SANJAY S SARNAIK -HUF- vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX

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WP/101846/2022HC KarnatakaKAHC02006720202226 September 2024Bench: JYOTI MULIMANI5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the department ought to have granted time to the petitioner to reply to the show cause notice, especially considering the request made on January 13, 2021, and the prevailing COVID-19 pandemic. The assessment order dated January 18, 2021, passed within six days of the request, was considered hurried. Consequently, the assessment order passed by the second respondent under Section 144 read with Sections 143(3A) and 143(3B) of the Income Tax Act, 1961, and the order dated March 30, 2022, passed by the first respondent under Section 264 of the Act, were quashed. The matter was remanded to the second respondent to the stage of the reply to the show cause notice under Section 144. The Court explicitly stated that no opinion was expressed on the merits of the case. The ratio decidendi is that a reasonable opportunity to respond to a show cause notice, particularly in exceptional circumstances like a pandemic and a specific request for time, must be afforded to the assessee.

What were the facts?

The petitioner, Sanjay.S.Sarnaik (HUF), an agriculturist, filed a return of income for Assessment Year 2018-19 on December 11, 2018, reporting agricultural income of Rs. 36,69,876/- and no taxable non-agricultural income. The case was selected for limited scrutiny. A notice under Section 143(2) was issued, to which the assessee did not respond. The department issued several notices under Section 142(1), also without response. On December 29, 2020, another notice was issued. In response on January 13, 2021, the assessee requested fifteen days to reply to a show cause notice under Section 144. However, the assessment order was passed on January 18, 2021. The petitioner's subsequent petition under Section 264 was dismissed on March 30, 2022. Aggrieved, the petitioner filed a writ petition before the High Court.

What were the issues?

1. Whether the assessment order passed on January 18, 2021, amidst the COVID-19 pandemic, without granting the requested fifteen days to reply to the show cause notice under Section 144 of the Income Tax Act, 1961, is arbitrary and deserves to be set aside? (Question of law and fact, turning on Section 144, Section 143(3A), Section 143(3B)). Assessee's contention: The department hurriedly passed the assessment order despite a request for fifteen days to reply, especially during the COVID-19 pandemic. The matter should be remanded to allow the petitioner to submit a reply. Revenue's contention: Despite several notices, the petitioner did not respond. The department's action is justified. A remand is opposed, and the writ petition is devoid of merits.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 142(1),Section 144,Section 264,Section 143(3A),Section 143(3B)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC-D:14072 WP No. 101846 of 2022

IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 26TH DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MS. JUSTICE JYOTI MULIMANI WRIT PETITION NO. 101846 OF 2022 (T-IT) BETWEEN:

SANJAY.S.SARNAIK (HUF) HIRESAUNSHI DEVNAL, BAGALKOT-587 101, (PAN: ABEHS9651L), REPRESENTED BY THE KARTHA, SRI. SANJAY.S.SARNAIK, AGED ABOUT 58 YEARS, SON OF SRI SAMBHASADASHIVA. …PETITIONER (BY SRI. JINITA CHATTERJEE AND SRI. H.R.KAMBIYAVAR., ADVOCATES)

AND:

1.

THE PRINCIPAL COMMISSIONER OF INCOME-TAX, C.R. BUILDING, NAVANAGAR, HUBBALLI-580 025.

2.

THE INCOME-TAX OFFICER, INCOME-TAX DEPARTMENT, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI-110 001. …RESPONDENTS (BY SRI. M.THIRUMALESH AND MIS. ROOPA ANAVEKAR, ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, SEEKING CERTAIN RELIEFS.

Digitally signed by THEJASKUMAR N Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC-D:14072 WP No. 101846 of 2022

THIS WRIT PETITION IS LISTED FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, AN ORDER IS MADE AS UNDER: ORAL ORDER Smt.Jinita Chatterjee., counsel for the petitioner has appeared through video conferencing. Sri.H.R.Kambiyavar., counsel for the petitioner and Sri.M.Thirumalesh., counsel for the respondent have appeared in person. 2. The short facts are these: It is stated that the petitioner is an agriculturist with no taxable non-agricultural income. He filed the return of income for the Assessment Year 2018-19 on 11.12.2018 showing an income of Rs.45,200/- (Rupees Forty-Five Thousand Two Hundred only) and agricultural income of Rs.36,69,876/- (Rupees Thirty-Six Lakh Sixty-Nine Thousand Eight Hundred and Seventy-Six only). The petitioner’s case was selected for limited scrutiny. The scrutiny proceedings were started by serving the notice under Section 143(2) of the Act. However, the assessee did not respond to the notice.

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NC: 2024:KHC-D:14072 WP No. 101846 of 2022

The department contends that several notices were issued under Section 142(1) of the Act, but the assessee did not respond to the same. The department issued one more notice on 29.12.2020. In response to the notice, on 13.01.2021, the assessee requested the authority to grant fifteen days to reply to the show cause notice issued under Section 144 of the Act. However, the authority hurriedly passed the assessment order on 18.01.2021. Aggrieved by the said assessment order, the petitioner filed a Section 264 petition and the same came to be dismissed on 30.03.2022. Hence, the petitioner has filed the captioned Writ Petition under Articles 226 and 227 of the Constitution of India on several grounds as set out in the Memorandum of Writ Petition. 3. Counsel Smt.Jinita Chatterjee., in presenting her arguments strenuously urged that despite a request for a grant of fifteen days, the department has passed an assessment order amidst the COVID-19 pandemic. She argued by saying that the petitioner may be allowed to submit his reply to the show cause notice. Hence, she submits that the matter may be remanded and the Writ Petition may be allowed.

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NC: 2024:KHC-D:14072 WP No. 101846 of 2022

By way of reply, counsel Sri.M.Thirumalesh., urged several contentions. He contends that despite the issuance of several notices, the petitioner did not respond to the same. He justified the action of the department. He strongly objected to a remand. Counsel submits that the Writ Petition is devoid of merits and the same may be dismissed. 4. Heard the arguments and perused the Writ papers with care. 5. A perusal of the Writ papers reveals that the assessee made a request on 13.01.2021 for grant of fifteen days, however the department hurriedly passed the order within six days i.e., on 18.01.2021 amidst the COVID-19 pandemic. In my view, the department ought to have given time to the petitioner to give a reply to the show cause notice. That has not been done. Hence, the matter requires a remand. The assessment order and the order under Section 264 of the Act are liable to be set aside, so they are set aside. 6. The Writ of Certiorari is ordered. The order dated 18.01.2021 passed by the second respondent under Section 144 R/w Sections 143(3A) and 143(3B) of the Income Tax Act,

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NC: 2024:KHC-D:14072 WP No. 101846 of 2022

1961 in DIN No: ITBA/AST/S/144/2020-21/1029852534(1) for the Assessment Year 2018-19 vide Annexure-B and the order dated 30.03.2022 passed by the first respondent under Section 264 of the Income Tax Act, 1961 in DIN & Order No.ITBA/REV/F/REV7/2021-22/1042187382(1) for the Assessment Year 2018-19 vide Annexure-D are quashed. The matter is remanded to the second respondent to the stage of reply to the show cause notice under Section 144 of the Act. 7. Resultantly, the Writ Petition is allowed and remanded. This Court has not expressed any opinion on the merits of the case.

Sd/- (JYOTI MULIMANI) JUDGE TKN LIST NO.: 2 SL NO.: 41

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