2022 (6) TMI 669 - HC - Income Tax

Court dismisses writ petitions challenging Income Tax Act orders, petitioner advised to appeal, no costs awarded.

The court dismissed the writ petitions challenging the impugned orders under Section 274 r/w Section 271 (1) (c) of the Income Tax Act, advising the ... Penalty under Section 271(1)(c) - notice issued under Section 274 - vagueness of penalty notice (concealment of income v. furnishing inaccurate particulars) - time limit for imposition of penalty under Section 275(1) - remedy by statutory appeal before the Appellate Commissioner - waiver under Section 220(6)Vagueness of penalty notice (concealment of income v. furnishing inaccurate particulars) - penalty under Section 271(1)(c) - Validity of the notices and consequential penalty orders under Section 274 r/w Section 271(1)(c) challenged as vague for not specifying whether concealment or inaccurate particulars was alleged. - HELD THAT: - The Court held that the petitioner, having had its registration under Section 12A cancelled and the Tribunal affirming that position, was required when filing returns to compute taxable income as a non exempt assessee and pay tax accordingly. The statutory scheme under which penalty may be levied for concealment or furnishing inaccurate particulars (as explained in the judgment) permits initiation of proceedings where the Assessing Officer is satisfied of such concealment or inaccuracy. The petitioner's challenge to the notices as a mere hyper technical plea was rejected because the petitioner had been aware of its non entitlement to exemption, had filed returns and replied to notices, and had sought writ remedies only after assessments were completed. The Court found no merit in quashing the impugned notices/orders and directed that the proper forum for challenge is the statutory appellate route. [Paras 13, 16, 17, 18, 19]Challenge to the notices and impugned penalty orders dismissed; writ petitions not maintainable to supplant statutory remedy.Remedy by statutory appeal before the Appellate Commissioner - waiver under Section 220(6) - time limit for imposition of penalty under Section 275(1) - Relief and procedural directions to be afforded to the petitioner pending or in relation to penalty proceedings. - HELD THAT: - The Court declined to interfere with the impugned notices/orders and instead granted the petitioner the statutory remedy of filing an appeal before the Appellate Commissioner. The Court permitted the petitioner to file the appeal within six weeks from receipt of the order and directed the Appellate Commissioner to consider and dispose of any such appeal on merits and expeditiously. The Court also recorded that the fact of tax having been paid may be considered by the assessing authority for possible waiver under Section 220(6). The assessment of time limits for passing penalty orders was referred to the statutory provisions governing Chapter XXI (including Section 275(1)) as relevant to the proceedings to follow. [Paras 15, 18, 19]Liberty granted to the petitioner to file a statutory appeal before the Appellate Commissioner within six weeks; Appellate Commissioner and assessing authority directed to consider and dispose of matters expeditiously and in accordance with law.Final Conclusion: Writ petitions dismissed; petitioner given liberty to pursue statutory remedy by filing an appeal before the Appellate Commissioner within six weeks and to submit to/contest the orders to be passed in the pending penalty notice, with directions to the authorities to decide expeditiously and to consider waiver under Section 220(6) where appropriate. Issues:Challenging impugned orders under Section 274 r/w Section 271 (1) (c) of the Income Tax Act, 1961 for various assessment years.Analysis:1. The petitioners challenged the impugned orders passed under Section 274 r/w Section 271 (1) (c) of the Income Tax Act for different assessment years. The challenge primarily focused on the vagueness of the notices issued, not clearly specifying whether there was concealment of income or furnishing inaccurate details, citing precedents from the High Court of Karnataka.2. The petitioners argued that being a charitable institution, there was no inaccurate detail or income concealment. They highlighted ongoing legal proceedings related to their charitable status and pending appeals against assessment orders. They emphasized that even if unsuccessful in appeals, the Department could still initiate proceedings under the Act, referencing a Supreme Court decision in a similar context.3. The petitioners contended that only the CIT appeal is competent to issue notices under the Act, and the impugned orders and notices lacked merit. They distinguished a previous court decision, asserting that the notices issued were vague and should be withdrawn based on Karnataka High Court judgments.4. The respondent opposed the petitions, arguing they should be dismissed. They claimed the issues were covered by previous court decisions and emphasized the petitioner's awareness of ineligibility for tax exemptions due to canceled registration. The respondent highlighted the petitioner's delayed tax payments post-assessment orders as a lack of merit in the writ petitions.5. The court examined the provisions of Section 271 (1) (c) of the Income Tax Act, empowering penalty imposition for concealing income or furnishing inaccurate particulars. It noted the petitioner's awareness of ineligibility for tax exemptions and the need to declare correct income. The court found the petitions lacking merit, advising the petitioner to seek remedies through the Appellate Commissioner and await further orders on the impugned notices.6. The court dismissed the writ petitions, granting the petitioner liberty to pursue remedies before the Appellate Commissioner and submit to further orders. It allowed the petitioner to file a statutory appeal within six weeks, urging expedited consideration and disposal by the Appellate Commissioner. The court directed the 2nd respondent to act promptly on the impugned notice, leaving the petitioner to address any adverse orders through the Appellate Commissioner. No costs were awarded, and connected miscellaneous petitions were closed.