LENOVA (INDIA) PRIVATE LIMTED vs. DEPUTY COMMISSIONER OF INCOME TAX

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WP/8984/2022HC KarnatakaKAHC01020391202212 August 2022Bench: S.R.KRISHNA KUMAR6 pages
AI SummaryAllowed

What did the High Court hold?

The tribunal held that the penalty order was passed on an erroneous ground as the appeal was still pending. Consequently, the penalty order and demand notice were quashed.

What were the facts?

The petitioner's appeal against an assessment order was pending before the ITAT. Despite this, the Assessing Officer passed an order levying penalty under Section 271(1)(c) on the erroneous premise that the appeal had been dismissed.

What were the issues?

Whether penalty proceedings under Section 271(1)(c) can be initiated and finalized when the assessee's appeal against the assessment order is still pending adjudication.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274,Section 156

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF KARNATAKA, BENGALURU

DATED THIS THE 12TH DAY OF AUGUST, 2022

BEFORE

THE HON'BLE MR.JUSTICE S.R.KRISHNA KUMAR

WRIT PETITION No.8984 OF 2022 (T-IT)

BETWEEN:

LENOVA (INDIA) PRIVATE LIMTED RBD ICON LEVEL- 2, DODDANEKUNDI VILLAGE MARATHAALLI OUTER RING ROAD BANGALORE - 560037 REPRESENTED HEREIN BY ITS MANAGER DIRECT TAXES MR AMITH H RAJA

…PETITIONER (BY SRI. TANMAYEE RAJKUMAR., ADVOCATE FOR SRI. DILIP., ADVOCATE)

AND:

1 . DEPUTY COMMISSIONER OF INCOME TAX

NATIONAL E ASSESSMENT CENTRE ROOM NO 401

2ND FLOOR , E RAMP

JAWAHARLAL NEHRU STADIUM

DELHI – 110003.

2 . DEPUTY COMMISSIONER OF INCOME TAX

CIRCLE 4 (1) (1) BMTC BUILDING KORAMANGALA

BANGALORE – 560095.

3 . ADDITIONAL COMMISSIONER OF INCOME TAX

NATIONAL E - ASSESSMENT CENTRE

ROOMNO 401 2ND FLOOR E -RAMP

JAWAHARLAL NEHRU

STADIUM DELHI – 110 003.

4 . PRINCIPAL COMMISSIONER OF INCOME TAX - 2

BMTC BUILDING ,80 FEET ROAD KORAMANGALA

BENGALURU - 560095

…RESPONDENTS (BY SRI. K.V.ARAVIND., ADVOCATE FOR R- TO R-3) (V/O/DT: 28.04.2022)

2 THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED: 31.03.2022 ANNEXURE-M PASSED BY R-1 UNDER SECTION 271(1) (C) OF THE ACT FOR THE ASSESSMENT YEAR 2016-2017.

THIS W.P. COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:-

ORDER In this petition, the petitioner has sought for the following reliefs: a) Quashing of the order dated 31.03.2022 bearing DIN ITBA/PNL/F/271(1)(c)/2021- 22/1042378796(1) (Annexure-M) passed by the 1st Respondent under Section 271(1)(c) of the Act for the assessment year 2016-17. b) Quashing the demand notice dated 31.03.2022 (Annexure-N) bearing DIN ITBA/PNL/S/156/2021-22/1042328424(1) issued by the 1st Respondent under Section 156 of the Act for the assessment year 2016- 17; c) Directing the Respondents to keep the penalty proceedings initiated vide notice bearing DIN No.ITBA/PNL/271(1)(c)/2021- 22/1032713437(1) dated 28.04.2021 under Sections 274 read with Section 271(1)(c) of the Act (Annexure-C), in abeyance, until disposal of the Petitioner’s appeal against the assessment order dated 28.04.2021 by the Income-tax Appellate Tribunal; and

3 d) Pass such other or further orders as this Hon’ble Court may deem fit in the facts and circumstances of the case, in the interests of justice and equity.

2.

Heard learned counsel for the petitioner, learned counsel for respondent Nos.1 to 3 and perused the material on record.

3.

The material on record discloses that aggrieved by the draft Assessment Order dated 31.12.2019, passed by the Assessing Officer, petitioner filed its objections before the Dispute Resolution Panel (DRP) which confirmed the additions made by the Assessing Officer on 04.03.2021, pursuant to which, respondent No.1 passed the Final Assessment Order on 28.04.2021 and issued a notice dated 11.06.2021 proposing to levy penalty under Section 274 r/w. 271(1)(c) of the Income Tax Act, 1961 (for short “the I.T. Act”).

4.

The petitioner preferred an appeal before the Income Tax Appellate Tribunal (ITAT) on 25.06.2021. Subsequently, respondent No.1 issued a notice to the petitioner on 23.07.2021, calling upon the petitioner to

4 inform the status of the appeal and to provide reasons as to why penalty should not be levied. In response thereto, petitioner sent its reply dated 22.03.2022 requesting the respondents to drop the penalty proceedings or atleast keep the same in abeyance till disposal of the appeal. It is the grievance of the petitioner that despite the aforesaid facts and circumstances, respondent No.1 has proceeded to pass the impugned order and issue the impugned demand notice both dated 31.03.2022 levying penalty upon the petitioner on the erroneous premise/basis that the appeal filed by the petitioner had been disposed of without appreciating that the appeal was still pending adjudication, despite which the respondents are proceeding to enforce and implement the impugned order and demand notice and as such, petitioner is before this Court by way of the present petition.

5.

Per contra, learned counsel for the respondents submits that there is no merit in the petition and that the same is liable to be dismissed.

6.

As rightly contended by the learned counsel for the petitioner, respondent No.1 has proceeded to pass the impugned order dated 31.03.2022 and imposed penalty upon the petitioner under Sec.271(1)(c) of the I.T. Act on the erroneous premise/ground that the appeal preferred by the petitioner had been dismissed without appreciating the material on record including the latest status of the appeal, which clearly establishes that the appeal is still pending adjudication as on today and consequently, the impugned order and notice passed/issued by respondent No.1 deserves to be quashed and the same are to be directed to be kept in abeyance till disposal of the appeal.

6.

In the result, I pass the following:- ORDER

(i) Petition is hereby allowed.

(ii) The impugned penalty order at Annexure-M dated 31.03.2022 and the impugned demand notice at Annexure- N dated 31.03.2022 are hereby quashed.

(iii) The respondents are directed to keep the penalty proceedings in abeyance till the disposal of the appeal

6 preferred by the petitioner before the appellate authority and the same attaining finality in accordance with law.

Sd/- JUDGE

Srl/Bmc

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