MALLELIL INDUSTRIES PRIVATE LIMITED vs. INCOME TAX OFFICER

PDF · subscribers
WP(C)/27395/2022HC KeralaKLHC01058018202225 August 2022Author: HONOURABLE MR. JUSTICE GOPINATH P.5 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court disposed of the writ petition by directing the National Faceless Appeal Centre to hear and dispose of the petitioner's appeal (Ext.P2) within a time limit. Crucially, the Court granted a stay of recovery of the demand based on the assessment order (Ext.P1), subject to the condition that the petitioner remits a sum equivalent to 20% of the demand within two weeks from the date of the judgment. The Court reasoned that this approach aligns with the general practice under Section 220(6) of the Income Tax Act, where stay is often granted upon deposit of 20% of the demand, as indicated by an Office Memorandum (Ext.P7). The appellate authority was directed to pass orders on the appeal after affording an opportunity of hearing to the petitioner within six months from the receipt of a certified copy of the judgment. The issue of whether the initial rejection of the stay application was justified on merits was implicitly deferred to the appellate authority's final decision on the appeal.

What were the facts?

The petitioner, Mallelil Industries Private Limited, filed a writ petition before the High Court of Kerala challenging the order (Ext.P9) of the first appellate authority (National Faceless Appeal Centre) which rejected their application for a stay of recovery of demand arising from an assessment order (Ext.P1). The petitioner contended that they could not respond to a notice from the National Faceless Appeal Centre to upload submissions for the stay application due to an oversight, leading to the dismissal of their stay petition without their arguments being considered. They argued that they have a substantial case on merits and that forcing them to pay the entire demand would be unjust. The respondent department argued that the stay petition was considered as per court directions and the petitioner could not claim oversight, asserting that the appellate authority's order was detailed and considered.

What were the issues?

1. Whether the rejection of the stay application by the National Faceless Appeal Centre, without considering the petitioner's submissions due to an alleged oversight, warrants interference by the High Court under its writ jurisdiction, particularly when the petitioner claims a substantial case on merits? Assessee's Contentions: - The petitioner argued that the dismissal of their stay application was erroneous as it was done without considering their submissions due to an oversight in responding to a notice from the National Faceless Appeal Centre. - They contended that they have a substantial case on merits and forcing them to pay the entire demand would cause gross injustice. Revenue's Contentions: - The respondent department argued that the stay petition was considered as per the directions of this Court in Ext.P8 judgment. - They submitted that the petitioner's claim of oversight was not a valid reason for non-response and that the National Faceless Appeal Centre had passed a detailed and considered order, which should not be interfered with.

Which sections of the Income-tax Act were involved?

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 MR. JUSTICE GOPINATH P. THURSDAY, THE 25TH DAY OF AUGUST 2022 / 3RD BHADRA, 1944 WP(C) NO. 27395 OF 2022 PETITIONER: MALLELIL INDUSTRIES PRIVATE LIMITED, MALLELIL HOUSE, ATTACHAKKAL P.O, PATHANAMTHITTA, KERALA- 689 691. REPRESENTED BY ITS MANAGING DIRECTOR, SREEDHARAN NAIR RAGHAVAN PILLAI. BY ADVS. ANIL D. NAIR TELMA RAJU EDATHARA VINEETA KRISHNAN MOHAMMED SAVAD K. P.K.BIJU RESPONDENTS: 1 INCOME TAX OFFICER, WARD 1 & TPS, TK ROAD, THIRUVALLA, KERALA -689 109. 2 INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, NATIONAL E-ASSESSMENT CENTRE - NEAC ROOM NO. 402, 2ND FLOOR, E-RAMP, NEAR GATE NO. - 10, JAWAHARLAL NEHRU STADIUM, DELHI – 110 003. 3 COMMISSIONER OF INCOME TAX (APPEALS), NATIONAL FACELESS ASSESSMENT CENTRE, NATIONAL E-ASSESSMENT CENTRE - NEAC ROOM NO. 402, 2ND FLOOR, E-RAMP, NEAR GATE NO. - 10, JAWAHARLAL NEHRU STADIUM, DELHI – 110 003. BY SRI. JOSE JOSEPH (SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 25.08.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 27395 OF 2022 2

JUDGMENT The petitioner has approached this Court being aggrieved by Ext.P9 order though which the petitioner's application seeking stay of recovery pursuant to Ext.P1 order of assessment has been rejected by the first appellate authority.

2.

The learned counsel appearing for the petitioner states that the appeal along with a stay petition was filed before the National Faceless Appeal Centre. It is submitted that due to an oversight, the petitioner could not respond to a notice issued by the National Faceless Appeal Centre to upload submissions / arguments to be considered while deciding the stay application. It is submitted that the officer, therefore, proceeded to dismiss the stay application without having the benefit of any submission on behalf of the petitioner. It is submitted that the petitioner has a substantial case on merits and it would be gross injustice if the petitioner is called upon to remit the entire demand following dismissal of the stay application.

3.

The learned Standing Counsel appearing for the WP(C) NO. 27395 OF 2022 3 respondent Department points out that the stay petition was considered pursuant to the directions issued by this Court in Ext.P8 judgment and it was not open to the petitioner to say that the petitioner could not respond to the notice issued by the National Faceless Appeal Centre, due to an oversight. It is submitted that the National Faceless Appeal Centre has passed a very detailed and considered order and there is no reason to interfere with that order in the facts and circumstances of this case.

4.

Having heard the learned counsel for the petitioner and the learned Standing Counsel for the Department, I am of the view that this writ petition can be disposed of directing that the appeal filed by the petitioner be heard and disposed of by the National Faceless Appeal Centre within a time limit and granting stay of recovery subject to the condition that the petitioner remits a sum equivalent to 20% of the demand in Ext.P1. I am inclined to take this view on account of the fact that normally, in proceedings under Section 220(6) of the Income Tax Act, before the Assessing Officer, stay is granted on deposit of 20% of the demand in terms of Ext.P7 Office Memorandum. This writ petition is, therefore, disposed of directing the National Faceless Appeal

WP(C) NO. 27395 OF 2022 4 Centre to consider and pass orders on Ext.P2 appeal after affording an opportunity of hearing to the petitioner and in accordance with law, within a period of six months from the date of receipt of a certified copy of this judgment. Till such time orders are passed on Ext.P2, the demands on the basis of Ext.P1 order of assessment shall remain stayed on condition that the petitioner remits a sum equivalent to 20% of the demand within a period of two weeks from today. The writ petition is disposed of as above. GOPINATH P. JUDGE DK

WP(C) NO. 27395 OF 2022 5

Appendix — schedule of exhibits
APPENDIX OF WP(C) 27395/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2018-19 DATED 30.03.2021 PASSED BY THE 2ND RESPONDENT Exhibit P2 TRUE COPY OF THE APPEAL MEMORANDUM FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT. Exhibit P3 TRUE COPY OF THE ACKNOWLEDGMENT DATED 26.08.2021 OF FILING OF THE APPEAL Exhibit P4 TRUE COPY OF THE STAY PETITION FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT. Exhibit P5 TRUE COPY OF THE COMMUNICATION DATED 10.12.2021 ISSUED BY THE 1ST RESPONDENT Exhibit P6 TRUE COPY OF THE OFFICE MEMORANDUM ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES DATED 31.07.2017 Exhibit P7 TRUE COPY OF THE OFFICE MEMORANDUM ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES DATED 29.02.2016 Exhibit P8 TRUE COPY OF THE JUDGMENT IN WRIT PETITION NO.664 OF 2022. Exhibit P9 TRUE COPY OF THE ORDER FOR THE YEAR 2018-19 DATED 02.08.2022 PASSED BY THE 3RD RESPONDENT. Exhibit P10 TRUE COPY OF THE NOTICE DATED 13.07.2022 ISSUED BY THE 3RD RESPONDENT.

More judgments on Section 220(6)

All 54 judgments and leading authorities on Section 220(6) →

Recent GST High Court judgments

Search GST case law →