SARGOD CHANDRE GOWDA GOKARNA, vs. THE CHIEF COMMISSIONER OF INCOME TAX (CCIT)

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WP/26990/2025HC KarnatakaKAHC01058250202531 October 2025Bench: S.R.KRISHNA KUMAR6 pages
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What did the High Court hold?

The High Court allowed the petition. Regarding the first issue, the Court held that the land acquisition compensation is exempted from income tax, citing the Division Bench decision in 'BANGALORE METRO RAIL CORPORATION LIMITED v. M/s. SRI BALAJI CORPORATE SERVICES AND OTHERS'. The Court found that the respondents erred in rejecting the petitioner's request for a refund on this ground. Concerning the second issue, the Court found that the respondents adopted a hyper-technical approach in rejecting the condonation of delay. The Court was of the considered opinion that the reasons provided by the petitioner for the delay were valid and sufficient. Therefore, the impugned order rejecting the condonation of delay was also set aside as being contrary to the material on record. The Court directed the respondent No.1 to refund the entire tax collected from the petitioner expeditiously, within one month of receiving the order.

What were the facts?

The petitioner, Sargod Chandre Gowda Gokarna, an individual assessee, filed his income tax returns for Assessment Year 2019-20, disclosing tax on long-term capital gains from compensation received from Karnataka Industrial Areas Development Board (KIADB). KIADB issued Form 16A belatedly in March 2024, preventing the petitioner from filing a revised return within the prescribed time. Consequently, the petitioner filed an application on June 1, 2024, seeking condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961, and a refund. The respondent authorities rejected this application both on grounds of delay and merits through an order dated July 29, 2025, which is now under challenge in this writ petition.

What were the issues?

1. Whether the land acquisition compensation received by the petitioner is exempted from income tax under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, and if the respondents erred in rejecting the refund request on this ground, thereby challenging the impugned order dated 29.07.2025. Assessee's contention: The petitioner contends that the land acquisition compensation is exempted from income tax, as supported by the Division Bench decision in 'BANGALORE METRO RAIL CORPORATION LIMITED v. M/s. SRI BALAJI CORPORATE SERVICES AND OTHERS'. Revenue's contention: The revenue rejected the application on merits, implying the compensation is taxable. 2. Whether the reasons assigned by the respondents for rejecting the petitioner's request for condonation of delay in filing the refund application were valid and sufficient, and if the impugned order rejecting the condonation of delay is contrary to the material on record. Assessee's contention: The petitioner argues that the belated issuance of Form 16A by KIADB constituted valid and sufficient cause for the delay in filing the refund application. Revenue's contention: The revenue rejected the condonation of delay, indicating they did not find the reasons sufficient.

Which sections of the Income-tax Act were involved?

Section 119(2)(b)

AI-generated summary — verify with the full judgment below

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HC-KAR NC: 2025:KHC:44512 WP No. 26990 of 2025

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 31ST DAY OF OCTOBER, 2025 BEFORE THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 26990 OF 2025 (T-IT) BETWEEN:

SARGOD CHANDRE GOWDA GOKARNA, S/O. SARGOD CHANDRE GOWDA AGED ABOUT 71 YEARS NO. 301, PRESTIGE ABSHOT, NO.26/1, SANKEY ROAD, VASANTH NAGAR, H.K.P. ROAD, S.O BENGALURU – 560 051 (ALSO RESIDING AT NO. 6, RAHEJA CHAMBERS NO.12, MUSEUM ROAD, BENGALURU – 560 001) …PETITIONER (BY SRI. SHREEHARI KUTSA, ADVOCATE)

AND:

1.

THE CHIEF COMMISSIONER OF INCOME TAX (CCIT) BENGALURU-1 AN AUTHORITY UNDER SECTION 116 OF THE INCOME ACT, 1961 CENTRAL REVENUE BUILDING, QUEEN’S ROAD, BENGALURU – 560 001

2.

THE PRINCIPAL COMMISSIONER OF INCOME TAX, BENGALURU AN AUTHORITY UNDER SECTION 116 OF THE INCOME ACT, 1961 CENTRAL REVENUE BUILDING, QUEEN’S ROAD, BENGALURU – 560 001

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

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HC-KAR NC: 2025:KHC:44512 WP No. 26990 of 2025

3.

THE INCOME TAX OFFICER, WARD 1(2)(1), BENGALURU THE ASSESSING OFFICER UNDER THE INCOME ACT, 1961 BMTC BUILDING, 80 FEET ROAD, KORAMANGLA, BENGALURU – 560 094

4.

CENTRAL BOARD OF DIRECT TAXES, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NEW DELHI AN AUTHORITY UNDER OF THE INCOME ACT, 1961 NORTH BLOCK, NEW DELHI – 110 011 REPRESENTED BY CHAIRMAN, CBDT …RESPONDENTS (BY SRI. M. DILIP, ADVOCATE)

THIS W.P. IS FILED UNDR ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF CERTIORARI STRIKING DOWN THE PARA 4 OF THE CIRCULAR NO. 9/2015 (F.NO.312/22/2015-OT), DATED 09.06.2015 ISSUED BY THE RESPONDENT NO.4 AND ENCLOSED AS ANNEXURE- P1 AND DECLARE THE SAME AS BEING ULTRA VIRES SECTION 119(2)(B) OF THE INCOME TAX ACT, 1961 AND ETC.,

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 striking down the para 4 of the Circular No. 9/2015 (F.No.312/22/2015-OT), dated 09.06.2015 issued by the Respondent No.4 and enclosed as Annexure- P1 and declare the same as

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HC-KAR NC: 2025:KHC:44512 WP No. 26990 of 2025

being ultra vires section 119(2)(b) of the Income Tax Act, 1961; b. Issue a writ of certiorari striking down the para 5 of the Circular No 11/2024 (F.No.312/63/2023-OT), dated 01.10.2024 issued by the Respondent No.4 and enclosed as Annexure- P2 and declare the same as being ultra vires section 119(2)(b) of the Income Tax Act, 1961 c. Issue a Writ of Certiorari or direction in the nature of writ of Certiorari to quash the digitally signed and electronically issued order under section 119(2)(b) of the Income Tax Act, 1961 dated 29/07/2025 issued by the Respondent No. 1 for the Assessment Year 2019- 20 and bearing the DIN No. ITBA/COM/F/17/2025- 26/1079028163(1) which is enclosed as Annexure N d. Issue a writ of mandamus or direction in the nature of writ of mandamus directing the Respondent to condone the delay in filing the revised return of income for the reasons mentioned in Annexure K dated 01.06.2024 e. And pass such other orders as this Hon'ble Court deems fit and proper in the interest of justice and equity including awarding of cost of this Petition.”

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HC-KAR NC: 2025:KHC:44512 WP No. 26990 of 2025

2.

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

3.

The material on record discloses that the petitioner who is the individual assessee under the Income Tax Act, 1961 [for short, ‘the IT Act’] filed his income tax returns for the assessment year 2019-20 and in the said returns, he voluntarily disclosed tax in respect of long term capital gains for receiving compensation from the concerned authority-Karnataka Industrial Areas Development Board. It is contended that the said KIADB issued Form 16A in relation to the aforesaid compensation belatedly in the month of March 2024 and consequently, the petitioner was precluded from filing revised return within the prescribed time and was constrained to file an application dated 01.06.2024 seeking condonation of delay in filing the revised return of income for the assessment year 2019-20 under Section 119(2)(b) of Income Tax Act and sought for refund accordingly. The said application was considered by the respondent who proceeded to reject the same both on the ground of delay as well as on merits by passing the impugned order dated 29.07.2025, which is assailed in the present petition.

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HC-KAR NC: 2025:KHC:44512 WP No. 26990 of 2025

4.

Insofar as the entitlement of the petitioner to claim exemption from payment of income tax on the land acquisition compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 is concerned, the said issue/question is truly and squarely covered by the Division Bench decision of this Court in the case of ‘BANGALORE METRO RAIL CORPORATION LIMITED v. M/s. SRI BALAJI CORPORATE SERVICES AND OTHERS’ in W.A. No.890/2022 and connected matters disposed of on 27.09.2023, wherein it is held that the land acquisition compensation is exempted from payment of income tax. Applying the law laid down by the Hon’ble Division Bench, I am of the considered opinion that the respondents committed error in rejecting the request of the petitioner for refund of the tax collected by them in relation to the subject land acquisition compensation.

5.

Insofar as the reasons assigned by the respondents to reject the request of the petitioner for condonation of delay is concerned, a perusal of the impugned order will indicate that the respondents had adopted hyper technical approach and failed to

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HC-KAR NC: 2025:KHC:44512 WP No. 26990 of 2025

consider and appreciate the reasons assigned by the petitioner in his application dated 01.06.2024, which clearly constituted valid and sufficient cause for not being able to submit the refund application within the prescribed period.

Under these circumstances, the impugned order rejecting the request for condonation of delay is also contrary to the material on record and the same deserves to be quashed on this ground also. In the result, the following: ORDER

i) The petition is hereby allowed.

ii) The impugned order dated 29.07.2025 at Annexure-N passed by respondent No.1 is hereby set aside.

iii) The respondent No.1 is directed to refund the entire tax collected by the respondents back to the petitioner as expeditiously as possible and at any rate within a period of one month from the date of receipt of a copy of this order.

Sd/- (S.R.KRISHNA KUMAR) JUDGE MDS List No.: 2 Sl No.: 36

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