CONSOLIDATED COFFEE LTD Vs. AGRICULTURAL INCOME TAX OFFICER

JUDGEMENT

(1.) ASSESSMENT under the Karnataka Agrl. IT Act, for asst. yrs. 1981-82 to 1985-86 were completed against the petitioner by the Agrl. ITO, Madikeri. Aggrieved, the petitioner preferred appeals before the Dy. Commr. of Commercial Taxes, Mangalore, and secured ad interim orders of stay against the recovery of the amount subject to the petitioner depositing a part of the amount and securing the balance by way of bank guarantees. The appeals eventually failed and were dismissed by a common order of the Dy. Commissioner dt. 19th of March, 1990. Soon thereafter, the bank guarantees furnished by the petitioner were invoked and the balance amount of tax covered by the same collected. The order passed by the Dy. Commissioner was all the same challenged in appeals before the Karnataka Tribunal which too met the same fate and were dismissed by the Tribunal on 3rd of November, 1994. Revision petitions against the Tribunal's order have been filed before this Court which have been heard and reserved for orders.

(2.) IN the meantime, by a notice dt. 7th of June, 1996, the Asstt. Commr. of Agrl. IT, Virajpet, proposed to levy a penalty as provided under s. 42 (1) for the default committed by the petitioner in making the payment of the amount of tax determined. Objections were filed to the notice which were considered and rejected by the Asstt. Commr. of Agrl. IT by his order dt. 6th of march, 1997, and a penalty at the prescribed rate amounting to Rs. 7,65,578 levied. Aggrieved, the petitioner has questioned the said order in the present petitions.

(3.) I have heard Mr. Sarangan, learned senior counsel appearing for the petitioner/ company who argued that the impugned order levying the penalty was illegal for it overlooked the fact that there was in force an order of interim stay from the appellate authority in the face whereof the petitioner/company could not be deemed to have been in default so as to warrant the imposition of any penalty. He contended that the Act did not permit levy of a penalty except in cases where there was a default on the part of the assessee in making the payment of tax determined against an assessee who had the benefit of an order of stay in its favour, no matter the said order was subsequently vacated.