2022 (4) TMI 909 - HC - Income Tax

Tax liability under The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015 - Later on the liability towards deposit of tax has been relaxed by drawing a proceedings under Section 30 of the Act of 2015, whereby, major part of the tax liability was kept in abeyance - as contended that the authority, who had initiated penalty proceedings under Section 41 of the Act of 2015 ought to have stayed further proceedings awaiting the order that may be passed in appeal.HELD THAT - We find that the petitioner has suffered a tax liability after adjudication by the Assessing Officer culminating in issuance of assessment order on 31.03.2021. Aggrieved by that, an appeal has been preferred by the petitioner before the Appellate Authority and there is no stay order placed before this Court by the petitioner. An order dated 05.01.2022 by an officer in the office of the Joint Commissioner of Income-Tax Central Circle ADDL/JCID Central, Jaipur has been placed and relied upon to submit that tax liability to some extent has been kept in abeyance. However, keeping in view the submissions of learned counsel for the respondent regarding mandate of Section 47 of the Act of 2015 with regard to bar of limitation for completion of penalty proceedings, if no order is passed after expiry of a period of one year from the end of the financial year in which the notice for imposition of penalty is issued under Section 46 of the Act of 2015 and further taking into consideration that the petitioner does not challenge the jurisdiction of the authority in initiating penalty proceedings but only seeks to invoke his discretion not to proceed with penalty proceedings till pendency of appeal, we are not inclined to stay the penalty proceedings. However, if any coercive steps are initiated after passing of the penalty proceedings, it would be open for the petitioner to move appropriate applications before the authority in accordance with law.

Summary

Issues:
1. Stay of penalty proceedings pending appeal under Section 15 of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015.
2. Interpretation of Sections 41, 46, and 47 of the Act of 2015 regarding penalty proceedings and limitation.
3. Jurisdiction of authority to initiate penalty proceedings and the discretion to stay proceedings during the pendency of an appeal.

Issue 1: Stay of Penalty Proceedings Pending Appeal:
The petitioner argued that despite a tax liability of approximately ?42 crores, an order dated 05.01.2022 relaxed the liability under Section 30 of the Act of 2015. The petitioner contended that penalty proceedings under Section 41 should have been stayed pending the appeal, citing the judgment in Commissioner Income-Tax Vs. Bhupen Champak Lal Dalal. However, the respondent argued that without a stay order against the tax liability, the mere filing of an appeal does not automatically stay penalty proceedings. The respondent emphasized the obligation under Section 41 to initiate penalty proceedings within the stipulated limitation period and highlighted the provisions of Section 46 regarding the imposition of penalties. The respondent asserted that the petition was premature and based on presumptions.

Issue 2: Interpretation of Sections 41, 46, and 47 of the Act of 2015:
The Court noted the petitioner's tax liability as per the assessment order dated 31.03.2021 and the appeal filed without a stay order. Referring to an order dated 05.01.2022, which partially kept the tax liability in abeyance, the Court considered the respondent's argument regarding the bar of limitation under Section 47 for penalty proceedings. The Court acknowledged that the petitioner did not challenge the authority's jurisdiction to initiate penalty proceedings but sought a discretionary stay pending the appeal. Consequently, the Court declined to stay the penalty proceedings, citing the obligation to comply with the statutory timelines and leaving open the option for the petitioner to seek remedies against coercive actions post the penalty proceedings.

Issue 3: Jurisdiction and Discretion of Authority in Penalty Proceedings:
The Court deliberated on the authority's jurisdiction to initiate penalty proceedings under Section 41 and the petitioner's plea to defer proceedings during the appeal. While considering the provisions of the Act of 2015 and the arguments presented, the Court emphasized the importance of adhering to statutory timelines and the lack of a stay order against the tax liability. The Court underscored the petitioner's right to challenge any penalty order through an appeal under Section 15. Ultimately, the Court rejected the application for stay, maintaining the need for compliance with the law and leaving the option open for the petitioner to address any coercive actions through appropriate legal channels.

This detailed analysis of the judgment from the Rajasthan High Court provides a comprehensive overview of the issues raised, the arguments presented by both parties, and the Court's reasoning in adjudicating the matter related to penalty proceedings under the Act of 2015.