Madras High Court recently addressed a writ petition filed by Mr. Andy Nadar Thirumani Nadar challenging an assessment order dated December 16, 2019. The petitioner had also filed a Statutory Appeal before the Commissioner of Income Tax (CIT Appeals) on January 2, 2020. Additionally, during the pendency of the petitioner’s appeal, a notice under section 272A(1)(d) of the Income Tax Act, 1961, was issued.
The petitioner, through counsel, argued that the impugned assessment order was issued without considering the petitioner’s response to a prior notice. The petitioner had replied to the notice on December 12, 2019. However, the assessment order dated December 16, 2019, was passed despite the response.
Furthermore, it was noted that the petitioner’s appeal included a specific plea regarding the violation of principles of natural justice.
The learned counsel for the petitioner referred to a Division Bench decision of the Madras High Court, K. S. Shivji and Co. Vs. The Joint Commercial Tax Officer, Esplanade Division, Madras, which highlighted that when a remedy is available under the statute, the petitioner should initially resort to it. However, there may be exceptional cases where the court may need to interfere even when a remedy is available.
The learned Senior Standing Counsel for the respondent contended that the petitioner had chosen to file an appeal against the assessment order, which had been received by the Appellate Commissioner. Therefore, the petitioner could not seek a dual remedy against the Appellate Commissioner.
It was emphasized that the petitioner needed to pre-deposit the amount as required by circulars/notifications issued under Section 119 of the Income Tax Act, 1961. Additionally, the Show Cause Notice dated May 27, 2021, under Section 272A(1)(d) of the Income Tax Act, 1961, indicated a maximum penalty of Rs.10,000, and therefore the notice should not justify a challenge to the assessment order solely because the appeal was pending.
The learned Senior Standing Counsel further argued that several appeals were pending before the Appellate Commissioner, so the petitioner should not seek interference with the assessment order based on the order of disposal of their appeal.
Conclusion: In this case, the Madras High Court dismissed the writ petition filed by Mr. Andy Nadar Thirumani Nadar, who had challenged an assessment order. The court directed the petitioner to explore remedies through the Appellate Commissioner, as the petitioner had chosen to file an appeal against the assessment order. The court emphasized the need for pre-depositing the required amount and the possibility of seeking relief through the Authority concerned as established by relevant precedents. The writ petition was dismissed, but the petitioner was granted the liberty to file an appropriate application for a stay of recovery proceedings in light of the pending appeal before the CIT Appeals.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Mr. R. S. Balaji, learned Senior Standing Counsel takes notice on behalf of the respondent.
2. The petitioner has challenged the impugned assessment order dated 16.12.2019. Aggrieved by the same, the petitioner has also filed a Statutory Appeal before the CIT Appeals on 02.01.2020. Pending disposal of the petitioner’s Appeal, the petitioner has also been now issued with a notice under section 272A(1)(d) of the Income Tax Act, 1961.
3. The learned counsel for the petitioner submits that the impugned Assessment order preceded a notice which was also replied by the petitioner on 12.12.2019. However, without considering the same, impugned Assessment order dated 16.12.2019 has been passed against the petitioner as in appeal.
4. The learned counsel for the petitioner further submits that in the appeal, the petitioner has taken a specific plea regarding violation of principles of natural justice.
5. The learned counsel for the petitioner has drawn attention to the decision of the Division Bench of this Court in K. S. Shivji and Co. Vs. The Joint Commercial Tax Officer, Esplanade Division, Madras [(1965) SCC Online Mad 87]. Para 3 of the order reads as under:
“3.When a remedy is available to an assessee under the Statute, he must first resort to it and when actually he has resorted to it and the appeal is pending, this Court would be reluctant to interfere with an order of assessment but there may be cases where this rule may not outweigh other considerations which may compel interference by this Court. We are of the view that this is one such case.”
6. The learned Senior Standing Counsel for the respondent submits that the petitioner has opted to file an Appeal against the Assessment order which has also been received by the Appellate Commissioner even as per the typed set filed by the petitioner on 02.01.2020. It is therefore submitted that the petitioner cannot ask for a dual remedy against the Appellate Commissioner.
7. It is submitted that the petitioner has to pre deposit the amount as per the circulars/Notifications issued under Section 119 of the Income Tax Act, 1961. That apart, it is submitted that the Show Cause Notice dated 27.05.2021 under Section 272A(1)(d) of the Income Tax Act, 1961 merely contemplates a maximum penalty of Rs.10,000/- and therefore issuance of the aforesaid notice would not justify a challenge to the impugned Assessment order dated 16.12.2019, merely because the appeal has not been disposed of.
8. It is further submitted that there are several appeals that are pending before the Appellate Commissioner. Therefore, the petitioner cannot ask for interference with the Assessment order, merely because the petitioner’s appeal will be disposed of on its turn. It is therefore submitted that petitioner as to pre-deposit 20% of the amount as is required.
9. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Senior Standing Counsel for the respondent.
10. The petitioner has an option to file application to stay further recovery proceedings and the impugned Assessment order before the Authority. In this connection, the decision of the Hon’ble Supreme Court in LG Electronics India Pvt Ltd Vs. The State of Tamil Nadu and others [Manu/TN/4547/2022], is invited, wherein, the Hon’ble Supreme Court held that in appropriate case, the Authority is empowered to grant suitable relief as far as pre-deposit.
11. Therefore, I do not find any merits in the present writ petition. Therefore, the writ petition is dismissed with liberty to the petitioner to file appropriate Application for stay of all recovery proceedings pursuant to the impugned Assessment order dated 16.12.2019 against which the petitioner is in Appeal before the CIT Appeals. If such application is filed, the Authority concerned shall dispose the same in the light of the LG Electronics India Pvt Ltd. Vs. The State of Tamil Nadu and others [Manu/TN/4547/2022].
12. The application shall be filed by the petitioner within a period of thirty days from the date of receipt of a copy of this order. All recovery proceedings shall be kept in abeyance for the aforesaid period of 60 days to facilitate the petitioner to approach the authorities. It is also open for the petitioner to file appropriate application for hearing of the appeal out of turn which shall also be considered and disposed on merits.
13. This writ petition stands dismissed with the above liberty. No costs. Consequently, connected writ miscellaneous petitions are closed.