KHODAY INDIA LTD ., vs. THE INCOME TAX OFFICER

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WP/42943/2018HC KarnatakaKAHC01016865201810 January 2019Bench: S.SUJATHA5 pages
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What did the High Court hold?

The High Court, in consideration of the petitioner's financial difficulties, the pendency of the appeal, and a previous co-ordinate bench order in a similar case involving the same assessee (W.P.No.42848/2018), directed the petitioner-company to deposit an additional Rs. 8,00,000/- on or before January 21, 2019. This deposit was to be made in addition to any amount already deposited. The Court also granted liberty to the petitioner to approach the First Appellate Authority for an early disposal of the appeal, subject to the aforesaid deposit. The learned CIT (Appeals) was requested to consider the assessee-company's request for expeditious disposal. The Court did not decide the merits of the appeal itself but provided interim relief regarding the demand and directed the appellate authority to consider expediting the appeal.

What were the facts?

The petitioner, Khoday India Ltd., is challenging an order dated June 12, 2018, passed by the Principal Commissioner of Income Tax (Respondent No. 2). This order directed the petitioner to pay 10% of the disputed demand for Assessment Year 2015-16 by December 31, 2018, pending the disposal of its appeal before the Commissioner of Income Tax (Appeals) (Respondent No. 3). The assessment order itself was passed under Section 143(3) read with Section 154 of the Income Tax Act, 1961, on December 29, 2017. The petitioner, citing financial difficulties, sought interim protection and an expedited disposal of its appeal, noting that the issue is covered by a Special Bench decision of the ITAT. The petitioner had already deposited Rs. 14 lakhs against the demand.

What were the issues?

1. Whether the petitioner-company should be granted interim protection against the demand of 10% of the disputed demand for AY 2015-16, given its financial difficulties and pending appeal before the CIT(A)? (Question of mixed law and fact, concerning Section 251 of the Income Tax Act, 1961, and principles of equity). Assessee's Contentions: - The company is in financial doldrums and cannot meet the demand as directed. - Interim protection is sought while the appeal is pending. - The issue is covered by a Special Bench decision of the ITAT. - Rs. 14 lakhs has already been deposited. - Relied on a previous order of the High Court in a similar writ petition (W.P.No.42848/2018) concerning the same assessee. Revenue's Contentions: - The Revenue had no objection to disposing of the writ petition in terms of the previous order of the High Court in W.P.No.42848/2018.

Which sections of the Income-tax Act were involved?

Section 143,Section 154,Section 251

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF JANUARY, 2019 BEFORE: THE HON’BLE MRS. JUSTICE S.SUJATHA WRIT PETITION No.42943/2018 (T – IT) BETWEEN:

KHODAY INDIA LTD ., ’BREWERY HOUSE’, 7TH MILE KANAKPURA ROAD, BENGALURU - 560 062 REP. BY ITS DIRECTOR SRI K.L.SWAMY

... PETITIONER

[BY SRI A.SHANKAR, SENIOR ADV. FOR SRI S.SUKUMAR, ADV.]

AND:

1.

THE INCOME TAX OFFICER WARD-4(1)(2) BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KORAMANGALA BENGALURU - 560 095.

2.

THE PRINCIPAL COMMISSIONER OF INCOME TAX, BENGALURU - 4 BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KORAMANGALA BENGALURU - 560 095.

3.

THE COMMISSIONER OF INCOME TAX (APPEALS) – 4, 7TH FLOOR, BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KORAMANGALA BENGALURU - 560 095.

…RESPONDENTS

[BY SRI JEEVAN J. NEERALGI, ADV.)

- 2 -

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO a) QUASH THE ORDER PASSED BY THE R-2 VIDE COMMUNICATION DATED 12.06.2018 VIDE ANNX-W TO PAY 10% OF THE DISPUTED DEMAND WITHIN 31.12.2018 FOR

THE ASSESSMENT YEAR 2015-16, PENDING DISPOSAL OF APPEAL BY R-3 AND ETC.

THIS PETITION COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:-

O R D E R

Learned counsel Sri.Jeevan J. Neeralgi is permitted to accept notice on behalf of the respondents.

2.

With the consent of the learned counsel appearing for the parties, the matter is taken up for final disposal, at this stage.

3.

The petitioner-company has assailed the order of demand arising out of the order of Assessment under Section 143 [3] read with the order passed under Section 154 of the Income Tax Act, 1961 ['Act' for short] dated 29.12.2017 passed by the respondent No.2, relating to the assessment year 2015-2016, whereby the petitioner is directed to pay 10% of the disputed demand before 31.12.2018 in three installments

- 3 - pending disposal of the appeal by the respondent No.3 interalia seeking a direction to the respondent No.3 to dispose of the appeals in an expedite manner.

4.

Learned Senior Counsel Sri A.Shankar representing the petitioner’s counsel has submitted that though the Regular Appeal against the impugned Assessment Order is pending before the First Appellate Authority, since the Company is in financial doldrums, it is not in a position to pay the amount as directed by the respondent No.2 and hence some interim protection may be given to the Company while the Appellate Authority may be requested to dispose of the appeal in accordance with the law, as the issue is covered by the Special Bench decision of the Income Tax Appellate Tribunal.

5.

Learned Senior Counsel submitted that Rs.14 lakhs has already been deposited by the petitioner against the demand made by the Revenue.

- 4 -

6.

Reference was made to the very same Assessee’s case, in W.P.No.42848/2018 dated 24.09.2018, wherein this Court was pleased to dispose of the Writ Petition directing the petitioner-company to deposit Rs.10,00,000/- out of the disputed demand reserving liberty to the petitioner to move before the concerned First Appellate Authority for early hearing of the appeal subject to the deposit, as directed. It is observed that the learned CIT [Appeals] may consider the request of the Assessee-company to dispose of the appeal expeditiously.

7.

Learned counsel Sri.Jeevan J. Neeralgi appearing for the Revenue has no objection to dispose of the writ petition in terms of the order of this Court in W.P.No.42848/2018, as aforementioned.

8.

Having heard the learned counsel appearing for the parties and in view of the order passed by the

- 5 - Co-ordinate Bench in the very same Assessee’s case as aforesaid, this Court is of the considered opinion that justice would be sub-served in directing the petitioner- company to deposit Rs.8,00,000/- (Rupees Eight Lakhs only) in addition to the amount already deposited if any, on or before 21.01.2019 with liberty to move before the concerned First Appellate Authority for early disposal of the appeal, subject to the aforesaid deposit.

Learned CIT [Appeals] may consider the request of the Assessee-company to dispose of the appeal expeditiously.

Ordered accordingly.

No costs.

Sd/- JUDGE NC.

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