2021 (11) TMI 330 - HC - Income Tax

Penalty u/s 274 read with Section 270 - Appeal against the assessment order is pending - Scope to pursue the statutory remedies available - HELD THAT - Order of assessment was passed on 26.03.2021 and the quantum of income for the relevant assessment year has already been assessed. Once the said assessment is completed, there is no prohibition in initiating proceedings for penalty under Section 274 read with Section 270A of the Act. Merely because an appeal against the said assessment order is pending consideration, the same is not a reason to defer initiation of proceedings for penalty under Section 270A of the Act. If the contention of the petitioner is accepted, the same will unnecessarily delay the proceeding under Section 270A of the Act which is not contemplated under the scheme of the statute. In matters of taxation, this Court would be loath to interfere especially when statutory forums are available to redress the grievance of the assessees. The parameters when interference can be made by this Court under Article 226 has been restated even recently in the decision in Assistant Commissioner of State Tax v. Commercial Steel Ltd. 2021 (9) TMI 480 - SUPREME COURT The case of the petitioner does not come within those parameters. If the petitioner is aggrieved by the order of penalty imposed, statutory remedies are available. The reasons put forth by the petitioner to overcome the statutory remedy of appeal is not tenable. Hence, the writ petition does not merit consideration and is dismissed leaving open the liberty of the petitioner to pursue the statutory remedies available.

Summary

Issues:
Challenge to penalty under Section 270A of the Income Tax Act for under reported income relating to assessment year 2018-19.

Analysis:
The petitioner challenged the penalty imposed under Section 270A of the Income Tax Act, amounting to ?42,24,835, being 50% of the tax for the under reported income for the assessment year 2018-19. The petitioner contended that since the assessment order for the year in question was under appeal, the imposition of penalty was premature and lacked authority. The petitioner argued that the penalty was intricately linked to the assessment order and the quantum of tax imposed, which had not attained finality.

The court considered the arguments presented by both parties and noted that the assessment order had been passed, and the income for the relevant assessment year had been assessed. The court emphasized that the pendency of an appeal against the assessment order did not prohibit the initiation of penalty proceedings under Section 270A of the Act. Delaying penalty proceedings due to the pending appeal would be contrary to the statutory scheme.

The court highlighted that in tax matters, interference by the court is limited, especially when statutory remedies are available to address the grievances of taxpayers. Referring to a recent decision, the court reiterated the parameters for court interference under Article 226. The court found that the petitioner's case did not meet these parameters and emphasized that statutory remedies for appealing the penalty were available to the petitioner. The court concluded that the writ petition lacked merit and dismissed it, while allowing the petitioner to pursue the statutory remedies available.

In conclusion, the court upheld the imposition of the penalty under Section 270A of the Income Tax Act, emphasizing that the pendency of an appeal against the assessment order did not preclude initiating penalty proceedings. The court highlighted the availability of statutory remedies for challenging the penalty and dismissed the writ petition, advising the petitioner to pursue the appropriate legal avenues for relief.