M/S SLN WOOD INDUSTRIES vs. THE INCOME TAX OFFICER

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WP/22074/2023HC KarnatakaKAHC01051544202307 November 2025Bench: S.R.KRISHNA KUMAR5 pages
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What did the High Court hold?

The High Court of Karnataka allowed the petition. It was an undisputed fact that the petitioner had not submitted a reply to the Section 142(1) notices. However, in light of the petitioner's assertion that the omission was due to bonafide reasons, unavoidable circumstances, and sufficient cause, and the request for one more opportunity, the Court found it just and appropriate to set aside the impugned assessment order (Annexure-A) passed under Section 144 of the Income Tax Act and the demand notice (Annexure-C). The matter was remitted back to the Income Tax Officer (Respondent No. 1) for reconsideration. The petitioner was granted liberty to submit its reply and documents, which the respondent was directed to consider. The Court's reasoning was based on providing a fair opportunity to the assessee when there were sufficient grounds for non-compliance. The operative direction was to set aside the impugned orders and remit the matter for fresh consideration from the stage of submitting the reply.

What were the facts?

The petitioner, M/s SLN Wood Industries, filed a writ petition before the High Court of Karnataka challenging an assessment order and a demand notice, both dated September 24, 2019, pertaining to Assessment Year 2017-18. The petitioner contended that it did not receive two notices issued by the respondents under Section 142(1) of the Income Tax Act, 1961, dated March 13, 2018, and December 7, 2018. Consequently, the petitioner was unable to submit its reply and supporting documents. The petitioner argued that this omission was due to bonafide reasons, unavoidable circumstances, and sufficient cause, and requested an opportunity to respond. The respondents argued that the petition lacked merit and should be dismissed.

What were the issues?

1. Whether the petitioner's failure to respond to the notices issued under Section 142(1) of the Income Tax Act, 1961, was due to bonafide reasons, unavoidable circumstances, and sufficient cause, warranting an opportunity to submit a reply and documents? (Question of fact and law, turning on Section 142(1) of the IT Act). Assessee's Contention: The petitioner argued that it did not receive the Section 142(1) notices dated March 13, 2018, and December 7, 2018, and therefore could not submit its reply and documents. This failure was attributed to bonafide reasons, unavoidable circumstances, and sufficient cause. The petitioner sought an opportunity to respond. Revenue's Contention: The respondents argued that the petition had no merit and was liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 142(1),Section 144

AI-generated summary — verify with the full judgment below

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HC-KAR NC: 2025:KHC:45464 WP No. 22074 of 2023

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7TH DAY OF NOVEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 22074 OF 2023 (T-IT) BETWEEN:

M/S SLN WOOD INDUSTRIES A PROPRIETORSHIP FIRM REPRESENTED BY ITS PROPRIETOR M VENUVAS S/O M VENKATARAMAIAH AGED ABOUT 34 YEARS AGRICULTURIST K M ROAD, GAVANAHALLY CHIKMAGALUR – 577 101.

…PETITIONER (BY SRI. DINESH.RAO.N, ADVOCATE) AND:

1.

THE INCOME TAX OFFICER WARD 2, INCOME TAX OFFICE COURT ROAD, CHIKMAGALUR-577 101.

2.

CENTRAL BOARD OF DIRECT TAXES THROUGH THE CHAIRPERSON DEPARTMENT OF REVENUE MINISTRY OF FINANCE , NORTH TALUK NEW DELHI -110 002.

3.

THE PRINCIPAL COMMISSIONER OF INCOME TAX BENGALURU-1, BMTC BUILDING 80 FEET ROAD, 6TH BLOCK NEAR KHB GAMES VILLAGE KORAMANGALA BENGALURU - 560 095. …RESPONDENTS

(BY SRI. M. THIRUMALESH, ADVOCATE FOR R-1 & R-2; SRI. Y.V. RAVIRAJ, ADVOCATE FOR R-3)

THIS W.P IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ASSESSMENT

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

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HC-KAR NC: 2025:KHC:45464 WP No. 22074 of 2023

ORDER DTD 24.09.2019 IN RESPECT OF ASSESSMENT YEAR 2017-18, COPY OF WHICH IS PRODUCED AT ANNEXURE-A BEARING NO.ITBA/AST/S/144-2019-20/1018277087(1) AND DEMAND NOTICE DTD 24.09.2019, ISSUED AGAINST THE PETITIONER, COPY OF WHICH IS PRODUCED AS ANNEXURE-C ITBA/AST/S/156/2019-20/1018277593(1) ISSUED BY MINISTRY OF FINANCE, INCOME TAX DEPARTMENT.

THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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

ORAL ORDER

In this petition, petitioner seeks the following reliefs:

“ i) Issue a Writ of Certiorari quashing the Assessment Order dated: 24.09.2019 in respect of Assessment year 2017-18, copy which is produced at Annexure-A Bearing No.ITBA/AST/S/144-2019- 20/1018277087(1) and Demand Notice dated: 24.09.2019, issued against the Petitioner, copy of which is produced as Annexure-C; ITBA/AST/S/156/2019-20/1018277596(1) issued by Ministry of Finance, Income Tax Department.

ii) And pass such other orders as this Hon’ble Court deems fit and proper in the interest of justice and equity.”

2.

Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record. 3. In addition to reiterating the various contentions urged in the memorandum of petition and referring to the material on record, learned counsel for the petitioner submits that notice issued by the respondents under Section 142(1) of the Income Tax Act,

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HC-KAR NC: 2025:KHC:45464 WP No. 22074 of 2023

1961 (for short, ‘IT Act’), dated 13.03.2018 was not received by petitioner and it was not aware of the notice and consequently, petitioner could not submit its reply / response along with documents to the said notice. Subsequently, respondents issued one more notice on 07.12.2018, which was not received by petitioner and it was not aware of the said notice also and consequently, petitioner could not submit its reply / response along with documents to the said notice. It is submitted that the inability and omission on the part of the petitioner to submit reply / response along with documents to the Section 142(1) notice dated 17.12.2018 was due to bonafide reasons, unavoidable circumstances and sufficient cause and as such, if one more opportunity is provided to the petitioner to do so by setting aside the impugned orders and notices, the petitioner would do so and respondents may be directed to proceed further in accordance with law. 4. Per contra, learned counsel for the respondents submits that there is no merit in the petition and that the same is liable to be dismissed.

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HC-KAR NC: 2025:KHC:45464 WP No. 22074 of 2023

5.

A perusal of the impugned order will indicate that it is an undisputed fact that petitioner has not submitted reply / response along with documents to Section 142(1) notices dated 13.03.2018 and 07.12.2018. Under these circumstances, in view of the specific assertion on the part of the petitioner that its inability and omission to submit a reply along with documents to Section 142(1) notice was due to bonafide reasons, unavoidable circumstances and sufficient cause and if one more opportunity is granted, petitioner would submit reply along with documents, I deem it just and appropriate to set aside the impugned orders at Annexure – A dated 24.09.2019 passed under Section 144 of the Income Tax Act, and remit the matter back to respondent No.1 for reconsideration afresh from the stage of submitting of reply by the petitioner to Section 142(2) notice dated 07.12.2018 and to proceed further in accordance with law. 6. In the result, pass the following: ORDER (i) The petition is hereby allowed. (ii) Impugned notice / order at Annexures – A and C are hereby set aside.

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HC-KAR NC: 2025:KHC:45464 WP No. 22074 of 2023

(iii) Matter is remitted back to respondent No.1 for reconsideration afresh in accordance with law from the stage of submitting of reply to the Notice under Section 142(1) of the IT Act dated 07.12.2018 (iv) Liberty is reserved in favour of the petitioner to submit additional pleadings, documents, etc., to the respondent, who shall consider the same and proceed further in accordance with law.

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

SV List No.: 2 Sl No.: 57

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