SMT RAJAMMA vs. INCOME TAX OFFICER

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WP/19826/2026HC KarnatakaKAHC01043744202621 July 2026Author: B M SHYAM PRASAD9 pages
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What did the High Court hold?

The High Court allowed the petition in part. It quashed the order dated 25.03.2024 under Section 148A(d), the notice dated 25.03.2024 under Section 148, the order dated 20.01.2025 under Sections 144 and 144B, the penalty notice dated 20.01.2025 under Section 271AA(1), and the penalty order dated 14.05.2025 under Section 272A(1)(d). The Court restored the proceedings for reconsideration, granting the petitioner an opportunity to file a response to the show cause notice dated 28.02.2024 under Section 148A(b). The Court found merit in the petitioner's submission that she should be allowed to explain that her entire receipt need not be taxed and that she must be allowed deductions for expenses. The Court noted that the petitioner had not had an opportunity to present her case. The challenge to Section 147A was not pressed. The petitioner was directed to appear before the Assessing Officer on 24.09.2026. All other contentions were left open.

What were the facts?

The petitioner, Smt. Rajamma, a 62-year-old transport contractor, filed a writ petition challenging various notices and orders issued by the Income Tax Department for Assessment Year 2020-21. These included a show cause notice under Section 148A(b) dated 28.02.2024, an order under Section 148A(d) dated 25.03.2024, a notice under Section 148 dated 25.03.2024, an order under Section 147 read with Sections 144 and 144B dated 20.01.2025, a penalty notice under Section 271AA(1) dated 20.01.2025, and a penalty order under Section 272A(1)(d) dated 14.05.2025. The petitioner also challenged the constitutionality of Section 147A of the IT Act. The proceedings were initiated based on alleged cash credits and withdrawals of Rs. 35,29,500/-.

What were the issues?

1. Whether the proceedings initiated under Section 148A(b) and subsequent orders and notices for Assessment Year 2020-21 are valid, considering the petitioner's claim of non-service and the nature of her income (transport contractor receipts from Mandya Milk Union Limited) which she contends should allow for expenditure deductions. (Mixed question of law and fact, concerning Sections 148A, 148, 147, 144, 144B, 271AA, 272A). 2. Whether Section 147A of the Income Tax Act, 1961, is ultra vires the Constitution of India. (Question of law). Assessee's Contentions: - The petitioner was not duly served with the notices and orders. - Her receipts from Mandya Milk Union Limited are for transport services and should be subject to deductions for expenses, leading to a lower net taxable income. - The reassessment proceedings were completed without considering these expenditure deductions. - The petitioner has updated her email ID and can now be served. Revenue's Contentions: - Not explicitly recorded in the judgment, but implied by their participation in defending the notices and orders. Petitioner's Withdrawal: - The petitioner does not intend to pursue the challenge to Section 147A of the IT Act.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148A(b),Section 148A(d),Section 148,Section 147,Section 144,Section 144B,Section 271AA(1),Section 272A(1)(d),Section 147A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF JULY, 2026 BEFORE THE HON'BLE MR. JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 19826 OF 2026 (T-IT) BETWEEN:

SMT RAJAMMA AGED 62 YEARS, W/O RAJA, NO.147, GEJJALAGERE, MANDYA 571428.

…PETITIONER (BY SRI. RAVI SHANKAR S V., ADVOCATE) AND:

1.

INCOME TAX OFFICER WARD 1 AND TPS, MANDYA 571401.

2.

NATIONAL FACELESS ASSESSMENT CENTRE, ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, INCOME TAX DEPARTMENT, MINISTRY OF FINANCE, ROOM NO. 401, 2ND FLOOR, E-RAMP,

Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA

JAWAHARLAL NEHRU STADIUM, DELHI 110003

3.

THE PRINCIPAL COMMISSIONER OF INCOME TAX - 3, BMTC BUILDING, KORAMANGALA, BANGALORE 560095

4.

UNION OF INDIA, REP. BY SECRETARY, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, KARTAVYA BHAVAN - 1, NEW DELHI 110 001

5.

CENTRAL BOARD OF DIRECT TAXES, REP BY ITS CHAIRMAN KARTAVYA BHAVAN-1 NEW DELHI-110001

…RESPONDENTS (BY SRI. M. THIRUMALESH, ADVOCATE FOR FOR SRI. NIRMAL MATHEW, ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A OF A WRIT OF CERTIORARI QUASHING THE NOTICE UNDER SECTION 148A(b) OF ACT DATED 28/02/2024, ITBA/AST/F/148A(SCN)/2023-24/1061630415(1) ISSUED BY RESPONDENT NO.1 FOR ASSESSMENT YEAR 2020-21 HEREIN MARKED AS ANNEXURE-A; ISSUE A WRIT OF CERTIORARI OR DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING THE ORDER UNDER SECTION 148A(d) OF

THE ACT DATED 25/03/2024 BEARING DIN NO. ITBA/AST/F/148A/2023-24/1063338321(1) ISSUED BY THE RESPONDENT NO.1 FOR THE ASSESSMENT YEAR 2020-21 HEREIN MARKED AS ANNEXURE-A1; ISSUE A OF A WRIT OF CERTIORARI QUASHING THE NOTICE UNDER SECTION 148 OF THE ACT DATED 25/03/2024 ITBA/AST/S/148-1/2023- 24/1063338374(1) ISSUED BY THE RESPONDENT NO.1 FOR THE ASSESSMENT YEAR 2020-21 HEREIN MARKED AS ANNEXURE-A2; ISSUE A WRIT OF CERTIORARI OR DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING THE ORDER PASSED U/S 147 R.W.S 144, 144B OF THE ACT DATED 20/01/2025 BEARING ITBA/AST/S/147/2024-25/1072351349(1) ISSUED BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2020-21 HEREIN MARKED AS ANNEXURE-A3; ISSUE A OF A WRIT OF CERTIORARI QUASHING THE PENALTY NOTICE UNDER SECTION 271AA(1) OF THE ACT, DATED 20/01/2025 NO.ITBA/PNL/S/271AA(1)/2024-25/1072352454(1) BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2020-21 HEREIN MARKED AS ANNEXURE-A4; ISSUE A OF A WRIT OF CERTIORARI QUASHING THE PENALTY ORDER U/S 272A(1)(d) OF THE ACT DATED 14/05/2025 ITBA/PNL/F/272A(1)(d)/2025- 26/1076194326(1) BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2020-21 HEREIN MARKED AS ANNEXURE-A5; ISSUE AN APPROPRIATE WRIT, ORDER OR DIRECTION, DECLARING THAT SECTION 147A OF THE ACT DATED 30/03/2026 IS ULTRA VIRES THE CONSTITUTION OF INDIA AND CONSEQUENTLY STRIKE DOWN THE SAME, HEREIN ENCLOSED AND MARKED AS ANNEXURE-A6.

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

ORAL ORDER

The petitioner, who is 62 years old and engaged in business as a Transport Contractor with Mandya Milk Union Limited, is aggrieved by the Show Cause Notice dated 28.02.2024 issued under Section 148A(b) of the Income Tax Act, 1961 [for short, 'the IT Act'] and the subsequent proceedings, including the penalty order. The details of these impugned proceedings are as follows.

Sl. No. Notices/ Orders Date Provisions of Income Tax Act, 1961 Annexures

Show Cause 28.02.2024 148A(b) A

Order 148A(d) A1

Order 20.01.2025 147 r.w.s 144, 144B A3

Penalty 20.01.2025 271AA(1) A4

Penalty Order 14.05.2025 272A(1)(d) A5

2.

The petitioner has also called in question the constitutionality of Section 147A of the IT Act.

Mr. Ravi Shankar S V, the learned counsel for the petitioner, and Mr. M. Thirumalesh, a learned Senior counsel for the respondents and who is assisted by Mr. Nirmal Mathew, a learned Standing counsel for the respondents, are heard for disposal of the petition with Mr. Ravi Shankar S V categorically stating that the petitioner does not intend to pursue with the grievance as against the provisions of Section 147A of the IT Act and the petitioner's grievance would be redressed if the proceedings are restored to the stage of response to the Notice dated 28.02.2024 under Section 148A (b) of the IT Act.

3.

In support of this request, Mr. Ravi Shankar S V emphasizes the following.

[A] The petitioner renders milk transport services to Mandya Milk Union Limited and the proceedings are initiated based on cash credits and withdrawals in her

account amounting to a sum of Rs.35,29,500/- for the assessment year 2020-21. [B] The petitioner's receipts are amounts credited by Mandya Milk Union Limited, which are withdrawn by the petitioner to meet the expenses, but the reassessment proceedings are completed on the basis that the petitioner's entire receipt must be taxed without any deduction towards expenditure. [C] The petitioner's net income after all the demands would be much less than the taxable income.

4.

The petitioner is not served with any of the notice even as could be seen from the Assessment Order and the petitioner is also not served with the Communication dated 23.12.2024 though it is

recorded that this Communication has been sent through speed post. The petitioner has not pursued with her tax practitioner, but on being served with the penalty order, she has updated her E-mail ID on the E-filing Portal. The petitioner can now be served with the details of the proceedings on "tejaswiniraj26@gmail.com".

5.

This Court finds considerable force in the submissions that the petitioner can explain that the entire receipt need not be taxed and she must be allowed deductions towards expenses for determination of net income which could be taxable, and the petitioner has not had an opportunity. The notices have been uploaded on her Portal but given the circumstances, this Court does not find malafides in the petitioner asserting circumstances, including her age and profile. This Court also does not find malafides in setting up the case that she was not duly served. As such, the following.

ORDER [A] The petition is allowed in-part quashing the following restoring the proceedings for reconsideration with opportunity to the petitioner to file the response to the Notice dated 28.02.2024 under Section 148A(b) of the IT Act: [i] the Order dated 25.03.2024 [Annexure - A1] under Section 148A (d) of the IT Act, [ii] the dated [Annexure - A2] under Section 148 of the IT Act], [iii] the Order dated 20.01.2025 [Annexure - A3] under Section 144 and 144B of the IT Act, [iv] the Penalty Notice dated 20.01.2025 [Annexure - A4] under Section 271AA(1) of the IT Act], and [v] the Penalty Order dated 14.05.2025 [Annexure - A5] under Section 272A(1)(d) of the IT Act, restoring the proceedings for reconsideration with

opportunity to the petitioner to file the response.

[B] The petitioner shall appear before the jurisdictional Assessing Officer [the first respondent] without further notice on 24.09.2026 and file response, if any.

[C] It is needless to observe that all contentions are otherwise left open to be considered.

Sd/- (B M SHYAM PRASAD) JUDGE

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