LOCALCUBE COMMERCE PRIVATE LIMITED vs. THE ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX

WP/18023/2024HC KarnatakaKAHC01037784202416 July 2024Bench: S SUNIL DUTT YADAV5 pages

AI SummaryRemanded

What did the High Court hold?

The High Court noted that the petitioner had made a representation for early disposal of the appeal, and no order had been passed on it. Consequently, the Court directed the 3rd respondent (Commissioner of Income Tax (Appeals)) to pass appropriate orders for the early disposal of the appeal, fixing a tentative date, subject to the pendency of cases and the peculiar facts of the case. Without prejudice to this direction, the Court set aside the order at Annexure-X (rejection of stay) and directed the 2nd respondent (Deputy Commissioner of Income-Tax) to reconsider the request for stay appropriately. The Court further directed that if a case for reduction of the deposit amount for stay is made out, the 2nd respondent should follow the procedure prescribed under Annexures-S and T. The petitioner was granted liberty to file written submissions in support of its stay request. The Court did not decide on the merits of the assessment order itself.

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 April 20, 2021, passed under Section 143(3) of the Income Tax Act, 1961, for Assessment Year 2018-19. The petitioner had appealed this order before the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, which was pending. The petitioner also represented for early disposal of the appeal, which remained unaddressed. The petitioner contended that the demands raised were substantial, impacting its solvency, and that its appeal had merit. Furthermore, a request for stay had been rejected by an order (Annexure-X) which the petitioner claimed was not a speaking order and contrary to established guidelines.

What were the issues?

1. Whether the High Court should direct the appellate authority to expeditiously dispose of the pending appeal filed by the petitioner against the assessment order for AY 2018-19, considering the financial implications of the demand and the petitioner's contention of having a good case on merits? (Question of mixed law and fact, concerning the procedural fairness and expeditious resolution of tax disputes under the Income Tax Act, 1961). Assessee's Arguments: - The assessment order under Section 143(3) for AY 2018-19 should be quashed. - The appeal against the assessment order is pending before the appellate authority. - A representation for early disposal of the appeal has not been acted upon. - The huge demands raised are impacting the petitioner's solvency. - The request for stay was rejected by a non-speaking order, contrary to guidelines. - The appellate authority should follow prescribed procedures for considering stay requests, including referring to the Principal Commissioner for reducing the deposit amount if appropriate. Revenue's Arguments: - The learned counsel for the revenue submitted that the petitioner's request for early hearing may be considered appropriately by the 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:28560 WP No. 18023 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. 18023 OF 2024 (T-IT) BETWEEN:

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

AND:

THE ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX INCOME TAX OFFICER NATIONAL E-ASSESSMENT CENTER 2ND FLOOR, JAWAHARLAL NEHRU STADIUM NEW DELHI - 110 003

THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE 4(1)(1), BENGALURU BMTC BUILDING, 80 FEET ROAD

Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:28560 WP No. 18023 of 2024

6TH BLOCK, KORAMANGALA BENGALURU - 560 095

THE COMMISSONER OF INCOMET-TAX (APPEALS) NATIONAL FACELSSS APPEAL CENTER INCOME TAX DEPARTMENT 2ND FLOOR, JAWARHALL NEHRU STADIUM NEW DELHI - 110 003

THE PRINCIPAL COMMISSIONER OF INCOME TAX-2 BENGALURU BMTC BUILDING, 80 FEET ROAD 6TH BLOCK, KORAMANAGALA 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 i) QUASH THE IMPUGNED ASSESSMENT ORDER DTD. 20.04.2021 BEARING DIN ITBA/AST/S/143(3)/2021-22/1032540848(1) PASSED BY THE R-1 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2018-19 (ANNEXURE A-1) AND ETC.

THIS PETITION, COMING ON FOR FINAL HEARING, 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.

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NC: 2024:KHC:28560 WP No. 18023 of 2024

It is the case of the petitioner that insofar as the assessment year 2018-19 is concerned, petitioner has filed an appeal against the order passed by the 1st respondent which appeal is pending consideration before the 3rd respondent. It is further submitted that the petitioner has made representation for early disposal of the appeal at Annexure-R which is 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-X which is not a speaking order and contrary to the guidelines applicable in the case of consideration of

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NC: 2024:KHC:28560 WP No. 18023 of 2024

request for stay as at Annexures-S and T. It is further submitted that in terms of the applicable circular, in the 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 representation at Annexure-R has been made for early disposal of the matter and no order is passed. It would be appropriate to direct respondent No.3 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

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NC: 2024:KHC:28560 WP No. 18023 of 2024

at Annexure-X is set aside and the 2nd respondent is directed to reconsider the request for stay appropriately and in the event, case is made out for reduction of deposit, to follow the procedure prescribed under Annexures-S and T. 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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