Nc: 2025:Khc:16965 v. Additional/Joint/Deputy/Assistant Commissioner Of Income Tax – W.p

Digitallysigned byCHANDANAB MLocation:High CourtofKarnataka IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24 DAY OF APRIL, 2025 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR -WRIT PETITION NO. 12417 OF 2025 (TIT) BETWEEN: COLUD SOFTWARE GROUP INDIA PRIVATE LIMITED NO. 33, PRESTIGE DYNASTY, SIVAN CHETTY GARDENS, S.O. BANGALORE NORTH, BANGALORE 560 042 REPRESENTED HEREIN BY ITS DIRECTOR PRAGYA CHAKRABORTY. …PETITIONER (BY SRI. TANMAYEE RAJKUMAR.,ADVOCATE) AND: 1. ASSESSMENT UNIT NATIONAL FACELESS ASSESSMENT CENTRE, 2 FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, NEW DELHI 110 003. JAWAHARLAL NEHRU STADIUM, NEW DELHI 110 003. 2. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 2(2)(1), BMTC BUILDING, 6 BLOCK, 80 FEET ROAD, KORAMANGALA, BANGALORE 560 095. KORAMANGALA, BANGALORE 560 095. 3. PRINCIPAL COMMISSIONER OF INCOME-TAX - 2 BMTC BUILDING, 6 BLOCK, 80 FEET ROAD, KORAMANGALA, BANGALORE 560 095. BANGALORE 560 095. …RESPONDENTS (BY SRI. M. DILIP, AND SRI. E.I. SANMATHI, ADVOCATES) SRI. E.I. SANMATHI, ADVOCATES) THIS W.P IS FILED PRAYING TO-(A) QUASHING THE ORDER DATED 25.03.2025 (ANNEXURE H) BEARING DIN ITBA/PNL/F/270A/2024-25/1075007565(1) PASSED BY THE 1ST RESPONDENT UNDER SECTION 270A OF THE ACT FOR THE ASSESSMENT YEAR 2021-22 AND ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM:HON'BLE MR JUSTICE S.R.KRISHNA KUMAR ORAL ORDER In this petition, the petitioner seeks the following reliefs: “(a) quashing the order dated 25.03.2025 (Annexure-H) bearing DIN ITBA/PNL/F/270A/2024-25/1075007565(1) passed by the 1[st] Respondent under Section 270A of the Act for the assessment year 2021-22; (b) quashing the demand notice dated 25.03.2025 (Annexure-J) bearing DIN ITBA/PNL/S/1;56/2024-25/1075002296(1) issued by the 1[st] Respondent under Section 156 of the Act for the assessment year 2021-22; (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. A perusal of the material on record will indicate that aggrieved by the Assessment Order dated 23.10.2024, the petitioner filed an appeal on 19.12.2024, which is pending - 3 - NC: 2025:KHC:16965 adjudication. In the meanwhile, respondent No.1 issued show-cause notice dated 17.01.2025 inter alia calling upon the petitioner to show-cause as to why penalty notice under Section 279-A should not be passed against it. In response to the same, the petitioner submitted a reply dated 30.01.2025 stating/requesting penalty proceedings be kept in abeyance till disposal of the appeal by the Tribunal. Despite the aforesaid reply submitted by it and pendency of the appeal, respondent No.1 passed the impugned penalty order, which is contrary to the Section 175 of the I.T. Act and as such, the same deserves to be quashed in the light of the judgment of this Court in the case of Edgeverve Systems Limited Vs. Additional/Joint/Deputy/Assistant Commissioner of Income Tax – W.P.No.8652/2022, dated 12.08.2022. 4. Per contra, learned counsel for the respondents submits that there is no merit in the petition and the same is liable to be dismissed. 5. In the case of Edgeverve Systems Limited Vs. Additional/Joint/Deputy/Assistant Commissioner of Income Tax – W.P.No.8652/2022, dated 12.08.2022, this Court held as under: “In this petition, the petitioner has sought for the following reliefs: a) Quashing the order dated 29.03.2022 (Annexure-J) bearing DIN ITBA/PNL/F/271(1)(c) /2021-22/1041995337(1) passed by the 1[st] Respondent under Section 271(1)(c) of the Act for the Assessment year 2016-17;bearing DIN ITBA/PNL/F/271(1)(c) /2021-22/1041995337(1) passed by the 1[st] Respondent under Section 271(1)(c) of the Act for the Assessment year 2016-17; 4. Per contra, learned counsel for the respondents submits that there is no merit in the petition and the same is liable to be dismissed. 5. In the case of Edgeverve Systems Limited Vs. Additional/Joint/Deputy/Assistant Commissioner of Income Tax – W.P.No.8652/2022, dated 12.08.2022, this Court held as under: “In this petition, the petitioner has sought for the following reliefs: a) Quashing the order dated 29.03.2022 (Annexure-J) bearing DIN ITBA/PNL/F/271(1)(c) /2021-22/1041995337(1) passed by the 1[st] Respondent under Section 271(1)(c) of the Act for the Assessment year 2016-17;bearing DIN ITBA/PNL/F/271(1)(c) /2021-22/1041995337(1) passed by the 1[st] Respondent under Section 271(1)(c) of the Act for the Assessment year 2016-17; b) Quashing the demand notice dated 29.03.2022 (Annexure-K) bearing DIN ITBA/PNL/S/156/ 2021-22/1041992914(1) issued by the 1[st]Respondent under Section 156 of the Act for the assessment year 2016-17. (Annexure-K) bearing DIN ITBA/PNL/S/156/ 2021-22/1041992914(1) issued by the 1[st]Respondent under Section 156 of the Act for the assessment year 2016-17. c) Directing the Respondents to keep the penalty proceedings initiated vide notice bearing DIN No.ITBA/PNL/S/271(1)(c)/2019-20/10230355 47(1) dated 24.12.2019 under Sections 274 read with Section 271(1)(c) of the Act (Annexure-B), in abeyance, until disposal of the Petitioner’s appeal against the assessment order dated 24.12.2019 by the CIT(A); and proceedings initiated vide notice bearing DIN No.ITBA/PNL/S/271(1)(c)/2019-20/10230355 47(1) dated 24.12.2019 under Sections 274 read with Section 271(1)(c) of the Act (Annexure-B), in abeyance, until disposal of the Petitioner’s appeal against the assessment order dated 24.12.2019 by the CIT(A); and d) 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. Hon’ble Court may deem fit in the facts and circumstances of the case, in the interests of justice and equity. 2. Heard Sri. T. Sooryanarayana, Senior counsel appearing on behalf of 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 Assessment Order dated 24.12.2019, passed by respondent No.2, petitioner preferred an appeal before the Appellate Authority and the same is pending adjudication. In the meanwhile, in response to the notice issued by respondent No.2 proposing to levy penalty under Section 274 r/w. 271(1)(c) of the Income Tax Act, 1961 (for short “the I.T. Act”), petitioner addressed a communication dated 10.01.2020 requesting the respondents to drop the penalty proceedings or atleast keep the same in abeyance. However, respondent No.1 issued notices dated 23.03.2021 and 07.05.2021 reiterating the demand to levy penalty on the petitioner, to which the petitioner issued replies dated 24.03.2021 and 21.05.2021 reiterating that the appeal was pending before the Appellate Authority and consequently, the penalty proceedings are to be dropped or kept in abeyance. It is the grievance of the petitioner that despite the aforesaid facts and circumstances, respondent No.1 has proceeded to pass the impugned order dated 29.03.2022 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. Subsequently, petitioner has filed rectification application dated 30.03.2022, which is also pending adjudication, despite which the respondents are proceeding to enforce and implement the impugned order and demand notice and as such, petitioner is before this Court by way of the present petition. 4. 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. 4. 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. 5. As rightly contended by the learned counsel for the petitioner, respondent No.1 has proceeded to pass the impugned order dated 29.03.2022 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. 6. In the result, I pass the following:- ORDER (i) Petition is hereby allowed. (ii) The impugned penalty order at Annexure-J dated 29.03.2022 and the impugned demand notice at Annexure-K dated 29.03.2022 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.” - 7 - 6. In the instant case, it is an undisputed fact that the appeal filed by the petitioner is still pending before the Tribunal and consequently, in view of the provisions contained in Section 275 of the I.T. Act coupled with the order of this Court in Edgeverve Systems Limited (supra), the impugned penalty order deserves to be quashed by issuing necessary directions in this regard. 7. In the result, I pass the following: ORDER i) The petition is allowed. ii) The impugned order at Annexure-H dated 25.03.2025 and the demand notice at Annexure-J dated 25.03.2025, passed by respondent No.1 are hereby quashed. 25.03.2025 and the demand notice at Annexure-J dated 25.03.2025, passed by respondent No.1 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. 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/- (S.R.KRISHNA KUMAR) JUDGE