SRI MUNIRAMAREDDY CHANDRASHEKAR vs. THE INCOME TAX OFFICER

PDF · subscribers
WP/9990/2026HC KarnatakaKAHC01022137202614 July 2026Author: B M SHYAM PRASAD7 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court allowed the petition in part. It quashed the impugned Assessment Order dated March 26, 2024, and the consequential Penalty Orders and Demands dated August 1, 2024, August 2, 2024, and August 5, 2024. The Court reasoned that the assessment proceedings were concluded ex-parte, and considering the petitioner's assertions, including the claim of not being aware of the assessment order until a recent demand notice and the attachment of his bank account, there was a need for interference. The Court restored the proceedings for reassessment, granting liberty to the petitioner to file a response to the Show Cause Notice dated February 16, 2024. The Court also noted the petitioner's submission regarding seeking a valuation from the DVO, stating that it is for the Assessing Officer to examine documents and call for such a valuation if circumstances justify, and the petitioner was reserved with liberty in this regard without a specific direction. The issue of the penalty under Section 270A was implicitly covered by the quashing of the assessment order.

What were the facts?

The petitioner, Sri Muniramreddy Chandrashekar, filed a writ petition challenging an assessment order dated March 26, 2024, passed under Section 144 read with Section 144B of the Income Tax Act, 1961, for Assessment Year 2022-23. He also challenged consequential penalty orders dated August 1, 2024, August 2, 2024, and August 5, 2024, passed under Sections 272A(1)(d), 271AAC(1), and 270A respectively. The assessment was initiated under 'CASS for Complete Scrutiny' due to long-term capital gains and high improvement cost. The petitioner received the first notice under Section 143(2) on June 1, 2023, with a reminder on September 18, 2023, which he received physically on December 19, 2023. He requested an adjournment due to the demise of his parents. Subsequent notices under Sections 144, 142(1), and 143(3) were sent via email in January and February 2024. The petitioner claims he was unaware of the assessment order until a demand notice dated February 5, 2026, and his bank account was attached.

What were the issues?

1. Whether the assessment order dated March 26, 2024, passed under Section 144 read with Section 144B of the IT Act, and the consequential penalty orders are liable to be quashed, considering the petitioner's contentions regarding lack of proper notice and opportunity to respond. Assessee's Contentions: - The petitioner purchased a vacant site in 2013 and constructed a four-storied building at a cost exceeding Rs. 2,20,00,000/-, which was transferred in 2021. - After requesting an adjournment due to parental demise, the petitioner engaged a tax practitioner who failed to communicate the service of email notices. - The petitioner was unaware of the assessment order until a recent demand notice dated February 5, 2026, leading to the attachment of his bank account. - The petitioner can justify the construction cost with supporting documents. - The petitioner requested that reassessment be completed after securing a valuation from the Departmental Valuation Officer (DVO) if his claimed valuation is not accepted. Revenue's Contentions: - The revenue did not explicitly record any specific contentions in the judgment regarding the validity of the assessment or penalty orders, but their counsel was heard on the terms of disposal.

Which sections of the Income-tax Act were involved?

Section 144,Section 144B,Section 143(2),Section 142(1),Section 143(3),Section 272A(1)(d),Section 271AAC(1),Section 270A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF JULY, 2026 BEFORE THE HON'BLE MR. JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 9990 OF 2026 (T-IT) BETWEEN:

SRI MUNIRAMAREDDY CHANDRASHEKAR AGED 53 YEARS, S/O MUNIRAMREDDY, NO.531, DODDATHOGURU, ELECTRONIC CITY, BANGALORE SOUTH, BANGALORE 560100 …PETITIONER (BY SRI. RAVI SHANKAR S V., ADVOCATE) AND:

1.

THE INCOME TAX OFFICER WARD 3(3)(1), BANGALORE- 560032.

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, JAWAHARLAL NEHRU STADIUM, DELHI 110003. …RESPONDENTS (BY SRI. M. THIRUMALESH, ADVOCATE)

Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA

THIS W.P. IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF CERTIORARI OR DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING THE ORDER PASSED U/S 144 R.W.S 144B DATED 26/03/2024 BEARING DIN ITBA/AST/S/144/2023-24/ 1063369118 (1) PASSED BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2022-23 HEREIN MARKED AS ANNEXURE-A. II) QUASHING THE PENALTY ORDER U/S 272A(1)(d) OF THE ACT DATED 01/08/2024 BEARING DIN ITBA/PNL/F/272A(1)(d)/2024-25/1067237872(1) BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2022-23 HEREIN MARKED AS ANNEXURE-A1. III) QUASHING THE PENALTY ORDER U/S 271AAC(1) OF THE ACT DATED 02/08/2024 BEARING DIN NO. ITBA/PNL/F/271AAC(1)/2024-25/1067278388(1) BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2022-23 HEREIN MARKED AS ANNEXURE-A2. IV) QUASHING THE PENALTY ORDER U/S 270A OF THE ACT DATED 05/08/2024 BEARING DIN NO. ITBA/PNL/F/270A/2024-25/1067321694(1) BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2022- 23 HEREIN MARKED AS ANNEXURE-A3. STAY OF OPERATION OF THE PENALTY ORDER U/S 270A OF THE ACT DATED 05.08.2024 BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2022 - 23 HEREIN MARKED AS ANNEXURE - A4

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

petitioner's grievance is Assessment Order dated 26.03.2024 under Section 144 read with Section 144B of the Income Tax Act, 1961 [for short, 'the IT Act'] [Annexure - A] and the subsequent penalty proceedings [as per Annexures - A1 to A3]. It is seen from the Assessment Order that petitioner's returns chosen for Assessment Year 2022-23 under 'CASS for Complete- 1 Scrutiny' on the ground of Long-Term Capital Gains and high improvement cost.

2.

The petitioner is issued with the first notice under Section 143(2) of the IT Act on 01.06.2023 and a reminder on 18.09.2023. The petitioner has received a hard copy of this notice by post on 19.12.2023. The petitioner has made a request for extension citing the demise of his parents. Thereafter, notices under Sections 144, 142(1) and 143(3) of the IT Act are issued to him in January and

February 2024 and each of these notices are delivered through e-mail alone. The Assessing Officer has concluded the assessment proceedings opining that cost claimed towards construction is high and unjustified.

3.

Mr. Ravi Shankar S V, the learned counsel for the petitioner, and Mr. M. Thirumalesh, the learned Senior Standing counsel for the respondents, are heard on the terms of disposal of the petition in the light of the following assertions on behalf of the petitioner.

[a] The petitioner has purchased a vacant site in the year 2013 and constructed a four storied building incurring a cost in excess of Rs.2,20,00,000/-.

[b] The petitioner has transferred this property in the year 2021 and has filed the returns claiming the expenditure as aforesaid.

[c] The petitioner, after the request for adjournment, had engaged the services of a tax practitioner, who has not communicated the service of notice through e-mail.

[d] That the petitioner was not aware of the Assessment Order until the recent demand notice dated 05.02.2026 and the petitioner's bank account remains attached pursuant to this recent communication.

[e] petitioner can justify supporting documents the cost of construction upon purchase of a vacant site.

4.

assessment proceedings concluded ex-parte, and the petitioner proposes to place on record materials to justify the cost of construction as asserted. This Court, on a careful

consideration of all these circumstances, is of the view that there must be interference with the impugned Assessment Order and the Demand Notice restoring the proceedings for reassessment with opportunity to the petitioner to respond to the Show Cause Notice dated 16.02.2024.

5.

At this stage, Mr. Ravi Shankar S V submits that this Court may also consider directing the reassessment to be completed upon securing a valuation from the Departmental Valuation Officer [DVO], if the concerned is of the opinion that the valuation as filed by the petitioner cannot be accepted. Mr. M. Thirumalesh submits that it is for the Assessing Officer to examine the documents and call for a valuation from DVO if circumstances justify. This Court finds force in the submission and the petitioner can only be reserved with liberty in this regard without issuing a specific direction. As such, the following.

ORDER

[A] The petition is allowed in-part.

[B] impugned Assessment Order dated 26.03.2024 [Annexure - A] and the Consequential Penalty Orders and the Demands [Annexures - A1 to A3] quashed liberty to petitioner to file a response to the Show Cause Notice under Section 143(3) of the IT Act dated 16.02.2024 as enabled by the Authorities on the Portal consequent to this Order.

Sd/- (B M SHYAM PRASAD) JUDGE

More judgments on Section 144B

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

Recent GST High Court judgments

Search GST case law →