M/S SRI DEVARAJ URS EDUCATIONAL TRUST vs. THE ASSISTANT COMMISSIONER OF INCOME-TAX

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WP/24243/2018HC KarnatakaKAHC01055969201803 December 2019Bench: S.SUJATHA5 pages
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What did the High Court hold?

The High Court directed the Commissioner of Income Tax (Appeals) to dispose of the pending appeal expeditiously, within twelve weeks. The penalty notice issued under Section 271AAB was kept in abeyance until the disposal of the appeal.

What were the facts?

The petitioner, an educational trust, filed a writ petition seeking to prevent the Assistant Commissioner from passing a penalty order under Section 271AAB of the Income Tax Act until their appeal against the assessment order was disposed of. The petitioner argued that the penalty notice was issued without jurisdiction.

What were the issues?

Whether penalty proceedings under Section 271AAB should be stayed pending appeal against the assessment order. The jurisdiction of issuing the penalty notice during the pendency of an appeal.

Which sections of the Income-tax Act were involved?

Section 271AAB,Section 132,Section 12A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF DECEMBER, 2019 BEFORE: THE HON’BLE MRS. JUSTICE S.SUJATHA WRIT PETITION No.24243/2018 (T – IT) BETWEEN:

M/s SRI DEVARAJ URS EDUCATIONAL TRUST FOR BACKWARD CLASSES (REGD.) REP BY ITS TRUSTEE SRI J.RAJENDRA AGED ABOUT 59 YEARS, S/O R.L.JALAPPA, TAMAKA, KOLAR - 563 103.

... PETITIONER

[BY SRI V.CHANDRASHEKAR & SRI M.LAVA, ADVS.]

AND:

THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE -1(4) #306, 3RD FLOOR, CENTRAL REVENUE BUILDING QUEENS ROAD, BENGALURU - 560 001. …RESPONDENT

[BY SRI K.V.ARAVIND, ADV.]

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA, PRAYING TO DIRECT THE RESPONDENT NOT TO PASS THE PENALTY ORDER UNDER SECTION 271AAB OF THE INCOME TAX ACT, 1961, TILL DISPOSAL OF THE APPEAL BY THE APPELLATE AUTHORITIES AGAINST THE ASSESSMENT ORDER PASSED FOR THE ASSESSMENT YEAR 2016-2017.

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

- 2 - O R D E R

Heard the learned counsel for the parties.

2.

The petitioner has sought for a direction to the respondent not to pass penalty order under Section 271AAB of the Income Tax Act, 1961 (‘Act’ for short) till the disposal of the appeal by the Appellate Authority for assessment year 2016-17, inter alia, seeking for a declaration that the notice issued under Section 271AAB of the Act at Annexure – A is without jurisdiction.

3.

The petitioner - Trust is an assessee under the provisions of the Act. It is contended that the Trust has established educational institutions and is registered under Section 12A of the Act; the returns of income are filed regularly and is being assessed to tax. A search under Section 132 of the Act was conducted on 06.08.2015, the statements were recorded from various persons. Pursuant to which the respondent has

- 3 - passed the assessment order relating to the assessment year in question and initiated penalty proceedings under Section 271AAB of the Act.

4.

It is submitted that the petitioner being aggrieved by the assessment order has filed an appeal before the Appellate Authority – Commissioner of Income Tax (Appeals) which is pending. It is the grievance of the petitioner that despite the request made to keep the penalty proceedings in abeyance till the disposal of the appeal before the Appellate Authority, the respondent is proceeding with the same. Hence, the present writ petition.

5.

Learned counsel for the petitioner would submit that the notice impugned at Annexure – A is without jurisdiction. During the pendency of the appeal proceedings, the penalty proceedings ought not to have been initiated under Section 271AAB of the Act.

- 4 -

6.

However, learned counsel for the parties have no objection to dispose of the writ petition with a direction to the Appellate Authority to dispose of the appeal pending against the order of the assessment dated 30.12.2017 in an expedite manner.

7.

In view of the aforesaid and the prayer of the petitioner being the same, this Court is of the considered view that the interest of justice would be sub-served in directing the Commissioner of Income Tax (Appeals) – 11, Bengaluru to dispose of the appeal in ITA No.220/CIT (A) – 11/Bengaluru/2017-18 in accordance with law in an expedite manner, in any event, not later than twelve weeks from the date of receipt of certified copy of the order. Ordered accordingly.

Till the disposal of the appeal, the penalty notice impugned herein dated 30.12.2017 at Annexure – A is kept in abeyance.

- 5 -

The writ petition stands disposed of in terms of the above.

Sd/- JUDGE

PMR

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