SRI. RAMAIAH REDDY HEMAVATHI vs. THE INCOME TAX OFFICER

PDF · subscribers
WP/22578/2026HC KarnatakaKAHC01049942202628 July 2026Author: B M SHYAM PRASAD8 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court allowed the petition in part, quashing the Assessment Order, Computation Sheet, Demand Notice, and the notices issued under Sections 270A and 272A(1)(d). The Court reasoned that the petitioner's circumstances, including her change of residence due to children's education, her tenants' failure to inform her of the notices, and her recent update of the address on the department's portal, justified an opportunity for her to respond to the Show Cause Notice dated 23.06.2025. The Court also acknowledged the petitioner's contention that she invested in agricultural lands and inadvertently claimed exemption under Section 54 instead of Section 54B. The proceedings were restored to the stage of the Show Cause Notice dated 23.06.2025, allowing the petitioner to file her response. The operative direction was to quash the impugned orders and notices and permit the petitioner to file her response.

What were the facts?

The petitioner, Sri. Ramaiah Reddy Hemavathi, is an individual who sold urban agricultural land for Rs. 10 Crores on 21.08.2023. She invested the sale proceeds in purchasing other agricultural lands and filed her return for Assessment Year 2024-25, claiming deductions for capital gains. The petitioner claims she did not receive notices due to a change in residence and her tenants' failure to inform her. She discovered the proceedings upon receiving a WhatsApp message from the Recovery Officer. The assessment order was passed under Section 144 read with Section 144B of the Income-Tax Act, 1961, along with a computation sheet, demand notice, and penalty notices under Sections 270A and 272A(1)(d). The petitioner asserts an error in claiming deduction under Section 54 instead of Section 54B.

What were the issues?

1. Whether the Assessment Order dated 10.02.2026, Computation Sheet dated 10.02.2026, Demand Notice dated 10.02.2026, Notice under Section 274 read with Section 270A dated 10.02.2026, and Notice under Section 274 read with Section 272A(1)(d) dated 09.02.2026, passed by the respondents, are liable to be quashed. (Mixed question of law and fact, concerning principles of natural justice and proper application of Income Tax Act provisions). Assessee's Contentions: - The petitioner, a homemaker, did not receive notices due to a change in residence and her tenants' failure to inform her. She only became aware of the proceedings upon receiving a WhatsApp message from the Recovery Officer. - If given an opportunity and proper notice, she would have produced documents to justify her return. - There is an error in claiming deduction under Section 54 of the IT Act when she is entitled to deduction under Section 54B of the IT Act, as she invested in agricultural lands, not residential property. Revenue's Contentions: - The revenue asserted that the petitioner came to know about the proceedings only upon receipt of a WhatsApp message from the Recovery Officer. - The assessment order noted that the petitioner was provided ample opportunities to furnish explanations and documents but failed to do so.

Which sections of the Income-tax Act were involved?

Section 144,Section 144B,Section 156,Section 270A,Section 272A(1)(d),Section 54,Section 54B

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28TH DAY OF JULY, 2026 BEFORE THE HON'BLE MR. JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 22578 OF 2026 (T-IT)

BETWEEN:

SRI. RAMAIAH REDDY HEMAVATHI W/O ABBHAIAH REDDY B M, AGED ABOUT 43 YEARS, PREVIOUSLY RESIDING AT NO. 9/4, BELLANDUR, BENGALURU - 560103. DEVASABISANAHALLI, OFF RING ROAD, CURRENTLY RESIDING AT NO. 31/1 AND 31/2, K. NO. 154, KARIYAMMANA AGRAHARA, BENGALURU-560037.

…PETITIONER (BY SRI.K. SHREEHARI., ADVOCATE)

AND:

1.

THE INCOME TAX OFFICER WARD 3(2)(1), BENGALURU BMTC BUILDING, 80 FEET ROAD, KORAMANGALA BENGALURU-560095.

Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA

2.

THE PRINCIPAL COMMISSIONER OF INCOME TAX, BENGALURU - 3 BMTC BUILDING, 80 FEET ROAD, KORAMANGALA BENGALURU-560095.

3.

ASSEEMENT UNIT MINISTRY OF FINANCE, GOVERNMENT OF INDIA, THROUGH THE NATIONAL FACELESS ASSESSMENT CENTRE, ROOM NO. 401, 2ND FLOOR, JAWAHAR LAL NEHRU STADIUM, PRAGATI VIHAR, NEW DELHI-110003.

4.

NATIONAL FACELESS ASSESSMENT CENTRE MINISTRY OF FINANCE, GOVERNMENT OF INDIA, ROOM NO.401, 2ND FLOOR, JAWAHAR LAL NEHRU STADIUM, PRAGATI VIHAR, NEW DELHI-110003.

…RESPONDENTS (BY SRI.M. THIRUMALESH., ADVOCATE A/W SRI. NIRMAL MATHEW., ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 THE CONSTITUTION INDIA PRAYING TO A) QUASHING THE ASSESSMENT ORDER DATED

10.02.2026 PASSED UNDER SECTION 144 READ WITH SECTION 144B OF THE INCOME-TAX ACT, 1961, BEARING DIN NO. ITBA/AST/S/144/2025- 26/1085800008(1), ISSUED BY THE RESPONDENT NO. 3 AND PRODUCED AS ANNEXURE F; B) QUASHING THE COMPUTATION SHEET DATED 10.02.2026, BEARING DIN AND DOCUMENT NUMBER ITBA/AST/S/324/2025- 26/1085800097(1), ISSUED BY THE RESPONDENT NO. 3 AND PRODUCED AS ANNEXURE G; C) QUASHING THE DEMAND NOTICE UNDER SECTION 156 OF THE INCOME-TAX ACT, 1961 DATED 10.02.2026, BEARING DIN AND NOTICE NO. ISSUED BY THE ITBA/AST/ S/156/2025-26/1085800071(1), RESPONDENT NO. 3 AND PRODUCED AS ANNEXURE H; D) QUASHING THE NOTICE UNDER SECTION 274 READ WITH SECTION 270A THE INCOME-TAX ACT, 1961 DATED 10.02.2026, BEARING DIN NO. ITBA/PNL/S/270A/2025- 26/1085800180(1), ISSUED BY THE RESPONDENT NO. 3 AND PRODUCED AS ANNEXURE J; E) QUASHING THE NOTICE UNDER SECTION 274 READ WITH SECTION 272A(1)(D) OF THE INCOME-TAX ACT, 1961 DATED 09.02.2026, BEARING DIN NO. ITBA/PNL/ S/272A(1)(D)/2025-26/1085754229(1), ISSUED BY THE RESPONDENT NO. 3 AND PRODUCED AS ANNEXURE K.

THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD

ORAL ORDER

The petitioner asserts that she is a homemaker who was at the relevant time residing in the premises in No.9/4, Devasabisanahalli, Bellandur, Bengaluru – 560 103; and that [a] she has acquired absolute interest in an urban agricultural land under the Gift Deed executed by her siblings; [b] she has transferred these urban agricultural lands under the Sale Deed dated 21.08.2023 for a total sale consideration of Rs.10 Crores; [c] she has utilized the sale proceeds to purchase different parcels of agricultural lands and [d] she has filed returns for the relevant assessment year 2024-25 offering capital gains claiming deduction against cost of acquisition as admissible to her siblings [the previous owners of the property] and the investment made by her in purchasing other agricultural lands.

2.

Sri Sreehari K., the learned counsel for the petitioner, submits that the petitioner, because of the children's education, while retaining the property offered, shifted her residence to another place as mentioned in the cause title but her tenants have not informed her about the notices issued as recorded in the impugned Assessment Order, and the learned counsel submits that if the petitioner had an opportunity and due notice, she would have produce the documents which are now enclosed in the petition to justify the Returns filed. The learned counsel also submits that there is an error in mentioning that the petitioner is entitled to deductions under Section 54 of the Income Tax Act, 1961 [for short, the IT Act’] when the petitioner is actually entitled to deductions under Section 54B of the IT Act.

3.

Sri Thirumalesh M., a learned senior standing counsel for the respondents who is assisted by Sri

Nirmal Mathew, another learned standing counsel for the respondents, are heard for disposal of the petition in the afore circumstances and also the assertion that the petitioner came to know about the proceedings only upon receipt of a WhatsApp message from the Recovery Officer in terms of Annexure-E3.

4.

The petitioner has produced the copies of the Transfer Deed/Sale Deed dated 21.08.2023 while also furnishing the details of the Purchase Deeds. The petitioner asserts that these documents corroborate the Returns filed and she can also justify the deductions as claimed while filing the Returns for the purposes of capital gains. The assessment is concluded, as could be seen from the Assessment Order, that the petitioner was directed to furnish copies of the Sale Deed/Transfer Deed and proof of investment in residential property [obviously, the reference to Section 54 of the IT Act is as mentioned in

the petitioner's ITR form] and the petitioner has not furnished any explanation or document despite providing ample opportunities.

5.

The petitioner's cause is that she had to change her location because of the children's education and her tenant who occupied the property did not inform her of the notices and she has only recently updated the address for communication on the department’s portal. The petitioner also contends that she has invested the sale proceeds in purchasing agricultural lands and not a residential property but inadvertently, in the Returns the capital gains exemption is claimed under Section 54 instead of Section 54B of the IT Act. These circumstances, in this Court’s opinion, justify an opportunity to the petitioner to file the response to the Show Cause Notice dated 23.06.2025. As such, the following:

ORDER [A] The petition is allowed in-part quashing the following impugned Orders/Notices restoring the proceedings to the stage of the Show Cause Notice dated 23.06.2025. Sl. No Description Date Annexure 1. Assessment Order F 2. Computatio n Sheet G 3. Demand H 4. J 5. 09.02.2026 K

[B] The petitioner shall file response as enabled consequent to this order.

Sd/- (B M SHYAM PRASAD) JUDGE SA Ct:sr

More judgments on Section 144B

All 10,521 judgments and leading authorities on Section 144B →

Recent GST High Court judgments

Search GST case law →