PRINCIPAL COMMISSIONER OF INCOME TAX BATHINDA vs. M/S HPCL MITTAL ENERTY LTD. AND ANR

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CWP/10705/2015HC Punjab & HaryanaPHHC01073777201526 July 2018Bench: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE AVNEESH JHINGAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court held that the writ petitions had become infructuous. This was because the primary challenge was to the ITAT's interim order granting a stay on penalty proceedings. However, during the pendency of the writ petitions, the ITAT had adjudicated the main appeals against the penalty order on merits. By a majority opinion, the ITAT allowed the assessee's appeals and quashed the penalty levied under Section 271(1)(c). Consequently, the issue of whether the interim stay was justified became moot as the penalty itself was set aside. Therefore, the writ petitions were disposed of as infructuous, with no decision on the merits of the stay order itself.

What were the facts?

The Principal Commissioner of Income Tax filed three writ petitions challenging an order dated 30.09.2014 by the Income Tax Appellate Tribunal (ITAT) which granted a stay on penalty proceedings during the pendency of appeals. The assessment years involved were 2008-09 and 2009-10. The assessee, M/s HPCL Mittal Energy Ltd. and M/s HPCL Mittal Pipelines Ltd., had filed revised returns declaring Nil income and claiming a refund. Penalty proceedings under Section 271(1)(c) were initiated. After the Commissioner of Income Tax (Appeals) dismissed the assessee's appeals against the penalty, the ITAT granted a stay. Subsequently, the ITAT, by a majority opinion, allowed the assessee's appeals against the penalty order and quashed the penalty. This rendered the writ petitions challenging the interim stay order infructuous.

What were the issues?

1. Whether the ITAT's order dated 30.09.2014, granting stay of penalty under Section 271(1)(c) of the Income Tax Act, 1961, during the pendency of appeals, was legally sustainable. The Revenue contended that the ITAT's order granting stay was erroneous. The Assessee argued that they had a prima facie good case on merits and law, and the balance of convenience lay in their favour, justifying the stay. The Assessee also pointed out that the Assessing Officer had illegally attached bank accounts and made recovery despite being aware of the pending appeals and stay applications before the Tribunal. The ITAT's subsequent decision on the merits of the penalty appeal, quashing the penalty, effectively resolved the underlying dispute.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(2),Section 143(3)

AI-generated summary — verify with the full judgment below

CWP No.10705 of 2015 -1-

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 1. CWP No.10705 of 2015 Date of decision : 26.07.2018 Principal Commissioner of Income Tax, Bathinda ........ Petitioner VS M/s HPCL Mittal Energy Ltd. and another ...... Respondents 2. CWP No.10804 of 2015 Principal Commissioner of Income Tax, Bathinda ........ Petitioners VS M/s HPCL Mittal Pipelines Ltd. and another ...... Respondents 3. CWP No.14318 of 2015 Principal Commissioner of Income Tax, Bathinda ........ Petitioners VS M/s HPCL Mittal Pipelines Ltd. and another ...... Respondents CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE AVNEESH JHINGAN Present:- Mr.Rohit Jain, Advocate for the petitioners. Mr. Dinesh Goyal, Senior Standing Counsel for the Revenue. *** AVNEESH JHINGAN, J. This order shall dispose of three writ petitions bearing CWP Nos. 10705, 10804 and 14318 of 2015. The assessment years involved are ANJU 2018.08.29 11:28 I attest to the accuracy and integrity of this document phhc

CWP No.10705 of 2015 -2- 2008-09 in CWP Nos.10705 and 10804 of 2015. In CWP No.14318 of 2015, assessment year is 2009-10. As the facts are common and issue involved is same, these are being disposed of by a common order. For the sake of convenience, the facts are being taken up from CWP No.10705 of 2015. The Principal Commissioner of Income Tax filed the writ petition seeking quashing of order dated 30.09.2014 (Annexure P-6) passed by Income Tax Appellate Tribunal, Amritsar (for short, 'ITAT') granting stay of penalty during the pendency of the appeal. In the writ petition, M/s HPCL Mittal Energy Ltd. and Income Tax Appellate Tribunal, Amritsar Bench, Amritsar have been arrayed as respondents No.1 and 2 respectively. The assessee filed the original return for the assessment year 2008-09 on 30.09.2008 declaring income of `23,61,30,520/-. The return was revised on 09.09.2009 declaring total income as Nil. Current year loss of business was declared claiming a refund of `8,15,93,109/-. Another revised return was filed on 30.09.2009, the refund claim remained the same. A notice under Section 143(2) of Income Tax Act, 1961 (for short, 'the Act') was issued on 13.03.2009. Assessment was framed vide order dated 30.11.2010 under Section 143(3) of the Act and penalty proceedings under Section 271 (1)(c) of the Act for concealment of Income were initiated separately. Being aggrieved of the assessment order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The appeal was dismissed vide order dated 28.03.2013. Further, an appeal was filed before ITAT, the same was dismissed vide order dated 31.12.2013. ANJU 2018.08.29 11:28 I attest to the accuracy and integrity of this document phhc

CWP No.10705 of 2015 -3- On 30.11.2010, a notice for penalty under Section 271(1)(c) of the Act was issued. The assessee filed a written reply on 22.12.2010, and ultimately, penalty was imposed vide order dated 18.02.2014. The assessee filed an appeal, which was dismissed by Commissioner of Income Tax (Appeals) on 02.07.2014. Feeling aggrieved further, appeal was filed before ITAT along with stay application. The Tribunal vide order dated 30.09.2014 granted stay. The relevant portion of the order is reproduced below:- “In view of the above discussion, the assessee, has, prima facie, a good case on the legal issue as well on merit in their favour, due to which, the balance of convenience lies in their favour, and also, the assessee would subjected to irreparable loss, if in the facts and circumstances of the case, as considered above, the stay is not granted to the assessee. Apropos the attachment order passed by the AO and recovery made, it is patent on record that vide letter dated 17.09.2014, the AO stood specifically informed of the pendency of the appeals as well as the stay applications before the Tribunal, still he went ahead and illegally attached the bank accounts and made unsustainable recovery. Accordingly, the attachment orders are hereby lifted and the AO is directed to refund the amount of the assessee immediately. Since the applications/letters in this regard have been filed before us today, no separate order in this regard needs to be issued. Ordered accordingly. In the result, all the three Stay Applications ANJU 2018.08.29 11:28 I attest to the accuracy and integrity of this document phhc

CWP No.10705 of 2015 -4- filed by the assessees are allowed. The connected main appeals are directed to be fixed for hearing on merit, for 17.11.2014.” Not satisfied with the said order, the present writ petition was filed. During the pendency of the writ petitions, the appeals against the penalty order passed under Section 271(1)(c) of the Act was heard by the Tribunal on 26.08.2015. There was a difference of opinion between the members and the matter was referred to the third member. The third member vide order dated 07.05.2018 rendered his opinion. The Tribunal vide order dated 20.06.2018 as per the majority opinion allowed the appeals of the assessee and quashed the penalty. In other words, appeals against the penalty order has been decided on merits and the levy of penalty has been set aside. The present writ petition has been rendered infructuous as the challenge was only against the interim order passed by Tribunal granting stay. The writ petitions are, therefore, disposed of as infructuous. (AJAY KUMAR MITTAL) JUDGE

(AVNEESH JHINGAN) 26.07.2018 JUDGE anju Whether speaking/reasoned? Yes/No Whether reportable? Yes/No ANJU 2018.08.29 11:28 I attest to the accuracy and integrity of this document phhc

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