RAMACHANDRAN vs. THE DEPUTY COMMISSIONER OF INCOME TAX
What did the High Court hold?
The High Court disposed of the writ petition by directing the Commissioner of Income Tax (Appeals) to consider and pass orders on the petitioner's appeal against Ext.P4. Recovery proceedings for the penalty amount were ordered to be kept in abeyance, subject to the petitioner remitting 10% of the penalty amount in four equal monthly installments, commencing from September 16, 2022. The reasoning was based on the pendency of the statutory appeal and the need to balance recovery with the appellate process. The Court did not decide on the merits of the penalty order itself but facilitated its adjudication by the appellate authority while providing interim relief to the petitioner. The principle is that recovery should generally be stayed when a substantive appeal is pending, with appropriate conditions for partial payment.
What were the facts?
The petitioner, Ramachandran, filed a writ petition before the High Court of Kerala challenging recovery proceedings initiated for a penalty assessed under Ext.P4. The petitioner contended that Ext.P4 was an ex parte order, and the penalty was imposed without considering his submissions. The Revenue stated that a search of the petitioner's premises revealed undisclosed income, which the petitioner admitted by filing a return and discharging the tax liability. The Revenue argued that penalty under Section 271AAB of the Income Tax Act is almost automatic. The petitioner countered that the penalty is not automatic and can be dropped by the authorities.
What were the issues?
1. Whether the recovery proceedings for penalty can be initiated when a statutory appeal against the penalty order is pending? (Mixed question of law and fact, concerning principles of natural justice and recovery provisions). 2. Whether the penalty under Section 271AAB of the Income Tax Act is automatic, or if the authorities have discretion to drop penalty proceedings? (Question of law, concerning the interpretation of Section 271AAB). Assessee's contentions: The petitioner argued that Ext.P4 penalty order was ex parte and passed without considering his contentions. He also argued that penalty under Section 271AAB is not automatic and can be dropped by the authorities. Revenue's contentions: The Revenue submitted that a search led to the detection of undisclosed income, which the petitioner accepted and paid tax on. They contended that penalty under Section 271AAB is almost automatic and that Ext.P4 order is valid.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
Cause title — parties, addresses and appearances
JUDGMENT The petitioner has approached this Court being aggrieved by proceedings initiated for recovery of amount of penalty assessed in terms of Ext.P4 order at a time when statutory appeal is pending against the order imposing penalty. It is the contention of the learned counsel for the petitioner that Ext.P4 is an ex parte order and the penalty was imposed without even considering the contentions of the petitioner.
The learned Standing Counsel for the respondent Department points out that a search was conducted in the premises of the petitioner. It is submitted that following the search, huge undisclosed income was detected and the petitioner voluntarily filed the return of income accepting that there was undisclosed income and discharged the liability for tax in respect of the amount of undisclosed income. It is submitted that penalty under Section 271AAB of the Income Tax Act is almost automatic and no fault can be found with Ext.P4 order. The learned counsel for the petitioner in reply states that the penalty under Section 271AAB of the Income Tax Act is not automatic and considering the facts and circumstances of the case, it is always open to the authorities to drop the WP(C) NO. 21162 OF 2022 3 proceedings for penalty.
Having regard to the facts and circumstances of the case, considering the contentions raised by either side and also considering the fact that an appeal against Ext.P4 order imposing penalty is pending before the 2nd respondent, this writ petition is disposed of directing the 2nd respondent to consider and pass orders on the appeal filed by the petitioner against Ext.P4 order. Any proceedings for recovery of amounts due under Ext.P4 shall be kept in abeyance on condition that the petitioner remits the sum equivalent to 10% of the amount of penalty in four monthly instalments commencing from 16.09.2022. The first instalment shall be paid on or before 16.09.2022 and subsequent instalments shall be paid on or before the 16th day of the succeeding months. The writ petition is disposed of as above. GOPINATH P. JUDGE DK
WP(C) NO. 21162 OF 2022 4
Appendix — schedule of exhibits
More judgments on Section 271AAB
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- M/S Amrit Cement Limited, Opposite Horse… vs DCIT, Central Cir 4(1), Kolkata, Aayakar…ITA 1557/KOL/2026[2013-14]Status: Disposed13 Oct 2026AY 2013-14
- M/S Amrit Cement Limited, Opposite Horse… vs DCIT, Central Cir 4(1), Kolkata, Aayakar…ITA 1556/KOL/2026[2012-13]Status: Disposed13 Oct 2026AY 2012-13
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