NIKE INDIA PRIVATE LIMITED vs. ADDITIONAL/JOINT/DEPUTY/ASSISTANT

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WP/9031/2022HC KarnatakaKAHC01020458202212 August 2022Bench: S.R.KRISHNA KUMAR5 pages
AI SummaryAllowed

What did the High Court hold?

The High Court found that the penalty order was passed on an erroneous premise as the appeal was still pending. Consequently, the impugned penalty order and demand notice were quashed.

What were the facts?

The petitioner's appeal before the ITAT was pending, but the respondent issued a penalty order under Section 271(1)(c) based on the erroneous assumption that the appeal had been dismissed. The petitioner sought to quash this penalty order and demand notice.

What were the issues?

Whether a penalty order under Section 271(1)(c) can be levied when the related appeal is still pending before the appellate authority. The validity of a penalty order passed on a mistaken premise about the status of an appeal.

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. 9031 OF 2022 (T-IT)

BETWEEN:

NIKE INDIA PRIVATE LIMITED NO.66/1,GROUND AND 1ST FLOOR OLYMPIA BUILDING, BAGMANE TECH PARK CV RAMAN NAGAR, BANGALORE RPERESENTED HEREIN BY ITS SENIOR TAX MANAGER MR NAGARAJ S

…PETITIONER (BY SMT.TANMAYEE RAJKUMAR., ADVOCATE)

AND:

1.

ADDITIONAL/JOIN/DEPUTY/ASSISTANT

COMMISSIONER OF INCOME TAX

NATIONAL E- ASSESSMENT CENTRE

ROOM NO. 401, 2ND FLOOR, E-RAMP

JAWAHARLAL NEGRU STADIUM

DELHI – 110 003.

2.

DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-3(1) (1)

BMTC BUILDING,80 FEET ROAD., KORAMANGALA

BENGALURU – 560 095.

3.

PRINCIPAL COMMISSIONER OF INCOME TAX-2

BMTC BUILDING, 80 FEET ROAD

KORAMANGALA

BENGALURU – 560 095.

…RESPONDENTS (BY SRI. E.I.SANMATHI., ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DTD: 01.04.2022 PASSED BY THE R-1 UNDER SECTION 271(1) (C) OF THE ACT FOR THE ASSESSMENT YEAR 2015-16 AND ETC.

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

2 ORDER In this petition, the petitioner has sought for the following reliefs: a) Stay the operation of the demand notice dated 31.03.2022 bearing No.ITBA/PNL/S/156/2022- 23/1042390118(1) (Annexure-K) issued by the 1st Respondent under Section 156 of the IT Act for the assessment year 2015-16 during the pendency of this writ petition. b) Pass an exparte order in terms of VI.1(a) above; and c) 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 and learned counsel for the respondents and perused the material on record.

3.

The material on record discloses that aggrieved by the draft Assessment Order dated 18.10.2019, 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 05.02.2021, pursuant to which, respondent No.1 passed the Final Assessment Order and

3 issued a notice 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 25.05.2021. Subsequently, respondent No.1 issued a notice on 05.07.2021 calling upon the petitioner to 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 12.07.2021 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 issue show-cause notice and demand notice dated 31.03.2022 followed by the impugned order dated 01.04.2022 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

4 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 01.04.2022 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.

7.

In the result, I pass the following:-

5 ORDER (i) Petition is hereby allowed. (ii) The impugned penalty order at Annexure-J dated 01.04.2022 and the impugned demand notice at Annexure- K 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 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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