Case Law Details
Anjanadri Fuel Station Vs ITO (Karnataka High Court)
Karnataka High Court held that till disposal of the appeals filed by the Assessee, it is necessary to keep the penalty orders and notices in abeyance. Thus, demand notice kept in abeyance.
Facts- Petitioner, being aggrieved by the Assessment Order dated 30.03.2023, has preferred an appeal on 12.05.2023. It is the grievance of the petitioner that despite pendency of the appeal before the Appellate Authority, the respondents have proceeded to issue penalty notice and show-cause notice followed by the impugned penalty orders and demand notice, which are assailed in the present petition.
Conclusion- This Court in the case of Mr. B.S. Uday Shetty Vs. The Assistant Commissioner of Income Tax has held that since the appeals were pending, it would be necessary to keep the penalty orders and demand notices in abeyance till disposal of the appeals.
A perusal of Section 275 of the I.T. Act will indicate that there is clear embargo/bar on proceeding to pass penalty order if an appeal is pending on the Assessment Order. As rightly contended by the learned counsel for the petitioner in S. Uday Shetty’s case, under identical circumstances, where the petitioner-Assessee did not file an appeal against the Original Assessment Order, this Court came to the conclusion that till disposal of the appeals filed by the Assessee, it is necessary to keep the penalty orders and notices in abeyance.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
In this petition, the petitioner seeks the following reliefs:
“i) Writ of Certiorari or writ in the nature of certiorari or any other appropriate writ order or direction under Article 226 of the Constitution of India; calling for the records of the Petitioners case and after examining the legality and validity thereof be pleased to quash and set aside the impugned order under Section 270A of Act dated 18.09.2023 in DIN:ITBA/PNL/F/270A/2023-24/ 1056251767(1) (Annexure-G) and Notice of Demand issued u/s 156 of the Act dated 18.09.2023 in DIN ITBA/PLN/S/156/2023-24/1056249880(1) (Annexure-G 1) for the AY 2018-19 and impugned order under Section 272A(1)(d) of Act dated 13.10.2023 in DIN and Order No. ITBA/PNL/F/272A(1)(D)/2023-24/1057044932(1) (Annexure-H) and Notice of Demand issued u/s 156 of the Act dated 13.10.2023 in DIN:ITBA/PNL/S/156/2023-24/1057041710(1) (Annexure-H1) for the AY 2018-19.
(ii) Writ of Mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction under Article 226 of Constitution of India ordering and directing the Respondents by themselves by their subordinates, servants or agents to withdraw and cancel the impugned order under Section 270a of Act dated 18.09.2023 in DIN: ITBA/PNL/F/270A/2023-24/ 1056251767(1) (Annexure-G) and Notice of Demand issued u/s 156 of the Act dated 18.09.2023 in DIN: ITBA/PNL/S/156/2023-24/1056249880(1) (Annexure-G 1) for the AY 2018-19 and impugned order under Section 272A(1)(D) of Act dated 13.10.2023 in DIN and Order No. ITBA/PNL/F/272A(1)(D)/2023-24/1057044932(1) (Annexure-H) and Notice of Demand issued u/s 156 of the Act dated 13.10.2023 in DIN: ITBA/PNL/S/156/2023-24/1057041710(1) (Annexure-H1) for the Ay 2018-19
(iii) A writ of Prohibition or a writ in the nature of Prohibition or any other appropriate writ, order or direction under Article 226 of Constitution of India prohibiting and restraining the Respondents by themselves their sub ordinates, servants and agents from taking any action in furtherance or consequent to impugned order under Section 270A of Act dated 18.09.2023 in DIN ITBA/PNL/F/270A/2023-24/1056251767(1) (Annexure-G) and Notice of Demand issued u/s 156 of the Act dated 18.09.2023 in DIN: ITBA/PNL/S/156/2023- 24/1056249880(1) (Annexure-G1) for the AY 2018-19 and impugned order under Section 272A(1)(D) of Act dated 13.10.2023 in DIN and Order No. ITBA/PNL/F/272A(1) (D)/2023-24/1057044932(1) (Annexure-H) and Notice of Demand issued u/s 156 of the Act dated 13.10.2023 in DIN: ITBA/PNL/S/156/2023-24/1057041710(1) (Annexure-H1) for the AY 2018-19 of the Act for the Assessment Year 2015-16 passed by Respondents.
(iv) Grant the interim relief in terms of prayer (iii) above, and
(v) Issue such other order, writ or direction as this Hon’ble Court deems fit.”
2. Heard learned counsel for the petitioner, learned counsel for the respondents and perused the material on record.
3. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner submits that aggrieved by the Assessment Order dated 30.03.2023 passed by the respondents for the Assessment Year 2018-19, the petitioner filed an appeal on 12.05.2023. It is the grievance of the petitioner that despite pendency of the appeal before the Appellate Authority, the respondents have proceeded to issue penalty notice and show-cause notice followed by the impugned penalty orders and demand notice, which are assailed in the present petition inter alia contending that since the appeals were pending, it would be necessary to keep the penalty orders and demand notices in abeyance till disposal of the appeals as held by this Court in the case of Mr. B.S. Uday Shetty Vs. The Assistant Commissioner of Income Tax – W.P.No.8585/2022 dated 21.04.2022.
4. Per contra, learned counsel for the respondents submits that even the impugned penalty orders are appealable orders and as such, keeping the penalty orders and demand notice in abeyance till disposal of the appeal would not arise in the facts and circumstances of the instant case and as such, there is no merit in the present petition and the same is liable to be dismissed.
5. A perusal of Section 275 of the I.T. Act will indicate that there is clear embargo/bar on proceeding to pass penalty order if an appeal is pending on the Assessment Order. As rightly contended by the learned counsel for the petitioner in S. Uday Shetty’s case (supra), under identical circumstances, where the petitioner-Assessee did not file an appeal against the Original Assessment Order, this Court came to the conclusion that till disposal of the appeals filed by the Assessee, it is necessary to keep the penalty orders and notices in abeyance. In view of the aforesaid facts and circumstances and the judgment of this Court in B.S. Uday Shetty’s case (supra), rendered under identical circumstances, the present petition also deserves to be disposed of keeping penalty orders and demand notices in abeyance till disposal of the appeals filed by the petitioner.
6. In the result, I pass the following:
ORDER
i. The Writ Petition is allowed.
ii. The impugned orders at Annexures-G and H dated 18.09.2023 and 13.10.2023 respectively, and the demand notices at Annexure-G1 and H1 dated 18.09.2023 and 13.10.2023 are hereby kept in abeyance till disposal of the appeals filed by the petitioner.
iii. Liberty is reserved in favour of the respondents to proceed further upon disposal of the appeals filed by the petitioner.
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