Case Law Details
Wexco Homes Private Ltd. Vs ACIT (Kerala High Court)
Introduction: In a recent case between Wexco Homes Private Ltd. and the Assistant Commissioner of Income Tax (ACIT), the Kerala High Court directed the Income Tax Department to consider a stay petition regarding penalty proceedings initiated under Section 271A of the Income Tax Act.
Detailed Analysis: Wexco Homes Private Ltd., a private limited company, underwent a search within its business premises under Section 132 of the Income Tax Act. The assessment proceedings for the assessment year 2009-2010 were completed, resulting in a total income assessment of Rs. 6,67,92,468/- and a tax due of Rs. 4,27,12,820/-. Despite the assessment, the company did not deposit any tax amount. Subsequently, penalty proceedings under Section 271A were initiated against the company.
In response, Wexco Homes Pvt Ltd. filed a stay petition before the Appellate Authority seeking relief from the penalty. However, without obtaining a stay, the company approached the Kerala High Court seeking a direction to stay the demand.
The Kerala High Court dismissed the writ petition but directed the Income Tax Department to expedite the consideration of the stay petition filed by Wexco Homes Pvt Ltd. The court emphasized that no interim order was passed staying the recovery or penalty proceedings.
Conclusion: The directive from the Kerala High Court signifies the importance of due process in penalty proceedings initiated under the Income Tax Act. While the court dismissed the writ petition, it underscored the need for the Income Tax Department to promptly consider stay petitions filed by taxpayers. This decision highlights the balance between taxpayer rights and tax enforcement measures, emphasizing the importance of procedural fairness in tax matters.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner is a private limited company registered under the provisions of the Companies Act. A search was conducted within the business premises of the petitioner under Section 132 of the Income Tax Act. The assessment proceedings for the assessment year 2009-2010 got completed vide Ext.P1 order dated 31.12.2016 under the provisions of Section 143(3) read with Section 147 of the Income Tax Act, 1961. The total income which was assessed in the hands of the petitioner was Rs.6,67,92,468/- and on which the due tax had been assessed at Rs.4,27,12,820/-. The petitioner has not deposited a single penny on the said tax assessed vide assessment order dated 31.12.2016. Against the said assessment order, the petitioner has filed appeal in 2017 but without any stay application. The penalty proceedings have been initiated under Section 271A against the petitioner, and the petitioner is facing recovery proceedings. At this stage, the petitioner has filed the stay petition recently before the Appellate Authority. However, the petitioner has approached this Court seeking a direction to stay the demand.
This Court finds absolutely no ground to entertain this writ petition on the facts stated above. Therefore, the writ petition is dismissed. However, the 2nd respondent is directed to consider the stay petition expeditiously, preferably within a period of four months. It is made clear that no interim order has been passed by this Court staying the recovery or the penalty proceedings.
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