M/S. SUNNY SILKS vs. ASSISTANT COMMISSIONER OF INCOME TAX

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WA/2021/2023HC KeralaKLHC01087379202323 November 2023Author: HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR,HONOURABLE DR. JUSTICE KAUSER EDAPPAGATH4 pages
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What did the High Court hold?

The High Court held that the finding of the Deputy Commissioner of Income Tax that the addition under Section 145A of the IT Act is to be considered at the time of disposal of the appeal is perfectly valid. The merit of the addition can only be considered during the appeal proceedings. Therefore, the impugned order imposing conditions for granting relief under Section 220(6) of the IT Act does not suffer from any jurisdictional error. The appellant has already challenged the assessment order in appeal and can move a stay application before the Appellate Authority. The High Court found no illegality in the impugned judgment. However, it directed that if the appellant files a stay application before the 2nd respondent (Appellate Authority), the Appellate Authority shall consider and dispose of either the stay application or the appeal itself within three weeks of receiving the application, after hearing the appellant. The appeal was disposed of with these directions.

What were the facts?

The appellant, M/s. Sunny Silks, a dealer in textile and readymade garments, is challenging a judgment of the High Court of Kerala that dismissed their writ petition. The appellant had filed an appeal against an assessment order for the assessment year 2017-18. Concurrently, they filed an application under Section 220(6) of the Income Tax Act, 1961, before the Deputy Commissioner of Income Tax (3rd respondent). The Deputy Commissioner passed an order (Ext.P11) directing the appellant to remit 20% of the demand as a condition for being treated as a person not in default. The appellant challenged this condition in the writ petition, which was dismissed by the learned Single Judge. This writ appeal is against that dismissal.

What were the issues?

1. Whether the condition imposed by the Deputy Commissioner of Income Tax under Section 220(6) of the Income Tax Act, 1961, requiring the appellant to remit 20% of the demand as a condition for being treated as a person not in default, suffers from any jurisdictional error, given that the assessment order itself is under challenge in appeal. Assessee's Contention: The appellant challenged the condition imposed in Ext.P11 order. (Implicitly, the condition was considered onerous or unjustified). Revenue's Contention: The revenue, represented by the Assistant Commissioner of Income Tax and the Commissioner of Income Tax (Appeals), defended the order. (Implicitly, the order was considered valid). 2. Whether the High Court's dismissal of the writ petition, upholding the condition imposed by the Deputy Commissioner, was legally sound. Assessee's Contention: The appellant sought to challenge the dismissal of their writ petition. Revenue's Contention: The revenue supported the High Court's dismissal.

Which sections of the Income-tax Act were involved?

Section 145A,Section 220(6)

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 DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE DR. JUSTICE KAUSER EDAPPAGATH THURSDAY, THE 23RD DAY OF NOVEMBER 2023/2ND AGRAHAYANA, 1945 WA NO. 2021 OF 2023 AGAINST THE JUDGMENT WP(C) 37823/2023 OF HIGH COURT OF KERALA APPELLANT/PETITIONER: M/S. SUNNY SILKS XXVIII/ 616A, CONVENT ROAD, CHALAKUDY P.O, THRISSUR DISTRICT . REPRESENTED BY PARTNER REENA DAVIS, W/O. SUNNY P.C, AGED 43 YEARS, PANJIKARAN HOUSE, MUPLIYAM POST, THRISSUR DISTRICT, PIN - 680307 BY ADVS.K.J.ABRAHAM NIKHIL JOHN ARAVINDAKSHAN K.R. AKHIL SHAJI RESPONDENT/RESPONDENT: 1 ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 2(1), AAYAKAR BHAVAN, INCOME TAX OFFICE, SHAKTHANTHAMPURAN NAGAR, THRISSUR DISTRICT, PIN - 680001 2 COMMISSIONER OF INCOME TAX (APPEALS) NATIONAL FACELESS APPEAL CENTRE (NFAC), INCOME TAX DEPARTMENT, NEW DELHI, PIN - 110001 3 DEPUTY COMMISSIONER OF INCOME TAX DCIT CIRCLE 1(1), & TPS, AAYAKAR BHAVAN, INCOME TAX OFFICE, SHAKTHANTHAMPURAN NAGAR, THRISSUR DISTRICT, PIN - 680001 BY ADVS.ADV. P.G. JAYASHANKAR KEERTHIVAS GIRI THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 23.11.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WA No.2021/2023 -:2:-

J U D G M E N T Dr. Kauser Edappagath, J.

This writ appeal has been filed challenging the judgment of the learned Single Judge in WP(C) No.37823/2023 dated 15th November, 2023. 2. The appellant is a dealer in textile and readymade garments and an assessee under the Income Tax Act, 1961 (for short, 'the IT Act'). Against the Ext.P4 assessment order for the year 2017-18, the appellant preferred Ext.P5 appeal before the 2nd respondent. In the meanwhile, the appellant also moved an application under Section 220(6) of the IT Act before the 3rd respondent. The 3rd respondent passed Ext.P11 order directing the appellant to remit 20% of the demand as a condition for treating him as a person not in default. The appellant filed the writ petition challenging the condition imposed in Ext.P11 order. After hearing both sides, the learned Single Judge dismissed the writ petition. The said judgment is under challenge before us.

3.

We have heard Sri.Abraham K. J., the learned counsel for the appellant and Sri.P.G.Jayashankar, the learned standing counsel for the Income Tax.

4.

The finding of the 3rd respondent in the impugned order that the question of addition under Section 145A of the IT Act is to be considered at the time of disposal of the appeal is perfectly valid. The merit in the addition can only be considered at the time of disposal of the appeal. In these circumstances, the impugned order imposing conditions for granting an order under Section 220(6) of the IT Act does not suffer from any jurisdictional error. The appellant has already challenged Ext.P4 assessment order in appeal before the 2nd respondent/Appellate Authority. The appellant can very well move a stay application before the Appellate Authority seeking the reliefs prayed for in the writ petition. We see no illegality in the impugned judgment. However, if the appellant files a stay application before the 2nd respondent, the 2nd respondent shall consider and dispose of either the said stay application or the appeal itself within a period of three weeks from the receipt of the application from the appellant, after hearing the appellant. The writ appeal is disposed of as above. DR. A.K.JAYASANKARAN NAMBIAR JUDGE DR. KAUSER EDAPPAGATH JUDGE Rp

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