URBAN CO OPERATIVE CREDIT SOCIETY LTD vs. ASSESSING OFFICER

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WP/16675/2022HC KarnatakaKAHC01037648202203 December 2025Bench: S.R.KRISHNA KUMAR4 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the impugned penalty order under Section 270A and the demand notice under Section 156 for Assessment Year 2018-19 deserved to be quashed. The reasoning was based on the fact that the Assessment Order, which was the foundation for these subsequent orders, had already been set aside by the High Court in a prior writ petition (W.P.No.13407/2025). The court noted that the previous order had remitted the matter back to the Assessing Officer for reconsideration. Therefore, the consequential penalty and demand notices, being dependent on the validity of the Assessment Order, could not stand. The court allowed the petition and quashed the penalty order and demand notice. No issue was expressly left undecided.

What were the facts?

The petitioner, Urban Co-operative Credit Society Ltd., filed a writ petition before the High Court of Karnataka challenging a penalty order under Section 270A of the Income Tax Act, 1961, and a demand notice under Section 156 of the Act, both dated February 2022, for Assessment Year 2018-19. These orders were passed by the Assessing Officer, the first respondent. The petitioner sought to quash these orders. The court noted that the Assessment Order, which preceded the penalty order, had already been set aside by the same court in a previous writ petition (W.P.No.13407/2025) and the matter was remitted back to the respondent for fresh consideration.

What were the issues?

1. Whether the penalty order under Section 270A and the demand notice under Section 156 for Assessment Year 2018-19 are liable to be quashed, given that the preceding Assessment Order has been set aside by this Court. Assessee's Contention: The assessee, through its senior counsel, argued that since the Assessment Order, which formed the basis for the penalty and demand, has been quashed and remitted for fresh consideration, the consequential penalty and demand notices should also be quashed. The assessee relied on the principle that a penalty cannot survive if the underlying assessment is invalidated. Revenue's Contention: The judgment does not record any specific arguments or contentions made by the revenue's counsel.

Which sections of the Income-tax Act were involved?

Section 270A,Section 156

AI-generated summary — verify with the full judgment below

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HC-KAR NC: 2025:KHC:50565 WP No. 16675 of 2022

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF DECEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 16675 OF 2022 (T-IT) BETWEEN:

URBAN CO OPERATIVE CREDIT SOCIETY LTD NO.1 CHURCH STREET, RAMANAGARA DISTRICT, RAMANAGAR – 562 117 REP. BY ITS GENERAL MANAGER, SRI C. RAVINDRA, (SOCIETY REGISTERD UNDER KARNATAKA CO-OPERATIVE SOCIETY ACT, 1959) …PETITIONER (BY SRI. M. V. SESHACHALA, SENIOR COUNSEL FOR SRI. G.S. NAGHARISH, ADVOCATE)

AND:

1.

ASSESSING OFFICER NATIONAL FACELESS ASSESSMENT CENTRE, NO.412-413, 1ST FLOOR, OPP. METRO PILLAR NO.793 DWARKA MOR, NEW DELHI – 110 059

2.

INCOMET AX OFFICER WARD -2(2)(3) BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK KORAMANGALA, BENGALURU – 560 095

3.

PRINCIPAL COMMISSIONER OF INCOME TAX-2 BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KORAMANGALA BENGALURU – 560 095 …RESPONDENTS (BY SRI. E.I. SANMATHI, ADVOCATE)

Digitally signed by CHANDANA B M Location: High Court of Karnataka

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HC-KAR NC: 2025:KHC:50565 WP No. 16675 of 2022

THIS W.P. IS FILED UNDER ARTICLE 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE PENALTY ORDER U/S.270A OF THE IT ACT DATED 10.02.2022 BEARING NO.ITBA/PNL/F/270A/2021-22/1039591425(1) ANNEXURE-E1 AND DEMAND NOTICE U/S.156 OF THE IT ACT DTD 09.02.2022 BEARING NO.ITBA/PNL/S/156/2021-22/1039589917(1) ANNEXURE-E2 FOR THE ASSESSMENT YEAR 2018-19 PASSED BY THE 1ST RESPONDENT.

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

CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR

ORAL ORDER

In this petition, petitioner seeks for the following reliefs:- “a. Issue a Writ of certiorari to quash the penalty order u/s 270A of the IT Act dated 10.02.2022 bearing No. ITBA/PNL/F/270A/2021-22/1039591425(1) Annexure- E1 & demand notice u/s 156 of the IT Act dated 09.02.2022 bearing No.ITBA/PNL/S/156/2021- 22/1039589917(1) Annexure-E2 for the Assessment year 2018-19 passed by the first respondent. b. Issue such other Writ or direction as this Hon’ble Court deems fit to grant in the facts and circumstances of the present case.”

2.

Heard learned Senior counsel for the petitioner and learned counsel for the respondents and perused the material on record.

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HC-KAR NC: 2025:KHC:50565 WP No. 16675 of 2022

3.

A perusal of the material on record will indicate that the Assessment Order, which preceded the impugned penalty order has been set aside by this Court in W.P.No.13407/2025 and the matter is remitted back to the concerned respondent for reconsideration afresh, as hereunder: “ORDER (i) The petition is allowed. (ii) The impugned Assessment Order dated 02.03.2021 at Annexure-G passed by respondent No.1 and the subsequent recovery notice dated 13.07.2021 at Annexure-L passed by respondent No.2 are hereby set aside. (iii) The matter is remitted back to respondent No.1 for reconsideration of the matter afresh, in accordance with law. (iv) Liberty is reserved in favour of the petitioner to submit reply/response, documents, etc., before respondent No.1, who shall consider the same, provide sufficient opportunity, hear the petitioner and proceed further, in accordance with law.” 4. Under these circumstances, the impugned penalty order also deserves to be quashed. 5. In the result, I pass the following:

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HC-KAR NC: 2025:KHC:50565 WP No. 16675 of 2022

ORDER (i) The petition is allowed. (ii) The impugned penalty order dated 10.02.2022 at Annexure-E1 and demand notice dated 09.02.2022 at Annexure-E2, passed/issued by respondent No.1, are hereby quashed.

Sd/- (S.R.KRISHNA KUMAR) JUDGE

BMC List No.: 2 Sl No.: 24

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