LOCALCUBE COMMERCE PRIVATE LIMITED vs. THE DEPUTY COMMISSIONER OF INCOME TAX

WP/17936/2024HC KarnatakaKAHC01037786202416 July 2024Bench: S SUNIL DUTT YADAV5 pages

AI SummaryPartly Allowed

What did the High Court hold?

The High Court noted that several representations for early disposal of the appeal had been made by the petitioner and no order had been passed. Consequently, the Court directed Respondent No. 2 (Commissioner of Income-tax (Appeals)) to pass appropriate orders fixing a tentative date for hearing, subject to the pendency of cases and the peculiar facts of the case. Additionally, the Court set aside the order at Annexure-AB rejecting the stay request and directed the 1st respondent (Deputy Commissioner of Income-tax) to reconsider the request for stay appropriately. If a case for reduction of deposit was made out, the 1st respondent was directed to follow the procedure prescribed under Annexures-Y and Z. The petitioner was granted liberty to file written submissions in support of their stay request.

What were the facts?

The petitioner, Localcube Commerce Private Limited, filed a writ petition before the High Court of Karnataka challenging an assessment order dated December 28, 2019, passed by the Deputy Commissioner of Income-tax (R-1) under Section 143(3) of the Income Tax Act, 1961, for the Assessment Year 2017-18. The petitioner had filed an appeal against this order before the Commissioner of Income-tax (Appeals) (R-2), which was pending. The petitioner had also made several representations for early disposal of the appeal, which remained unaddressed. The petitioner highlighted the huge demands raised, their potential impact on solvency, and argued they had a strong case on merits. Furthermore, a request for stay had been rejected by an order (Annexure-AB) which the petitioner contended was not speaking and contrary to applicable guidelines.

What were the issues?

1. Whether the High Court should direct the Appellate Authority (R-2) to expeditiously dispose of the pending appeal filed by the petitioner against the assessment order for AY 2017-18, considering the representations made for early disposal and the financial implications of the demand. Assessee's Contention: The petitioner argued that the pending appeal should be disposed of expeditiously due to the huge demands, which could affect their solvency, and that they have a strong case on merits. They also contended that the rejection of their stay request was not a speaking order and was contrary to guidelines. Revenue's Contention: The revenue's counsel submitted that the petitioner's request for early hearing may be considered appropriately by the Appellate Authority.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:27686 WP No. 17936 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH DAY OF JULY, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 17936 OF 2024 (T-IT)

BETWEEN:

LOCALCUBE COMMERCE PRIVATE LIMITED A COMPANY GOVERNED BY THE COMPANIES ACT, 2013 HAVING ITS PRNCIPAL OFFICE AT: 14-F-1, KUMBALAGODU INDUSTRIAL AREA 2ND PHASE, KUMBALAGODU BENGALURU - 560 074 REPRSENTED HEREIN BY ITS DIRECTOR SRI SRIDHAR GUNDAIAH … PETITIONER (BY SRI. BHARADWAJ SHESHADRI, ADVOCATE A/W SRI SANDEEP HUILGOL., ADVOCATE)

AND:

THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE 4(1)(1) BENGALURU BMTC BUILDING, 80 FEET ROAD 6TH BLOCK, KORAMANGALA BENGALURU - 560 095

THE COMMISSIONER OF INCOME-TAX (APPEALS) NATIONAL FACELESS APPEAL CENTRE INCOME TAX DEPARTMENT 2ND FLOOR, JAWAHARLAL NEHRU STADIUM NEW DELHI - 110 003

Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:27686 WP No. 17936 of 2024

THE COMMISSIONER OF INCOME TAX (APPEALS) BENGALURU BMTC BUILDING, 80 FEET ROAD 6TH BLOCK, NEAR KHB GAMES VILLAGE KORAMANGALA BENGALURU - 560 095

THE PRINCIPAL COMMISSIONER OF INCOME TAX, BENGALURU BMTC BUILDING, 80 FEET ROAD 6TH BLOCK, KORAMANGALA BENGALURU - 560 095 … RESPONDENTS (BY SRI. E.I. SANMATHI., ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED ASSESSMENT ORDER DTD. 28.12.2019 BEARING DIN ITBA/AST/S/143(3)/2019-20/1023348720(1) PASSED BY THE R-1 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2017-18 (ANNEXURE A-1) AND ETC.

THIS PETITION COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP THIS DAY, THE COURT MADE THE FOLLOWING:

ORDER

Petitioner has sought for setting aside of the assessment order at Annexure-A1 passed under Section 143(3) of the Income Tax Act.

It is the case of the petitioner that insofar as the assessment year 2017-18 is concerned, petitioner has

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NC: 2024:KHC:27686 WP No. 17936 of 2024

filed an appeal against the order passed by the 1st respondent which appeal is pending consideration before the 2nd respondent. It is further submitted that the petitioner has made several representations for early disposal of the appeal at Annexure-V series which are still pending consideration and no orders are passed regarding the same.

It is further submitted that the demands raised are huge and the financial implications of such demand would have the effect on the solvency of the petitioner. It is further submitted that as the petitioner has good case on merits, a direction may be passed to the Appellate Authority to dispose off the appeal expeditiously. It is also pointed out that insofar as the application seeking stay, request for stay has been rejected by order at Annexure- AB which is not a speaking order and contrary to the guidelines applicable in the case of consideration of request for stay as at Annexures-Y and Z. It is further submitted that in terms of the applicable circular, in the

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event the Authority finds it appropriate, reference may be made to the Principal Commissioner of Income Tax for reducing the amount to be deposited while considering the stay.

Sri. E. I. Sanmathi, learned counsel submits that the request of the petitioner for early hearing may be considered by the Authority appropriately.

It must be noticed that admittedly several representations at Annexure-V series have been made for early disposal of the matter and no order is passed. It would be appropriate to direct respondent No.2 to pass appropriate orders fixing the tentative date, subject to the pendency of cases before him and the peculiar facts of this case as made out in the petition.

In light of the observations made above, without prejudice to the direction made above, the order at Annexure-AB is set aside and the 1st respondent is directed to reconsider the request for stay appropriately

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NC: 2024:KHC:27686 WP No. 17936 of 2024

and in the event, case is made out for reduction of deposit, to follow the procedure prescribed under Annexures-Y and Z. Petitioner is at liberty to file written submissions in support of his request for consideration of stay which may be considered appropriately.

Accordingly, petition is disposed off.

Sd/- JUDGE

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