B.S. Uday Shetty Vs ACIT (Karnataka High Court)
The Karnataka High Court has addressed a petition filed by B.S. Uday Shetty, who challenged a penalty order and a notice of demand issued under Sections 270A and 156 of the Income Tax Act, respectively. The petitioner’s primary grievance was that the penalty was imposed despite an appeal having been filed against the underlying assessment order for the assessment year 2018–19. The petitioner, who was aggrieved by an assessment order from April 16, 2021, had delayed filing an appeal due to the COVID-19 pandemic and technical difficulties. He eventually filed the appeal on September 3, 2021.
The core of the dispute was a procedural issue: the tax authorities contended that the petitioner had generated a single acknowledgment for appeals for two different assessment years (2018–19 and 2019–20), which they considered invalid. Consequently, the penalty proceedings were initiated on the premise that no valid appeal was in existence for the 2018–19 assessment year. The petitioner’s counsel argued that a valid appeal was indeed filed, supported by Form 35 and the acknowledgment.
The High Court adopted a non-technical approach to the issue. The court noted that it was a verifiable fact whether a valid appeal was filed in time and that a “hyper-technical” approach was not necessary. Therefore, the court disposed of the petition by quashing the impugned penalty order and the subsequent notice of demand. The court saved the penalty notice and directed the Assessing Officer to verify the validity of the appeal filed by the petitioner. The court ruled that the Assessing Officer could proceed with the penalty proceedings in accordance with the law only after confirming whether a valid appeal had been filed. The judgment effectively provided the petitioner with an opportunity to prove the validity of his appeal.
