Isha Travels And Tours Pvt Ltd Vs ACIT (Delhi High Court)
Summary : The Delhi High Court granted interim protection to Isha Travels And Tours Pvt Ltd by staying recovery proceedings arising from the penalty order dated 29 June 2026 until the next hearing. The petitioner submitted that its appeal against the quantum assessment was pending before the Commissioner of Income Tax (Appeals). Despite this pending appeal and a request to adjourn the penalty proceedings, the Assessing Officer had passed the penalty order and issued a demand notice. A preliminary objection was raised that the petitioner could pursue a statutory appeal against the impugned penalty order.
Considering the circumstances, the Court expressed a prima facie view that section 275(1)(a) of the Income Tax Act, 1961 required the Assessing Officer to keep the penalty proceedings in abeyance until the quantum appeal was decided. On that basis, it provisionally considered the proceedings to be in breach of the statutory provision and without jurisdiction. The Court issued notice, which counsel for the respondent accepted, and granted six weeks to file a reply, followed by six weeks for any rejoinder. The matter was listed for 3 February 2027, with recovery pursuant to the penalty order stayed until then. The order provides interim relief and does not finally decide the writ petition or set aside the penalty order.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Mr. Jaspal Singh Sethi, learned counsel for the petitioner submitted that though petitioner’s appeal against the assessment order (on quantum) is pending consideration before the Commissioner of Income Tax (Appeals), without waiting for the decision of the appeal, the Assessing Officer (AO) has passed the impugned penalty order and issued a notice of demand dated 29.06.2026, in spite of petitioner’s request for adjourning the penalty proceedings.
2. Learned counsel raises a preliminary objection that the petitioner can prefer an appeal against the penalty order impugned in the writ petition.
3. Having regard to the facts and circumstances of the case and considering that there is a clear embargo under Section 275(1)(a) of the Income Tax Act, 1961, mandating that until the appeal is decided against the quantum demand, the AO shall keep the penalty proceedings in abeyance, we are of the prima-facie view that the penalty proceedings taken up by the AO are in breach of statutory provision and thus, without jurisdiction.
4. Issue notice. Mr. Lakshya, learned counsel for the respondent accepts notice.
5. Mr. Lakshya, associate to Mr. Siddhartha Sinha, learned Senior Standing Counsel prays for and is granted six weeks’ time to file reply.
6. Rejoinder, if any, be filed within six weeks’ thereafter.
7. List this case on 03.02.2027.
8. Till then, recovery proceedings in furtherance of the penalty order dated 29.06.2026 shall remain stayed.
