INDUSTRIALISTS AND PROFESSIONALS MULTIPURPOSE CO OP SOCIETY LIMITED vs. THE INCOME TAX OFFICER

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WP/20337/2026HC KarnatakaKAHC01044729202614 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 held that the petitioner's appeal was undisputedly belated by 123 days, and the hospitalization of the petitioner's representative due to a heart condition was not in serious dispute. The Court found reason to interfere with the impugned Order-in-Appeal, noting that the assessment proceedings were concluded ex-parte. The Court observed that the Commissioner of Income Tax (Appeals) could have, under the proviso to Section 251(1)(a) of the Act, interfered with the Assessment Order and restored the proceedings for a fresh assessment. Therefore, the Court set aside the impugned ex parte Assessment Order dated 16.09.2022 and the Penalty Orders under Sections 272A(1)(d), 270A, and 271AAC(1). The proceedings were restored to the second respondent (National Faceless Assessment Centre) for fresh consideration, with liberty to the petitioner to respond to the Show Cause Notice dated 29.08.2022 upon intimation of enablement on the portal. The ratio decidendi is that a genuine medical emergency of a key functionary of a society, leading to a delay in filing an appeal, coupled with the ex-parte nature of the assessment and the powers available to the appellate authority, warrants interference by the High Court in its writ jurisdiction to ensure a fair opportunity for the assessee to present its case.

What were the facts?

The petitioner, Industrialists & Professionals Multipurpose Co Op Society Limited, is challenging an Assessment Order dated 16.09.2022 passed under Section 144 read with Section 144B of the Income Tax Act, 1961, and consequential Penalty Orders under Sections 272A(1)(d), 270A, and 271AAC(1) for Assessment Year 2020-21. The petitioner's appeal against the Assessment Order before the Commissioner of Income Tax (Appeals) was dismissed for being delayed by 123 days. The delay was attributed to the hospitalization of the Society's President due to a heart condition, preventing him from granting necessary approval. The Commissioner rejected the condonation of delay application, finding the reason insufficient. The petitioner then filed a writ petition before the High Court of Karnataka.

What were the issues?

1. Whether the Commissioner of Income Tax (Appeals) erred in rejecting the petitioner's application for condonation of delay of 123 days in filing the appeal against the Assessment Order dated 16.09.2022, thereby failing to consider the sufficient cause of the President's hospitalization, as contemplated under Section 251(3) of the Income Tax Act, 1961? Assessee's Contentions: - The Assessment Order is ex parte, treating the entire receipt as undisclosed income, leading to a high demand. - The petitioner's bank accounts are frozen due to penalty orders, making it impossible to pay the 20% pre-deposit required for further appeal to the Income Tax Appellate Tribunal. - The petitioner's claim of the President's hospitalization during the relevant period, causing the delay, is bona fide. - Reliance is placed on the proviso to Section 251(1)(a) of the Act, which allows the Commissioner (Appeals) to set aside an assessment under Section 144 and refer the case back for a fresh assessment if satisfied with the reasons. Revenue's Contentions: - The revenue, represented by the standing counsel, was heard on whether the Court should interfere in the given circumstances. No specific arguments or reliance on authorities were recorded for the revenue.

Which sections of the Income-tax Act were involved?

Section 144,Section 144B,Section 250,Section 272A(1)(d),Section 270A,Section 271AAC(1),Section 251(1)(a),Section 251(3)

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. 20337 OF 2026 (T-IT) BETWEEN:

INDUSTRIALISTS & PROFESSIONALS MULTIPURPOSE CO OP SOCIETY LIMITED, NO 19722, REGISTERED UNDER THE KARNATAKA CO-OPERATIVE SOCIETIES ACT, 1959 NETHAJI SUBASH CHANDRA BOSE ROAD, BYPASS ROAD, KUSHALNAGAR, KUSHALNAGAR TALUK, KODAGU 571234. PAN AABAN6823G

REPRESENTED BY SRI SRIJESH B D, CEO OF THE PETITIONER AGED 46 YEARS, S/O DEJAPPA B S, RESIDING AT 3RD BLOCK, INDIRA BADAVANE, KUSHALNAGAR …PETITIONER (BY SRI. RAVI SHANKAR S V., ADVOCATE) AND:

1.

THE INCOME TAX OFFICER WARD - 1 AND TPS, MADIKERI - 571201

Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA

2.

NATIONAL FACELESS ASSESSMENT CENTRE, REPRESENTED BY ADDITIONAL/ JOINT/DEPUTY/ ASSESSMENT UNIT 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.

3.

NATIONAL FACELESS APPEAL CENTRE, DELHI "C" BLOCK, 4TH FLOOR, DR S.P. MUKHERJEE CIVIC CENTRE, NEW DELHI - 110002 REP. BY COMMISSIONER OF INCOME TAX …RESPONDENTS (BY SRI. M THIRUMALESH, ADVOCATE)

THIS WP 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 16/09/2022 BEARING DIN ITBA/AST/S/144/2022- 23/1045577258 (1) PASSED BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2020-21 HEREIN MARKED AS ANNEXURE A. II) QUASHING THE PENALTY ORDER

DATED 21/03/2023 PASSED U/S 272A(1)(D) OF THE ACT DIN ITBA/PNL/F/272A(1)(D)/2022- 23/1051067820(1) BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2020-21 HEREIN MARKED AS ANNEXURE - A1. III) QUASHING THE PENALTY ORDER DATED 25/05/2026 PASSED U/S 270A OF THE ACT ITBA/PNL/F/270A/2026-27/1089171327(1) BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2020-21 HEREIN MARKED AS ANNEXURE - A2. IV) QUASHING THE PENALTY ORDER DATED 26/05/2026 ISSUED U/S 271AAC(1) OF THE ACT DIN ITBA/PNL/F/271AAC(1)/2026-27/ 1089216526 (1) BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2020-21 HEREIN MARKED AS ANNEXURE A3

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 has called in question the Assessment Order dated 16.09.2022 under Section 144 read with Section 144B of the Income Tax Act, 1961 [for short, ‘the Act’] and the consequential Penalty Orders under Section 272A[1][d], 270A and 271AAC[1] of the Act. The impugned Assessment Order and the Penalty Orders are produced as Annexures – A, A1 to A3.

2.

The petitioner has filed an appeal against the afore Assessment Order with the concerned Commissioner of Income Tax [Appeals] under Section 250 of the Act, and the appeal is dismissed on the ground of limitation. The petitioner has filed an application for condonation of delay of 123 days in filing the appeal stating that its President was hospitalized during the relevant time because of a heart condition and therefore the President of the Society, was not in a position to grant the required

approval. The Commissioner of Income Tax [Appeals], after referring to different decisions, has opined that the reason offered by the petitioner's representative will not constitute sufficient cause for condonation of delay and has rejected the appeal.

3.

Sri Ravishankar S V, the learned counsel for the petitioner, arguing for interference with the Assessment Order, submits the following stating that the petitioner's grievance would be redressed if the proceedings are restored with opportunity to file a response to the Show Cause Notice preceding the impugned Assessment Order. [A] The Assessment Order is an ex parte order, and the entire receipt is treated as undisclosed income resulting in a demand at the rate of 78% of the entire receipt. [B] After the impugned Penalty Orders, the petitioner's bank accounts are frozen and if the petitioner has to avail further appeal

with Income Taxable Appellate Tribunal, the petitioner, who has to pay 20% of the Demand, will not be in a position to offer such deposit. [C] The petitioner is bona fide in stating that its President was hospitalized during the relevant period, and as such, there was a delay in filing the appeal.

4.

Sri Ravishankar S V invites this Court's attention to the proviso to Section 251[1][a]1 of the

1 251 (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers— (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment : Provided that where such appeal is against an order of assessment made under section 144, he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment (3) The Joint Commissioner (Appeals) or Commissioner (Appeals) may admit an appeal after the expiration of the said period if he is satisfied that the appellant had sufficient cause for not presenting it within that period.

Act to canvass that the Commissioner of Appeals, if in a given circumstance, is satisfied with the reasons offered may set aside the ex parte Order under Section 144 of the Act and refer the case back to the Assessing Officer for making a fresh assessment. Sri M Thirumalesh, a learned standing counsel for the respondents who accepts notice for the respondents, is heard on whether this Court must interfere in the afore circumstances.

5.

The petitioner's appeal undisputedly is belated by 123 days, and it is also not in serious contest that the petitioner's representative was hospitalized during the relevant time. The question of lack of due diligence and sufficient cause essential for condoning the delay in filing the appeal must be considered in these circumstances, and this Court is of the view that mere reference to certain decisions would not amount to a due consideration of all

circumstances to decide on whether there must be condonation of delay.

6.

The petitioner’s case is that it’s President was hospitalized during the relevant time because of a heart condition, and this is not in serious dispute. Therefore, this Court finds reason to interfere with the impugned Order-in-Appeal. The assessment proceedings are concluded ex-parte, and because the Commissioner Income Tax [Appeals] could also, as contemplated under the proviso to Section 251[1][a] of the Act, interfere with the Assessment Order and restore the proceedings for fresh assessment, this Court is of the view that there must be an interference with the impugned ex parte Assessment Order and Penalty Orders restoring proceedings for fresh consideration. In the light of the afore, the following. ORDER [A] The petition is allowed in-part.

[B] The impugned Assessment Order dated 16.09.2022 [Annexure-A] and the Penalty Orders under Section 272A[1][d], 270A and 271AAC[1] of the Act [Annexures-A1 to A3] are set aside restoring proceedings to second respondent for fresh consideration with liberty to petitioner to respond to the Show Cause Notice dated 29.08.2022 and the petitioner shall file such Response upon intimation of the enablement thereof on the portal.

Sd/- (B M SHYAM PRASAD) JUDGE

AN/-

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