Penalty under the Income Tax Act cannot be imposed while the assessment order is under appeal, as per Section 275.

ORAL ORDER

1. Heard Sri S. Annamalai, learned counsel for the petitioner and Sri M. Thirumalesh and Sri M. Dilip, learned counsel for the respondents. Perused the writ petition papers.

2. Learned counsel for the petitioner would submit that petitioner is before this Court under Article 226 of the Constitution of India, questioning the correctness and legality of the order of penalty passed under Section 270A of the Income Tax Act, 1961 (for short'the Act') as at Annexures-A1 to A3 dated 20.03.2023 for the assessment year 2020-2021 and also computation sheet and demand notices at Annexures B1 to B3 dated 20.03.2023. Learned counsel would further submit that assessment order as at Annexure D was passed against the petitioner on 13.09.2022, and against the said assessment order, the petitioner filed appeal before the Commissioner of Income Tax (Appeals). On 16.11.2022 (Annexure-F) the said filing of appeal was intimated to the 1^st respondent/authority under Annexure-H and Annexure-K dated 09.03.2023. But the respondent proceeded to pass penalty order under Section 270A , 270AAC of the Act. Learned counsel placing reliance on Section 275 of the Act, submits that no order imposing penalty could have been passed, when the subject matter is in appeal under Section 246 of the Act. Thus he prays for quashing penalty order as well as the demand notices.

3. Per contra, Sri Thirumalesh, learned counsel for the respondent/revenue would submit that petitioner failed to inform the filing of appeal in time. Further he submits that even to the notices, the petitioner failed to reply, as such the respondent/authorities proceeded to pass order under Section 270A and 271AAC of the Act. However, it is submitted that Commissioner has disposed of the appeal and against that, petitioner has filed an appeal before the Tribunal under Section 253 of Act, which is pending consideration. Thus it is prayed to pass appropriate order.

4. Having heard the learned counsel for the parties and on perusal of the entire writ petition papers, I am of the view, that impugned order of penalty and demand notices are opposed to Section 275 of the Act. It is not in dispute that the assessment order was passed against the petitioner on 13.09.2022 and against the said assessment order, the petitioner filed appeal on 16.11.2022. Penalty proceedings were initiated by issuance of notice under Annexures-E1 and E2 dated 13.09.2022. The filing of appeal against the assessment order was intimated to respondent/authority only on 09.03.2023. However, Section 275 of the Act makes it clear that no order imposing penalty shall be passed in a case, where the relevant assessment order or other order is subject matter of appeal to the Joint Commissioner (Appeals) or to Commissioner (Appeals) under Section 246 of the Act.

5. In the instant case, in view of filing of appeal by the petitioner against the assessment order dated 13.09.2022, the respondents could not have proceeded with the penalty proceedings. The action of the respondents in imposing the penalty is contrary to the above stated provision. Hence the following :-

ORDER

a. Writ petition is allowed in part.

b. Annexure A1 dated 20.03.2023 bearing No.ITBA/PNL/F/270A/2022-23/1051011292(1), Annexure A2 dated 20.03.2023 bearing No.ITBA/PNL/S/270A/2022-23/1045575677(1), Annexure A3 dated 20.03.2023 bearing No.ITBA/PNL/S/156/2022-23/1051005480(1), Annexure B1 dated 20.03.2023 bearing No.ITBA/PNL/F/271AAC(1)/2022-23/1051011296(1), Annexure B2 dated 20.03.2023 bearing No.ITBA/PNL/S/271AAC(1)/2022-23/1045575615(1) and

Annexure B3 dated 20.03.2023 bearing No.ITBA/PNL/S/156/2022-23/1051005485(1), are quashed.

c. The proceedings initiated by issuance of notice at Annexure E1 dated 13.09.2022 bearing No.ITBA/PNL/d/270/2022-23/1045575677(1) and Annexure E2 dated 13.09.2022 bearing No.ITBA/PNL/S/271AAC(1)/2022-23/1045575615(1), shall be proceeded depending on the outcome of the appeal, that is pending before the Tribunal.