Pentium Construction Private Limited / Vellalath Gopinathan v. The Income-tax Officer Ward-5(1)(3), Bangalore / Syndicate Bank / Principal Commissioner of Income-tax-5, Bangalore
[Citation -2020-LL-0720-6]

Citation 2020-LL-0720-6
Appellant Name Pentium Construction Private Limited / Vellalath Gopinathan
Respondent Name The Income-tax Officer Ward-5(1)(3), Bangalore / Syndicate Bank / Principal Commissioner of Income-tax-5, Bangalore
Court HIGH COURT OF KARNATAKA
Relevant Act Income-tax
Date of Order 20/07/2020
Judgment View Judgment
Keyword Tags application for stay • coercive steps • bogus expenses • payment of tax
Bot Summary: Petitioner has challenged the assessment order dated 30th December 2019 passed by the 1st respondent- Income Tax Officer, Bengaluru. Petitioner has filed an application before the Assessing Authority on 20th March 2020 seeking stay of assessment order and the Assessing Authority rejected the same on 23rd March 2020. Thereafter, petitioner filed an application for stay before third respondent namely, the Principal Commissioner of Income Tax-5, Bengaluru of the Income Tax Act will meet an assessee with consequences of making the payment. Though the application was pending for more than two months, petitioner has not been heard. The following: ORDER The third respondent- PCIT shall grant an opportunity to petitioner to put forth its case so far as the application for stay is concerned. The petitioner shall appear before the PCIT on 30th July 2020 and take further instructions. The PCIT, after hearing the petitioner, shall dispose of the said application within a period of four weeks from the date of petitioner s appearance.


1 IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 20TH DAY OF JULY, 2020 BEFORE HON'BLE MR.JUSTICE P.S. DINESH KUMAR WRIT PETITION No.8531 OF 2020 (T-IT) BETWEEN : 1. M/S. PENTIUM CONSTRUCTION PRIVATE LIMITED S J PATEL BUSINESS CHAMBERS II FLOOR, NO.2/2, II MAIN VINAYAKA CIRCLE PALACE GUTTAHALLI BANGALORE-560 003 [REPRESENTED BY MR. VELLALATH GOPINATHAN MANAGING DIRECTOR AGED ABOUT 54 YEARS S/O LATE KARUNAKARAN NAIR] 2. MR. VELLALATH GOPINATHAN MANAGING DIRECTOR OF M/S. PENTIUM CONSTRUCTIONS PVT LTD II FLOOR, MANANCHIRA TOWER A.G. ROAD, KOZHIKODE KERALA-673 001 PETITIONERS (BY SHRI. V. RAGHURAMAN, ADVOCATE) [THROUGH VIDEO CONFERENCE] AND : 1. INCOME TAX OFFICER WARD-5 (1) (3) BMTC BUILDING 80 FEET ROAD, 6TH BLOCK NEAR KHB GAMES VILLAGE KORAMANGALA BANGALORE-560 095 2 2. SYNDICATE BANK (REPRESENTED BY BANK MANAGER) HOTEL FOURA BUILDINGS MAVOOR ROAD, TEA KOZHIKODE KERALA-673 001 3. PRINCIPAL COMMISSIONER OF INCOME TAX-5 BMTC BUILDING 80 FEET ROAD, 6TH BLOCK NEAR KHB GAMES VILLAGE KORAMANGALA BANGALORE-560 095 ... RESPONDENTS (BY SHRI. E.I. SANMATHI, ADVOCATE FOR R1 & R3) [THROUGH VIDEO CONFERENCE] .... THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH IMPUGNED ASSESSMENT ORDER DTD.30.12.2019 (ANNEXURE-A) PASSED BY R-1 AS BEING VIOLATIVE OF ARTICLE OF ARTICLE 14, ARTICLE 19 (1) (g) OF CONSTITUTION AND ETC. THIS WRIT PETITION COMING ON FOR ORDERS THIS DAY, COURT MADE FOLLOWING: ORDER Though this matter is listed for orders regarding completion of service of notices to respondents. Shri E.I.Sanmathi, learned Standing Counsel appears for respondents No.1 & 3, Income Tax Department. 2. matter being in short compass, as prayed for by learned advocates for petitioner and respondents No.1 & 3, it is taken up for final disposal. 3 3. Petitioner has challenged assessment order dated 30th December 2019 (Annexure-A) passed by 1st respondent- Income Tax Officer, Bengaluru. On 12th March 2020, Assessing Authority instructed second respondent bank to freeze petitioner s Bank account. Petitioner has filed application before Assessing Authority on 20th March 2020 seeking stay of assessment order and Assessing Authority rejected same on 23rd March 2020. Thereafter, petitioner filed application for stay before third respondent namely, Principal Commissioner of Income Tax-5, Bengaluru ( PCIT for short)) under Section 246A of Income Tax Act, 1961. Since no orders were passed by PCIT, petitioner has approached this Court with prayer to quash assessment order. 4. Shri Raghuraman, learned advocate for petitioner submitted that whilst this writ petition is pending consideration, on 17th July 2020, PCIT has passed order directing petitioner to deposit 20% of tax amount 4 in six installments. said order has been passed without notice and without hearing petitioner. Shri Raghuraman further submitted that Assessing Authority has disallowed expenditure of nearly Rs.7.87 crores, which petitioner has incurred by making payment to its contractors. list of eighteen such contractors has been recorded in assessment order. Notices were issued to said contractors and they have given reply to Assessing Authority. However, without properly appreciating replies, Assessing Authority has disallowed expenditure and assessed payment of tax of Rs. 3.35 Crores. 5. To substantiate his submission, Shri Raghuraman adverted to letter dated 24th December 2019 written by M/s SanWe MEP Contracting Private Limited and email by M/s Credai Calicut on 26th December 2019. He submitted that these replies were given prior to date of assessment order namely, 30th December 2019. He argued that though this is factual matrix, Assessing Authority has called these expenses as bogus expenses 5 and disallowed. Petitioner is thus not liable to pay any tax. Therefore, conditional order passed by PCIT directing petitioner to pay 20% of amount assessed in assessment order is also not sustainable in law. Accordingly, he prayed for allowing this petition. 6. Shri Sanmathi argued opposing petition. He submitted that appeal is pending before appellate authority and PCIT has partly allowed stay application and directed payment of 20% tax amount in six easy installments. When appeal is pending, writ petition challenging assessment order is not maintainable. 7. I have carefully considered rival submissions and perused records. 8. It is not in dispute that assessment order is passed on 30th December 2019. M/s SanWe MEP Contracting Private Limited have sent their reply to Income Tax Officer on 24th December 2019 and M/s Credai Calicut on 26th December 2019. As per Raghuraman s 6 submission, all contractors have submitted their reply and petitioner is prepared to furnish them before PCIT. said two letters addressed to Income Tax Officer prima facie show that Assessing Authority has not taken note them while passing assessment order on 30th December 2019. Assessing Authority has disallowed expenditure of Rs.7.87 crores, by calling expenditure as bogus . As noticed herein, replies of two contractors are on record and same are admittedly received prior to date of assessment order. Therefore, saddling on assessee to pay taxes by disallowing expenditure without appreciating replies received under Section 133(6) of Income Tax Act will meet assessee with consequences of making payment. It is always expected of Assessing Authority to take note of and examine replies of recipients of such expenditure. In instant case, it appears same is overlooked. 9. Admittedly, application was filed before PCIT seeking stay of assessment order. same has also been disposed of without hearing petitioner. Generally, in all 7 cases, application filed before any quasi judicial authority is required to be heard before any orders are passed and more so, in case of this nature, where assessee becomes liable to pay huge taxes. application has been presented before PCIT on 30th April 2020 and order has been passed on 17th July 2020. Though application was pending for more than two months, petitioner has not been heard. 10. In facts and circumstances of case, submission of Shri Sanmathi, seeking to defend Revenue by contending that petitioner has been shown concession to pay 20% of tax amount, that too in six equal installments is too fragile to be countenanced. 11. Hence, following: ORDER third respondent- PCIT shall grant opportunity to petitioner to put forth its case so far as application for stay is concerned. PCIT, subject to his convenience, may either hear petitioner in person or 8 through video conference. petitioner shall appear before PCIT on 30th July 2020 and take further instructions. PCIT, after hearing petitioner, shall dispose of said application within period of four weeks from date of petitioner s appearance. No coercive steps to recover tax amount shall be initiated till PCIT passes his order. 12. writ petition is accordingly disposed of. No costs. Sd/- JUDGE Yn. Pentium Construction Private Limited / Vellalath Gopinathan v. Income-tax Officer Ward-5(1)(3), Bangalore / Syndicate Bank / Principal Commissioner of Income-tax-5, Bangalore
Report Error