Kamal Kumar Kothari, Son Of Shri Bhanwar Singh Kothari, Agedabout 64 Years, Resident Of 501, Panchratna Building, M.s.b. Karasta, Johri Bazar, Jaipur v. Joint Commissioner Of Income Tax, Central Circle, Jaipur,New Central Revenue Building, Bhagwan Dass Road,Statue Circle, Jaipurnew Central Revenue Building, Bhag

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 15187/2024 Kamal Kumar Kothari, Son Of Shri Bhanwar Singh Kothari, AgedAbout 64 Years, Resident Of 501, Panchratna Building, M.s.b. KaRasta, Johri Bazar, Jaipur ----Petitioner Versus 1. Assistant Commissioner Of Income Tax, Central Circle-2,Jaipur Having Its Address At Room No. 403, 4Th Floor,Jeevan Nidhi-2, Lic Building, Ambedkar Circle, JaipurJaipur Having Its Address At Room No. 403, 4Th Floor,Jeevan Nidhi-2, Lic Building, Ambedkar Circle, Jaipur 2. Joint Commissioner Of Income Tax, Central Circle, Jaipur,New Central Revenue Building, Bhagwan Dass Road,Statue Circle, JaipurNew Central Revenue Building, Bhagwan Dass Road,Statue Circle, Jaipur ----Respondents For Petitioner(s) : Mr. Siddharth Ranka with Mr. Rohan ChatterMr. Rohan ChatterFor Respondent(s): Mr. Siddharth Bapna with Mr. Meyhul MittalMr. Meyhul Mittal HON'BLE THE CHIEF JUSTICE MR. MANINDRA MOHAN SHRIVASTAVA HON'BLE MR. JUSTICE ASHUTOSH KUMAR Order 10/12/2024 1.When this case was listed on 28.11.2024, this Court noticedthe point arising for consideration in the case as to whether theorder of assessment having been assailed in the appeal, duringthe pendency of the appeal, penalty proceedings could continue. 2.Learned counsel for the petitioner, relying upon theprovisions contained in Section 275(1)(a) of the Income Tax Act,1961 (for short ‘the Act of 1961’) would submit that once anappeal is preferred, penalty proceedings have to be kept inabeyance as mandated by law and penalty proceedings could not proceed. The alternative submission is that the satisfaction whichhas been recorded by the Assessing Authority that present is a fitcase for initiating penalty proceedings, is based on incorrectappreciation of facts and law and such finding was not warranted.He would submit that as the Appellate Authority does not havejurisdiction to stay demand created under the order passed by theAssessing Authority, this writ petition had to be filed. 3.Learned counsel for the petitioner would further submit thatunless a demand notice is actually issued against the petitioner, hemay not take recourse to the provisions contained in Section 220(6) of the Act of 1961. 4.On the other hand, learned counsel appearing for therespondent-Revenue would submit that the provisions contained inSection 275(1)(a) does not create an absolute embargo oninitiation of penalty proceedings but it only bars such proceedingsto be initiated beyond prescribed period of limitation. 5.He would next submit that even if the Appellate Authoritymay not stay the demand created under order of assessment,impugned in the appeal, the petitioner otherwise has a remedy ofmaking such application for stay of demand under Section 220 (6)of the Act of 1961. The petitioner without taking recourse to theappropriate remedy available to him under the law, has filed thiswrit petition. He would submit that as and when the demandnotices are issued, the petitioner may take recourse to appropriateremedy available under the law. 6.The writ petition filed by the petitioner seeks quashing andsetting aside of notice dated 01.07.2024 issued under Section271E of the Act of 1961, or in alternative, to keep the notice in abeyance till the outcome of the appeal pending before theCommissioner of Income Tax (Appeals). 7.The assessment order which has been impugned in theappeal, records satisfaction that present is a fit case for initiatingpenalty proceedings. 8.The question which arises for consideration is as to whetherthe provisions contained in Section 275(1)(a), per se, operates asbar to initiation of penalty proceedings once an appeal is filed. Toresolve this controversy, we need to closely look into andscrutinize the provisions contained in Section 275(1)(a) of the Actof 1961 which is extracted herein below:- abeyance till the outcome of the appeal pending before theCommissioner of Income Tax (Appeals). 7.The assessment order which has been impugned in theappeal, records satisfaction that present is a fit case for initiatingpenalty proceedings. 8.The question which arises for consideration is as to whetherthe provisions contained in Section 275(1)(a), per se, operates asbar to initiation of penalty proceedings once an appeal is filed. Toresolve this controversy, we need to closely look into andscrutinize the provisions contained in Section 275(1)(a) of the Actof 1961 which is extracted herein below:- “275. [(1)] No order imposing a penalty under thisChapter shall be passed- [(a) in a case where the relevant assessment or otherorder is the subject-matter of an appeal to the [JointCommissioner (Appeals) or to the] Commissioner(Appeals) under section 246 [or section 246A] or anappeal to the Appellate Tribunal under section 253,after the expiry of the financial year in which theproceedings, in the course of which action for theimposition of penalty has been initiated, arecompleted, or six months from the end of the monthin which the order of the [Joint Commissioner(Appeals) or the] Commissioner (Appeals) or, as thecase may be, the Appellate Tribunal is received by the[Principal Chief Commissioner or] Chief Commissioneror [Principal Commissioner or] Commissioner,whichever period expires later: [Provided that in a case where the relevantassessment or other order is the subject-matter of anappeal to the [Joint Commissioner (Appeals) or tothe] Commissioner (Appeals) under section 246 orsection 246A, and [the Joint Commissioner (Appeals)or] the Commissioner (Appeals) passes the order onor after the 1st day of June, 2003 disposing of suchappeal, an order imposing penalty shall be passedbefore the expiry of the financial year in which theproceedings, in the course of which action forimposition of penalty has been initiated, arecompleted, or within one year from the end of the financial year in which the order of [the JointCommissioner (Appeals) or] the Commissioner(Appeals) is received by the [Principal ChiefCommissioner or] Commissioner, whichever is later;]” 9.On carefully scanning through the aforesaid provision what isrevealed is that the provision creates a bar based on limitation. Itdoes not create a complete embargo on initiation of penaltyproceedings on mere filing of appeal. The bar is that if theproceedings are not initiated within the period of limitation,prescribed therein, it will be barred by limitation. Therefore, thebar is based on failure to initiate proceedings and not on merefiling of appeal. That is what flows on literal reading of theprovision. There is no warrant for us to add something more into itand to create a new bar on initiation or continuance of penaltyproceedings upon mere filing of appeal. Therefore, the submissionof learned counsel for the petitioner in this regard must fail. 10.The next submission of learned counsel for the petitioner isthat at present he is left with no remedy against penaltyproceedings, if any, initiated by issuance of a demand. Accordingto him, remedy under Section 220 (6) of the Act of 1961 could notbe taken recourse to unless a notice for initiation of penaltyproceedings or demand is issued against the petitioner. 11.We do not find any difficulty in holding that the remedyunder Section 220 (6) of the Act of 1961 would be available assoon as any demand is issued against the petitioner. There is acomplete mechanism provided under the law. Even though theAppellate Authority before whom the assessment order is underchallenge may not stay the demand which is initiated separatelyby instituting proceedings, the moment such notices are issued, 11.We do not find any difficulty in holding that the remedyunder Section 220 (6) of the Act of 1961 would be available assoon as any demand is issued against the petitioner. There is acomplete mechanism provided under the law. Even though theAppellate Authority before whom the assessment order is underchallenge may not stay the demand which is initiated separatelyby instituting proceedings, the moment such notices are issued, the provisions contained in Section 220 (6) of the Act of 1961 andthe remedy engrafted therein, becomes invocable at the instanceof the assessee. It will always be open for the assessee to moveappropriate application before the Assessing Officer and seekdeclaration in the matter of stay. 12.Learned counsel for the respondent-Revenue is right insubmitting that if the order passed by the Assessing Officer underSection 220 (6) of the Act of 1961 does not redress the grievance,an application could be preferred before the next higher authorityi.e. Commissioner, Income Tax. 13.We are of the view that at this stage, the writ remedy neednot be invoked because the petitioner does have a remedy underthe law. Whether or not in a given case, stay of demand has to beordered, would essentially be in the exercise of the discretion bythe Assessing Officer, as provided under Section 220 (6) of the Actof 1961. 14.We leave it open for the petitioner to approach theappropriate authority at an appropriate stage when the demandnotices are issued to him. 15.The writ petition is dismissed with the aforesaid observation.Pending application, if any, also stands dismissed. (ASHUTOSH KUMAR),JKAMLESH KUMAR-RAHUL/3 (MANINDRA MOHAN SHRIVASTAVA),CJ