2019 (10) TMI 742 - HC - Income Tax

Penalty u/s 271D and u/s 271E - HELD THAT - Exts.P11 and P12 orders of the First Appellate Authority have required the petitioner society to pay only ₹ 2.5 crores each as against penalty amounts of ₹ 48 crores and ₹ 44 crores (approximately), that were imposed on the petitioner. Under normal circumstances this would have been viewed as a reasonable and valid exercise of discretion by the First Appellate Authority that does not call for any interference by this Court in this proceedings under Article 226 of the Constitution of India. In the instant case, however, the financial position of the petitioner society is projected as weak, and more importantly, it has been more than 8 months since the Appeals have been filed before the Appellate Authority and the petitioner has been enjoying the benefit of a stay from this Court since January 2019. I deem it appropriate to dispose the Writ Petition with a direction to the 3rd respondent Appellate Authority, before whom the Appeals preferred by the petitioner against the orders of penalty are pending, to consider and pass orders in the said Appeals within a period of three months from the date of receipt of a copy of the judgment, after hearing the petitioner.

Summary

Issues:
Challenge against orders passed in stay applications along with Appeals against penalty orders under Section 271D and 271E of the Income Tax Act during the assessment year 2015-2016.

Analysis:
The petitioner, a primary agricultural credit society, faced penalties for contravening Section 269SS and 269T of the Income Tax Act by accepting cash deposits exceeding ?20,000. The penalties imposed amounted to ?48,79,81,702 under Section 271D and ?44,38,36,515 under Section 271E. The petitioner sought a stay on penalty recovery pending the disposal of Appeals against the penalty orders. The Appellate Authority directed the petitioner to pay ?2.5 crores in each Appeal as a condition for granting stay on the remaining penalty amounts, which the petitioner contested due to its weak financial position.

Upon admission of the Writ Petition, the Court granted an interim stay on further proceedings related to the penalty orders. The Court acknowledged the Appellate Authority's discretion in requiring the petitioner to pay only ?2.5 crores in each Appeal out of the total penalties imposed. However, considering the petitioner's financial state and the prolonged duration since filing the Appeals, the Court directed the Appellate Authority to decide on the Appeals within three months from the judgment date. The stay on penalty recovery was to continue until the Appellate Authority's decision is communicated to the petitioner.

In conclusion, the Writ Petition was disposed with instructions for the Appellate Authority to review and decide on the Appeals within three months, maintaining the stay on penalty recovery until the Authority's decision is communicated to the petitioner. The petitioner was directed to provide a copy of the Writ Petition and the judgment to the Appellate Authority for necessary action.