2022 (11) TMI 1472 - HC - Income Tax

Alternate remedy of appeal against penalty/recovery proceedings - notices are issued under Section 274 r/w Section 271F - case of the petitioner is that the assessment in question pertain to the period, during which the winding up proceedings against the petitioner was at large and subsisting when the petitioner was under the control of the Official Liquidator - HELD THAT - As petitioner is well conscious as clearly seen from prayer clause (c), that an alternate remedy of appeal is available to the petitioner which needs to be filed before the CIT(Appeals) as per the provisions of Section 246 of the Income Tax Act. However, as the immediate concern of the petitioner is with regard to the penalty and recovery proceedings thereof, the present petition was moved contending that the alternate remedy is not an efficacious remedy. However, considering the peculiar facts of the case, we are of the opinion that the petitioner needs to avail of the alternate remedy as available to the petitioner in law i.e. by filing appeal before the Commissioner of Income Tax (Appeals). Insofar as the apprehension of the petitioner in regard to the penalty/recovery proceedings are concerned, in our opinion, it would be appropriate that the said proceedings shall not be taken forward till the Appellate Authority decides the appeals. The petitioner is permitted to file an appeal assailing the impugned re-assessment orders before the Appellate Authority (Commissioner of Income Tax (Appeals)). The Appeals be filed within a period of two weeks from today.

Summary

Issues: Challenge to assessment orders, penalty/recovery proceedings, access to e-filing portal, winding up order recall

Challenge to Assessment Orders:
The petition challenges four assessment orders under Section 147 of the Income Tax Act, 1961, issued by the Revenue. The petitioner, a private limited company, argues that during the relevant period, it was under the control of the Official Liquidator due to a winding-up order. The petitioner contends that the assessment orders are prejudicial, illegal, and based on incorrect grounds. The Revenue added income based on funds in escrow and with the State Bank of India, claiming tax deductions were not considered.

Official Liquidator's Response:
The Official Liquidator disputes the petitioner's claims, stating that no statement of affairs was filed, no records were provided, and no funds were with the Official Liquidator. The Official Liquidator asserts that all actions were in accordance with the law and challenges the petitioner's allegations.

Revenue's Position:
The Revenue, represented by counsel, defends the assessment orders and penalty actions as lawful.

Judgment and Directions:
The court notes the petitioner's awareness of the appeal remedy available under Section 246 of the Income Tax Act. Despite the petitioner's concerns about penalty/recovery proceedings, the court directs the petitioner to file an appeal before the Commissioner of Income Tax (Appeals). The court orders that penalty/recovery proceedings be stayed until the appeals are decided. The petitioner is directed to cooperate in the appeal process. The court clarifies that the stay order does not indicate a stance on the merits of the case. The Appellate Authority is to decide independently. The court also ensures the petitioner's access to the e-filing portal for returns.

Conclusion:
The petition is disposed of with directions for the petitioner to file appeals against the assessment orders. The court stays penalty/recovery proceedings pending appeal resolution. The judgment emphasizes the independence of the Appellate Authority in deciding the case's merits. The petitioner is instructed to collaborate in the appeal process, and access to the e-filing portal is facilitated. No costs are awarded in this matter.