High Court stays penalty proceedings during pendency of petition u/s 264 filed before Commissioner of Income Tax
ABCAUS Case Law Citation:
ABCAUS 2482 (2018) 08 HC
The instant petition was filed by assessee against the impugned penalty notice issued by the Assessing Officer (AO) under Section 221(1) of the Income Tax Act, 1961 (the Act).
Against the Assessment Order, the petitioner had filed a petition for rectification u/s 154 before the AO. The said application was not disposed of for more than one year and therefore the petitioner filed a Writ Petition for a direction to the Assessing Officer to rectify the error, which according to the petitioner, was apparent on the face of the record.
Three days after the writ petition was filed, the AO passed the order rejecting the application for rectification. Thereafter, the AO issued the impugned notice directing the petitioner to show-cause as to why penalty should not be levied under the said section in respect of the demand under Section 143(1)(a).
The Hon’ble High Court observed that the petitioner had filed a revision petition under Section 264 of the Act before the Commissioner of Income Tax which was still pending.
The Hon’ble High Court opined that in the interregnum, if the impugned notice under Section 221 (1) of the Act was to be enforced the petitioner’s rights would be prejudiced. Apart from that, the revision petition filed by the petitioner before the Commissioner was likely to be rendered as infructuous. Therefore, the impugned penalty proceedings had to necessarily await the decision of the Commissioner of Income Tax on the petition filed under Section 264 of the Income Tax Act.
The Hon’ble High Court directed the AO to keep the impugned notice in abeyance and await the decision in the petition filed under Section 264 of the Act.
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