TALUK AGRICULTURAL PRODUCE MARKETING CO-OPERATIVE SOCIETY LTD vs. INCOME TAX OFFICER

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WP/9540/2026HC KarnatakaKAHC01020702202626 March 2026Bench: S SUNIL DUTT YADAV3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Karnataka set aside the assessment order at Annexure-C. The Court noted that the proceedings did not have the benefit of any response from the petitioner. Given the petitioner's assertion that the deposits were genuine and would be exempt under Section 80-P of the Act, the Court found it appropriate to set aside the ex-parte assessment order. The matter was remitted to the stage of reply to the notice under Section 148 of the Act, with all contentions kept open. The Court did not decide on the genuineness of the deposits or the applicability of Section 80-P, as these were issues to be addressed at the remanded stage.

What were the facts?

The petitioner, Taluk Agricultural Produce Marketing Co-operative Society Ltd., challenged a re-opening notice dated 28/03/2025 and the subsequent assessment order dated 28/03/2025, issued by the Income Tax Officer, Ward 1 and TPS, Hassan, and the Assessing Officer, National Faceless Assessment Centre, Delhi. The petitioner submitted that the assessment order was ex-parte because they failed to reply to the notice under Section 148 of the Income Tax Act, 1961, due to an oversight by their auditor. The assessment order treated cash deposits as unexplained income under Section 69-A of the Act due to the absence of any explanation. The petitioner asserted that the deposits were genuine and eligible for exemption under Section 80-P of the Act.

What were the issues?

1. Whether the ex-parte assessment order passed without considering the assessee's explanation regarding cash deposits is valid, particularly when the assessee claims the deposits are genuine and exempt under Section 80-P of the Income Tax Act, 1961? Assessee's Contention: The assessee argued that the assessment order was ex-parte due to an auditor's lapse and that the cash deposits were genuine and eligible for exemption under Section 80-P of the Act. They sought to quash the re-opening notice and the assessment order. Revenue's Contention: The revenue, through the Assessing Officer, treated the cash deposits as unexplained income under Section 69-A of the Act in the absence of any explanation from the assessee in response to the notice under Section 148 of the Act.

Which sections of the Income-tax Act were involved?

Section 148,Section 69-A,Section 80-P

AI-generated summary — verify with the full judgment below

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HC-KAR NC: 2026:KHC:17215 WP No. 9540 of 2026 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF MARCH, 2026 BEFORE THE HON'BLE MR. JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 9540 OF 2026 (T-IT) BETWEEN: 1. TALUK AGRICULTURAL PRODUCE MARKETING CO-OPERATIVE SOCIETY LTD (TALUK AGRICULTURE PRODUCE CO-OPERATIVE MARKETING SOCIETY) (A SOCIETY REGISTERED UNDER KCS ACT, 1959), ARSIKERE, ARSIKERE TALUK, HASSAN DISTRICT - 573 103. REPRESENTED BY ITS C.E.O SRI. CHANNABASAPPA MOHAN KUMAR, AGE: 52 YEARS. … PETITIONER (BY SRI. MAHESH R UPPIN., ADVOCATE) AND: 1. INCOME TAX OFFICER WARD 1 AND TPS, AAYAKAR BHAVAN, 2ND STAGE, BELUR ROAD, HASSAN - 573 201. 2. ASSESSING OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI - 110 001 … RESPONDENTS (BY SRI. THIRUMALESH M., ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO i) QUASH THE RE-OPENING NOTICE DT. 28/03/2025 BEARING DIN ITBA/AST/S/148_1/2024- Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA

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HC-KAR NC: 2026:KHC:17215 WP No. 9540 of 2026 25/1075180269(1) DT. 28/03/2025 ISSUED BY 1ST RESPONDENT MARKED AS ANNEXURE - B BY ISSUING A WRIT IN THE NATURE OF CERTIORARI AND ETC.

THIS PETITION COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S SUNIL DUTT YADAV ORAL ORDER

Sri. Thirumalesh M, learned counsel accepts notice for respondents. 2. Petitioner has challenged the assessment order at Annexure-C. It is submitted that the order passed is an ex-parte order as the petitioner did not make out any reply to the notice issued in light of lapse on the part of the auditor. 3. Perused the assessment order. It is noticed that the assessee has not filed returns of income in response to the notice under Section 148 of the Income Tax Act, 1961 (for short 'the Act'). The Authority taking note of the cash deposits and in the absence of any explanation, treated the deposits as 'unexplained income' under Section 69-A

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HC-KAR NC: 2026:KHC:17215 WP No. 9540 of 2026 of the Act and proceeded to complete adjudication and raised the demand. 4. The proceedings admittedly do not have the benefit of any response by the petitioner. The petitioner submits that the deposits are genuine and would be exempt under Section 80-P of the Act. 5. In light of the assertion of the petitioner, it would be appropriate to set aside the assessment order at Annexure-C. 6. Accordingly, the assessment order at Annexure-C is set aside. The matter is remitted to the stage of reply to the notice under Section 148 of the Act. All contentions are kept open. 7. In light of the above, the petition is disposed of. SD/- (S SUNIL DUTT YADAV) JUDGE VP

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