BAZARCLICK SERVICES PRIVATE LIMITED vs. INCOME TAX OFFICER WARD -1(1) (1)

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WP/20365/2026HC KarnatakaKAHC01044524202608 July 2026Author: B M SHYAM PRASAD7 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the petition, quashing the impugned orders and notices. The Court found that the respondents did not dispute the fact that the assessment proceedings were continued based on a Section 148 notice issued when the company was not in existence. The Court agreed with the petitioner's contention that in such a situation, the entire proceedings must fail as they would be void from the very initiation. Furthermore, the Court noted that the alleged escaped income of Rs. 17,82,000/- was below the threshold of Rs. 50,00,000/- contemplated under Section 149 of the Income Tax Act for the relevant assessment year. Consequently, the Court quashed the Order of Sanction dated 26.04.2021, the Notice under Section 148 dated 14.06.2021, the Assessment Order dated 24.02.2026, and the penalty notices under Sections 271(1)(c) and 271B dated 24.02.2026.

What were the facts?

The petitioner, Bazarclick Services Private Limited, is challenging assessment proceedings for Assessment Year (AY) 2016-17. The company was struck off the Register of Companies in 2017. The Assessing Officer (AO) applied to the National Company Law Tribunal (NCLT) for the company's revival to conclude the assessment. The NCLT allowed the revival on March 22, 2022. The petitioner contends that the AO continued assessment proceedings based on a Section 148 notice dated June 14, 2021, issued when the company was not in existence, without issuing a fresh notice after revival. The alleged escaped income is Rs. 17,82,000, which the petitioner claims is below the threshold under Section 149 of the Income Tax Act.

What were the issues?

1. Whether the assessment proceedings initiated based on the Section 148 notice dated June 14, 2021, are void ab initio, considering the petitioner company was struck off the Register of Companies at the time of issuance and subsequently revived. 2. Whether the assessment proceedings, if continued without a fresh notice after the company's revival, are vitiated. 3. Whether the alleged escaped income of Rs. 17,82,000/- is below the threshold contemplated under Section 149 of the Income Tax Act for the relevant assessment year. Assessee's Arguments: The petitioner argues that the Section 148 notice was issued when the company was non-existent, rendering the initiation void ab initio. They further contend that continuing proceedings based on this notice without a fresh notice after revival is illegal. Additionally, the petitioner asserts that the alleged escaped income is below the threshold limit prescribed under Section 149 of the IT Act. Revenue's Arguments: The revenue, through its counsel, does not dispute that proceedings were continued based on the notice issued when the company was not in existence. They also acknowledge that in such a scenario, the proceedings would be void from the initiation. The revenue also implicitly accepts that the alleged escaped income is below the threshold under Section 149.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 149,Section 151,Section 250,Section 271(1)(c),Section 271B,Section 144B

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 8TH DAY OF JULY, 2026 BEFORE THE HON'BLE MR. JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 20365 OF 2026 (T-IT)

BETWEEN:

BAZARCLICK SERVICES PRIVATE LIMITED A COMPANY REGISTERED UNDER THE COMPANIES ACT, 2013, HAVING IT REGISTERED OFFICE AT 63/3, A.K. COLONY, ARHAM TOWERS, K.R. ROAD, BEHIND SBI, 7TH BLOCK, UDAYPURA JAYANAGAR, BENGALURU 560 075.

REPRESENTED BY ITS MANAGING DIRECTOR, DIPAK KUMAR BAID, S/O NIRMAL KUMAR BAID, R/O PRESTIGE ELYSIAN APARTMENT, FLAT NO.2118, BANNERGHATTA ROAD, BENGALURU 560 076

…PETITIONER

(BY SRI. HEMANT VENKATRAY PAI, ADVOCATE)

AND:

1.

INCOME TAX OFFICER WARD -1(1) (1) BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, BENGALURU - 560095

Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA

2.

INCOME TAX OFFICER, WARD - 2(1)(1), BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, BENGALURU 560095

3.

PRINCIPAL COMMISSIONER OF INCOME TAX-1, BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK. BENGALURU-560095.

4.

ASSESSMENT UNIT, NATIONAL FACELESS ASSESSMENT CENTRE, REP. BY ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, INCOME TAX DEPARTMENT, ROOM NO.401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, NEW DELHI - 110 003.

…RESPONDENTS

(BY SRI. M. DELIP, ADVOCATE ALONG WITH SRI. VINAYAK S PANDI, ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO A) ISSUE A WRIT OF CERTIORARI OR DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING SANCTION DATED 26.04.2021 ACCORDED UNDER SECTION 151 OF THE ACT FOR THE AY 2016-17 BY RESPONDENT NO.3 ITBA/AST/S/118/2021- 22/1032684116(1), A COPY OF WHICH IS ENCLOSED

AND MARKED AS ANNEXURE-A. B) ISSUE A WRIT OF CERTIORARI OR DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING NOTICE DATED 14.06.2021 ISSUED UNDER SECTION 148 OF THE ACT FOR THE AY 2016-17 BY NO.

ITBA/AST/S/148/2021-22/1033456867(1), ENCLOSED AND MARKED AS ANNEXURE-B. C) ISSUE A WRIT OF CERTIORARI OR DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING ORDER DATED 24.02.2026 PASSED UNDER SECTION 147 R.W.S 250 R.W.S 144B OF THE ACT FOR THE AY 2016-17 BY NO.4 ITBA/AST/S/147/2025-26/1086504359(1), ENCLOSED AND MARKED AS ANNEXURE-C. D) ISSUE A WRIT OF CERTIORARI OR DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING THE NOTICE DATED 24.02.2026 ISSUED UNDER SECTION 271(1)(C) OF THE ACT FOR THE AY 2016-17 BY RESPONDENT NO.4 ITBA/PNL/S/271(1)(C)/2025- 26/1086505216(1), HEREIN ENCLOSED AND MARKED AS ANNEXURE-D. E) ISSUE A WRIT OF CERTIORARI OR DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING THE NOTICE DATED 24.02.2026 ISSUED UNDER SECTION 271B OF THE ACT FOR THE AY 2016-

BY NO.4 ITBA/PNL/S/271B/2025-26/1086505208(1), ENCLOSED AND MARKED AS ANNEXURE-E.

THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD

ORAL ORDER

The petitioner's grievance is essentially with the Assessment Order 24.02.2026 for the assessment year 2016-17 under Section 147 read with Section 250 of the Income Tax Act, 1961 [for short, 'the IT Act']. The petitioner has also called in question the Order of Sanction dated 26.04.2021, the notice dated 14.06.2021 under Section 148 of the IT Act and other proceedings.

2.

Mr. Hemant Venkatray Pai, the learned counsel for the petitioner, submits that the principal question is whether the first respondent could have concluded the assessment proceedings based on the notice dated 14.06.2021 under Section 148 of the IT Act and in support of a finding in favour of the petitioner

on this question, the learned counsel emphasizes the following.

[a] The petitioner was struck off from the Register of Companies by the Registrar of Companies in the year 2017.

[b] The Assessing Officer has filed an application with the National Company Law Tribunal [NCLT] under the Companies Act, 2013 for revival of the Company to facilitate conclusion of the assessment proceedings.

[c] The NCLT has allowed this application vide the order dated 22.03.2022 and the Company is thus revived.

[d] The Assessing Officer, without issuing fresh notice, has continued the proceedings under the 148 notice dated 14.06.2021 and that the proceedings

continued based on such notice must fail because the initiation is void ab initio.

3.

Mr. Hemant Venkatray Pai also points out that the Assessing Officer, without issuing fresh notice, has continued the proceedings under the 148 notice dated 14.06.2021, that the proceedings continued based on such notice must fail because the initiation is void ab initio and that the alleged income that has escaped tax is in a sum of Rs.17,82,000/- which is much below the threshold contemplated under Section 149 of the Income Tax Act.

4.

Mr. M. Dilip, the learned Standing counsel for the respondents, is heard in the light of these circumstances. The position that proceedings are continued based on the notice dated 14.06.2021 issued when the Company was not in existence is not in dispute and in that event, the entire proceedings must fail as it would be void from the very initiation. Further, this Court must also consider that the income

alleged to have escaped is in a sum of Rs.17,82,000/- when the limitation under Section 149 of the IT Act relevant to the assessment year was Rs.50,00,000/-. In the light of the afore, the following. ORDER

The petition is allowed quashing the Order of Sanction 26.04.2021 [Annexure - A], Notice under Section 148 of the IT Act dated 14.06.2021 [Annexure - B], Assessment Order 24.02.2026 [Annexure - C], Notice for penalty under Section 274 read with Section 271(1)(c) of the IT Act dated 24.02.2026 [Annexure - D] and Notice for penalty under Section 274 read with Section 271B of the IT Act dated 24.02.2026 [Annexure - E].

Sd/- (B M SHYAM PRASAD) JUDGE RB

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