Case Law Details
Alka Ventures Private Limited Vs Additional / Joint / Deputy / ACIT / ITO (Kerala High Court)
In a recent judgment, the Kerala High Court directed Alka Ventures Private Limited to deposit 12 crore rupees as advance tax to maintain an appeal against an assessment order. The case revolves around the company’s failure to file a return of income for the assessment year 2016-17 and subsequent proceedings initiated by the Income Tax Department.
Alka Ventures, a Private Limited Company operating in the real estate sector, faced assessment proceedings for the mentioned fiscal year. The assessment concluded with an order under Section 147 r/w Section 144 and Section 144B of the Income Tax Act, 1961, based on transactions involving immovable property. The order subjected Alka Ventures to a higher rate of tax due to unexplained investments under Section 69 of the Income Tax Act, 1961.
The company previously challenged the assessment order through a writ petition, which was dismissed, instructing Alka Ventures to pursue statutory remedies against the order. Subsequently, the company filed an appeal under the Faceless Appeal Scheme, 2021, along with a stay application.
Alka Ventures argued for exemption from advance tax payment under Section 249 of the Income Tax Act, 1961, considering the circumstances of the case. However, the Department contended that significant investments were made by the company in subsequent years without fulfilling tax obligations for the assessed year.
After hearing both parties, the court directed Alka Ventures to deposit a total of 12 crores rupees against the demands mentioned in the assessment order. The payment is to be made in installments, with a portion due before a specified date. Failure to comply would allow the Department to initiate recovery proceedings.
The judgment underscores the importance of fulfilling tax obligations and statutory remedies in income tax proceedings. Alka Ventures is mandated to deposit the specified amount to maintain its appeal, highlighting the court’s emphasis on compliance with tax laws and procedures.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner is a Private Limited Company engaged in the real estate business. For the assessment year 2016-17, the petitioner did not file a return of income. Proceedings were initiated for assessment, following which an order was issued under Section 147 r/w Section 144 and Section 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the 1961 Act’). There were some transactions of purchase and sale of immovable property in that assessment year and the proceedings were finalized against the petitioner on the basis that there was unexplained investment under Section 69 of the 1961 Act. The petitioner was, therefore, assessed at the higher rate of tax by applying the provisions of Section 115 BBE of the 1961 Act.
2. According to the petitioner, the petitioner had earlier approached this Court challenging the order of assessment by filing W.P.(C)No.13736/2022. However, that writ petition was disposed of on 30.01.2024 refusing to interfere with the order of assessment and directing that the petitioner will have to avail statutory remedies against the order of assessment. According to the petitioner, he filed an appeal before the authority under the Faceless Appeal Scheme, 2021 along with an application for stay. It is the case of the petitioner that by virtue of the provisions contained in Section 249 of the 1961 Act, the Appellate Authority may having regard to the proviso to sub-section (4) of Section 249 of the 1961 Act exempt the petitioner from the requirement of paying the advance tax in cases where a return of income has not been filed by the petitioner / assessee. It is submitted that in the facts and circumstances of this case, a demand in the order of assessment (Ext.P15) is Rs.68 crores. It is submitted that for all the subsequent assessment years, including for the assessment year 2023-2024, the petitioner has filed a loss return and the same has been accepted along with an intimation under Section 143(1) of the 1961 Act. It is submitted that considering the aforesaid facts, the petitioner may be permitted to prosecute his appeal against Ext.P15 order of assessment without having to pay the advance tax in terms of the proviso to sub-section (4) of Section 249 of the 1961 Act.
3. Sri. A. Kumar, the learned Senior Counsel appearing for the petitioner, on the instructions of Adv. G. Mini has referred to the provisions of Section 249 of the 1961 Act to contend that the case of the petitioner / assessee falls within Section 249(4)(b) of the 1961 Act and therefore, by the application of the proviso to that sub-section, the Appellate Authority is well within its powers to exempt the petitioner from payment of any amount as advance tax for maintaining the appeal.
4. The learned Standing Counsel appearing for the respondent Department would submit that the demand relates to the assessment year 2016-17. It is submitted that even in the year 2017-18, the petitioner has made substantial investments in immovable property while not filing a return of income or paying even the admitted tax in respect of the assessment year 2016-17. It is submitted that since the demand in Ext.P15 order of assessment is in excess of Rs.68 crores, even if the appellate authority were to consider the case as one covered by the proviso to Section 249(4)(b) of the 1961 Act, a substantial amount will have to be remitted by the petitioner for maintaining the appeal.
5. Having heard the learned Senior Counsel appearing for the petitioner and the learned Standing Counsel appearing for the respondent Department, I am of the view that since it is not seriously disputed that the case of the petitioner falls under the proviso Section 249(4)(b) of the 1961 Act, Ext.P17 appeal filed by the petitioner against Ext.P15 order of assessment for the assessment year 2016-17 can be directed to be disposed of on merits after affording an opportunity of hearing to the petitioner on the condition that the petitioner remits a total sum of Rs 12 crores against the demands in Ext.P15 order of assessment. An amount of Rs.11.75 crores shall be remitted by the petitioner in 8 equal monthly installments commencing from 15.04.2024. Subsequent installments shall be paid on or before the 15th day of the succeeding months. The petitioner shall remit a sum of Rs.25 lakhs towards the demand in Ext.P15 on or before 31.03.2024. If the petitioner fails to remit the amounts as directed above, it will be open to the Department to proceed for recovery of amounts assessed in terms of Ext.P15. Since the above condition is to be satisfied for maintaining the appeal, it is directed that the appeal filed by the petitioner shall be taken up and adjudicated only after the entire amounts (Rs 12 crores) payable by the petitioner in terms of this judgment are paid, as directed.
The writ petition will stand disposed of as above.
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