ANJANADRI FUEL STATION vs. INCOME TAX OFFICER

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WP/6164/2024HC KarnatakaKAHC01010320202414 August 2024Author: S.R.KRISHNA KUMAR6 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the writ petition. The Court referred to Section 275 of the Income Tax Act, 1961, which provides a bar on proceeding to pass a penalty order if an appeal is pending on the assessment order. The Court found that the situation was identical to the case of Mr. B.S. Uday Shetty (supra), where the Court had held that it was necessary to keep the penalty orders and notices in abeyance until the disposal of the appeals filed by the assessee. Consequently, the Court ordered that the impugned penalty orders and demand notices for AY 2018-19 be kept in abeyance until the disposal of the appeals filed by the petitioner. Liberty was granted to the respondents to proceed further upon the disposal of the appeals.

What were the facts?

The petitioner, Anjanadri Fuel Station, represented by its partner, filed a writ petition before the High Court of Karnataka. The petition challenged penalty orders under Section 270A and Section 272A(1)(d) of the Income Tax Act, 1961, along with demand notices, all dated September 18, 2023, and October 13, 2023, respectively, for Assessment Year 2018-19. The petitioner's grievance was that these penalty and demand notices were issued despite an appeal against the original assessment order for AY 2018-19 being pending before the appellate authority. The petitioner had filed this appeal on May 12, 2023.

What were the issues?

1. Whether the issuance of penalty orders and demand notices under Sections 270A and 272A(1)(d) of the Income Tax Act, 1961, is legally valid when an appeal against the underlying assessment order for AY 2018-19 is pending before the appellate authority? Assessee's contention: The petitioner argued that since an appeal against the assessment order was pending, the penalty orders and demand notices should be kept in abeyance until the disposal of the appeal. They relied on the High Court's decision in Mr. B.S. Uday Shetty Vs. The Assistant Commissioner of Income Tax. Revenue's contention: The respondents contended that the impugned penalty orders are themselves appealable orders. Therefore, keeping them in abeyance until the disposal of the appeal against the assessment order would not be appropriate in the given facts and circumstances, and the petition lacked merit.

Which sections of the Income-tax Act were involved?

Section 270A,Section 272A(1)(d),Section 156,Section 275

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF AUGUST, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 6164 OF 2024 (T-IT) BETWEEN:

ANJANADRI FUEL STATION, REPRESENTED BY ITS PARTNER, HANUMANTH RAO, S/O SRI SHANKAR RAO, AGED ABOUT 39 YEARS, R/A NO.109, DURGAPARAMESHWARI NAGAR, KEREPALYA, HOSAKEREHALLI, BANASHANKARI 3RD STAGE, BENGALURU-560 085. HAVING ITS OFFICE AT SY NO.28/2, KATHA NO. 349/348/308/434, AMRVTHANG MANI ROAD, KONANKUNTE, BENGALURU-560 062. PAN NO.ABHFA9006E …PETITIONER (BY SRI. BALRAM R. RAO, ADVOCATE)

AND:

1.

INCOME TAX OFFICER, WARD 3(2)(1), BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU-560 095.

2.

DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 3(1)(1), BMTC BUILDING, 80FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU-560 095. …RESPONDENTS (V.C.O DATED 14.06.2024, BY SRI.M TIRUMALESH, ADVOCATE)

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

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO DIRECT 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 SEC 270A OF ACT DTD 18.09.2023 IN DIN ITBA/PNL/F/270A/2023- 24/1056251767(1) (ANNEXURE-G) AND NOTICE OF DEMAND ISSUED U/S

OF THE ACT DTD IN ITBA/PLN/S/156/2023-24/1056249880(1) (ANNEXURE-G1) FOR THE AY 2018-19 AND IMPUGNED ORDER UNDER SEC 272A(1)(d) OF ACT DTD 13.10.2023 IN AND ORDER NO. ITBA/PNL/F/272A(1)(d)/2023-24/1057044932(1) (ANNEXURE-H) AND NOTICE OF DEMAND ISSUED U/S 156 OF THE ACT DTD 13.10.2023 IN DIN ITBA/PNL/S/156/2023-24/1057041710(1) (ANNEXURE-H1) FOR THE AY 2018-19 AND ETC.,

THIS WRIT PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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

ORAL ORDER

In this petition, the 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 270A of Act dated DIN:ITBA/PNL/F/270A/2023-24/ 1056251767(1) (Annexure-G) and Notice of Demand issued u/s 156 of the Act dated 18.09.2023 in DIN ITBA/PLN/S/156/2023-24/1056249880(1) (Annexure-G1) for the AY 2018-19 and impugned order under Section 272A(1)(d) of Act dated 13.10.2023 in DIN and Order No.

ITBA/PNL/F/272A(1)(D)/2023-24/1057044932(1) (Annexure-H) and Notice of Demand issued u/s 156 of the Act dated 13.10.2023 DIN:ITBA/PNL/S/156/2023- 24/1057041710(1) (Annexure-H1) for the AY 2018-19.

(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 270a of Act dated DIN: ITBA/PNL/F/270A/2023-24/ 1056251767(1) (Annexure-G) and Notice of Demand issued u/s 156 of the Act dated 18.09.2023 in DIN: ITBA/PNL/S/156/2023-24/1056249880(1) (Annexure-G1) for the AY 2018-19 and impugned order under Section 272A(1)(D) of Act dated 13.10.2023 in DIN and Order No. ITBA/PNL/F/272A(1)(D)/2023-24/1057044932(1) (Annexure-H) and Notice of Demand issued u/s 156 of the Act dated 13.10.2023 in DIN: ITBA/PNL/S/156/2023- 24/1057041710(1) (Annexure-H1) for the Ay 2018-19

(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 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 270A of Act dated ITBA/PNL/F/270A/2023-24/1056251767(1) (Annexure-G) and Notice of Demand issued u/s 156 of the Act dated

DIN: ITBA/PNL/S/156/2023- 24/1056249880(1) (Annexure-G1) for the AY 2018-19 and impugned order under Section 272A(1)(D) of Act dated 13.10.2023 in DIN and Order No. ITBA/PNL/F/272A(1) (D)/2023-24/1057044932(1) (Annexure-H) and Notice of Demand issued u/s 156 of the Act dated 13.10.2023 in DIN: ITBA/PNL/S/156/2023-24/1057041710(1) (Annexure- H1) for the AY 2018-19 of the Act for the Assessment Year 2015-16 passed by Respondents.

(iv) Grant the interim relief in terms of prayer (iii) above, and (v) Issue such other order, writ or direction as this Hon’ble Court deems fit.”

2.

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

3.

In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner submits that aggrieved by the Assessment Order dated 30.03.2023 passed by the respondents for the Assessment Year 2018-19, the petitioner filed an appeal on 12.05.2023. It is the grievance of the petitioner that despite pendency of the appeal before the Appellate Authority, the respondents have proceeded to issue penalty notice and show- cause notice followed by the impugned penalty orders and demand

notice, which are assailed in the present petition inter alia contending that since the appeals were pending, it would be necessary to keep the penalty orders and demand notices in abeyance till disposal of the appeals as held by this Court in the case of Mr. B.S. Uday Shetty Vs. The Assistant Commissioner of Income Tax - W.P.No.8585/2022 dated 21.04.2022.

4.

Per contra, learned counsel for the respondents submits that even the impugned penalty orders are appealable orders and as such, keeping the penalty orders and demand notice in abeyance till disposal of the appeal would not arise in the facts and circumstances of the instant case and as such, there is no merit in the present petition and the same is liable to be dismissed.

5.

A perusal of Section 275 of the I.T. Act will indicate that there is clear embargo/bar on proceeding to pass penalty order if an appeal is pending on the Assessment Order. As rightly contended by the learned counsel for the petitioner in B.S. Uday Shetty’s case (supra), under identical circumstances, where the petitioner-Assessee did not file an appeal against the Original Assessment Order, this Court came to the conclusion that till disposal of the appeals filed by the Assessee, it is necessary to

keep the penalty orders and notices in abeyance. In view of the aforesaid facts and circumstances and the judgment of this Court in B.S. Uday Shetty’s case (supra), rendered under identical circumstances, the present petition also deserves to be disposed of keeping penalty orders and demand notices in abeyance till disposal of the appeals filed by the petitioner.

6.

In the result, I pass the following: ORDER i. The Writ Petition is allowed. ii. The impugned orders at Annexures-G and H dated 18.09.2023 and 13.10.2023 respectively, and the demand notices at Annexure-G1 and H1 dated 18.09.2023 and 13.10.2023 are hereby kept in abeyance till disposal of the appeals filed by the petitioner. iii. Liberty is reserved in favour of the respondents to proceed further upon disposal of the appeals filed by the petitioner.

Sd/- (S.R.KRISHNA KUMAR) JUDGE

BMC List No.: 1 Sl No.: 39

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