MARTIN PUTHUMANA THOMAS vs. ASSISTANT COMMISSIONER OF INCOME TAX KANNUR,

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WP(C)/1316/2019HC KeralaKLHC01003343201915 February 2019Author: HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU8 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the writ petition. It held that while the appellate authority has discretion to grant conditional stay orders, the petitioner's argument that such discretion is curtailed when a strong prima facie case is shown is not supported by any established proposition of law. The court emphasized that in judicial review, it should not interfere with discretionary orders passed by statutory authorities unless the authority acted ultra vires or exercised its powers in a "bogus and pervasive" manner. The court found no such grounds to interfere with the impugned order (Ext.P5, referring to Ext.P12). The court directed that if the appellate authority insists on the balance demand as per Ext.P12, it must consider the amounts paid by the petitioner after filing the writ petition. The compliance date for the condition in Ext.P12 was extended by two months, acknowledging the petitioner's bona fide prosecution of the writ petition.

What were the facts?

The petitioner, Martin Puthumana Thomas, proprietor of M/s. Puthumana Gold House, filed a writ petition challenging an interim order (Ext.P12) passed by the Commissioner of Income Tax (Appeals). This order directed the petitioner to pay 15% of the aggregate demand, reduced by amounts already paid, in three equal installments, to stay the balance demand pending appeal adjudication. The petitioner had challenged assessment orders (Ext.P2 series) through appeals (Ext.P3). Subsequent to filing the writ petition, the petitioner paid Rs. 17,79,490/- on September 26, 2018, with specific amounts allocated to assessment years 2010-11, 2011-12, 2012-13, and 2013-14.

What were the issues?

1. Whether the appellate authority's discretion to grant a conditional stay order is unfettered when the appellant demonstrates a strong prima facie case? (Mixed question of law and fact, concerning Section 251 of the Income Tax Act, 1961). Assessee's Contentions: - The Supreme Court has consistently held that a notice under Section 148 of the Income Tax Act must contain reasons. Once an assessee requests reasons for a Section 148 notice, the authority must supply them. (Relied on Supreme Court judgments). - While acknowledging the appellate authority's discretion to grant conditional orders, the petitioner argued that such orders should not be a mere ritual if a strong prima facie case is demonstrated. Revenue's Contentions: - No specific contentions for the revenue are recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 148,Section 251

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU FRIDAY, THE 15TH DAY OF FEBRUARY 2019 / 26TH MAGHA, 1940 WP(C) No. 1316 of 2019 PETITIONER/S: MARTIN PUTHUMANA THOMAS, AGED 41 YEARS PROPRIETOR OF M/S.PUTHUMANA GOLD HOUSE, MAIN ROAD, PAYYANNUR-670307, BY ADVS. SRI.S.ARUN RAJ SMT.C.T.SUJA RESPONDENT/S: 1 ASSISTANT COMMISSIONER OF INCOME TAX KANNUR, CIRCLE-1, KANNUR RANGE, KANNUR-670006. 2 THE PRINCIPAL COMMISSIONER OF INCOME TAX, AAYAKAR BHAVAN, MANANCHIRA, KOZHIKODE-673001. 3 THE COMMISSIONER OF INCOME TAX (APPEALS), AAYAKAR BHAVAN, MANANCHIRA, KOZHIKODE-673001. OTHER PRESENT: SC SRI CHRISTOPHER ABRAHAM THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 15.02.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) No. 1316 of 2019 ..2..

JUDGMENT The petitioner, an assessee, challenged the Ext.P2 series of assessment orders in Ext.P3 appeals. The appellate authority, that is, the Commissioner of Income Tax Appeals, issued Ext.P12 order of stay. In that, the appellate authority directed the petitioner “to pay 15% of the aggregate demand as reduced by demand already paid” in three equal instalments so that the balance demand will stand stayed until the adjudication of the appeal. Assailing this interim order, the petitioner has filed this WP(C).

2.

The petitioner's counsel has brought to my notice that after filing the WP(C), the petitioner paid Rs.17,79,490/- on 26.09.2018. The break-up amount for each assessment year ..3.. runs as follows: Payment made on 26.09.2018 2010-11 Rs.9,85,590/- 2011-12 Rs.3,05,390/- 2012-13 Rs.1,43,890/- 2013-14 Rs.3,44,62/-

3.

Sri.Arun Raj S., the learned counsel for the petitioner, has submitted arguments on the merits. According to him, the Supreme Court, through a series of judgments, has held that a notice under Section 148 of the Income Tax Act must have reasons set out. Once an assessee receives notice under Section 148 of the Income Tax Act and requests the authority concerned for reasons, the authority, then, ought to supply the reasons for the notice under Section 148 of the Income Tax Act. In this context, Sri.Arun Raj has drawn my attention to a couple of judgments from the Supreme Court.

4.

At any rate, I am concerned with the ..4.. discretionary domain of the appellate authority. The petitioner's counsel has fairly submitted that the appellate authority does have the discretion to grant a conditional order; nevertheless, he asserts that once the appellant demonstrates more than a prima facie case, passing a conditional order cannot be a ritual.

5.

Attractive

as the learned

counsel's submissions is, there cannot be any proposition of law, nor can I readily find one, that if the appellant could demonstrate as he presumes for a fruitful case in appeal. Still, he does not deprive of the appellate authority's discretion. The courts, in judicial review, are not to interfere with the discretionary orders and passed by statutory authorities unless the authority has acted ultra vires, are the very exercise of judiciary, bogus and pervasive. I there find ..5.. neither of the grounds. I express my inability to interfere with the Ext.P5. I, accordingly, dismiss the WP(C). If the appellate authority insists on balance of Ext.P12, it will take into account the amounts the petitioner is said to have paid after filing this WP(C). As the petitioner has been bona fide in prosecuting this WP(C), the date the appellate authority fixed for compliance of the condition in Ext.P12 stands extended by two months. DAMA SESHADRI NAIDU JUDGE Bka/16.02.2019

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE LETTERS DATED 28.8.2016 SUBMITTED BY THE PETITIONER TO THE 1ST RESPONDENT SEEKING THE REASONS FOR REOPENING THE ASSESSMENT FOR THE AY'S 2010-11 TO 2014-15. WP(C) No. 1316 of 2019 ..6.. EXHIBIT P2 TRUE COPY OF THE ASSESSMENT ORDER DATED 29.12.2016 PASSED BY THE 1ST RESPONDENT FOR THE ASSESSMENT YEARS 2010-11. EXHIBIT P2(a) TRUE COPY OF THE ASSESSMENT ORDER DATED 29.12.2016 PASSED BY THE 1ST RESPONDENT FOR THE ASSESSMENT YEARS 2011-12. EXHIBIT P2(b) TRUE COPY OF THE ASSESSMENT ORDER DATED 29.12.2016 PASSED BY THE 1ST RESPONDENT FOR THE ASSESSMENT YEARS 2012-13. EXHIBIT P2(c) TRUE COPY OF THE ASSESSMENT ORDER DATED 29.12.2016 PASSED BY THE 1ST RESPONDENT FOR THE ASSESSMENT YEARS 2013-14. EXHIBIT P2(d) TRUE COPY OF THE ASSESSMENT ORDER DATED 29.12.2016 PASSED BY THE 1ST RESPONDENT FOR THE ASSESSMENT YEARS 2014-15. EXHIBIT P3 TRUE COPY OF THE STATUTORY FIRST APPEALS FILED BEFORE THE 3RD RESPONDENT BY THE PETITIONER FOR THE AY 2010-11. EXHIBIT P3(a) TRUE COPY OF THE STATUTORY FIRST APPEALS FILED BEFORE THE 3RD RESPONDENT BY THE PETITIONER FOR THE AY 2011-12. EXHIBIT P3(b) TRUE COPY OF THE STATUTORY FIRST APPEALS FILED BEFORE THE 3RD RESPONDENT BY THE PETITIONER FOR THE AY 2012-13. EXHIBIT P3(c) TRUE COPY OF THE STATUTORY FIRST APPEALS FILED BEFORE THE 3RD RESPONDENT BY THE PETITIONER FOR THE AY 2013-14. WP(C) No. 1316 of 2019 ..7.. EXHIBIT P3(d) TRUE COPY OF THE STATUTORY FIRST APPEALS FILED BEFORE THE 3RD RESPONDENT BY THE PETITIONER FOR THE AY 2014-15. EXHIBIT P4 TRUE COPY OF THE ORDER DATED 22.2.2017 ISSUED TO THE PETITIONER BY THE 1ST RESPONDENT REJECTING THE STAY PETITION FOR THE AY'S 2010-11 TO 2014-15. EXHIBIT P5 TRUE COPY OF THE CHALLANS EVIDENCING THE PAYMENTS MADE BY THE PETITIONER ON 30.3.2017 AND 13.4.2017. EXHIBIT P6 TRUE COPY OF THE STAY PETITION FILED BEFORE THE 2ND RESPONDENT BY THE PETITIONER FOR THE AY-2010-11. EXHIBIT P6(a) TRUE COPY OF THE STAY PETITION FILED BEFORE THE 2ND RESPONDENT BY THE PETITIONER FOR THE AY-2011-12. EXHIBIT P6(b) TRUE COPY OF THE STAY PETITION FILED BEFORE THE 2ND RESPONDENT BY THE PETITIONER FOR THE AY-2012-13. EXHIBIT P6(c) TRUE COPY OF THE STAY PETITION FILED BEFORE THE 2ND RESPONDENT BY THE PETITIONER FOR THE AY-2013-14. EXHIBIT P6(d) TRUE COPY OF THE STAY PETITION FILED BEFORE THE 2ND RESPONDENT BY THE PETITIONER FOR THE AY-2014-15. EXHIBIT P6A TRUE COPY OF THE LETTER DATED 24.6.2017 SUBMITTED TO THE 2ND RESPONDENT BY THE PETITIONER. EXHIBIT P7 TRUE COPY OF THE ORDER DATED 21.11.2017 PASSED BY THE 2ND RESPONDENT DISPOSING THE STAY PETITIONS FOR THE AY'S 2010-11 TO 2014-15. WP(C) No. 1316 of 2019 ..8.. EXHIBIT P8 TRUE COPY OF THE ORDER DATED 21.11.2017 PASSED BY THE 2ND RESPONDENT IN THE CASE OF AN ASSESEE SRI.P.K.VIJAYAN, SOUTH BAZAR, KANNUR. EXHIBIT P9 TRUE COPY OF THE COMPUTERIZED RECEIPT EVIDENCING THE PAYMENTS MADE ON 14.12.2017 BY THE PETITIONER FOR THE AY 2011-12 TO 2014-15. EXHIBIT P10 TRUE COPY OF THE STAY PETITION FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT CIT (APPEALS), KOZHIKODE FOR THE AY-2010-11. EXHIBIT P10(a) TRUE COPY OF THE STAY PETITION FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT, CIT (APPEALS), KOZHIKODE FOR THE AY-2011-12. EXHIBIT P10(b) TRUE COPY OF THE STAY PETITION FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT, CIT (APPEALS), KOZHIKODE FOR THE AY-2012-13. EXHIBIT P10(c) TRUE COPY OF THE STAY PETITION FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT, CIT (APPEALS), KOZHIKODE FOR THE AY-2013-14. EXHIBIT P10(d) TRUE COPY OF THE STAY PETITION FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT, CIT (APPEALS), KOZHIKODE FOR THE AY-2014-15. EXHIBIT P11 TRUE COPY OF THE JUDGMENT DATED 12.2.2018 PASSED IN WPC.NO.4333 OF 2018 BY THIS HONOURABLE COURT. EXHIBIT P12 TRUE COPY OF THE ORDER DATED 12.9.2018 PASSED BY THE 3RD RESPONDENT ON EXHIBIT P10 SERIES STAY PETITION FOR THE AY'S 2010-11, 2011-12, 2012-13, 2013-14 AND 2014-15.

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