M/S. ORIENTAL SHOPPING COMPLEX vs. PRINCIPLE COMMISSIONER OF INCOME TAX

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WP(C)/39687/2018HC KeralaKLHC01092229201806 December 2018Author: HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court noted the submissions made by the petitioner's counsel and the fair submission by the Department's Standing Counsel. The Standing Counsel stated that the Department would release the bank guarantee forthwith. Recording this submission, the High Court disposed of the writ petition. The core of the decision is the Department's undertaking to release the bank guarantee, which resolves the petitioner's grievance in this writ petition. No specific legal principle was elaborated upon by the court, as the matter was resolved based on the Department's concession.

What were the facts?

The petitioner, M/s. Oriental Shopping Complex, a partnership firm, was involved in penalty proceedings under Section 271(1)(c) of the Income Tax Act. Initially, the petitioner succeeded before the first appellate authority. However, the Department preferred a second appeal to the Income Tax Appellate Tribunal (ITAT), which was allowed. Subsequently, the petitioner filed an appeal before the High Court. The High Court, via an interim order, directed the petitioner to furnish a bank guarantee for the penalty amount and later set aside the Tribunal's order, remanding the matter back to the ITAT. Upon remand, the ITAT dismissed the Department's second appeal, thereby restoring the order of the first appellate authority. Despite these proceedings attaining finality, the Department had not released the bank guarantee furnished by the petitioner.

What were the issues?

1. Whether the Department is obligated to release the bank guarantee furnished by the petitioner, given that the penalty proceedings have attained finality in favor of the petitioner. The petitioner argued that since the proceedings have concluded with the ITAT dismissing the Department's appeal on remand, the bank guarantee should be released forthwith. The Department, through its Standing Counsel, conceded to the petitioner's claim and agreed to release the bank guarantee immediately.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

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 DAMA SESHADRI NAIDU THURSDAY ,THE 06TH DAY OF DECEMBER 2018 / 15TH AGRAHAYANA, 1940 WP(C).No. 39687 of 2018 PETITIONER/S: M/S. ORIENTAL SHOPPING COMPLEX FLAT NO.3B, CHOICE TOWERS, MANORAMA JUNCTION, KOCHI- 682 016, REPRESENTED BY ITS PARTNER HEMA D.LAKHANI. BY ADV. SMT.PREETHA S.NAIR RESPONDENT/S: 1 PRINCIPLE COMMISSIONER OF INCOME TAX C.R.BUILDINGS, IS PRESS ROAD, COCHIN-682 018. 2 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-II(2), C.R.BUILDINGS, IS PRESS ROAD, COCHIN- 682 018. OTHER PRESENT: SRI CHRISTOPHER ABRAHAM, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 06.12.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

JUDGMENT The petitioner, a partnership firm, faced the penalty proceedings under Section 27(1) (c) of the Income Tax Act. It succeeded in appeal, but the Department took the second appeal before the Income Tax Appellate Tribunal. It was allowed. Then, the petitioner filed ITA No.157 of 2018. WPC No.39687 of 2018 2 This Court, initially through Ext.P3 interim order, required the petitioner to provide the bank guarantee for the penalty amount and eventually set aside the Tribunal's order and remanded the matter to the Tribunal. On remand, the Tribunal dismissed the Department's second appeal. In other words, it restored the first Appellate Authority's order. Thus, the proceedings have attained finality.

2.

Despite the proceedings attaining finality, the Department has not so far released the bank guarantee, the petitioner produced in compliance with Ext.P3 interim order of this Court. In that context, the petitioner has filed this writ petition.

3.

In response to the submissions made by the petitioner's counsel, the Standing Counsel has fairly submitted that the Department will release the bank guarantee forthwith. Recording the Standing Counsel's submission, I dispose of the writ petition. DAMA SESHADRI NAIDU JUDGE

WPC No.39687 of 2018 3

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 A TRUE COPY OF THE DEPUTY COMMISSIONER OF INCOME TAX ORDER DATED 05.11.2008 RAISING A DEMAND OF RS.7,82,636/- INCLUDING INTEREST UNDER SECTION 220(2) AND REFUND. EXHIBIT P2 A TRUE COPY OF THE APPEAL MEMORANDUM ALONG WITH ITS ANNEXURES AND STAY PETITION. EXHIBIT P3 A TRUE COPY OF THE INTERIM ORDER IN I.A.NO.2857/2008 IN I.T.A.NO.156/2008 DATED 18.12.2008. EXHIBIT P4 TRUE COPY OF THE JUDGMENT IN I.T.A.NO.156 OF 2008 DATED 22.11.2016. EXHIBIT P5 A TRUE COPY OF THE TRIBUNALS ORDER DATED 03.07.2017. EXHIBIT P6 TRUE COPY OF THE LETTER DATED 04.09.2017. EXHIBIT P7 TRUE COPY OF THE LETTER DATED 08.08.2018. Css/

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