M/S. VRINDA MARKETING ENTERPRISES vs. ADDITIONAL COMMISSIONER OF INCOME TAX,

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WP/29722/2026HC KarnatakaKAHC01065216202606 October 2026Bench: B M SHYAM PRASAD9 pages
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What did the High Court hold?

The High Court allowed the petitions in part. It quashed the order under Section 148A(3) dated 16.06.2026, the prior approval order under Sections 148A(3) and 151 dated 12.06.2026, and the notice under Section 148 dated 16.06.2026. The court reasoned that while there might be some procedural issues with the prior approval, the fitness of the case for reassessment under Section 147 of the Income Tax Act, 1961, needed to be adjudicated with an opportunity for the petitioner to provide further clarifications. The assessee was directed to appear before the Income Tax Officer on 16.10.2026 to file any further clarifications sought by the officer, who was directed to consider the explanation in light of the court's observations. The principle is that procedural irregularities in initiating reassessment proceedings can lead to setting aside the initial orders and notices, allowing for re-consideration with opportunities for the assessee to provide necessary documentation and explanations.

What were the facts?

The assessee, M/s. Vrinda Marketing Enterprises, a partnership firm, filed two writ petitions before the High Court of Karnataka challenging orders and notices issued by the Additional Commissioner of Income Tax and the Income Tax Officer. These actions pertain to assessment years 2021-22 and 2022-23. The impugned orders include an order under Section 148A(3) dated 16.06.2026, a prior approval order under Sections 148A(3) and 151 dated 12.06.2026, and a notice under Section 148 dated 16.06.2026. The revenue alleged undisclosed business turnover of Rs. 72,79,580/- for AY 2021-22 and Rs. 82,24,948/- for AY 2022-23. The assessee had responded to the show-cause notices.

What were the issues?

1. Whether the High Court should intervene in the reassessment proceedings initiated by the revenue against the assessee, considering the alleged deficiencies in the orders and notices issued under Sections 148A and 148 of the Income Tax Act, 1961. Assessee's contentions: - The petitioner had furnished a detailed response to the notices under Section 148A(1), explaining that the amounts in question were unsecured loans and not turnover. They provided ledger accounts and offered further information. - The orders under Section 148A(3) were passed based on incorrect premises, including the submission of wrong bank statements, mismatch in details, and failure to produce confirmations for unsecured loans. - There was a typographical error in mentioning the financial year of the bank statement, but the correct statements were produced. The assessee would have furnished confirmations if specifically asked. Revenue's contentions: - The revenue, through its standing counsel, argued on whether the court should interfere and on what terms, if interference was deemed necessary.

Which sections of the Income-tax Act were involved?

Section 148A,Section 147,Section 148,Section 151

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

WP No. 29722 of 2026
WP No. 29723 of 2026

Read from the judgment's own cause title. This page is filed under one of them.

HC-KAR IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6TH DAY OF OCTOBER, 2026 BEFORE THE HON'BLE MR. JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 29722 OF 2026 (T-IT) C/W WRIT PETITION NO. 29723 OF 2026 (T-IT)

IN WP No. 29722/2026

BETWEEN:

M/S. VRINDA MARKETING ENTERPRISES A PARTNERSHIP FIRM REGISTERED UNDER THE INDIAN PARTNERSHIP ACT, 1932, HAVING ITS OFFICE AT NO. 9/83, G1 TO G5, G37 TO G41, M1 TO M5, M37 TO M41, CITY POINT, MAIN ROAD, YEDTHARE, BYNDOOR, UDUPI-576214 REPRESENTED BY ITS PARTNER, SRI. K VENKATESH KINI.

…PETITIONER (BY SRI.S.S. NAGANAD., SENIOR ADVOCATE FOR SRI. NAGESH MORO.,ADVOCATE)

AND:

1.

ADDITIONAL COMMISSIONER OF INCOME TAX,

Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA HC-KAR RANGE-1, MANGALORE C.R. BUILDING, N.G. ROAD, ATTAWARA, MANGALURU-575001.

2.

INCOME TAX OFFICER, WARD 1 AND TPS, UDUPI AAYAKAR BHAVAN, UDUPI, MALPE ROAD, AADI UDUPI, AMBALAPADI (PO), UDUPI-576103.

…RESPONDENTS (BY SRI.M. THIRUMALESH., ADVOCATE A/W SRI. NIRMAL MATHEW., ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 16.06.2026 BEARING NO. ITBA/AST/F/148A/2026-27/1089765384(1) PASSED BY RESPONDENT NO. 2 (ANNEXURE C); II. QUASH THE PRIOR APPROVAL ORDER DATED 12.06.2026 BEARING NO. ITBA/AST/S/128/2026-27/1089659793(1) PASSED BY THE RESPONDENT NO. 1 (ANNEXURE C1); III QUASH THE NOTICE DATED 16.06.2026 BEARING NO. ITBA/AST/S/148-1/2026-27/1089765685(1) PASSED BY RESPONDENT NO. 2 (ANNEXURE D);

IN WP NO. 29723/2026

BETWEEN:

M/S. VRINDA MARKETING ENTERPRISES HC-KAR A PARTNERSHIP FIRM REGISTERED UNDER THE INDIAN PARTNERSHIP ACT, 1932, HAVING ITS OFFICE AT NO. 9/83, G1 TO G5, G37 TO G41, M1 TO M5, MB TO M41, CITY POINT, MAIN ROAD, YEDTHARE, BYNDOOR, UDUPI-576214 REPRESENTED BY ITS PARTNER, SRI. K VENKATESH KINI.

...PETITIONER

(BY SRI. S.S. NAGANAND., SENIOR ADVOCATE FOR SRI. NAGESH MORO., ADVOCATE)

AND:

1.

ADDITIONAL COMMISSIONER OF INCOME TAX INCOME TAX, RANGE-1 C.R. BUILDING, N.G. ROAD, ATTAWARA, MANGALURU-575001.

2.

INCOME TAX OFFICER, WARD 1 TPS, AAYAKAR BHAVAN, UDUPI, MALPE ROAD, AADI UDUPI, AMBALAPADI (PO), UDUPI-576103.

...RESPONDENTS

(BY SRI.M. THIRUMALESH., ADVOCATE A/W SRI. NIRMAL MATHEW., ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 16.06.2026 BEARING NO.

HC-KAR ITBA/AST/F/148A/2026-27/1089757290(1) PASSED BY RESPONDENT NO. 2 (ANNEXURE C); II. QUASH THE PRIOR APPROVAL ORDER DATED 12.06.2026 BEARING NO. ITBA/AST/S/128/2026-27/1089659275(1) PASSED BY THE RESPONDENT NO. 1 (ANNEXURE C1); III. QUASH THE NOTICE DATED 16.06.2026 BEARING NO. ITBA/AST/S/148-1/2026-27/1089757676(1) PASSED BY RESPONDENT NO. 2 (ANNEXURE D).

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

ORAL ORDER

The petitioner [common in both these petitions] has called in question the following which relate to Assessment Years 2021-22 and 2022-24. The details of the impugned Order and the Notice in the petition in W.P.No.29722/2026 read as under:

Sl. No.

Notices/ Orders

Date Provisions of Income Tax Act, 1961

Annexures 1 Order 16.06.2026 148A(3) C

2 Prior Approval Order

12.06.2026

148A(3) and 151

C1 3 Notice 16.06.2026 148 D HC-KAR The details of the impugned Order and the Notice in the petition in W.P.No.29723/2026 read as under:

Sl. No.

Notices/ Orders

Date Provisions of Income Tax Act, 1961

Annexures 1 Order 16.06.2026 148A(3) C 2 Prior Approval Order

12.06.2026

148A(3) and 151

C1 3 Notice 16.06.2026 148 D

2.

Sri S.S.Naganand, the learned Senior Counsel for the petitioner, submits that this Court must intervene because of the following reasons.

[A] The petitioner is issued with notices under Section 148A(1) of the IT Act to show cause against the alleged undisclosed business turnover of Rs.72,79,580/- for the assessment year 2021-22 and Rs.82,24,948/- for the assessment year 2022-23. The petitioner is called upon to furnish documents to explain transactions HC-KAR along with the financial statement, balance sheet and profit and loss account and report.

[B] The petitioner has filed a detailed response to each of these notices furnishing the details of those entities/persons from whom unsecured loan, which do not constitute a turnover, along with copies of the ledger account of those persons and also offering to furnish further information if required, but the orders under Section 148A(3) of the IT Act is in the premise [i] that the petitioner has furnished wrong bank statements, [ii] that there is mismatch and [iii] that the petitioner has not produced confirmation from those who have extended bank loans.

HC-KAR [C] There is a typographical error in mentioning the financial year of the bank statement, but the relevant bank statements are produced; and if the petitioner was called upon to furnish confirmation from each of those who have extended unsecured loan, the petitioner would have.

3.

Sri M. Dilip, a learned standing counsel for the respondents, is heard on whether this Court must interfere on any of the grounds and if the Court must, then the terms thereof with Sri S. S. Naganand placing on record a copy of this Court’s order in W.P.No.28272/2026 [T-IT]1, stating that in similar circumstances this Court, even though the petitioner in such case argued on the deficiency in the prior approval, has only interfered with the order under Section 148A(3) of the IT Act restoring the

1 This petition is disposed of on 09.19.2026 HC-KAR proceedings for re-consideration with liberty to such petitioner to file further clarification that the second respondent may seek.

4.

This Court, even in these writ petitions because of the similarities in the circumstances, though there could be some amiss in how the prior approval has come about, is only inclined to set aside the proceedings as fitness of the cases for reassessment under Section 147 of the IT Act can be adjudged with opportunity to the petitioner to file confirmation from the persons and to furnish further details if required for assessment of the fitness of the case. As such, this Court interferes with the order under Section 148A(3) of the IT Act and the notice under Section 148 of the IT Act in the following terms. ORDER [A] The petitions are allowed – in – part.

HC-KAR [B] The following are quashed.

Sl. No.

Notices/ Orders

Date Provisions of Income Tax Act, 1961

Annexures 1 Order 16.06.2026 148A(3) C 2 Prior Approval Order

12.06.2026 148A(3) and 151

C1 3 Notice 16.06.2026 148 D

[C] The petitioner, without further notice, shall appear before the Income Tax Officer, Ward 1 and TPS, Udupi [the second respondent] on 16.10.2026 and the petitioner will be at liberty to file any further clarification that the second respondent may seek but the second respondent mut consider the explanation offered in the light of this Court’s observation as afore.

Sd/- (B M SHYAM PRASAD) JUDGE SA Ct:sr

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