Case Law Details
Aadhitya Property Developers Vs Additional/Joint/Deputy/ACIT, ITO (Madras High Court)
Madras High Court has issued an interim order staying penalty proceedings initiated against Aadhitya Property Developers under Sections 270A and 271AAC of the Income Tax Act, 1961. The court’s decision comes in light of a pending appeal filed by the assessee before the Appellate Authority against the underlying assessment order.
The case pertains to the assessment year 2017-18. An assessment order was passed against Aadhitya Property Developers on September 27, 2021, under Section 147 read with Section 144B of the Income Tax Act. Although delayed, reportedly due to the Covid-19 situation, the assessee filed an appeal against this assessment order with the Appellate Authority on February 24, 2022. The appeal, along with a delay condonation petition, is currently awaiting a decision.
Meanwhile, pursuant to the assessment order, the Revenue initiated separate penalty proceedings, concluding them with penalty orders issued under Section 270A on February 24, 2022, and under Section 271AAC on February 21, 2022. Aadhitya Property Developers challenged these penalty orders through writ petitions before the High Court.
Counsel for the petitioner, Mr. N.V. Narayanan, argued that allowing the penalty orders to be executed while the primary assessment appeal is still pending would prejudice the assessee’s interests and effectively render the ongoing appeal proceedings otiose. He sought the court’s intervention to prevent immediate enforcement of the penalty.
Mr. A.N.R. Jaya Pratap, learned Standing Counsel for the respondents, contended that the appeal against the assessment order was filed belatedly on December 6, 2021 (the court records later show Feb 24, 2022 as appeal filing date, while original assessment order was Sep 27, 2021 and appeal filed on 06.12.2021. The date 24.02.2022 may be a typo or the date of condonation application). He argued that since the delay condonation was still pending, the Revenue was not precluded from proceeding with or concluding the penalty proceedings.
After considering the submissions, the High Court acknowledged that the appeal against the assessment order, though delayed, was pending before the Appellate Authority. The court observed that allowing the execution of the penalty orders would indeed prejudice the assessee’s interests, as the fundamental quantum of tax liability, which forms the basis for the penalties, is still under dispute in the main appeal.
Consequently, the High Court disposed of the writ petitions with directions. The impugned penalty proceedings have been ordered to be kept in abeyance until the Appellate Authority renders a decision on the appeal against the assessment order dated September 27, 2021. The court clarified that the Revenue can then determine the further course of action regarding the penalty orders based on the outcome of the appeal. Additionally, the Appellate Authority has been directed to expedite the hearing of the appeal, including the delay condonation petition, and decide the same preferably within six months from the date of receiving the High Court’s order.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner is an assessee under the respondents. For the assessment year 2017-18 after completing the assessment under Section 147 read with Section 144B of the Income Tax Act, 1961 (in short ‘the Act’), assessment order was passed on 27.09.2021.
2. As against the said assessment order, though belatedly due to Covid-19 situation, the petitioner assessee filed appeal before the Appellate Authority on 24.02.2022. Since there is a delay in filing the appeal, delay condonation is yet to be completed, however it is the fact that, the appeal though filed belatedly, it is pending before the Appellate Authority as on date.
3. In the meanwhile, pursuant to the assessment order, the Revenue initiated penalty proceedings under two provisions of the Act, viz., Section 270A and 271AAC separately. Those proceedings came to an end, under which, penalty oder under Section 270A of the Act was issued on 24.02.2022. Like that, penalty order under Section 271AAC was also issued against the petitioner assessee on 21.02.2022. Challenging these penalty orders, these writ petitions have been filed.
4. Heard Mr. N.V. Narayanan, learned counsel appearing for the petitioner, who would submit that, since appeal has been filed against the very assessment order before the Appellate Authority, where, the appeal is still pending, before which, if the penalty proceedings concluded in the impugned orders are given effect to, that would greatly prejudice the interest of the petitioner as that would make indirectly otiose the appeal proceedings pending before the Appellate Authority against the assessment order, therefore, the learned counsel seeks indulgence of this Court against the impugned penalty proceedings.
5. Heard Mr.A.N.R.Jaya Pratap, learned Standing Counsel for the respondents, who would submit that, as against the assessment order dated 27.09.2021, appeal should have been filed in time, but admittedly this appeal has been filed only on 06.12.2021. Therefore, there is a delay in filing the appeal which is yet to be condoned, hence, at this juncture, since the Revenue is not prevented or precluded from proceeding against the petitioner assessee, to impose penalty under Section 270A as well as 271AAC, those proceedings since have already been initiated were concluded and therefore, these impugned proceedings cannot be said to be unlawful or infirm, hence, no interference is required, he submitted.
6. I have considered the said rival submissions made by the learned counsel appearing for the parties and have perused the materials placed before this Court.
7. As has been rightly pointed out by the learned counsel for the petitioner assessee, against the assessment order dated 27.09.2021, regular appeal has been filed before the Commissioner (Appeals) or Appellate Authority though belatedly due to Covid-19 situation and the said appeal including the condone delay petition seems to be pending before the Appellate Authority.
8. When that being so, if these penalty proceedings which are concluded in the impugned orders in both the writ petitions are permitted to be executed, certainly that will prejudice the interest of the petitioner as the main issue with regard to the quantum made in the assessment order dated 27.09.2021 itself is the subject matter before the Appellate Authority, hence these penalty proceedings can await for sometime till the decision is taken by the Appellate Authority in the appeal.
9. In that view of the matter, this Court is inclined to dispose of these writ petitions with the following orders:
(i) That the impugned proceedings shall be kept in abeyance till a decision is taken by the Appellate Authority in the appeal filed by the petitioner dated 06.12.2021 against the order of assessment dated 27.09.2021. It is needless to mention that, once a decision has come from the Appellate Authority depending upon the outcome of the same, the further course of action with regard to the impugned orders i.e., the penalty proceedings can be decided by the Revenue.
(ii) The Appellate Authority is hereby directed to take up the appeal including the condone delay petition and decide the same as early as possible preferably within six months from the date of receipt of a copy of this order.
10. With these directions, both the Writ Petitions are disposed of. No costs. Consequently, connected miscellaneous petitions are closed.
Author Bio
