The Kerala High Court directed the Income tax department to decide the condonation application for 277 days in filing the Income tax Appeal and the stay application.
M/S Sheikh Sons, the petitioner filed a petition to issue a writ of mandamus directing the 2nd respondent, CIT (Appeals), National Faceless Assessment Centre, Delhi to consider and pass an order on Appeals and stay petitions for the AY 2017-18, as expeditiously as possible, at any rate within a time limit as may be fixed by the Court.
Further prayed to issue a writ of mandamus directing the respondents/income tax department not to take any further proceedings based on the assessment order and penalty order for the AY 2017-18 pending final disposal of and statutory first appeals and stay petitions by the 3rd respondent.
The petitioner is a partnership firm constituted for the purchase and sale of land, buildings etc. The petitioner did not file a return of its income for the assessment year 2017-2018. The petitioner was issued with a notice under Section 142(1) of the Income Tax Act, 1961 (‘Act, 1961’) for the assessment year 2017-2018. Thereafter, an assessment order dated 22.03.2022 was issued under Section 147 read with Sections 144 and 144B of the Act, 1961 making huge additions and determining the total income as Rs.4,28,41,120/-. The penalty proceedings were also initiated against the petitioner and the petitioner was imposed with a penalty at the rate of 200% of the assessed tax under section 270A of the Act, 1961 i.e., Rs.1,97,68,606/-, as is evident from the impugned order dated 27.09.2022.
The petitioner filed the appeal with a delay of 277 days challenging the assessment order. Against the penalty order, an appeal was filed on 25.01.2023. The appeals were filed with a huge delay of 277 and 276 days respectively. The petitioner has also filed stay applications along with appeals.
The counsel for the petitioner submitted that the appellate authority has not passed any order on the application for condonation of delay or the stay application filed along with appeals.
Further stated that, as per CBDT Circular dated 29.02.2016, if the assessee deposits 20% of the assessed tax and penalty amount, there would be an interim order till the disposal of the appeals. The said circular is not binding on the appellate authority, the same being the quasi-judicial authority. Despite the above circular, the appellate authority, being the quasi-judicial authority, may grant the interim order.
The Supreme Court in the case of Principal Commissioner of Income Tax Vs. LG Electronics India Pvt. Ltd. held that the administrative circular will not operate as a fetter on the power of the appellate authority to exercise its discretion for order on deposits or consideration of facts of the particular case.
In that view of the matter, the Supreme Court has clarified that in all the cases where the appeal is filed, it will be open to the authorities, on the facts of individual cases, to grant deposit orders of a lesser amount than 20%, pending appeal.
It was viewed that the Supreme Court has not said that no amount would be liable to be deposited for granting an interim order. The Supreme Court has only clarified that the appellate authority may issue an order for depositing less than 20% tax amount depending on the facts of the particular case.
The single judge bench of Justice Dinesh Kumar Singh disposed of the writ petition with a direction to the 3rd respondent to take up the application for condonation of delay and if the delay is condoned, then decide the application for staying the demand in pursuance to the assessment order. The third respondent is granted one month to decide the application for condonation of delay and application for stay.
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