- 1 - HC-KAR NC: 2025:KHC:36170 WP No. 16835 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 16835 OF 2025 (T-IT) BETWEEN: SHOREBIRDS LEISURE PRIVATE LIMITED COMPANY INCORPORATED UNDR THE COMPANIES ACT, 1956 REPRESENTED BY ITS ACCOUNTS MANAGER SRI RAVINDRANATH C I SON OF SRI ISHWARADASS C S AGED ABOUT 53 YEARS NO.12, SERVICE ROAD DOMLUR BANGALORE - 560 071 …PETITIONER (BY SRI. VENKATESH G., ADVOCATE) AND: 1. ASSESSMENT UNIT REP. BY ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME-TAX/ INCOME-TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, INCOME-TAX DEPARTMENT, MINISRY OF FINANCE, ROOM NO.401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI-110 003. Digitally signed by NAGAVENI Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:36170 WP No. 16835 of 2025 2. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 6(1)(1), BMTC BUILDING, NEAR NATIONAL GAMES VILLAGE, KORAMANGALA, BANGALORE - 560 095. …RESPONDENTS (BY SRI. M. DILIP, ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE PENALTY ORDER PASSED BY THE RESPONDENT NO. 1 UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) BEARING DIN NO. ITBA/PNL/F/271(1)(C)/2024-25/1074543529(1) FOR THE ASSESSMENT YEAR 2014-15, HEREIN MARKED AS ANNEXURE-A1 AND ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: - 3 - HC-KAR NC: 2025:KHC:36170 WP No. 16835 of 2025 CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA ORAL ORDER The petitioner is before this Court, seeking the following prayer: "Wherefore it is prayed that this Hon'ble Court be pleased to: i) Issue a writ of Certiorari and direction in the nature of a writ of certiorari quashing the penalty order passed by the Respondent No. 1 under section 271(1)(c) of the Income Tax Act, 1961 (for short 'the Act') bearing DIN No. ITBA/PNL/F/271(1)(c)/2024-25/1074543529(1) for the Assessment Year 2014-15, herein marked as Annexure-A1. ii) Issue a writ of Certiorari and direction in the nature of a writ of certiorari quashing the computation sheet dated 15.03.2025 bearing Document and DIN No. ITBA/PNL/M/271(1)(c)/2023-24/1053724602(1) for the Assessment Year 2014-15 issued by the Respondent No.1, herein marked as Annexure-A2. iii) Issue a writ of Certiorari and direction in the nature of a writ of certiorari quashing the demand notice dated 15.03.2025 issued u/s 156 bearing DIN & Notice No. ITBA/PNL/S/156/2024-25/1074543431(1), for the assessment year AY 2014-15 issued by the Respondent No. 1, herein marked as Annexure-A3. iv) And pass such other orders as this Hon'ble Court deems fit and proper in the interest of justice and equity." - 4 - HC-KAR NC: 2025:KHC:36170 WP No. 16835 of 2025 2. Heard Sri. Venkatesh G., learned counsel appearing for the petitioner, Sri. M. Dilip, learned counsel appearing for the respondents and have perused the material on record. 3. Respondent No.1 passes an Assessment Order under Section 143(3) of the Income Tax Act, 1961 ('for short 'the Act') determining assessed income at Rs.3,53,61,175/- as against the returned income of Rs.Nil. 4. A show cause notice and consequential penalty order is passed under Section 274 read with Section 271(1)(c) of the Act. The petitioner then prefers an appeal before the Commissioner of Income Tax (Appeals), which also comes to be disposed. Again a show cause notice is issued. The petitioner then files an appeal. Against the appeal, which was disposed on 31.05.2023, the matter was taken before the Tribunal. The Tribunal on hearing the parties, restores the appeal before the Commissioner of Income Tax (Appeals), which was pending consideration. At the stage, when it was pending consideration, a further notice was issued by the first respondent passing an order of penalty under Section 271(1)(c) of the Act. The issue - 5 - HC-KAR NC: 2025:KHC:36170 WP No. 16835 of 2025 is whether during the subsistence of the appeal before the Commissioner of Income Tax (Appeals), the first respondent could have passed an order of penalty. The issue is considered by the Co-ordinate Bench of this Court in W.P.No.6164/2024 dated 14.08.2025 and held it was impermissible in law. 5. The Co-ordinate Bench of this Court in the aforesaid petition, has held as follows: "3. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner submits that aggrieved by the Assessment Order dated 30.03.2023 passed by the respondents for the Assessment Year 2018-19, the petitioner filed an appeal on 12.05.2023. It is the grievance of the petitioner that despite pendency of the appeal before the Appellate Authority, the respondents have proceeded to issue penalty notice and show-cause notice followed by the impugned penalty orders and demand notice, which are assailed in the present petition inter alia contending that since the appeals were pending, it would be necessary to keep the penalty orders and demand notices in abeyance till disposal of the appeals as held by this Court in the case of Mr. B.S. Uday Shetty Vs. The Assistant Commissioner of Income Tax W.P.No.8585/2022 dated 21.04.2022. 4. Per contra, leamed counsel for the respondents submits that even the impugned penalty orders are appealable orders and as such, keeping the penalty orders and demand notice in abeyance till disposal of the appeal would not arise in the facts and circumstances of - 6 - HC-KAR NC: 2025:KHC:36170 WP No. 16835 of 2025 the instant case and as such, there is no merit in the present petition and the same is liable to be dismissed. 5. A perusal of Section 275 of the I.T. Act will indicate that there is clear embargo/bar on proceeding to pass penalty order if an appeal is pending on the Assessment Order. As rightly contended by the learned counsel for the petitioner in B.S. Uday Shetty's case (supra), under identical circumstances, where the petitioner-Assessee did not file an appeal against the Original Assessment Order, this Court came to the conclusion that till disposal of the appeals filed by the Assessee, it is necessary to keep the penalty orders and notices in abeyance. In view of the aforesaid facts and circumstances and the judgment of this Court in B.S. Uday Shetty's case (supra), rendered under Identical circumstances, the present petition also deserves to be disposed of keeping penalty orders and demand notices in abeyance till disposal of the appeals filed by the petitioner. 6. In the result, I pass the following: ORDER i. The Writ Petition is allowed. ii. The Impugned orders at Annexures-G and H dated 18.09.2023 and 13.10.2023 respectively, and the demand notices at Annexure-G1 and H1 dated 18.09.2023 and 13.10.2023 are hereby kept in abeyance till disposal of the appeals filed by the petitioner. ili. Liberty is reserved in favour of the respondents to proceed further upon disposal of the appeals filed by the petitioner." 6. Learned counsel appearing for the respondents would not dispute the position as is considered by the Co-ordinate Bench of this Court in the aforesaid petition. - 7 - HC-KAR NC: 2025:KHC:36170 WP No. 16835 of 2025 7. In that light, the following: ORDER (i) The petition is allowed. (ii) The impugned orders at Annexures-A1, A2 and A3, stand quashed. (iii) The show cause notice and further proceedings would await the decision of the appeal pending before the Commissioner of Income Tax (Appeals). . Sd/- (M.NAGAPRASANNA) JUDGE SJK List No.: 1 Sl No.: 85 CT-SG