SRI. PRAKASHA vs. THE ASSESSMENT UNIT

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WP/21494/2026HC KarnatakaKAHC01047293202621 July 2026Bench: B M SHYAM PRASAD10 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court allowed the petition in part. It held that the respondents could not dispute that the petitioner should have been given seven days to show cause against the notice under Section 148A(b) of the Income Tax Act, 1961, unless there was a reasoned order reducing this period. The Court found merit in the petitioner's grievance regarding the inadequate notice period and the subsequent proceedings. Consequently, the Court set aside the assessment order, demand notices, and penalty orders related to AY 2018-19, including the notice under Section 148A(b) and the subsequent orders and notices. The Court granted the petitioner liberty to file a response to the Show Cause Notice dated 22.03.2022 by 24.09.2026. All questions were left open to be considered in the subsequent proceedings. The ratio decidendi is that a statutory notice period, if not adhered to without valid reasons, renders subsequent proceedings vulnerable and warrants intervention by the High Court in its writ jurisdiction to ensure a fair opportunity to the assessee.

What were the facts?

The petitioner, Sri Prakasha, is challenging assessment orders, demand notices, and penalty orders for Assessment Year (AY) 2018-19. The proceedings were initiated by the Assessment Unit, National Faceless Assessment Centre, and the Income Tax Officer, Ward 1, Tumkur. The petitioner's business involves purchasing copra from farmers and selling to wholesale dealers. He withdrew cash remittances through banking channels to pay farmers, but these withdrawals were classified as 'unexplained income' and brought to tax. The petitioner contends that the show cause notice under Section 148A(b) dated 22.03.2022, issued for AY 2018-19, provided an inadequate response period of six days, excluding the notice date, instead of the statutory seven days. This led to the issuance of subsequent assessment, demand, and penalty orders.

What were the issues?

1. Whether the notice issued under Section 148A(b) of the Income Tax Act, 1961, dated 22.03.2022, for AY 2018-19, which provided only six days (excluding the notice date) for the petitioner to respond, is valid, considering the statutory minimum period of seven days. Assessee's contention: The petitioner argues that the reduced notice period of six days, instead of the statutory seven days, is arbitrary and deprives him of a proper opportunity to respond to the show cause notice. He relies on the principle that a shorter period than statutorily prescribed, without valid reasons, vitiates the proceedings. Revenue's contention: The learned standing counsels for the respondents did not dispute that the petitioner ought to have been extended an opportunity of seven days to show cause, excluding the date of the notice, unless reasoned otherwise.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 156,Section 270A,Section 271AAC(1),Section 226(3),Section 148A,Section 148A(b),Section 148A(d),Section 148

AI-generated summary — verify with the full judgment below

- 1 - HC-KAR IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF JULY, 2026 BEFORE THE HON'BLE MR. JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 21494 OF 2026 (T-IT) BETWEEN:

SRI. PRAKASHA S/O MAHALINGAPPA AGED ABOUT 58 YEARS BEHIND KARNATAKA BANK, DABBEGHATTA ROAD, TURUVEKERE (RURAL), TUMKUR DISTRICT-572227. …PETITIONER (BY SRI.NARENDRA KUMAR J JAIN., ADVOCATE) AND:

1.

THE ASSESSMENT UNIT NATIONAL FACELESS- ASSESSMENT CENTRE, INCOME TAX DEPARTMENT, MINISTRY OF FINANCE, ROOM NO.401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI 110003.

2.

INCOME TAX OFFICER WARD 1 AND TPS AAYAKAR BHAVAN, RAMAKRISHNAGAR,

Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA

- 2 - HC-KAR KUNIGAL ROAD, TUMKUR -572013 …RESPONDENTS (BY SRI. VINAYAKA S PANDIT., ADVOCATE A/W SRI. M. DILIP., ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO (A) QUASH AS FAR AS THE PETITIONER IS CONCERNED BY AN APPROPRIATE WRIT OR ORDER IN THE NATURE OF CERTIORARI OR OTHERWISE THE IMPUGNED ASSESSMENT ORDER DATED 02.03.2023 ISSUED BY THE LEARNED FIRST RESPONDENT UNDER SECTION 147 R.W.S 144B VIDE DIN ITBA/AST/S/147/2022- 23/1050322775(1) FOR AY 2018-19, ENCLOSED IN ANNEXURE A; (B) QUASH AS FAR AS THE PETITIONER IS CONCERNED BY AN APPROPRIATE WRIT OR ORDER IN THE NATURE OF CERTIORARI OR OTHERWISE THE IMPUGNED DEMAND NOTICE RAISED UNDER SECTION 156 DATED 02.03.2023 FOR THE PAYMENT OF TAX SO ASSESSED ISSUED BY THE LEARNED FIRST RESPONDENT VIDE DIN ITBA/AST/S/156/2022- 23/1050323085(1) FOR THE AY 2018-19, ENCLOSED IN ANNEXURE B; (C) QUASH AS FAR AS THE PETITIONER IS CONCERNED BY AN APPROPRIATE WRIT OR ORDER IN THE NATURE OF CERTIORARI OR OTHERWISE THE IMPUGNED PENALTY ORDER UNDER SECTION 270A OF THE INCOME-TAX ACT, 1961 DATED 25.09.2023

- 3 - HC-KAR PASSED BY THE LEARNED FIRST RESPONDENT FOR LEVY OF PENALTY VIDE ITBA/PNL/F/270A/2023- 24/1056517261(1) FOR THE AY 2018-19, ENCLOSED IN ANNEXURE C; (D) QUASH AS FAR AS THE PETITIONER IS CONCERNED BY AN APPROPRIATE WRIT OR ORDER IN THE NATURE OF CERTIORARI OR OTHERWISE THE IMPUGNED DEMAND NOTICE RAISED UNDER SECTION 156 DATED 25.09.2023 FOR THE PAYMENT OF PENALTY U/S 270A SO ASSESSED BY THE LEARNED FIRST RESPONDENT VIDE ITBA/PNL/S/156/2023- 24/1056517262(1) FOR THE AY 2018-19, ENCLOSED IN ANNEXURE D; (E) QUASH AS FAR AS THE PETITIONER IS CONCERNED BY AN APPROPRIATE WRIT OR ORDER IN THE NATURE OF CERTIORARI OR OTHERWISE THE IMPUGNED PENALTY ORDER UNDER SECTION 271AAC(1) OF THE INCOME-TAX ACT, 1961 DATED 25.09.2023 PASSED BY THE LEARNED FIRST RESPONDENT FOR LEVY OF PENALTY VIDE ITBA/PNL/F/271AAC(1)/2023-24/1056515582(1) FOR THE AY 2018-19, ENCLOSED IN ANNEXURE E; (F) QUASH AS FAR AS THE PETITIONER IS CONCERNED BY AN APPROPRIATE WRIT OR ORDER IN THE NATURE OF CERTIORARI OR OTHERWISE THE IMPUGNED DEMAND NOTICE RAISED UNDER SECTION 156 DATED 25.09.2023 FOR THE PAYMENT OF PENALTY U/S 270A SO ASSESSED BY THE LEARNED FIRST RESPONDENT VIDE ITBA/PNL/S/156/2023-24/1056516645(1) FOR THE AY 2018-19, ENCLOSED IN ANNEXURE F;

- 4 - HC-KAR (G) QUASH AS FAR AS THE PETITIONER IS CONCERNED BY AN APPROPRIATE WRIT OR ORDER IN THE NATURE OF CERTIORARI OR OTHERWISE THE IMPUGNED NOTICE ISSUED UNDER SECTION 226(3) DATED 26.03.2026 ISSUED BY THE LEARNED SECOND RESPONDENT TO AXIS BANK FOR ATTACHING THE BANK ACCOUNT OF THE PETITIONER VIDE ITBA/RCV/S/226(3)1/2025-26/1087932547(1) FOR THE AY 2018-19, ENCLOSED IN ANNEXURE G; (H) QUASH AS FAR AS THE PETITIONER IS CONCERNED BY AN APPROPRIATE WRIT OR ORDER IN THE NATURE OF CERTIORARI OR OTHERWISE THE IMPUGNED NOTICE ISSUED UNDER SECTION 226(3) DATED 26.03.2026 ISSUED BY THE LEARNED SECOND RESPONDENT TO STATE BANK OF INDIA FOR ATTACHING THE BANK ACCOUNT OF THE PETITIONER VIDE ITBA/RCV/S/226(3)1/2025-26/1087931161(1) FOR THE AY 2018-19, ENCLOSED IN ANNEXURE H; (I) QUASH AS FAR AS THE PETITIONER IS CONCERNED BY AN APPROPRIATE WRIT OR ORDER IN THE NATURE OF CERTIORARI OR OTHERWISE THE IMPUGNED NOTICE ISSUED UNDER SECTION 226(3) DATED 26.03.2026 ISSUED BY THE LEARNED SECOND RESPONDENT TO STATE BANK OF INDIA FOR ATTACHING THE BANK ACCOUNT OF THE PETITIONER VIDE ITBA/RCV/S/226(3)1/2025-26/1087932381(1) FOR THE AY 2018-19, ENCLOSED IN ANNEXURE J; (J) QUASH AS FAR AS THE PETITIONER IS CONCERNED BY AN

- 5 - HC-KAR APPROPRIATE WRIT OR ORDER IN THE NATURE OF CERTIORARI OR OTHERWISE THE IMPUGNED NOTICE UNDER SECTION 148A(B) DATED 22.03.2022 ISSUED THE LEARNED SECOND RESPONDENT VIDE ITBA/AST/F/148A(SCN)2021-22/1041247053(1) FOR THE AY 2018-19, ENCLOSED IN ANNEXURE K; (K) QUASH AS FAR AS THE PETITIONER IS CONCERNED BY AN APPROPRIATE WRIT OR ORDER IN THE NATURE OF CERTIORARI OR OTHERWISE THE IMPUGNED NOTICE UNDER SECTION 148A(D) DATED 31.03.2022 ISSUED BY THE LEARNED SECOND RESPONDENT VIDE ITBA/AST/F/148A/2021-22/1042281764(1) FOR THE AY 2018-19, ENCLOSED IN ANNEXURE L; (L) QUASH AS FAR AS THE PETITIONER IS CONCERNED BY AN APPROPRIATE WRIT OR ORDER IN THE NATURE OF CERTIORARI OR OTHERWISE THE IMPUGNED NOTICE UNDER SECTION 148 DATED 31.03.2022 ISSUED BY THE LEARNED SECOND RESPONDENT VIDE ITBA/AST/S/148_1/2021-22/1042349363(1) FOR THE AY 2018-19, ENCLOSED IN ANNEXURE-M.

THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD

- 6 - HC-KAR ORAL ORDER

The petitioner's grievance is with the lack of opportunity with the issuance of Notice under Section 148A[b] of the Income Tax Act, 1961 [for short, 'the Act'] dated 22.03.2022 [Annexure-K] for the assessment year 2018-19 and the conclusion of the proceedings subsequent thereto. The details of the impugned proceedings are as follows. Sl. No. Notices/ Orders Date Provisions of Income Tax Act, 1961 Annexures 1 Assessment Order 02.03.2023 147 r/w. 144, 144B A 2 Notice of Demand 02.03.2023 156 B 3 Penalty Order 25.09.2023 270A C 4 Notice of Demand 25.09.2023 156 D 5 Penalty Order 25.09.2023 271AAC[1] E 6 Notice of Demand 25.09.2023 156 F 7 Notice 26.03.2026 226[3] G 8 Notice 26.03.2026 226[3] H 9 Notice 26.03.2026 226[3] J 10 Show Cause Notice 22.03.2022 148A[b] K 11 Order 31.03.2022 148A[d] L 12 Notice 31.03.2022 148 M

- 7 - HC-KAR

2.

The petitioner's case is that he is engaged in purchase of copra from farmers to be sold to the wholesale dealers, and as part of his business, he has withdrawn cash remittances through banking channels to pay the farmers for the produce sold by them but the cash withdrawals have been classified as 'unexplained income' and brought to tax. 3. Sri Narendra Kumar J Jain, the learned counsel for the petitioner, relying upon these set of circumstances, submits that this Court could consider disposing of the petition with liberty to the petitioner to file response to the Show Cause Notice dated 22.03.2022 because as against the statutory period of seven days relevant for the assessment year, the petitioner is admittedly given six days. In elaboration, the learned counsel submits that the Show Cause Notice issued is dated 22.03.2022 and the petitioner is permitted to respond on the e-filing portal by 28.03.2022 and that the petitioner,

- 8 - HC-KAR excluding the date of the Notice, is given six days without assigning any reason to reduce the minimum notice period. Sri M Dilip and Sri Vinayaka S Pandit, the learned standing counsels who accept notice for the respondents, are heard for disposal of the petition in the light of these submissions. 4. The learned Standing Counsels cannot dispute that unless reasoned the petitioner ought to have been extended with an opportunity of seven days to show cause excluding the date of the Notice. This Court is persuaded to intervene not only because of these circumstances but also the circumstances set up by the petitioner to justify cause against the reassessment as is now concluded. This Court finds that the petitioner must therefore have an opportunity to show cause as per the Notice under Section 148A[b] of the Act. In the circumstances, the following.

- 9 - HC-KAR

ORDER [A] The petition is allowed-in-part.

[B] The following impugned orders/Notices are set aside reserving liberty to the petitioner to respond to the Show Cause Notice dated 22.03.2022 [Annexure-K]. Sl. No . Notices/ Orders Date Provisions of Income Tax Act, 1961 Annexures 1 Assessment Order 02.03.2023 147 r/w. 144, 144B A 2 Notice of Demand 02.03.2023 156 B 3 Order 25.09.2023 270A C 4 Notice of Demand 25.09.2023 156 D 5 Order 25.09.2023 271AAC[1] E 6 Notice of Demand 25.09.2023 156 F 7 Notice 26.03.2026 226[3] G 8 Notice 26.03.2026 226[3] H 9 Notice 26.03.2026 226[3] J 10 Order 31.03.2022 148A[d] L 11 Notice 31.03.2022 148 M

- 10 - HC-KAR [C] The petitioner shall file such response to the Show Cause Notice with the second respondent by 24.09.2026 without receipt of any further notice. It is needless to observe that all questions are left open to be considered in such proceedings.

Sd/- (B M SHYAM PRASAD) JUDGE

AN/-

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