M/S SHEIKH SONS vs. INCOME TAX OFFICER, WARD-1, MAYOS

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WP(C)/28750/2023HC KeralaKLHC01062797202319 September 2023Bench: HONOURABLE MR. JUSTICE D. K. SINGH8 pages
AI SummaryRemanded

What did the High Court hold?

The High Court disposed of the writ petition with specific directions to the 3rd respondent (Commissioner of Income Tax (Appeals)). The Court held that the petitioner was not entitled to an order as prayed for, particularly an interim order without depositing any amount, especially considering the significant delays in filing the appeals. The Court acknowledged the Supreme Court's clarification in Principal Commissioner of Income Tax Vs. LG Electronics India Pvt. Ltd. that administrative circulars do not fetter the appellate authority's discretion to grant interim orders, and that such orders can be made for depositing less than 20% of the tax amount depending on the facts. However, the Court emphasized that the Supreme Court did not state that no amount would be liable to be deposited for granting an interim order. Therefore, the Court directed the 3rd respondent to first take up the application for condonation of delay. If the delay is condoned, then the 3rd respondent is to decide the application for staying the demand arising from the assessment order. The 3rd respondent was granted one month's time to decide both the condonation of delay and the stay application. No issue was expressly left undecided.

What were the facts?

The petitioner, M/s Sheikh Sons, a partnership firm dealing in land and building, failed to file its income tax return for Assessment Year (AY) 2017-18. Following a notice under Section 142(1), an assessment order dated March 22, 2022, was issued under Sections 147, 144, and 144B, determining a total income of Rs. 4,28,41,120/-. Penalty proceedings were initiated, and a penalty of Rs. 1,97,68,606/- (200% of assessed tax) was imposed under Section 270A by an order dated September 27, 2022. The petitioner filed appeals against both the assessment and penalty orders with significant delays of 277 and 276 days, respectively, along with stay applications. The petitioner approached the High Court seeking a writ of mandamus to direct the appellate authority to decide these appeals and stay petitions expeditiously and to restrain further proceedings pending their disposal.

What were the issues?

1. Whether the High Court, in its writ jurisdiction, should direct the 3rd respondent (Commissioner of Income Tax (Appeals)) to consider and pass orders on the appeals and stay petitions filed by the petitioner for AY 2017-18, and to restrain further proceedings pending their disposal? Assessee's Contention: The petitioner argued that the appellate authority had not passed any order on the applications for condonation of delay and stay petitions. They also referred to CBDT Circular dated 29.02.2016, suggesting that depositing 20% of the assessed tax and penalty could lead to an interim order until appeal disposal. Reliance was placed on the Supreme Court's decision in Principal Commissioner of Income Tax Vs. LG Electronics India Pvt. Ltd., which clarified that administrative circulars do not fetter the appellate authority's discretion to grant interim orders, potentially for a lesser deposit amount based on individual case facts. Revenue's Contention: The judgment does not explicitly record any specific arguments made by the revenue. However, the Court's observations suggest that the revenue's implicit stance would be against granting a stay without any deposit, especially given the substantial delays.

Which sections of the Income-tax Act were involved?

Section 142(1),Section 147,Section 144,Section 144B,Section 270A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH TUESDAY, THE 19TH DAY OF SEPTEMBER 2023 / 28TH BHADRA, 1945 WP(C) NO. 28750 OF 2023 PETITIONER: M/S SHEIKH SONS TRIDENT ARCADE, PINANGODE ROAD, KALPETTA VIA, WAYANAD,PIN – 673 121 REPRESENTED BY ITS MANAGING PARTNER C.K. USMAN BY ADV S.ARUN RAJ RESPONDENTS: 1 INCOME TAX OFFICER, WARD-1, MAYOS SULTHAN BATHERY, KAINATTY, KALPETTA, WAYANAD, PIN – 673 122. 2 ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE INCOME TAX DEPARTMENT, 2ND FLOOR, E- RAMP, JAWAHARLAL NEHRU STADIUM, NEW DELHI, PIN – 110 003. 3 COMMISSIONER OF INCOME TAX (APPEALS) NATIONAL FACELESS APPEAL CENTRE INCOME TAX DEPARTMENT, 2ND FLOOR, E- RAMP, JAWAHARLAL NEHRU STADIUM, NEW DELHI, PIN – 110 003. 4 THE PRINCIPAL COMMISSIONER OF INCOME TAX AAYAKAR BHAVAN, NORTH BLOCK, MANANCHIRA, KOZHIKODE, PIN – 673 001. OTHER PRESENT: CHRISTOPHER ABRAHAM-SC-IT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 19.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) NO. 28750 OF 2023 2 DINESH KUMAR SINGH, J. -------------------------------------------- WP(C) NO. 28750 OF 2023 -------------------------------------------- Dated this the 19th day of September, 2023 J U D G M E N T 1. The present Writ Petition has been filed under Article 226 of the Constitution of India, seeking the following prayers. “i) To issue a writ of mandamus directing the 2nd respondent:- CIT (Appeals), National Faceless Assessment Centre, Delhi to consider and pass order on Exhibit P-2 and P-4 Appeals and/or Exhibit P-5 and P-6 stay petitions for the AY 2017-18, as expeditiously as possible, at any rate within a time limit as may be fixed by this Honourable Court: ii) To issue a writ of mandamus directing the respondents/income tax department not to take any further proceedings based on Exhibit P-1 assessment order and P-3 penalty order for

WP(C) NO. 28750 OF 2023 3 the AY 2017-18 pending final disposal of Exhibit P-2 and P-4 statutory first appeals/Exhibit P-5 and P-6 stay petitions by the 3rd respondent; And iii) To issue such other appropriate writ, order or directions as this Hon’ble Court may deem just and proper to issue in the facts and circumstances of the case.” 2. The petitioner is a partnership firm constituted for the purchase and sale of land, building etc. The petitioner did not file return of its income for the assessment year 2017-2018. The petitioner was issued with a notice under Section 142(1) of the Income Tax Act, 1961 (‘Act, 1961’ for short) for assessment year 2017-2018. Thereafter, Exhibit P1 assessment order dated 22.03.2022 was issued under Section 147 read with Sections 144 and 144B of the Act, 1961 making huge additions and

determining the

total

income

WP(C) NO. 28750 OF 2023 4 Rs.4,28,41,120/-. The penalty proceedings were also initiated against the petitioner and the petitioner was imposed with a penalty at the rate of 200% of the assessed tax under section 270A of the Act, 1961 i.e., Rs.1,97,68,606/-, as is evident from Ext.P3 impugned order dated 27.09.2022. 3. Challenging Exhibit P1 assessment order, the petitioner had filed Exhibit P2 appeal with a delay of 277 days. Against Exhibit P3 penalty order, Exhibit P4 appeal is filed on 25.01.2023. The appeals were filed with a huge delay of 277 and 276 days respectively. The petitioner has also filed Exts.P5 and P6 stay applications along with Exhibits P2 and P4 appeals respectively. 4. The learned counsel for the petitioner submits that the appellate authority has not passed any order on the application for condonation of delay or the stay application filed along with Exts. P2 and P4 appeals.

WP(C) NO. 28750 OF 2023 5 5. The Learned Counsel for the petitioner also submits that, as per CBDT Circular dated 29.02.2016, if the assessee deposits 20% of the assessed tax and penalty amount, there would be an interim order till the disposal of the appeals. The said circular is not binding on the appellate authority, the same being the quasi judicial authority. Despite the above circular, the appellate authority, being the quasi judicial authority, may grant the interim order. 6. The learned counsel for the petitioner has placed reliance upon the single paragraph order of the Supreme Court in the case of Principal Commissioner of Income Tax Vs. LG Electronics India Pvt. Ltd. passed in Civil Appeal No.6850 of 2018 on 20.07.2018, from where it is clear that the Supreme Court has only said that the administrative circular will not operate as a fetter on the power of the appellate authority to exercise

WP(C) NO. 28750 OF 2023 6 its discretion for order on deposits or consideration of facts of the particular case. In that view of the matter, the Supreme Court has clarified that in all the cases where the appeal is filed, it will be open to the authorities, on the facts of individual cases, to grant deposit orders of a lesser amount than 20%, pending appeal. 7. Thus, the Supreme Court has not said that no amount would be liable to be deposited for granting an interim order. The Supreme Court has only clarified that the appellate authority may issue an order for depositing less than 20% tax amount depending on the facts of the particular case. 8. The petitioner, prayer that without depositing any amount, this Court should grant an interim order till the disposal of the stay application is liable to be rejected. I am of the view that the petitioner is not untitled to an order as prayed for especially when the petitioner has filed

WP(C) NO. 28750 OF 2023 7 appeals with a delay of 277 days. 9. Therefore, this writ petition is disposed of only with a direction to the 3rd respondent to take up the application for condonation of delay and if the delay is condoned, then decide the application for staying the demand in pursuance to the assessment order. 10. The third respondent is granted one month’s time to decide the application for condonation of delay and application for stay. 11. Writ petition is finally disposed of. Sd/- DINESH KUMAR SINGH JUDGE rpr

WP(C) NO. 28750 OF 2023 8 APPENDIX OF WP(C) 28750/2023 PETITIONER’S EXHIBITS Exhibit P1 A TRUE COPY OF THE ASSESSMENT ORDER DATED 22- 3-2022 UNDER SECTION 147 R.W.S 144 AND 144B OF THE ACT PASSED BY THE 2ND RESPONDENT FOR THE AY 2017-18 Exhibit P2 A TRUE COPY OF THE APPEAL ALONG WITH THE DELAY CONDONATION PETITION E-FILED ON 24-1- 2023 BY THE PETITIONER BEFORE THE 3RD RESPONDENT FOR THE AY 2017-18 Exhibit P3 A TRUE COPY OF THE PENALTY ORDER DATED 27-9- 2022 UNDER SECTION 270A OF THE ACT PASSED BY THE 1ST RESPONDENT FOR THE AY 2017-18 Exhibit P4 A TRUE COPY OF APPEAL E-FILED ON 25-1-2023 BEFORE THE 3RD RESPONDENT ALONG WITH THE DELAY CONDONATION Exhibit P5 A TRUE COPY OF THE STAY PETITION E-FILED ON 23-8-2023 IN EXHIBIT P-2 APPEAL BEFORE THE 3RD RESPONDENT:- CIT (APPEALS), NATIONAL FACELESS APPEAL CENTRE, DELHI FOR THE AY 2017-18 Exhibit P6 A TRUE COPY OF THE STAY PETITION E-FILED ON 23-8-2023 IN EXHIBIT P-4 APPEAL BEFORE THE 3RD RESPONDENT:- CIT (APPEALS), NATIONAL FACELESS APPEAL CENTRE, DELHI FOR THE AY 2017-18

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