THE COCHIN MALABAR ESTATES AND INDUSTRIES LIMITED vs. THE COMMISSIONER OF INCOME TAX (APPEALS)-1,

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WP(C)/19681/2020HC KeralaKLHC01049453202023 September 2020Author: HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the order of the Commissioner of Income Tax (Appeals)-1 (Ext.P5) directing the petitioner to pay 20% of the disputed amount pending disposal of the appeal is not legally sustainable. The Court found that the order reflects a patent non-application of mind by the Commissioner and a failure to properly exercise the discretion conferred by statutory provisions. Consequently, the Court quashed Ext.P5. The Court directed the first respondent to pass orders on the appeal (Ext.P3) itself within six months from the date of receipt of a copy of the judgment, after hearing the petitioner. Until orders are passed and communicated, recovery steps for amounts confirmed by the assessment order (Ext.P2) shall be kept in abeyance. The petitioner is to produce a copy of the writ petition and the judgment before the first respondent for further action.

What were the facts?

The petitioner, The Cochin Malabar Estates and Industries Limited, is aggrieved by an assessment order (Ext.P2) passed under the Income Tax Act. They filed an appeal (Ext.P3) and a stay petition (Ext.P4) before the Commissioner of Income Tax (Appeals)-1, the first respondent. The first respondent passed an order (Ext.P5) on the stay petition, directing the petitioner to pay 20% of the disputed amount pending disposal of the appeal. The petitioner contends that this order reflects a mechanical application of mind and reliance on Board Circulars without considering the merits of the case. The appeal has been pending since January 2020.

What were the issues?

1. Whether the order of the Commissioner of Income Tax (Appeals)-1 directing the petitioner to pay 20% of the disputed amount pending disposal of the appeal is legally sustainable? (Question of law and fact, concerning the exercise of discretion under statutory provisions). Assessee's Contention: The petitioner argues that the order (Ext.P5) reflects a patent non-application of mind by the first respondent and a failure to properly exercise the discretion conferred by statutory provisions. They contend that the order was mechanically passed, relying on Board Circulars without considering the merits of the case. Revenue's Contention: The judgment does not record any 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 WEDNESDAY, THE 23RD DAY OF SEPTEMBER 2020 / 1ST ASWINA, 1942 WP(C).No.19681 OF 2020(I) PETITIONER/S: THE COCHIN MALABAR ESTATES AND INDUSTRIES LIMITED 234A,RACE COURSE ROAD, COIMBATORE-641018,REPRESENTED BY ITS'DIRECTOR MR.CHANDRA PRAKASH SHARMA. BY ADVS. SRI.A.KUMAR SRI.P.J.ANILKUMAR SMTG.MINI(1748) SRI.P.S.SREE PRASAD SHRI.JOB ABRAHAM SRI.AJAY V.ANAND RESPONDENT/S: 1 THE COMMISSIONER OF INCOME TAX (APPEALS)-1, POORNIMA BUILDINGS,MANORAMA JUNCTION, PANAMPILLY NAGAR,KOCHI-682036. 2 INCOME TAX OFFICER, (CORPORATE) WARD 2 (4),KOCHI-682018. OTHER PRESENT: SC: JOSE JOSEPH THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.09.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.19681 OF 2020(I) 2

JUDGMENT Aggrieved by Ext.P2 assessment order under the Income Tax Act, the petitioner had preferred Ext.P3 appeal and Ext.P4 stay petition before the 1st respondent. The 1st respondent mechanically passed Ext.P5 order on Ext.P4 stay petition and directed the petitioner to pay 20% of the disputed amount, pending disposal of the appeal. It is apparent from a perusal of Ext.P5 order that there has been no application of mind by the 1st respondent on the merits of the case before him, and he has mechanically proceeded to rely on Board Circulars while directing the assessee to pay 20% of the disputed amount, pending disposal of the appeal. In my view, Ext.P5 order of the 1st respondent cannot be legally sustained since it reflects a patent non-application of mind by the 1st respondent, as also his failure to properly exercise the discretion that was conferred on him by the statutory provisions. I therefore, quash Ext.P5 order and direct 1st respondent to pass orders on Ext.P3 appeal itself, considering the fact that the appeal has been pending since January 2020, within six months from the date of receipt of a copy of this judgment, after hearing the petitioner. Needless to say, till such time as orders are passed by the 1st respondent in the appeal, and the order communicated to the petitioner, recovery steps for recovery of amounts confirmed against the petitioner by Ext.P2 assessment order shall be kept in abeyance. The petitioner shall produce a copy of the writ petition together with a copy of this judgment, before the 1st respondent, for further action. A.K.JAYASANKARAN NAMBIAR JUDGE SJ

WP(C).No.19681 OF 2020(I) 3

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE APPEAL BEFORE THE ITAT AGAINST THE ORDER U/S 263 EXHIBIT P2 TRUE COPY OF THE ORDER OF ASSESSMENT DATED 31.12.2019 EXHIBIT P3 TRUE COPY OF THE MEMORANDUM OF APPEAL DATED 28.01.2020 EXHIBIT P4 TRUE COPY OF THE APPLICATION FOR STAY DATED 10.2.2020 EXHIBIT P5 TRUE COPY OF THE ORDER ON THE APPLICATION FOR THE STAY DATED 3.08.2020 BY THE 1ST RESPONDENT.

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