PERUVAYAL SERVICE CO-OPERATIVE BANK LTD. vs. ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX /INCOME TAX OFFICER

The learned counsel appearing for the petitioner submits that Ext.P2 order is absolutely illegal and unsustainable in law. It is submitted that for a technical error committed by the assessee while furnishing its return of income, a huge penalty of Rs.54 lakhs has been imposed by Ext.P2 order. It is submitted that following the completion of assessment, there is no tax liability in so far as the petitioner / assessee is concerned. It is submitted that in such circumstances, there was no under reporting of income as alleged and a huge penalty of Rs.54 lakhs ought not to have been imposed especially considering the fact that the provisions of Section 270A of the Income Tax Act does not provide for a mandatory penalty. The learned counsel for the petitioner further points out that going by the provisions of sub-section (6) of Section 270A of the Income Tax Act, since there was no suppression or underreporting of any income by the petitioner and all materials were placed before the Assessing Officer, the petitioner could not have been mulcted with any liability.

The learned Standing Counsel appearing for the respondent submits that the petitioner has an effective alternative remedy by way of appeal and there are no special circumstances, which will enable the petitioner to approach this court directly under Section Article 226 of the Constitution of India. It is pointed out that even if the contention of the petitioner is accepted, the authority is acted within its juri iction and the quantum of penalty by itself cannot be a reason for this Court to interfere under Article 226 of the Constitution of India, especially when there is an effective alternative remedy as far as the petitioner is concerned.

Having heard the learned counsel for the petitioner and the learned Standing counsel for the respondent, I am of the opinion that the petitioner can be relegated to the remedy of appeal. I find that the Standing Counsel for the Department is right in contending that there is no juri ictional error warranting interference with Ext.P2 order of penalty directly in exercise of juri iction under Article 226 of the Constitution of India. However, taking note of the fact that there was no tax liability after assessment and the petitioner is a society running at a loss, I am of the opinion that Ext.P2 order can be directed to be kept in abeyance till a decision is taken on the stay petition in the appeal to be filed by the petitioner. Accordingly, this writ petition will