- 1 - HC-KAR NC: 2025:KHC:52408 WP No. 12885 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF DECEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 12885 OF 2025 (T-IT) BETWEEN: WATER (INDIA) PRIVATE LIMITED NO.36-A, II PHASE, PEENYA INDUSTRIAL AREA BENGALURU NORTH, BENGALURU - 560 058. (PAN AAACW1411C) A PRIVATE LIMITED COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 AND REPRESENTED BY ITS MANAGING DIRECTOR, MR. ANIL KUMAR TIRUMALA AGED ABOUT 56 YEARS OCC MANAGING DIRECTOR RESIDING AT A-906, 3RD FLOOR, CENTURY INDUS, NEAR JNANAKSHI SCHOOL, R.R. NAGAR, BENGALURU - 560 098. …PETITIONER (BY SRI. ANKUR PAI DHUNGAT, ADVOCATE) AND: 1. ASSESSMENT UNIT INCOME TAX DEPARTMENT MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NORTH BLOCK, NEW DELHI - 110 001. Digitally signed by SHARADAVANI B Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:52408 WP No. 12885 of 2025 2. DEPUTY COMMISSIONER OF INCOME- TAX CIRCLE 7(1)(1), 2ND FLOOR, BMTC BUILDING, 80 FT. ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU - 560095. 3. DEPUTY COMMISSIONER OF INCOME-TAX TRANSFER PRICING, DC/ACIT TP 2(2)(2), BMTC BUILDING, 80 FT. ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU - 560095. 4. THE PRINCIPAL COMMISSIONER OF INCOME TAX RANGE 7, BENGALURU, BMTC BUILDING, 80 FT. ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU - 560 095. …RESPONDENTS (BY SRI. E.I. SANMATHI, ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO-1. ISSUE A WRIT OF CERTIORARI OR ANY OTHER WRIT AS THE HONBLE HIGH COURT MAY DEEM FIT AND QUASH THE FOLLOWING ANNEXURE-F IMPUGNED PENALTY ORDER DATED 20.03.2025 PASSED BY THE RESPONDENT NO.1 UNDER SECTION 270A OF THE ACT FOR THE AY 2020-21 IN DIN ITBA/PNL/F/270A/2024- 25/1074737487(1) ANNEXURE-F1 AND ETC., THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: - 3 - HC-KAR NC: 2025:KHC:52408 WP No. 12885 of 2025 CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR ORAL ORDER 1. In this petition, the petitioner seeks the following reliefs: "ANNEXURE 'F' Impugned penalty order dated 20.03.2025 passed by the Respondent No.1 under section 270A of the Act for the AY 2020-21 in DIN: ITBA/PNL/F/270A/2024-25/1074737487(1) ANNEXURE 'F1' Impugned computation sheet dated 20.03.2025 passed by the Respondent No.1 under section 270A of the Act for the AY 2020-21 in DIN & Order No.: ITBA/PNL/S/270A/2024- 25/1066211758(1) ANNEXURE 'F2' Impugned demand notice dated 20.03.2025 issued by the Respondent No.1 under section 156 of the IT Act for the AY 2020-21 in DIN & Notice No. ITBA/PNL/S/156/2024-25/1074734402(1) ii. issue any other writ, order or direction to which the Petitioner is found entitled to in the present facts and circumstances." 2. Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record. - 4 - HC-KAR NC: 2025:KHC:52408 WP No. 12885 of 2025 3. A perusal of the material on record will indicate that aggrieved by the Final Assessment Order dated 28.06.2024, the petitioner filed an appeal on 26.08.2024, which is pending adjudication. In the meanwhile, respondent No.1 issued show-cause notice dated 04.03.2025 inter alia calling upon the petitioner to show- cause as to why penalty order under Section 270A should not be passed against it. In response to the same, the petitioner submitted a reply dated 07.03.2025 stating/requesting penalty proceedings be kept in abeyance till disposal of the appeal by the Tribunal. Despite the aforesaid reply submitted by it and pendency of the appeal, respondent No.1 passed the impugned penalty order, which is contrary to the Section 275 of the I.T. Act and as such, the same deserves to be quashed in the light of the judgment of this Court in the case of Edgeverve Systems Limited Vs. Additional/Joint/Deputy/Assistant Commissioner of Income Tax – W.P.No.8652/2022, dated 12.08.2022. - 5 - HC-KAR NC: 2025:KHC:52408 WP No. 12885 of 2025 4. Per contra, learned counsel for the respondents submits that there is no merit in the petition and the same is liable to be dismissed. 5. In the case of Edgeverve Systems Limited Vs.Additional/Joint/Deputy/Assistant Commissioner of Income Tax – W.P.No.8652/2022, dated 12.08.2022, this Court held as under: “In this petition, the petitioner has sought for the following reliefs: a)Quashing the order dated 29.03.2022 (Annexure-J) bearing DIN ITBA/PNL/F/271(1)(c) /2021- 22/1041995337(1) passed by the 1st Respondent under Section 271(1)(c) of the Act for the Assessment year 2016- 17; b)Quashing the demand notice dated 29.03.2022 (Annexure-K) bearing DIN ITBA/PNL/S/156/ 2021- 22/1041992914(1) issued by the 1st Respondent under Section 156 of the Act for the assessment year 2016-17. c) Directing the Respondents to keep the penalty proceedings initiated vide notice bearing DIN No.ITBA/PNL/S/271(1)(c)/2019- 20/10230355 47(1) dated 24.12.2019 under Sections 274 read with Section 271(1)(c) of the Act (Annexure-B), in abeyance, until disposal of the - 6 - HC-KAR NC: 2025:KHC:52408 WP No. 12885 of 2025 Petitioner’s appeal against the assessment order dated 24.12.2019 by the CIT(A); and d)Pass such other or further orders as this Hon’ble Court may deem fit in the facts and circumstances of the case, in the interests of justice and equity. 2. Heard Sri. T. Sooryanarayana, Senior counsel appearing on behalf of learned counsel for the petitioner and learned counsel for the respondents and perused the material on record. 3. The material on record discloses that aggrieved by the Assessment Order dated 24.12.2019, passed by respondent No.2, petitioner preferred an appeal before the Appellate Authority and the same is pending adjudication. In the meanwhile, in response to the notice issued by respondent No.2 proposing to levy penalty under Section 274 r/w. 271(1)(c) of the Income Tax Act, 1961 (for short “the I.T. Act”), petitioner addressed a communication dated 10.01.2020 requesting the respondents to drop the penalty proceedings or atleast keep the same in abeyance. However, respondent No.1 issued notices dated 23.03.2021 and 07.05.2021 reiterating the demand to levy penalty on the petitioner, to which the petitioner issued replies dated 24.03.2021 and 21.05.2021 reiterating that the appeal was pending before the Appellate Authority and consequently, the penalty proceedings are to be dropped or kept in abeyance. It is the grievance of the petitioner that despite the aforesaid facts and circumstances, respondent No.1 has proceeded to pass the impugned order dated 29.03.2022 levying penalty upon the petitioner on the erroneous premise/basis that the appeal filed by the petitioner had been disposed of without appreciating that the appeal was still pending adjudication. Subsequently, petitioner has filed - 7 - HC-KAR NC: 2025:KHC:52408 WP No. 12885 of 2025 rectification application dated 30.03.2022, which is also pending adjudication, despite which the respondents are proceeding to enforce and implement the impugned order and demand notice and as such, petitioner is before this Court by way of the present petition. 4. Per contra, learned counsel for the respondents submits that there is no merit in the petition and that the same is liable to be dismissed. 5. As rightly contended by the learned counsel for the petitioner, respondent No.1 has proceeded to pass the impugned order dated 29.03.2022 and imposed penalty upon the petitioner under Sec.271(1)(c) of the I.T. Act on the erroneous premise/ground that the appeal preferred by the petitioner had been dismissed without appreciating the material on record including the latest status of the appeal, which clearly establishes that the appeal is still pending adjudication as on today and consequently, the impugned order and notice passed/issued by respondent No.1 deserves to be quashed and the same are to be directed to be kept in abeyance till disposal of the appeal. 6. In the result, I pass the following:- ORDER (i) Petition is hereby allowed. (ii) The impugned penalty order at Annexure-J dated 29.03.2022 and the impugned demand notice at Annexure-K dated 29.03.2022 are hereby quashed. (iii) The respondents are directed to keep the penalty proceedings in abeyance till the disposal of the appeal preferred by the petitioner before the appellate authority and the same attaining finality in accordance with law.” - 8 - HC-KAR NC: 2025:KHC:52408 WP No. 12885 of 2025 6. In the instant case, it is an undisputed fact that the appeal filed by the petitioner is still pending before the Tribunal and consequently, in view of the provisions contained in Section 275 of the I.T. Act coupled with the order of this Court in Edgeverve Systems Limited (supra), the impugned penalty order deserves to be quashed by issuing necessary directions in this regard. 7. In the result, I pass the following: ORDER i) The petition is allowed. ii) The impugned order at Annexure-F dated 20.03.2025, Computation Sheet at Annexure-F1 dated 20.03.2025 and the demand notice at Annexure-F2 dated 20.03.2025, passed by respondent No.1 are hereby quashed. iii) The respondents are directed to keep the penalty proceedings in abeyance till the disposal of the appeal preferred by the - 9 - HC-KAR NC: 2025:KHC:52408 WP No. 12885 of 2025 petitioner before the appellate authority and the same attaining finality, in accordance with law. Sd/- (S.R.KRISHNA KUMAR) JUDGE GH List No.: 2 Sl No.: 46