SMT SUREKHA CHANDER vs. INCOME TAX OFFICER

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WP/22548/2022HC KarnatakaKAHC01051913202220 August 2024Bench: S.R.KRISHNA KUMAR5 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the impugned penalty orders under Section 271(1)(c) of the Income Tax Act, 1961, for AY 2014-15 and 2015-16, do not survive for consideration. This is because the original re-assessment orders, pursuant to which these penalty orders were passed, were set aside by the Principal Commissioner of Income Tax during the pendency of the writ petition. Consequently, the penalty orders, being dependent on the validity of the re-assessment orders, have lost their foundation. The Court quashed the impugned penalty orders. The ratio decidendi is that penalty proceedings initiated based on an assessment order that is subsequently quashed or set aside are rendered unsustainable.

What were the facts?

The petitioner, Smt. Surekha Chander, filed a writ petition challenging penalty orders passed under Section 271(1)(c) of the Income Tax Act, 1961, for Assessment Years (AY) 2014-15 and 2015-16. These penalty orders were issued pursuant to re-assessment orders dated March 29, 2022, and notices under Section 274 and 271(1)(c) of the Act. The petitioner had also filed revision applications under Section 264 of the IT Act before the Principal Commissioner of Income Tax (Respondent No. 3) during the pendency of which the impugned penalty orders were passed. Subsequently, during the pendency of the writ petition, the revision petitions filed by the petitioner for AY 2014-15 and 2015-16 were allowed by Respondent No. 3, setting aside the original re-assessment orders.

What were the issues?

1. Whether the impugned penalty orders passed under Section 271(1)(c) of the Income Tax Act, 1961, for AY 2014-15 and 2015-16 are sustainable in light of the subsequent allowance of revision petitions and setting aside of the original re-assessment orders. The petitioner argued that since the original re-assessment orders, which formed the basis for the penalty orders, have been set aside by the Principal Commissioner of Income Tax, the penalty orders no longer survive and ought to be quashed. The revenue did not record any specific arguments in the judgment.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274,Section 264,Section 154

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:33451 WP No. 22548 of 2022

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF AUGUST, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO.22548 OF 2022 (T-IT) BETWEEN:

SMT. SUREKHA CHANDER, W/O KESHAV CHANDER, AGED ABOUT 49 YEARS, PREVIOUSLY R/AT 101, GRASSLAND APARTMENTS, 4 EAGLE STREET, LANGFORD TOWN, BENGALURU – 560 025.

PRESENTLY R/AT APARTMENT NO.104 ATHENTS 2, ACROPOLIS, NO.20, HOSUR ROAD, BANGALORE – 560 029.

…PETITIONER (BY SRI. BALRAM R. RAO, ADVOCATE)

AND:

1.

INCOME TAX OFFICER, WARD 5(3)(1), BENGALURU, HMT BHAVAN, NO.59, BELLARY ROAD, GANGANAGAR, KARNATAKA – 560 032.

2.

ADDITIONAL JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX NATIONAL FACELESS ASSESSMENT CENTRE, DELHI. INCOME TAX DEPARTMENT, DELHI, II FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI – 110 003.

Digitally signed by LEELAVATHI S R Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:33451 WP No. 22548 of 2022

3.

PRINCIPAL COMMISSIONER OF INCOME TAX, BENGALURU – 3, BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KROAMANGALA, BENGALURU – 560 095. …RESPONDENTS (BY SRI. M. DILIP, ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO CALL FOR RECORDS OF THE PETITIONER’S CASE AND AFTER EXAMINING THE LEGALITY AND VALIDITY THEREOF BE PLEASED TO QUASH AND SET ASIDE THE IMPUGNED ORDER U/S 271(1)(C) OF ACT DATED 21.09.2022 IN DIN: ITBA/PNL/F/271(1)(C)/2022- 23/1045789338(1)(ANNEXURE-G) FOR THE A.Y.2014-15, IMPUGNED ORDER U/S 154 R.W.S. 271(1)(C) OF ACT DATED 14.10.2022 IN DIN AND ORDER NO.ITBA/REC/F/154/2022-23/1046314387(1) (ANNEXURE-J) FOR THE A.Y.2014-15 AND IMPUGNED ORDER U/S 271(1)(C) OF ACT DATED 21.09.2022 IN DIN : ITBA/PNL/F/271(1)(C)/2022-23/1045795107(1) (ANNEXURE-H)OF THE ACT FOR THE A.Y.2015-16.

THIS WRIT PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR

ORAL ORDER

In this petition, petitioner seeks the following reliefs: “(i) Writ of certiorari or writ in the nature of certiorari or any other appropriate writ order or direction under Article 226 of the Constitution of India; calling for the records of the Petitioners case and after examining the legality and validity thereof be pleased to quash and set aside the impugned order under Section 271(1)(c) of Act dated 21.09.2022 in DIN: ITBA/PNL/F/271(1)(c)/2022- 23/1045789338(1)(Annexure-G) for the A.Y.2014-15,

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NC: 2024:KHC:33451 WP No. 22548 of 2022

impugned order u/s 154 r.w.s. 271(1)(c) of Act dated 14.10.2022 in DIN and Order No: ITBA/REC/F/154/2022- 23/1046314387(1) (Annexure-J) for the AY 2014-15 and impugned order under Section 271(1)(c) of Act dated 21.09.2022 in DIN. ITBA/PNL/F/271(1)(C)/2022- 23/1045795107(1) (Annexure-H) of the Act for the Assessment Year 2015-16.

(ii) Writ of Mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction under Article 226 of Constitution of India ordering and directing the Respondents by themselves by their subordinates, servants or agents to withdraw and cancel the impugned order under Section 271(1)(c) of Act dated 21.09.2022 in DIN: ITBA/PNL/F/271(1)(C)/2022-23/ 1045789338(1)(Annexure-G)

for the A.Y.2014-15, impugned order under Section 154 r.w.s. 271(1)(c) of the Act dated 14.10.2022 in DIN and Order No. ITBA/REC/F/154/2022-23/1046314387(1) (Annexure-J) for the AY 2014-15 and impugned order u/s 271(1)(c) of the Act dated 21.09.2022 in DIN. ITBA/PNL/F/271(1)(C)/2022- 23/1045795107(1) (Annexure-H) of the Act for the Assessment Year 2015-16 and

(iii) A writ of Prohibition or a writ in the nature of Prohibition or any other appropriate writ, order or direction under Article 226 of the Constitution of India, prohibiting and restraining the Respondents by themselves their sub ordinates, servants and agents from taking any action in furtherance or consequent to impugned order under Section 271(1)(c) of the Act dated 21.09.2022 in DIN.

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NC: 2024:KHC:33451 WP No. 22548 of 2022

ITBA/PNL/F/271(1)(C)/2022-23/1045789338(1) (Annexure- G) for the AY 2014-15, impugned order under Section 154 r.w.s 271(1)(c) of the Act dated 14.10.2022 in DIN and Order No: ITBA/REC/F/154/2022-23/1046314387(1) (Annexure-J) for the AY 2014-15 and impugned order under Section 271 (1)(c) of the Act dated 21.09.2022 in DIN:

ITBA/PNL/F/271(1)(C)/2022-23/1045795107 (1) (Annexure-H) of the Act for the Assessment Year 2015-16 passed by the Respondents.

(iv) Issue any such other order or direction as this Hon’ble Court deems fit and direct the Respondents on this writ petition.”

2.

Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.

3.

A perusal of the material on record will indicate that on 29.03.2022, re-assessment orders were passed against the petitioner in relation to the Assessment years 2014-15 and 2015- 16, respectively, pursuant to which, notices were issued to the petitioner on 29.03.2022 under Section 274 and 271(1)(c) of the Income Tax Act, 1961 and moreover, all the aforesaid orders are dated 29.03.2022, hence, the petitioner preferred revision applications under Section 264 of the IT Act before respondent No.3 – Principal Commissioner of Income Tax. During pendency of the said revision proceedings, the respondent passed the

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NC: 2024:KHC:33451 WP No. 22548 of 2022

impugned penalty orders under Section 271(1)(c) of the IT Act, which are assailed by the petitioner in the present petition.

4.

During pendency of the present petition, the aforesaid revision petition filed by the petitioner for the assessment years 2014-15 and 2015-16 were allowed by respondent No.3, which sets aside the original re-assessment orders passed against the petitioner. Under these circumstances, in the light of setting aside of the original re-assessment orders, pursuant to which the impugned penalty orders were passed, the impugned penalty orders do not survive for consideration in the present petition and the same deserves to be quashed.

5.

In the result, I pass the following: ORDER

(i) Petition is hereby allowed.

(ii) The impugned penalty orders at Annexures – G, H and J all dated 21.09.2022 are hereby quashed.

Sd/- (S.R.KRISHNA KUMAR) JUDGE SV; List No.: 1 Sl No.: 47

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