ALUKKAS JEWELLERY KANNUR vs. DEPUTY COMMISSIONER OF INCOME TAX

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WP(C)/20249/2020HC KeralaKLHC01051006202029 September 2020Author: HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR5 pages
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What did the High Court hold?

The High Court held that in situations where a notice (Ext.P8) was issued to the petitioner calling them for the final hearing of the appeal itself, there was no requirement to insist on a pre-deposit as a condition for granting a stay of recovery pending the disposal of the appeal. The Court reasoned that the issuance of the notice for final hearing indicated that the appellate authority was proceeding to decide the appeal on merits. Therefore, demanding a pre-deposit at that stage, especially when the appeal was nearing its conclusion, would be unduly burdensome. Accordingly, the Court quashed Exts.P5 and P10, which were orders related to the deposit of amounts pending appeal disposal. The Court directed the 2nd respondent (Appellate Authority) to consider and pass orders on Ext.P2 appeal within six months from the date of receiving a copy of the judgment, after hearing the petitioner. Recovery steps for the amounts confirmed by the impugned assessment order were to be kept in abeyance pending the disposal of the appeal.

What were the facts?

The petitioner, M/s Alukkas Jewellery Kannur, filed a writ petition before the High Court of Kerala challenging a stay order (Ext.P10) issued by the Deputy Commissioner of Income Tax (Appeals). The petitioner had filed an appeal against an assessment order. While the appeal and stay petition were pending before the 2nd respondent (Commissioner of Income Tax Appeals), the petitioner received a notice (Ext.P8) to submit written submissions for the purpose of deciding the appeal itself. The petitioner complied with this notice. However, subsequently, the petitioner was served with Ext.P10, which demanded the deposit of certain amounts pending the disposal of the appeal. The petitioner contended that since the appeal was already listed for hearing and written submissions had been furnished, the appeal should be disposed of directly, and they should not be compelled to deposit amounts.

What were the issues?

1. Whether the insistence on a pre-deposit as a condition for granting a stay of recovery, pending disposal of an appeal, is justified when the appeal itself has been listed for final hearing and written submissions have been filed? (Question of law and fact, concerning the principles of natural justice and procedural fairness under the Income Tax Act). Assessee's Contentions: - The petitioner argued that since the appeal was posted for hearing and written submissions had been furnished, the appeal itself could be disposed of. - Consequently, the petitioner contended that they should not be subjected to the difficulty of depositing amounts pending the disposal of the appeal. Revenue's Contentions: - The judgment records no specific contentions made by the revenue.

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 A.K.JAYASANKARAN NAMBIAR TUESDAY, THE 29TH DAY OF SEPTEMBER 2020 / 7TH ASWINA, 1942 WP(C).No.20249 OF 2020(E) PETITIONER/S: M/s ALUKKAS JEWELLERY KANNUR ADMN. OFFICE, ALUKKAS COMPLEX, RAMOHAM ROAD, KOZHIKODE- 673 004, REPRESENTED BY ITS MANAGING PARTNER A.V. FRANCIS. BY ADVS. SRI.S.ARUN RAJ SMT.C.T.SUJA RESPONDENT/S: 1 DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1, KANNUR, O/O. ADDL.COMMISSIONER OF INCOME TAX, KONNOTHUMCHAL, CHOVVA P.O, KANNUR-670 006 2 COMMISSIONER OF INCOME TAX (APPEALS) AAYAKAR BHAVAN, MANANCHIRA, CALICUT-673 001 OTHER PRESENT: SC: CHRISTOPHER ABRAHAM THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 29.09.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.20249 OF 2020(E) 2

JUDGMENT The petitioner has approached this Court aggrieved by Ext.P10 stay order passed against him under the Income Tax Act, in an appeal preferred by him against an order of assessment. In the writ petition, it is the case of the petitioner that while the appeal and stay petition were pending consideration before the Appellate Authority namely the 2nd respondent, the 2nd respondent had issued Ext.P8 notice calling upon the petitioner to submit the written submission for the purposes of deciding the appeal itself. While the petitioner had complied with the said notice, and had submitted the written submission for the purposes of hearing the appeal, he was served with Ext.P10 order in the stay application asking him to deposit some amounts, pending consideration of the appeal. In the writ petition, the petitioner contends that in as much the appeal itself was posted for hearing and the written submissions in connection with the hearing of the appeal have already been furnished, the appeal itself can be disposed and the petitioner need not be put to the difficulty of having to deposit amounts pending disposal of the appeal. 2.I have heard the learned counsel appearing for the petitioner and also the learned Standing Counsel appearing for the respondents. On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I am of the view that in as much as Ext.P8 notice was issued to the petitioner calling him to appear for the final hearing of the appeal itself, there is no requirement at this stage to insist on a WP(C).No.20249 OF 2020(E) 3 pre-deposit as a condition for grant of stay of recovery, pending disposal of the appeal. Accordingly. I quash Exts.P5 and P10 orders passed in connection with the deposit of amounts pending disposal of the appeal and direct the Appellate Authority namely, the 2nd respondent, to consider and pass orders on Ext. P2 appeal within an outer time limit of six month from the date of receipt of a copy of this judgment, after hearing the petitioner. The petitioner shall produce a copy of the writ petition together with a copy of this judgment, before the 2nd respondent, for further action. I also make it clear that the pending disposal of the appeal, the recovery steps for recovery of amounts confirmed against the petitioner by the order impugned in the appeal shall be kept in abeyance. A.K.JAYASANKARAN NAMBIAR JUDGE SJ

WP(C).No.20249 OF 2020(E) 4

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE ASSESSMENT ORDER DATED 30.12.2019 PASSED BY THE 1ST RESPONDENT AND THE DEMAND NOTICE ISSUED FOR THE AY 217-18 EXHIBIT P2 TRUE COPY OF THE APPEAL MEMORANDUM DATED 21.1.2020 FILED BY THE PETITIONER FIRM BEFORE THE 2ND RESPONDENT FOR THE AY 2017- 18 EXHIBIT P3 TRUE COPY OF THE STAY PETITION FILED BY THE PETITIONER FIRM BEFORE THE ASSESSING OFFICER, 1ST RESPONDENT FOR THE AY 2017-18 EXHIBIT P4 TRUE COPY OF THE JUDGMENT DATED 14.2.2020 IN W.P(C) NO.4318 OF 2020 PASSED BY THIS HONOURABLE COURT EXHIBIT P5 TRUE COPY OF THE ORDER DATED 4.3.2020 PASSED BY THE 1ST RESPONDENT ON EXHIBIT P3 APPLICATION EXHIBIT P6 TRUE COPY OF THE STAY APPLICATION ALONG WITH LETTER DATED 9.3.2020 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE AY 2017-18 EXHIBIT P7 TRUE COPY OF THE NOTICE DATED 19.2.2020 ISSUED BY THE 2ND RESPONDENT ON THE STAY APPLICATION EXHIBIT P7A TRUE COPY OF THE WRITTEN SUBMISSION DATED 24.6.2020 E-FILED BY THE PETITIONER ON STAY PETITION BEFORE THE 2ND RESPONDENT FOR THE AY 2017-18 EXHIBIT P8 TRUE COPY OF THE NOTICE DATED 17.8.2020 ISSUED BY THE 2ND RESPONDENT ASKING FOR E- FILING THE WRITTEN SUBMISSION FOR DISPOSAL OF EXHIBIT P2 APPEAL EXHIBIT P9 TRUE COPY OF THE WRITTEN SUBMISSIONS DATED 26.08.2020 IN THE APPEAL MEMORANDDUM FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT WP(C).No.20249 OF 2020(E) 5 FOR THE AY 2017-18 EXHIBIT P10 TRUE COPY OF THE ORDER DATED 8.9.2020 PASSED BY THE 2ND RESPONDENT ON EXHIBIT P6 STAY PETITION FOR THE AY 2017-18

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