HC Imposes 1.5 Lakh Fine for Obtaining Interim Income Tax Order with Suppressed Facts

Amber Commodeal Private Limited Vs ITO (Calcutta High Court)

Introduction: In a recent ruling by the Calcutta High Court, the case of Amber Commodeal Private Limited vs. ITO shed light on the serious consequences of suppressing material facts in Income Tax proceedings. The court’s decision highlights the importance of transparency and honesty in legal proceedings, particularly when seeking interim orders. In this article, we will delve into the details of the case and the court’s stern stance on contempt of court in such matters.

Detailed Analysis:

1. Background of the Case: The petitioner, Amber Commodeal Private Limited, challenged an order dated 22nd July, 2022, under Section 148A(d) of the Income Tax Act, 1961, relating to the assessment year 2014-15. Subsequent proceedings were based on the notice dated 22nd July, 2022, issued under Section 148 of the Income Tax Act, 1961. An interim order had been passed by the Calcutta High Court on 28th April, 2023, in this regard.

2. Suppression of Material Facts: It came to light that the petitioner had failed in their duty to bring to the notice of the Court crucial information. Specifically, it was revealed that before the interim order of 28th April, 2023, was passed by the Court, a final order of assessment under Section 147 of the Act had already been passed on 24th March, 2023. Furthermore, an appeal against the final assessment order had been filed on 23rd April, 2023.

3. Contempt of Court: The petitioner’s conduct in suppressing these material facts and misleading the Court was strongly condemned by the learned counsel appearing for the petitioner. It was deemed highly reprehensible and tantamount to contempt of Court.

4. Repeat Offender: The Court noted that the same petitioner had previously committed a similar offense in respect of the earlier assessment year 2015-16, obtaining an interim order through deception. In response to this repeated misconduct, the petitioner’s writ petition had been dismissed, and exemplary costs were imposed.

5. Court’s Ruling: While the Court considered prosecuting the petitioner for their repeated misconduct, it chose to issue a stern warning instead. The petitioner was spared from prosecution but was directed to pay a significant cost of Rs. 1,50,000/- to the West Bengal State Legal Services Authority within a week from the date of the ruling. Failure to comply with this condition would result in prosecution. The main writ petition was dismissed, and all interim orders were vacated.

Conclusion: The case of Amber Commodeal Private Limited vs. ITO serves as a cautionary tale about the serious consequences of suppressing material facts in legal proceedings, especially in Income Tax matters. The Calcutta High Court’s decision underscores the vital principles of transparency and honesty before the Court. It warns against attempting to mislead the Court and emphasizes the need for strict adherence to ethical and legal standards. This ruling is a reminder that the Court takes a dim view of such behavior and is willing to impose substantial costs and even consider contempt of court proceedings when warranted. Businesses and individuals involved in legal matters should take heed of this ruling and ensure full disclosure of facts to maintain the integrity of the legal process.

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

The Court: By this writ petition, petitioner has challenged the impugned order dated 22^nd July, 2022 under Section 148A(d) of the Income Tax Act, 1961 relating to assessment year 2014-15 and subsequent proceedings based on the impugned notice dated 22^nd July, 2022 under Section 148 of the Income Tax Act, 1961, in which an interim order was passed by this Court on 28t^h April, 2023.

Learned counsel appearing for the petitioner submits that being an officer of the Court he failed his duty to bring to the notice of this Court the suppression and misleading committed by the petitioner that before 28t^h April, 2023 when the interim order was passed by this Court staying all further proceedings subsequent to an order under Section 148A(d) of the Act, final order of assessment under Section 147 of the Act was already passed on 24t^h March, 2023 and an appeal was also filed against the aforesaid final assessment order on 23^rd April, 2023. The act and conduct of the petitioner in suppressing the material fact and misleading the Court in obtaining the interim order even by not disclosing the aforesaid fact to his lawyer is highly depricable and amounting to contempt of Court also. It is also the matter of record that the very same assessee petitioner has committed similar offence in respect of the earlier assessment year 2015-16 and had obtained an interim order and taking note of such conduct of the petitioner, the writ petition of the petitioner was dismissed with exemplary cost. This type of petitioner who dare to commits such offence before the highest Court of the State deserves to be prosecuted for repeatedly misleading and suppressing before the Court in obtaining the interim order. However, this Court is sparing him with a warning that in future if one more such type of case is found against him, he will be prosecuted and in this case he is spared from any prosecution on condition of making payment of costs of Rs. 1,50,000/- to the West Bengal State Legal Services Authority within a week from date and to file receipt of payment of the same before the Court on 3^rd October, 2023. Main writ petition being WPO 887 of 2023 is dismissed and all interim orders are vacated.

List this matter as ‘To Be Mentioned’ on 3^rd October, 2023.