ZERONE CONSULTING PVT. LTD vs. INCOME TAX OFFICER

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WP(C)/3115/2023HC KeralaKLHC01007516202331 January 2023Author: HONOURABLE MR. JUSTICE T.R.RAVI6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court admitted the writ petition and noted that the Standing Counsel took notice for the respondents. The Court observed that the petitioner had already availed the statutory remedy of appeal against the penalty order. It was also noted that the issue was not one that could be considered and disposed of in the writ proceedings. Therefore, the Court held that the interest of justice would be served by relegating the petitioner to their appellate remedy. The Court directed the 5th respondent (Commissioner of Income Tax (Appeals)) to hear and dispose of Ext.P8 appeal at the earliest, within six months from the date of receipt of the judgment. The time granted for payment of 20% of the demand in Ext.P12 was extended by one month.

What were the facts?

The petitioner, Zerone Consulting Pvt. Ltd., filed a writ petition before the High Court of Kerala. The petition sought to quash an order (Ext.P11) rejecting a rectification petition and to stay proceedings pursuant to another order (Ext.P7). Ext.P7 imposed a penalty of Rs. 81,53,075/- under Section 271(1)(c) of the Income Tax Act, 1961. The petitioner had filed an appeal (Ext.P8) against this penalty order. While the appeal was pending, the petitioner approached the Assessing Authority for rectification, which was rejected by Ext.P11. The Assessing Officer, by Ext.P12 dated 17.01.2023, granted a stay of recovery of the penalty on the condition of paying 20% of the demand within ten days.

What were the issues?

1. Whether the High Court should entertain a writ petition to quash a rectification order and stay penalty proceedings when an appeal against the penalty order is pending and a conditional stay of recovery has been granted. Assessee's Contentions: The petitioner sought to quash Ext.P11 (rejection of rectification) and stay proceedings pursuant to Ext.P7 (penalty order). They also prayed for the disposal of their appeal (Ext.P8). Revenue's Contentions: The Standing Counsel took notice for the respondents. No specific arguments for the revenue are recorded in the judgment regarding the merits of the case.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

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 T.R.RAVI TUESDAY, THE 31ST DAY OF JANUARY 2023 / 11TH MAGHA, 1944 WP(C) NO. 3115 OF 2023 PETITIONER: ZERONE CONSULTING PVT. LTD FIRST FLOOR, PLOT # 17B, COCHIN SPECIAL ECONOMIC ZONE, KAKKANAD, ERNAKULAM, KERALA- 682037 REPRESENTED BY ITS DIRECTOR, ASHIQ AL JHAN. BY ADVS. ANIL D. NAIR P.K.BIJU TELMA RAJU ANJANA A. RESPONDENTS: 1 INCOME TAX OFFICER CORPORATE WARD-2(2), CENTRAL REVENUE BUILDING, I.S PRESS ROAD, KOCHI, PIN – 682018. 2 ASSISTANT COMMISSIONER OF INCOME TAX CORPORATE CIRCLE 2 (1), CENTRAL REVENUE BUILDING, IS PRESS ROAD, KOCHI, PIN – 682018. 3 ADDITIONAL/ JOINT/ DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX INCOME DEPARTMENT, NATIONAL FACELESS ASSESSMENT CENTRE (NFAC), NEW DELHI – 110001. 4 PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL REVENUE BUILDING IS PRESS ROAD, KOCHI- 682018. WP(C) NO. 3115 OF 2023 2 5 COMMISSIONER OF INCOME TAX (APPEALS) NATIONAL FACELESS APPEAL CENTRE NEW DELHI – 110001. SRI. JOSE JOSEPH, SC. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 31.01.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 3115 OF 2023 3 T.R. RAVI, J. -------------------------------------------- W.P.(C) No.3115 of 2023 -------------------------------------------- Dated this the 31st day of January, 2023

JUDGMENT Admit. Standing Counsel takes notice for the respondents. The writ petition has been filed praying to quash Ext.P11 and stay all further proceedings pursuant to Ext.P7. There is also a prayer for disposal of Ext.P8 appeal. As per Ext.P7, the competent Authority had imposed penalty of Rs.81,53,075/- under Section 271(1)(c) of the Income Tax Act, 1961. Ext.P8 is the appeal preferred against the order of penalty. Pending

the appeal the petitioner had approached the Assessing Authority and by Ext.P11, the petition for rectification of the penalty order has been rejected. In Ext.P12 the Authority had granted stay of recovery of the penalty on condition of paying 20% of the demand within ten days from the receipt of the communication. The order is dated 17.01.2023. It can thus be seen that the appeal is pending consideration and as far as the WP(C) NO. 3115 OF 2023 4 penalty is concerned the Assessing Officer has directed payment of 20% of the demand. Since the petitioner has already availed the statutory remedy and since the issue is not one which can be considered and disposed of in these proceedings, interest of justice will be served if the petitioner is relegated to take the appellate remedy. In the above circumstances, the writ petition is disposed of directing the 5th respondent to hear and dispose of Ext.P8 appeal at the earliest, at any rate within six months from the date of receipt of a copy of this judgment. The time granted for payment of 20% of demand in Ext.P12 shall stand extended by a further period of one month. T.R.RAVI JUDGE mpm

WP(C) NO. 3115 OF 2023 5

Appendix — schedule of exhibits
APPENDIX OF WP(C) 3115/2023 PETITIONER'S EXHIBITS Exhibit P1 TRUE COPY OF THE ASSESSMENT ORDER UNDER SECTION 143(3), DATED 23.11.2017 ISSUED BY THE 1ST RESPONDENT. Exhibit P2 TRUE COPY OF ORDER UNDER SECTION 263 DATED 16-03-2020 OF THE REPLY FILED BY THE 4TH RESPONDENT. Exhibit P3 TRUE COPY OF THE ASSESSMENT ORDER DATED 30.09.2021 UNDER SECTION 143(3) R.W.S. 263 ISSUED BY THE 2ND RESPONDENT. Exhibit P4 TRUE COPY OF NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) DATED 30-09-2021 ISSUED BY THE 2ND RESPONDENT. Exhibit P5 TRUE COPY OF SHOW CAUSE NOTICE UNDER SECTION 271(1)(C) DATED 16-03-2022 ISSUED BY THE 3RD RESPONDENT. Exhibit P6 TRUE COPY OF REPLY FILED BY THE PETITIONER TO SHOW CAUSE NOTICE UNDER SECTION 271(1) (C) DATED 17-03-2022. Exhibit P7 TRUE COPY OF THE ASSESSMENT ORDER DATED 21.03.2022 UNDER SECTION 271(1)(C)ISSUED BY THE 3RDRESPONDENT. Exhibit P8 TRUE COPY OF THE APPEAL FILED ON 19-04-2022 BEFORE THE 5TH RESPONDENT. Exhibit P9 TRUE COPY OF RECTIFICATION APPLICATION FILED U/S 154 DATED 25-04-2022 BEFORE THE DY. COMMISSIONER OF INCOME TAX. Exhibit P10 TRUE COPY OF CBDT CIRCULAR NO. 25/2015 DATED 31.12.2015. WP(C) NO. 3115 OF 2023 6 Exhibit P11 TRUE COPY OF ORDER DATED 15.12.2022 PASSED BY 2ND RESPONDENT TOWARDS RECTIFICATION REQUEST MADE BY THE PETITIONER. Exhibit P12 TRUE COPY OF ORDER DATED 17.01.2023 PASSED BY 2ND RESPONDENT TOWARDS STAY OF DEMAND U/S 220(6). Exhibit P13 TRUE COPY OF OFFICE MEMORANDUM NO. F NO. 404/72/93-ITCC DATED 31.07.2017 ISSUED BY THE CBDT. Exhibit P13 (a) TRUE COPY OF OFFICE MEMORANDUM NO. F NO. 404/72/93-ITCC DATED 29-02-2016 ISSUED BY THE CBDT.

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