2006 (2) TMI 637 - HC - Income Tax

Summary

Issues:
1. Quashing of order by Commissioner of Income-tax (Appeals) for assessment year 2002-03.
2. Quashing of penalty proceedings by the same authority.
3. Issuance of penalty notice under section 274 read with section 271 of the Income-tax Act by Commissioner, Income-tax (Appeals) instead of Assessing Officer.

Analysis:

1. The petitioner sought a writ to quash the order dated 13-1-2006 passed by Commissioner of Income-tax (Appeals) for the assessment year 2002-03. The High Court heard arguments from both parties' counsels. It was acknowledged that the petitioner had already filed a second appeal before the Income-tax Tribunal against the said order, which was pending consideration. Additionally, an application for expeditious disposal of the appeal before the Tribunal was also pending, with a fixed date of 3rd March, 2006 for its disposal. The Court expected the Tribunal to pass an appropriate order on the application.

2. The petitioner's counsel contended that the penalty notice under section 274 read with section 271 of the Income-tax Act was issued for the first time by the Commissioner, Income-tax (Appeals), and no penalty proceeding was initiated by the Assessing Officer during the assessment. Considering the facts and circumstances of the case, the Court directed that, until the appeal before the Tribunal was disposed of, the penalty proceedings could be finalized, but the penalty order should not be served on the petitioner.

3. The High Court, with the direction given in the case, disposed of the writ petition finally, without imposing any costs on either party. The judgment addressed the issues of quashing the order by the Commissioner of Income-tax (Appeals) for the assessment year 2002-03, the quashing of penalty proceedings by the same authority, and the issuance of the penalty notice by the Commissioner, Income-tax (Appeals) instead of the Assessing Officer. The Court provided a balanced approach by allowing the penalty proceedings to be completed but preventing the service of the penalty order on the petitioner until the appeal before the Tribunal was resolved.