High Court Of Madras
Fountainhead Communications Ltd. vs. Additional Commissioner Of Income Tax & Ors.
Sections 220, 271D
Asst. Year 2003-04
K. Mohan Ram, J.
Writ Petn. No. 11225 of 2006 & WPMP No. 12763 of 2006
21st April, 2006
Counsel Appeared
P.S. Raman for Sivanandraj, for the Petitioner : Ms. Pushya Seetharaman, for the Respondents
ORDER
K. Mohan Ram, J. :
Ms. Pushya Seetharaman, learned senior Central Government standing counsel, takes notice for the respondents. By consent of both the parties, the writ petition itself is taken up for final disposal. The prayer in the writ petition is for the issuance of a writ of certiorari to set aside the order dt. 31st March, 2006, passed by the Tribunal, Chennai Bench A. The facts of the case are as follows. The petitioner-company filed its return for the asst. yr. 2003-04 on 1st Dec., 2003, declaring an income of Rs. 30,00,780 along with a tax audit report under s. 44AB as an annexure enlisting the cash transactions in excess of Rs. 20,000 to bring the notice of the authorities. Pursuant thereto, the Addl. CIT, Company Range-II, on 30th Aug., 2004, issued a notice to furnish the reasons for the two transactions in cash in excess of Rs. 20,000 failing which a penalty would be levied at the rate of 100 per cent of the amount transacted in cash. On 25th Feb., 2005, the petitioner-company filed its reply to the show-cause notice explaining the pressing circumstances due to which cash transactions in excess of Rs. 20,000 were executed. The first respondent rejected the explanations of the petitioner without giving reasons and levied a penalty of Rs. 11,65,240. The petitioner preferred an appeal to the second respondent. The second respondent upheld the findings of the first respondent and dismissed the appeal. Hence the petitioner preferred an appeal before the Tribunal and the same is pending disposal. The first respondent has been sending notices under s. 226(3) to various banks where the petitioner maintains an account and also to various clients of the petitioner. It is pertinent to submit that the first respondent issued notices to the tune of Rs. 22,52,039, even though the penalty under s. 271D was only Rs. 11,65,240. The petitioner filed a stay petition before the Tribunal and the same was taken up for hearing on 31st March, 2006, and the Tribunal passed the following order : “By this stay petition, the assessee seeks stay for recovery of disputed tax demand of Rs. 11,65,240.
2. After hearing the rival parties and perusing the material placed before us, we are of the opinion that it is not a fit case for grant of stay as the assessee has not paid any amount of the total demand raised by the Department and the tax due which is now sought to be stayed is in the nature of penalty. However, we are inclined to grant early hearing of the appeal and accordingly direct the Registry to post the case for hearing on out of turn basis on 1st June, 2006. It is also directed that the assessee will not seek unnecessary adjournment on the date of hearing of the appeal.”
Aggrieved by the said order the above writ petition has been filed.
4. Heard Mr. P.S. Raman, learned senior counsel for the petitioner, and Ms. Pushya Seetharaman, learned senior standing counsel for the respondents.
5. Mr. P.S. Raman, learned senior counsel for the petitioner, drew the attention of this Court to the provisions contained in ss. 269SS, 271D and 273B of the IT Act and submitted that the order of the first appellate authority is a non-speaking order and drew the attention of this Court to para 6 of the order of the first appellate authority is as follows :
“6. I have considered the rival submissions. The appellant stated that the cash loan was taken to settle a supplier payment and to get its cheques honoured. I do not find any considerable force in the submissions of the appellant. In the circumstances of the case, I do not find any infirmity in the action of the Addl. CIT who levied the penalty, as this case is a fit case for levy of penalty. The penalty of Rs. 11,65,240 levied under s. 271D is confirmed. The appellant fails on this ground.”
6. Referring to the abovesaid order of the first appellate authority, learned senior counsel submits that though all the transactions are reflected in the account books and there is no allegation of any suppression of income, etc., the first appellate authority has not at all considered the explanations submitted by the petitioner in the grounds of appeal filed and in the petition seeking waiver and sufficient grounds have been raised to establish a prima facie case for grant of waiver. But the Tribunal has not at all considered any of these aspects, but has simply rejected the petition and fixed an early date for hearing.
7. Ms. Pushya Seetharaman, learned senior standing counsel for the IT Department submits that the Tribunal has fixed an early date for the hearing of the appeal, since the liability on the petitioner is huge. She submitted that some conditions should be imposed for granting interim orders.
8. The said submissions made by learned senior counsel for the petitioner are acceptable and it is prima facie seen that the first appellate authority has not at all considered the case on the merits and has also not considered the various objections and explanations offered by the petitioner. The order of the first appellate authority is virtually a non-speaking order passed in a mechanical manner. The Tribunal ought to have considered these aspects of the matter and considered the petition filed by the petitioner for waiver in accordance with law. But, instead of doing that, the Tribunal has passed an order rejecting the petition stating that it is not a fit case for grant of stay, as the assessee has not paid any amount towards the total demand raised by the Department and the tax due which is now sought to be stayed is in the nature of penalty. This Court is of the considered view that the Tribunal has also committed an error in not considering as to whether a prima facie case has been made out for granting waiver, as prayed for by the petitioner when a huge amount is demanded from the petitioner-assessee that too in the nature of penalty. The Tribunal ought to have considered whether a prima facie case is made out or not. Since the order suffers from non-application of mind, the same is liable to be set aside.
9. Considering the fact that all the transactions in question are reflected in the accounts as submitted by learned senior counsel for the petitioner and there is no suppression, there shall be an order of interim stay till the disposal of the appeal. Since the Tribunal has fixed an early date for final disposal of the appeal i.e., on 1st June, 2006, the petitioner shall not seek any adjournment on that date and co-operate with the Tribunal in disposing of the appeal.
With the above directions the writ petition is disposed of. No costs. Consequently, connected WPMP is closed.
[Citation : 285 ITR 36]
