2019 (10) TMI 607 - HC - Income Tax

Penalty u/s 271D and 271E - HELD THAT - This Court in these proceedings under Article 226 of the Constitution of India take note of the submissions of the learned counsel for the petitioners that the appeals preferred by them against the penalty orders have since been heard by the appellate authority and orders are not passed in the appeals only because of the pendency of these writ petitions. Also note that when these writ petitions were admitted by this Court this Court had by an interim order passed in March 2019 stayed the recovery of the penalty amounts from the petitioners during the pendency of the writ petitions. The writ petitions have been pending before this Court for over six months and a stay has also been operating in favour of the petitioners in the meanwhile. Taking note of the fact that the statutory appeals can now be disposed by the First Appellate Authority dispose these writ petitions by directing the CIT (Appeals) before whom the appeals preferred by the petitioners against the orders of penalty passed against them under the Income Tax Act are pending to consider and pass orders on the same expeditiously after hearing the petitioners at any rate within three months from the date of receipt of a copy of this judgment.

Summary

Issues:
1. Penalty orders under Sections 271D and 271E of the Income Tax Act against Primary Agricultural Credit Societies for non-compliance with Section 269 SS.
2. Appeal before the First Appellate Authority and petitions under Section 226 for considering them as assessees not in default.
3. Challenge to the orders of the Joint Commissioner of Income Tax directing payment of 10% of penalty amounts.
4. Stay of recovery of penalty amounts during pendency of writ petitions.
5. Directions for expeditious disposal of statutory appeals by the First Appellate Authority.

Analysis:
1. The petitioners, Primary Agricultural Credit Societies, were penalized under Sections 271D and 271E of the Income Tax Act for accepting cash deposits exceeding Rs. 20,000 from members in violation of Section 269 SS, with penalty amounts ranging from Rs. 36 Crores to Rs. 218 Crores.

2. The petitioners appealed before the First Appellate Authority and sought relief under Section 226 to be considered as assessees not in default. The Joint Commissioner of Income Tax directed them to pay 10% of the penalty amounts in installments, leading to the petitioners challenging these orders due to financial constraints.

3. After considering submissions from both parties, the Court acknowledged the reasonableness of the Joint Commissioner's orders but noted the pendency of appeals due to the writ petitions. The Court had stayed the recovery of penalty amounts during the writ petitions, which had been pending for over six months. Consequently, the Court directed the Commissioner of Income Tax (Appeals) to expedite the disposal of the appeals within three months from the judgment date, maintaining the stay on recovery until the appellate orders are communicated to the petitioners.

4. The Court's decision aimed to facilitate the resolution of the appeals pending before the First Appellate Authority, ensuring timely adjudication while continuing the stay on penalty recovery to protect the petitioners' interests during the appeal process. The directive sought to balance the interests of both parties by expediting the resolution of the legal dispute in a fair and efficient manner.