construction, challenging the order of a learned Single Judge who quashed a notice issued by the Revenue. The notice was intended to attach rents due to the assessee for non-payment of assessed income tax. The assessee had been allowed to pay the tax in installments and had defaulted, leading to the issuance of the notice. The Single Judge's decision was based on the absence of consideration of the stay application before issuing the notice. The High Court reversed this decision, emphasizing the legal validity of the Revenue's demand.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 733741 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 12-01-2012
• Assessment Year: misc
• Other Referred Cases: MIs. S.S.ENTERPRISE & ANOTHER vs. INCOME TAX OFFICER, WARD-532
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: S M CHANDRASHEKAR
• Assessee Lawyers: AMEET DESHPANDE
• Keywords: Appeal; Income Tax; Recovery proceedings; Scrutiny assessment; Stay Application
• Section: 143(3); 226(3)

Judgement Text

"IN THE HIGH COURT OF KARNATAKA CIRCUIT BENCH AT GULBARGA DATED THIS THE 12Th DAY OF JANUARY, 2012 PRESENT THE HON’BLE MR. JUSTICE . KUMAR AND THE HON’BLE MR. JUSTICE B. SREENIVASE GOWDA W.A.NO.10042/2011 (T- IT) BETWEEN: The Assistant Commissioner Of Income Tax, Circle-I. Aayakar Bhavan, Sedam Road, Gulbarga. . . .Appellant (By Sri Ameet Kumar Deshpande, Adv.) AND: Shetty Construction. G-I. Siddharth Plaza. Shetty Enclave. Aland Road. Guiharga. Rep. By its Partner, Udaya Shankar Shetty. . . . Respondent (By Sri. S.M,Chandrashekar, Adv. for respondent.) This WA is filed under Section 4 of the Karnataka High Court Act, praying to set aside the Order dated: 20-01-2011 passed in the Writ Petition No.80032/2011 (T-IT) by the single Judge. This W.A. coming on for prt’liminary hearing this day. N.Kumar J. delivered the following: JUDGMENT This appeal is by the Revenue challenging the order passed by the learned Single Judge who has quashed the notice dt. 29-11-10, wherein the Revenue has attached the rents payable by the tenant of the assessee. 2. The return filed by the assessee was taken up for scrutiny assessment under Sec. 143(3) of the Income Tax Act (herein after referred to as the Act for short). It was completed on 31- 12-09 and demand of Rs. 1,38,26,762/- was raised, Challenging the said assessment, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) on 22-2-10. The Commissioner of Income Tax permitted the assessee to pay the income tax in monthly 3 instalments of Rs. 10,00,000/- commencing from 29-3- 10. Accordingly, the assessee paid a sum of Rs. 10,00,000/- for the month of March, 2010 and thereafter, he committed default and in the month of April, 2010, the assessee has requested to adjust the arrears of tax out of the refund for the assessment year 2008-09 and 2009-10. Accordingly, refund of Rs.4,21,600/- was also adjusted towards the income tax payable by the assessee. It is thereafter, for the balance amount, the impugned notice was issued attaching the rents due to the assessee. It is this notice which is challenged before this Court. 3. The learned Single Judge was of the view when appeal is filed and application for stay is pending, without considering the application for stay. the Revenue had no justification to issue the impugned nenee under Sec. 226(3) of the Act. In support of the said view, he learned Single Judge has relied on a judgment of the Kolkata High Court rendered 4 in MIs. S.S.ENTERPRISE & ANOTHER vs. INCOME TAX OFFWER, WARD-5321 on identical facts. 4. The law is well settled. Viien an assessment order is passed and in pursuance of the same a demand is raised, if the assessee is aggrieved by such demand and assessment order, there is a right to prefer an appeal. However, he has to deposit the amount of tax. ‘I’1u question of granting exemption from payment of tax or payment of a portion of the tax is a matter to be considered by the appellate authority. If the assessee has made a request. as in the instant ease, on such a request being made, the appellate authority permitted the assessee to pay the tax due in monthly instalments of Rs. 10,00,000/-. The assessee acquiesced with that order, made payment of Rs. 10,00,000/- for the month of March. Thereafter, he did not make any payment. He requested for adjustment of arrears of tax out of the refunl ‘ r the year 2008-09 and 2009-10 of Rs.4,21.öOO/-. Adjusrnent was given by the department. It is thereafter when he did not 5 S make payment, they initiated proceedings for recovering the sum by issuing the Impugned notice. 5. Demand made by the Revenue is legal and valid and no interference with the same is permitted in law. Therefore, the order passed by the learned Single Judge is erroneous and requires to be set aside. Hence, we pass the following order. 6. Appeal is allowed. Impugned order is set aside. The Revenue shall proceed to recover the amount outstanding in accordance with law. JUDGE Sd/rn. JUDGE Mgn/ "