PRATHAMIKA KRISHI PATHINA SAHAKARA vs. COMMISSIONER OF INCOME TAX (APPEALS)

PDF · subscribers
WP/12555/2026HC KarnatakaKAHC01028271202628 April 2026Bench: S SUNIL DUTT YADAV6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court allowed the amendment of the writ petition to include challenges to the assessment order and demand notice. It noted that the assessment order (Annexure-B) was passed without the petitioner's participation, which they attributed to their auditor's lapse. The petitioner claimed eligibility for deduction under Section 80P and argued that bank deposits, representing contributions from farmer members, should not be treated as unexplained income under Section 69A. The Court found that the Assessing Officer had treated substantial bank deposits and other credits as unexplained income. Considering the petitioner's submission that they could explain the source of these deposits if given an opportunity, the Court deemed it appropriate to reopen the proceedings. Accordingly, the assessment order (Annexure-B), demand notice (Annexure-C), and bank account attachment order (Annexure-D), along with proceedings pursuant to the Section 148 notice, were set aside. The matter was remitted to the stage of reply to the notice issued under Section 148A(b). The petitioner was directed to appear before the Assessing Officer on May 25, 2026, and pay costs of Rs. 10,000/-. All contentions on merits were kept open.

What were the facts?

The petitioner, Prathimika Krishi Pathina Sahakara Sangha Niyamitha, filed a writ petition challenging an assessment order (Annexure-B), a demand notice (Annexure-C), and a bank account attachment order under Section 226(3) of the Income Tax Act, 1961 (Annexure-D), dated March 30, 2026, passed by the Assessing Officer. The petitioner claimed the assessment order was ex-parte due to their auditor's lapse. They asserted entitlement to deduction under Section 80P and argued that bank deposits, attributed to farmer members, should not be treated as unexplained income under Section 69A. The Assessing Officer had noted substantial unexplained bank deposits and other credits.

What were the issues?

1. Whether the assessment order, demand notice, and bank account attachment order are valid, considering the petitioner's claim of ex-parte proceedings due to auditor's lapse and their entitlement to Section 80P deduction and explanation for bank deposits under Section 69A? (Question of law and mixed fact and law, concerning Sections 80P and 69A of the Income Tax Act, 1961). Assessee's Contentions: - The assessment order was ex-parte due to an auditor's lapse. - The petitioner is eligible for deduction under Section 80P. - Bank deposits represent contributions from farmer members and should not be treated as unexplained income under Section 69A. Revenue's Contentions: - Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 80P,Section 69A,Section 148,Section 148A,Section 226(3)

AI-generated summary — verify with the full judgment below

- 1 -

HC-KAR NC: 2026:KHC:23677 WP No. 12555 of 2026 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28TH DAY OF APRIL, 2026 BEFORE THE HON'BLE MR. JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 12555 OF 2026 (T-IT) BETWEEN: PRATHAMIKA KRISHI PATHINA SAHAKARA SANGHA NIYAMITHA, THANNIRALA, THANNIRALLU, HASSAN-573 201, (A SOCIETY REGISTERED UNDER KCS ACT, 1959) REP. BY ITS CEO, MR. B. L. JAVAREGOWDA S/O. LANKEGAWDA, AGE 56 YEARS, R/O. 8TH CROSS, 3RD MAIN, 2ND STAGE, BEHIND FLOR MILL, SHANTHI NAGAR, HASSAN-573 201. …PETITIONER (BY SRI. GIRISH V BHAT., ADVOCATE) AND: 1. COMMISSIONER OF INCOME TAX (APPEALS), NATIONAL FACELESS APPEAL CENTRE, DELHI - 110 001. 2. ASSESSING OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI - 110 001. Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA

- 2 -

HC-KAR NC: 2026:KHC:23677 WP No. 12555 of 2026 3. INCOME TAX OFFICER, WARD 1 AND TPS, AAYAKAR BHAVAN, 2ND STAGE, BELUR ROAD, HASSAN - 573 201. 4. THE BRANCH MANAGER, HASSAN DISTRICT CENTRAL CO-OPERATIVE BANK LTD., UNNATHI, B. M. ROAD, HASSAN-573 201. …RESPONDENTS (BY SRI. M. THIRUMALESH, ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING THE IMPUGNED BANK A/C ATTACHMENT ORDER/NOTICE UNDER SEC. 226(3) OF THE ACT DATED 30.03.2026, PASSED BY THE 3RD RESPONDENT BEARING NO.ITBA/COM/F/17/2025- 26/1088121493(1) VIDE ANNEXURE-D TO THE WRIT PETITION AND ETC.,

THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S SUNIL DUTT YADAV

- 3 -

HC-KAR NC: 2026:KHC:23677 WP No. 12555 of 2026 ORAL ORDER The petitioner has filed an application seeking for amendment of the petition. The amendment relates to the prayer column whereby the petitioner seeks to assail validity of the impugned assessment order as well as the demand notice. Certain additional amendments are sought including as regards the name of the petitioner.

In light of the averments and submissions made, I.A.No.2/2026 filed under VI Rule 17 of CPC is allowed. Amended petition filed is taken on record. 2. The petitioner has suffered an assessment order at Annexure-B which according to the petitioner is in-effect an exparte order as the petitioner did not participate in the proceedings. It is the case of the petitioner that non-participation of the proceedings is due to the lapse on part of the auditor. It is submitted that the petitioner is entitled for deduction under Section 80P of the Income

- 4 -

HC-KAR NC: 2026:KHC:23677 WP No. 12555 of 2026 Tax Act, 1961 (for short, 'the Act') and would also demonstrate, if an opportunity is granted that the unexplained income which is taken note of by virtue of the deposits in the bank would be explained to be deposits of the members who are farmers and could not have been taken note of as unexplained income in terms of Section 69A of the Act. 3. Perused the assessment order at Annexure-B. The authority has issued notice under Section 148 as well as other communication and has proposed for variations. The authority has taken note of the deposits in the bank as well as interest on bank deposits and noticing that the deposits were substantial and there was no explanation regarding the same, the authority has concluded that such deposits are unexplained income. 4. The authority has also noticed that there were credits other than the interest on deposits and no explanation was forthcoming regarding the same. In light

- 5 -

HC-KAR NC: 2026:KHC:23677 WP No. 12555 of 2026 of the adjudication having concluded on the basis of records available with the authority by considering the deposits as unexplained income and in light of submission that the petitioner would explain the source of such deposits by providing necessary material before the authority, it would be appropriate to reopen the proceedings and afford an opportunity to the petitioner by putting it on terms. 5. Accordingly, the orders at Annexures-B, C and D are set aside, as also all other proceedings pursuant to the Section 148 notice. Matter is remitted to the stage of reply to notice issued under Section 148A(b). Petitioner to appear before respondent No.3 without further notice on 25.05.2026. 6. In light of setting aside of the impugned orders as noticed above, the instructions made pursuant to recovery proceedings by the revenue to the Bank for attachment to be rescinded, forthwith.

- 6 -

HC-KAR NC: 2026:KHC:23677 WP No. 12555 of 2026 7. Petitioner to make out reply to the notice issued under Section 148A(b) and matter to be proceeded thereafter. Petitioner is put on terms to pay cost of Rs.10,000/- to the Karnataka Advocates Clerks Benevolent Trust, High Court Building, Bengaluru. 8. Accordingly, petition is disposed of. All contentions on merits are kept open. Sd/- (S SUNIL DUTT YADAV) JUDGE MCR

More judgments on Section 80P

All 5,069 judgments and leading authorities on Section 80P →

Recent GST High Court judgments

Search GST case law →