K.S.NANDAKUMAR, PROPRIETOR, VYSALI TEXTI vs. INCOME TAX OFFICER, WARD-2, KOLLAM AND

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WP(C)/9962/2009HC KeralaKLHC01051548200907 April 2009Author: HONOURABLE MR.JUSTICE K.M.JOSEPH4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that it would be conducive to the interest of justice to dispose of the penalty appeal (Ext.P5) after the disposal of the assessment appeal filed before the Income Tax Appellate Tribunal (Ext.P3). The Court directed the Commissioner of Income Tax (Appeals) to take up the penalty appeal (Ext.P5) and dispose of it only after a decision is taken in the assessment appeal (Ext.P3) by the Income Tax Appellate Tribunal. The Court also encouraged both parties to cooperate in ensuring the early disposal of the assessment appeal before the ITAT. The Court did not decide on the merits of the penalty proceedings themselves, but rather on the procedural sequencing of the appeals.

What were the facts?

The petitioner, K.S. Nandakumar, proprietor of Vysali Textiles, is an assessee under the Income Tax Act, 1961. An assessment order was passed on December 29, 2006. The petitioner appealed this order, which was partly allowed. Subsequently, the petitioner filed a further appeal before the Income Tax Appellate Tribunal (ITAT). In parallel, penalty proceedings under Section 271(1)(C) for concealing income were initiated, resulting in a penalty order against the petitioner. The petitioner filed a statutory appeal against this penalty order before the Commissioner of Income Tax (Appeals) [CIT(A)], which was pending and unnumbered. The petitioner sought a writ of certiorari to quash the penalty proceedings and a direction for the CIT(A) to keep proceedings in abeyance pending the ITAT's decision on the assessment appeal.

What were the issues?

1. Whether the penalty proceedings under Section 271(1)(C) of the Income Tax Act, 1961, can be initiated and proceeded with independently of the outcome of the assessment appeal before the Income Tax Appellate Tribunal, especially when the penalty notice was issued on the same date as the assessment order. Assessee's Contention: The petitioner argued that penalty under Section 271(1)(C) can only be imposed when specific facts mentioned in clauses (a) to (d) are established in the course of proceedings under the Act. The petitioner also highlighted that the penalty notice was issued on the same date as the assessment order. Revenue's Contention: The revenue contended that the penalty proceedings are independent of the assessment proceedings.

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 K.M.JOSEPH TUESDAY, THE 7TH APRIL 2009 / 17TH CHAITHRA 1931 WP(C).No. 9962 of 2009(M) ------------------------------------- PETITIONER(S): ---------------------- K.S. NANDAKUMAR, PROPRIETOR, VYSALI TEXTILES, MUKKADA, KOLLAM. BY ADV. SRI.DALE P.KURIEN RESPONDENT(S): -------------------------- 1. INCOME TAX OFFICER, WARD - 2, KOLLAM. 2. THE COMMISSIONER OF INCOME TAX (APPEALS), THIRUVANANTHAPURAM. BY STANDING COUNSEL SRI.JOSE JOSEPH. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07/04/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.M.JOSEPH, J. ------------------------------------------------------ W.P.(C) No. 9962 of 2009-M ---------------------------------------------- Dated, this the 7th day of April, 2009

J U D G M E N T The prayers in the writ petition is to call for the records of the case in Ext.P5 by way of issuing a writ of certiorari and to direct the Commissioner of Income Tax (Appeal), the 2nd respondent, to keep in abeyance all further proceedings in Ext.P5 waiting for a final decision in Ext.P3 appeal. Petitioner is an assessee under the Income Tax Act, 1961 (“Act” for short). Ext.P1 is the assessment order dated 29.12.2006. Petitioner carried the matter in appeal. The appeal is partly allowed. According to the petitioner, petitioner carried the matter in further appeal before the Income Tax Appellate Tribunal vide Ext.P3 appeal memo. It is stated that in the course of appeal proceedings, penalty proceedings under Sec.271 (1) ( C) for concealing income has been initiated. Ext.P4 is the order imposing penalty on the petitioner. Ext.P5 is the statutory appeal preferred before the 2nd respondent. It is stated that the appeal before the 2nd respondent is pending. It is not yet numbered and listed.

WPC No. 9962/2009 -2- The prosecution launched against the petitioner has been stayed by this court by Ext.P6 judgment. It is stated that the petitioner has filed an early posting petition for hearing the assessment appeal before the Appellate Tribunal.

2.

I heard the learned counsel for the petitioner and learned standing counsel appearing on behalf of the respondents. Learned counsel for the petitioner points out that under Sec.271 (1) ( C) of the Act penalty can be imposed only when the facts mentioned in clauses a to d are established in the course of proceedings under the Act. I notice that the notice for imposing penalty is on the same date as the date on which the assessment order is passed. Learned counsel for the respondent pointed out that they are independent proceedings. I would think that it will be conducive to the interest of justice that the penalty appeal (Ext.P5) is disposed of after the disposal of the appeal filed before the Income Tax Appellate Tribunal. The writ petition is disposed of as follows: There will be a direction to the 2nd respondent to take up Ext.P5 appeal and dispose of the same only after a WPC No. 9962/2009 -3- decision is taken in Ext.P3 appeal by the Income Tax Appellate Tribunal. It is open to the petitioner and also the respondents to co-operate and see that Ext.P3 appeal is disposed of at the earliest. (K.M.JOSEPH) JUDGE. MS

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