By Sri.m.v.seshachala, Senior Counsel Forsri. Aravind v. Chavan, Advocate

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27 DAY OF MARCH, 2018 BEFORE, THR HON’BLE MRS.JUSTICEKE S.SUJATHA WRIT PETITION Nos.12789;12'7790/2018 ;IT) BETWEEN M/s. Charishma Hotels Pvt. Ltd., sy.No.90/4, Hotel Park Plaza,Marathahalli Outer Ring Road,Munnekollalu,Bengaluru — 560 037.Rep. by its Managing DirectorSri. Austin Roach| ....Petitioner (By Sri.M.V.Seshachala, Senior Counsel forsri. Aravind V. Chavan, Advocate) AND: 1.|The Income Tax Officer,Ward — 2(1)(3),Room No.207,2[3,]Floor, BMTC Building,7['!]Block, 80 Feet Road,Koramangala,Bengaluru — 560 O95. 2.|The Commissioner of Income Tax (Appeals) — 2, BMTC Building,T['!]Floor, 80 Feet Road,7['!]Block, Koramangala,Bengaluru — 560 O95. -D- 3.|The Principal Commissioner of Income Tax,Bengaluru — 2,6[th|]Floor, BMTC Building,|80 Feet Road,7['!]Block, Koramangala,Bengaluru — 560 O95.Bengaluru — 2,6[th|]Floor, BMTC Building,|80 Feet Road,7['!]Block, Koramangala,Bengaluru — 560 O95. .... Respondents (By Sri.Jeevan J. Neeralgi, Advocate) These writ petitions are filed under Articles 226 &227 of the Constitution of India, praying to direct therespondent No.2 to consider and dispose of the Appeals.for the Assessment years 2012-13 and 2015-16 pendingbefore him within a period of two months and to quashthe interim order passed by the respondent No.1 dated07.02.2018 produced as Annexure -—- K and date12.03.2018 produced as Annexure — M and reconsiderin accordance with CBDT Circular and the judgment ofthis Court and etc. These writ petitions coming on forpreliminaryhearingthis day, the Court made the following; ORDER Learned Counsel Sri. Jeevan J. Neeralgi, accepts notice on behalf of respondents.| 2 |The petitioner has challenged the interim order passed by the l[ ']respondent on O7.02.2018|marked at Annexure-K to the Writ Petition as well as theorder passed by the 1[ ']respondent dated 12.03.2018 marked at Annexure-M to the writ petition, 1nter aliaseeking for a direction to the 2[3,]respondent to considerand dispose of the appeals for the assessment years2012-2013 and 2015-2016 pending before him within aperiod of two months. 3.|Petitioner is an assessee being assessed as.per the provisions of Income Tax Act, 1961 (hereinaiterreferred to as ‘Act’ for short). It is a company registeredunder the Companies Act, 1956. The assessee claimsdeduction under Section 35AD of the Act, of the entirecapital of Rs.118,74,31,816/-. Assessments for theassessment year 2012-13 were concluded rejecting theclaim of the petitioner for the deduction under SectionSOAD of the Act. Aggrieved by the same, petitionerpreferred an appeal before Commissioner of Income Tax(Appeals)-2, Bengaluru (hereinafter referred to as‘CIT(A)’ for short), for the assessment year 2012-2013. 4On30.03.2016,AssessmentorderWaSpassed for the assessment year 2013-14 declining themandatory depreciation under Explanation 5 to Section32(1) of the Act. Aggrieved by the same, appeal was.preferred before the CIT(A) on 29.01.2018. It appears,on 07.02.2018, application for interim stay of recoveryfor assessment year 2015-16 got disposed of with aconditional order to pay 20% of the demand made bythe Assessing Officer. The same was confirmed by thePrincipal Commissioner of Income Tax. Being aggrievedby the said orders of the Assessing officer as well as theCommissioner of Income Tax directing the petitioner tomake payment of 20% of the demand as well as theappeals not being disposed of by the AppellateAuthority-CIT(A), the petitioner is before this Court.| 5.|Learned Senior Counsel Sri.M.V.Seshachala|appearing for the petitioner-assessee submitted that theparameters set out in the Circular No.1914 issued by 5.|Learned Senior Counsel Sri.M.V.Seshachala|appearing for the petitioner-assessee submitted that theparameters set out in the Circular No.1914 issued by the CBDT has not been properly appreciated by theAssessing Officer as well as the Principal Commissionerof Income Tax, while directing the petitioner to make20% of the demand. Inviting the attention of this Courtto Instruction No.4(B) and 4(C) of the Circular 1914, thelearned counsel submitted that in a case where stay ofdemand is granted by the Assessing Officer on paymentof 20% of the disputed demand and the assessee is stillagerieved,he.approachthe.jurisdictionaladministrativePrincipalCommissionerot IncomeTax/CIT for a review of the decision of the Assessingofficer. Since the petitioner was aggrieved by the orderof the Assessing officer directing him to deposit 20% ofthe demand amount, Review petition was filed beforethe Principal Commissioner of Income Tax, which cameto be rejected by the Income Tax Officer. The order ofrejection by the Income Tax Officer dated 12.03.2018 atAnnexure-M is null and void as the Income Tax Officer|has no competency to decide the review petition. Whereas the Principal Commissioner of Income tax isthe competent authority to decide the review petition.That being so, the order at Annexure-M deserves to bequashed. It is further submitted that at the firstinstance Income Tax Officer mechanically passed orderat Annexure-K dated O7.02.2018 contrary to theCircular instructions namely Circular No.1914. The twoimportant factors mentioned in Circular No.1914 iswhether the assessment order suffers from being“unreasonably highpitched”' or whether“any genuinehardship would be caused to the assessee”'in case the'assessee were required to deposit 20% of the disputeddemand amount or not, has not been examined.Without assigning any reasons, the Income Tax Officerdirected the petitioner-assessee to deposit 20% of thedemand amount which isab-initio,void and illegal. In|support of his contention, the learned Senior Counselplaced reliance on the order passed by this Court in thecase ot.Flipkart India Private Limited Vs. The. Assistant Commissioner of Income Tax and othersin W.P.Nos.1339-1342/2017 (T-IT} 6. It is the contention ot the Learned Senior|counsel appearing for the petitioner that in terms ofsection 250 (6A) of the Act, appeal filed by the assesseebefore the Appellate Authority-CIT(A) requires to bedisposed of within a period of one year from the end ofthe financial year in which the appeal has been filedbefore the Appellate Authority. Though the appeal wasfiled on 29.04.2015 relating to the assessment yearAO1LPI-VO1andOTL290.01.2701relatingTO the.assessment year 2015-16, both involving the same issuerelating to the depreciation under Explanation 95 ofsection 32(1) of the Act and deduction under SectionSOAD, non-disposal of the appeals by the AppellateAuthority within the reasonable time has causedhardship to the assessee to face the demand made by the respondent-authorities where huge tax lability iscreated without valid basis. TS|Learned Counsel Sri.Sanmathi would fairlysubmit that Annexures K and M are not passed inaccordance|with|law.andthe.Sarmmrequiresreconsideration. As regards the other contentions of thelearned Senior Counsel, it was submitted that the.Appellate Authority shall dispose of the appeals inaccordance with law and no directions are warranted. 8.|Heard the learned counsel for the parties|and perused the materials on record. QO Annexures K and M deserves to be set-aside|for the reason that no speaking order is passed by theauthorities while directing the petitioner-assessee todeposit 20% of the demand amount, mechanicallyreferringTO CBDTinstructionNo.1914dated|21.03.1996. In the light of the judgment of this Courtin the case otFlipkart India Private Limitedoreferred| TS|Learned Counsel Sri.Sanmathi would fairlysubmit that Annexures K and M are not passed inaccordance|with|law.andthe.Sarmmrequiresreconsideration. As regards the other contentions of thelearned Senior Counsel, it was submitted that the.Appellate Authority shall dispose of the appeals inaccordance with law and no directions are warranted. 8.|Heard the learned counsel for the parties|and perused the materials on record. QO Annexures K and M deserves to be set-aside|for the reason that no speaking order is passed by theauthorities while directing the petitioner-assessee todeposit 20% of the demand amount, mechanicallyreferringTO CBDTinstructionNo.1914dated|21.03.1996. In the light of the judgment of this Courtin the case otFlipkart India Private Limitedoreferred| Supra, the Income Tax Officer i.e. the AssessingAuthority has to examine the applicability of theinstructions of Circular No.1914 in as much as whether|theassessment|1S|“unreasonablyhighpitched”OTwhether“any genuine hardship would be caused to theassessee” in casethe assessee were required to deposit|20% of the disputed demand amount. Without anyapplication of mind, the Assessing Authority hasdemanded 20% of the demand amount while disposingof the said application. Surprisingly, though the reviewpetition was filed before the Principal Commissioner ofIncome tax, Income Tax Officer has passed the orderwhich is wholly without jurisdiction. It is well settledlaw that any order passed without jurisdiction is nullityand not valid in the eye of law. Hence, for these reasons,Annexures K and M cannot be sustained, accordinglyquashed. Matter is remitted to respondent No.1 to re-consider the application for stay in accordance with lawin an expedite manner. 10.|As regards the pendency of appeals beforethe Appellate Authority-CIT(A), ordinarily this Courtwould not have ventured to direct the AppellateAuthority to dispose of the appeals within a time frame.But, considering the totality of the circumstances of thecase, this Court is of the considered opinion that justicewolullbe|sub-served|in.directingtheAppellateAuthority-CIT(A) to dispose of the appeals filed by thepetitioner for the assessment years 2012-13 and 2015-16 in accordance with law, in an expedite manner, inany event not later than six months from the date ofreceipt of certified copy of this order. With the aforesaid observations, Writ petitionsstand disposed of. SV| Sd/-. JUDGE|