POPULAR FINANCE COMPANY vs. THE ADDITIONAL COMMSSIONER OF INCOME TAX

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WP(C)/12560/2019HC KeralaKLHC01031733201926 April 2019Author: HONOURABLE MR.JUSTICE V.G.ARUN7 pages
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What did the High Court hold?

The High Court of Kerala held that since the petitioner has availed the statutory remedy of appeal against the penalty order (Ext.P1) within time, and has also filed an application for stay of the demand (Ext.P3), it is appropriate that recovery pursuant to the penalty order be deferred until a decision is taken on the stay petition. The Court directed the second respondent (Commissioner of Income Tax (Appeals)) to defer coercive steps until a decision is taken on Ext.P3. The Court also directed the second respondent to take expeditious steps for considering the stay petition. The operative direction is to defer coercive steps and expedite the decision on the stay petition.

What were the facts?

The petitioner, M/s. Popular Finance (and its related entities M/s. Popular Finance Company and M/s. Popular Mini Finance), is an assessee under the Income Tax Act. The petitioner received a penalty order (Ext.P1) from the first respondent, the Additional Commissioner of Income Tax, under Section 271E of the Income Tax Act. The petitioner challenged this penalty order by filing an appeal (Ext.P2) with the second respondent, the Commissioner of Income Tax (Appeals). Simultaneously, the petitioner filed an application (Ext.P3) for a stay of the demand arising from the penalty order. The assessment years are not specified in the judgment.

What were the issues?

1. Whether the petitioner is entitled to a stay of coercive recovery proceedings pending the decision on their stay petition, given that they have availed the statutory remedy of appeal within the prescribed time. Assessee's Contention: The petitioner argues that since they have filed an appeal against the penalty order and an application for stay of demand within the statutory period, recovery proceedings should be deferred until a decision is made on the stay petition. The petitioner relies on the principle that availing a statutory remedy should not be rendered infructuous by immediate coercive action. Revenue's Contention: The judgment does not record any specific contentions from the revenue regarding the stay petition or the deferral of recovery proceedings. The revenue is represented by the Additional Commissioner of Income Tax and the Commissioner of Income Tax (Appeals).

Which sections of the Income-tax Act were involved?

Section 271E

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Heard together (3 matters)

W.P.(C) No.12560 of 2019
W.P.(C)No.12604 of 2019
W.P.(C)No.12621 of 2019

Read from the judgment's own cause title. This page is filed under one of them.

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE V.G.ARUN FRIDAY, THE 26TH DAY OF APRIL 2019/6TH VAISAKHA, 1941 W.P.(C) No.12560 of 2019 PETITIONER: M/S.POPULAR FINANCE, POPULAR TOWERS, VAKAYAR, KONNI, PATHANAMTHITTA-689 698, REPRESENTED BY THOMAS DANIEL, AGED 64 YEARS, S/O.T.K.DANIEL. MANAGING PARTNER, BY ADVS. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENTS: 1 THE ADDITIONAL COMMSSIONER OF INCOME TAX, THIRUVALLA RANGE, THIRUVALLA-689 101. 2 THE COMMISSIONER OF INCOME TAX(APPEALS), SASTRI ROAD, KOTTAYAM-686 001. OTHER PRESENT: S.C.: SRI.JOSE JOSEPH THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 26.04.2019 ALONG WITH W.P.(c)Nos.12604 & 12621 of 2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) Nos.12560, 12604 & 12621 of 2019 2 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE V.G.ARUN FRIDAY, THE 26TH DAY OF APRIL 2019/6TH VAISAKHA, 1941 W.P.(C)No.12604 of 2019 PETITIONER: M/S.POPULAR FINANCE COMPANY, POPULAR TOWERS, VAKAYAR, KONNI, PATHANAMTHITTA - 689 698, REPRESENTED BY THOMAS DANIEL, MANAGING PARTNER, AGED 64 YEARS, S/O.T.K.DANIEL. BY ADVS. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENTS: 1 THE ADDI.COMMISSIONER OF INCOME TAX, THIRUVALLA RANGE, THIRUVALLA - 689 101. 2 THE COMMISSIONER OF INCOME TAX (APPEALS), SASTRI ROAD, KOTTAYAM - 686 001. OTHER PRESENT: S.C.: SRI.JOSE JOSEPH THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 26.04.2019 ALONG WITH W.P.(C)Nos.12560 & 12621/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) Nos.12560, 12604 & 12621 of 2019 3 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE V.G.ARUN FRIDAY, THE 26TH DAY OF APRIL 2019/6TH VAISAKHA, 1941 W.P.(C)No.12621 of 2019 PETITIONER: M/S.POPULAR MINI FINANCE, POPULAR TOWERS, VAKAYAR, KONNI, PATHANAMTHITTA 689 698, REPRESENTED BY THOMAS DANIEL, MANAGING PARTNER, AGED 64 YEARS, S/O. T.K. DANIEL. BY ADVS. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENTS: 1 THE ADDI.COMMISSIONER OF INCOME TAX, THIRUVALLA RANGE, THIRUVALLA - 689 101. 2 THE COMMISSIONER OF INCOME TAX (APPEALS), SASTRI ROAD, KOTTAYAM 686 001. OTHER PRESENT: S.C. : SRI.JOSE JOSEPH THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 26.04.2019 ALONG WITH W.P.(C)Nos.12604 & 12560/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) Nos.12560, 12604 & 12621 of 2019 4

JUDGMENT The petitioner, an assessee under the Income Tax Act, was served with Ext.P1 penalty order, issued by the first respondent under Section 271E of the Income Tax Act. The petitioner has challenged Ext.P1 by filing Ext.P2 appeal. Along with the appeal, the petitioner has filed Ext.P3 application for stay of the demand pursuant to Ext.P1. Since the petitioner has availed the statutory remedy against Ext.P1 within time, it is only appropriate that recovery pursuant to Ext.P1 be deferred till a decision is taken on Ext.P3 stay petition.

Therefore, the Writ Petition is disposed of directing the second respondent to defer coercive steps until a decision is taken on Ext.P3 stay petition. The second respondent shall take expeditious steps for considering the stay petition. V.G.ARUN ss JUDGE APPENDIX - W.P.(C) 12621/2019 PETITIONER'S EXHIBITS: EXHIBIT P1 COPY OF ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2014-15 DATED 27.3.2019. EXHIBIT P2 COPY OF APPEAL FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2014-15 DATED 18.4.2019. EXHIBIT P3 COPY OF STAY PETITION FIELD BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2014-15 DATED 17.4.2019. APPENDIX - W.P.(C) 12604/2019 PETITIONER'S EXHIBITS: EXHIBIT P1 COPY OF ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2014-15. EXHIBIT P2 COPY OF APPEAL FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2014-15. EXHIBIT P3 COPY OF STAY PETITION FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2014-15. APPENDIX - W.P.(C) 12560/2019 PETITIONER'S EXHIBITS: EXHIBIT P1 COPY OF ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2014-15. EXHIBIT P2 COPY OF APPEAL FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2014-15. EXHIBIT P3 COPY OF STAY PETITION FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2014-15.

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