M/S. ALKA VENTURES PRIVATE LIMITED, vs. ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX / INCOME TAX OFFICER,

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WP(C)/10023/2024HC KeralaKLHC01090933202415 March 2024Bench: HONOURABLE MR. JUSTICE GOPINATH P.8 pages
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What did the High Court hold?

The High Court held that since it was not seriously disputed that the petitioner's case falls under the proviso to Section 249(4)(b) of the Income Tax Act, 1961, the appeal filed against the assessment order for AY 2016-17 could be disposed of on merits. This was conditioned upon the petitioner remitting a total sum of Rs. 12 crores against the demand. The payment was structured: Rs. 25 lakhs by March 31, 2024, and the remaining Rs. 11.75 crores in eight equal monthly installments starting from April 15, 2024. The appeal would only be adjudicated after the full Rs. 12 crores were paid. If the petitioner failed to comply, the Department could proceed with recovery. The Court directed the appeal to be taken up and adjudicated only after the entire Rs. 12 crores were paid as stipulated. The writ petition was disposed of with these directions.

What were the facts?

The petitioner, M/s. Alka Ventures Private Limited, engaged in real estate, is challenging an assessment order for Assessment Year 2016-17. The petitioner had not filed a return of income for this year, leading to proceedings under Section 147 r/w Section 144 and Section 144B of the Income Tax Act, 1961. The assessment was finalized based on unexplained investment under Section 69, with tax levied at the higher rate under Section 115BBE. A previous writ petition challenging the assessment order was dismissed, directing the petitioner to avail statutory remedies. The petitioner then filed an appeal before the Faceless Appeal Scheme, 2021, seeking exemption from paying advance tax as per the proviso to Section 249(4) of the Act, citing a demand of Rs. 68 crores and subsequent loss returns accepted for later assessment years.

What were the issues?

1. Whether the petitioner can be exempted from paying advance tax for maintaining an appeal against the assessment order for AY 2016-17, under the proviso to Section 249(4)(b) of the Income Tax Act, 1961, given the substantial demand and subsequent accepted loss returns. Assessee's Contention: The petitioner argues that its case falls under Section 249(4)(b) of the Act, and the proviso empowers the Appellate Authority to exempt it from paying advance tax for filing the appeal, considering the facts and circumstances, including the large demand and accepted loss returns for subsequent years. Revenue's Contention: The respondent Department submits that while the case might fall under the proviso to Section 249(4)(b), a substantial amount will still need to be remitted by the petitioner for maintaining the appeal, given the demand of over Rs. 68 crores for AY 2016-17 and the petitioner's substantial investments in property in AY 2017-18 without filing returns or paying admitted tax for AY 2016-17.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 69,Section 115BBE,Section 249,Section 143(1)

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

WP(C) NO. 10023 OF 2024
T.C. 36/16

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

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. FRIDAY, THE 15TH DAY OF MARCH 2024 / 25TH PHALGUNA, 1945 WP(C) NO. 10023 OF 2024 PETITIONER: M/S. ALKA VENTURES PRIVATE LIMITED, T.C. 36/1690(1) MEENA, SUBHASH NAGAR, TRIVANDRUM, REPRESENTED BY ITS FINANCE MANAGER & AUTHORIZED SIGNATORY, SHRI. KUMAR MADHAVAN. BY ADVS. G.MINI(1748) P.J.ANILKUMAR P.S.SREE PRASAD RESPONDENTS: 1 ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX / INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, NEW DELHI, PIN – 110 001. 2 NATIONAL FACELESS ASSESSMENT CENTRE, (UNDER THE NATIONAL FACELESS APPEALS SCHEME),NEW DELHI, REPRESENTED BY THE CIT (APPEALS), PIN – 110 001. 3 THE COMMISSIONER OF INCOME TAX (APPEALS), NATIONAL FACELESS ASSESSMENT CENTRE,NEW DELHI, PIN – 110 001. 4 THE JOINT COMMISSIONER OF INCOME TAX, KARAMANA (PO),THIRUVANANTHAPURAM, PIN – 695 002. BY ADVS. SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT SRI. A. KUMAR (SR.) P.R. AJITH KUMAR, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 15.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) NO. 10023 OF 2024 2 JUDGMENT The petitioner is a Private Limited Company engaged in the real estate business. For the assessment year 2016-17, the petitioner did not file a return of income. Proceedings were initiated for assessment, following which an order was issued under Section 147 r/w Section 144 and Section 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the 1961 Act’). There were some transactions of purchase and sale of immovable property in that assessment year and the proceedings were finalized against the petitioner on the basis that there was unexplained investment under Section 69 of the 1961 Act. The petitioner was, therefore, assessed at the higher rate of tax by applying the provisions of Section 115 BBE of the 1961 Act. 2. According to the petitioner, the petitioner had earlier approached this Court challenging the order of assessment by filing W.P.(C)No.13736/2022. However, that writ petition was disposed of on 30.01.2024 refusing to interfere with the order of assessment and directing that the petitioner

WP(C) NO. 10023 OF 2024 3 will have to avail statutory remedies against the order of assessment. According to the petitioner, he filed an appeal before the authority under the Faceless Appeal Scheme, 2021 along with an application for stay. It is the case of the petitioner that by virtue of the provisions contained in Section 249 of the 1961 Act, the Appellate Authority may having regard to the proviso to sub-section (4) of Section 249 of the 1961 Act exempt the petitioner from the requirement of paying the advance tax in cases where a return of income has not been filed by the petitioner / assessee. It is submitted that in the facts and circumstances of this case, a demand in the order of assessment (Ext.P15) is Rs.68 crores. It is submitted that for all the subsequent assessment years, including for the assessment year 2023-2024, the petitioner has filed a loss return and the same has been accepted along with an intimation under Section 143(1) of the 1961 Act. It is submitted that considering the aforesaid facts, the petitioner may be permitted to prosecute his appeal against Ext.P15 order of assessment without having to pay the advance tax in terms of the proviso to sub-section (4) of Section 249 of the 1961 Act.

WP(C) NO. 10023 OF 2024 4 3. Sri.A.Kumar, the learned Senior Counsel appearing for the petitioner, on the instructions of Adv.G.Mini has referred to the provisions of Section 249 of the 1961 Act to contend that the case of the petitioner / assessee falls within Section 249(4)(b) of the 1961 Act and therefore, by the application of the proviso to that sub-section, the Appellate Authority is well within its powers to exempt the petitioner from payment of any amount as advance tax for maintaining the appeal. 4. The learned Standing Counsel appearing for the respondent Department would submit that the demand relates to the assessment year 2016-17. It is submitted that even in the year 2017-18, the petitioner has made substantial investments in immovable property while not filing a return of income or paying even the admitted tax in respect of the assessment year 2016-17. It is submitted that since the demand in Ext.P15 order of assessment is in excess of Rs.68 crores, even if the appellate authority were to consider the case as one covered by the proviso to Section 249(4)(b) of the 1961 Act, a substantial amount will have to be remitted by the petitioner for

WP(C) NO. 10023 OF 2024 5 maintaining the appeal. 5. Having heard the learned Senior Counsel appearing for the petitioner and the learned Standing Counsel appearing for the respondent Department, I am of the view that since it is not seriously disputed that the case of the petitioner falls under the proviso Section 249(4)(b) of the 1961 Act, Ext.P17 appeal filed by the petitioner against Ext.P15 order of assessment for the assessment year 2016-17 can be directed to be disposed of on merits after affording an opportunity of hearing to the petitioner on the condition that the petitioner remits a total sum of Rs 12 crores against the demands in Ext.P15 order of assessment. An amount of Rs.11.75 crores shall be remitted by the petitioner in 8 equal monthly installments commencing from 15.04.2024. Subsequent installments shall be paid on or before the 15th day of the succeeding months. The petitioner shall remit a sum of Rs.25 lakhs towards the demand in Ext.P15 on or before 31.03.2024. If the petitioner fails to remit the amounts as directed above, it will be open to the Department to proceed for recovery of amounts assessed in terms of Ext.P15. Since the above condition is to be satisfied for maintaining the

WP(C) NO. 10023 OF 2024 6 appeal, it is directed that the appeal filed by the petitioner shall be taken up and adjudicated only after the entire amounts (Rs 12 crores) payable by the petitioner in terms of this judgment are paid, as directed. The writ petition will stand disposed of as above. Sd/- GOPINATH P. JUDGE DK

WP(C) NO. 10023 OF 2024 7 APPENDIX OF WP(C) 10023/2024 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ACKNOWLEDGEMENT OF THE RETURNS FILED FOR AY 2017-18 , DATED 31/03/2018. Exhibit P2 TRUE COPY OF THE ACKNOWLEDGEMENT OF THE RETURNS FILED FOR AY 2018-19, DATED 30/10/2018 Exhibit P3 TRUE COPY OF THE ACKNOWLEDGEMENT OF THE RETURNS FILED FOR AY 2019-20, DATED 26/09/2020 Exhibit P4 TRUE COPY OF THE ACKNOWLEDGEMENT OF THE RETURNS FILED FOR AY 2020-21, DATED 29/03/2021 Exhibit P5 TRUE COPY OF THE ACKNOWLEDGEMENT OF THE RETURNS FILED FOR AY 2021-22, DATED 31/03/2022 Exhibit P6 TRUE COPY OF THE ACKNOWLEDGEMENT OF THE RETURNS FILED FOR AY 2022-23, DATED 23/12/2022 Exhibit P7 TRUE COPY OF THE ACKNOWLEDGEMENT OF THE RETURNS FILED FOR AY 2023-24, DATED 30/12/2023 Exhibit P8 TRUE COPY OF THE INTIMATION ORDER ISSUED UNDER SECTION 143(1) FOR THE RETURN FILED FOR AY 2017-18. DATED 28/06/2018 Exhibit P9 TRUE COPY OF THE INTIMATION ORDER ISSUED UNDER SECTION 143(1) FOR THE RETURN FILED FOR AY 2018-19. DATED 11/04/2019 Exhibit P10 TRUE COPY OF THE INTIMATION ORDER ISSUED UNDER SECTION 143(1) FOR THE RETURN FILED FOR AY 2019-20. DATED 04/10/2020 Exhibit P11 TRUE COPY OF THE INTIMATION ORDER ISSUED UNDER SECTION 143(1) FOR THE RETURN FILED FOR AY 2020-21. DATED 29/03/2021 Exhibit P12 TRUE COPY OF THE INTIMATION ORDER ISSUED UNDER SECTION 143(1) FOR THE RETURN FILED FOR AY 2021-22. DATED 31/03/2022

WP(C) NO. 10023 OF 2024 8 Exhibit P13 TRUE COPY OF THE INTIMATION ORDER ISSUED UNDER SECTION 143(1) FOR THE RETURN FILED FOR AY 2022-23. DATED 23/12/2022 Exhibit P14 TRUE COPY OF THE INTIMATION ORDER ISSUED UNDER SECTION 143(1) FOR THE RETURN FILED FOR AY 2023-24. DATED 30/12/2023 Exhibit P15 TRUE COPY OF THE ASSESSMENT ORDER DATED 31.3.2022 Exhibit P16 TRUE COPY OF THE JUDGMENT IN WRIT PETITION(C) NO.13736 DATED 30.1.2024 OF THIS HON'BLE COURT. Exhibit P17 TRUE COPY OF THE APPEAL MEMORANDUM DATED 19.2.2024 TOGETHER WITH THE ACKNOWLEDGEMENT Exhibit P18 TRUE COPY OF THE APPLICATION FOR STAY DATED 19.2.2024. Exhibit P19 TRUE COPY OF THE APPLICATION FOR EXEMPTION DATED NIL. Exhibit P20 TRUE COPY OF THE COMMUNICATION DATED 6.3.2024 OF THE PETITIONER TO THE JOINT COMMISSIONER

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