SHRI SHANMUKHA SHIVAPPA YANDIGERI vs. CENTRAL BOARD OF DIRECT TAXES

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WP/105558/2022HC KarnatakaKAHC02017169202212 September 2024Bench: JYOTI MULIMANI4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the assessment order was indeed ex parte because the notice did not reach the assessee due to an incorrect address. Consequently, the Court found it proper to allow the assessee to contest the matter by participating in the proceedings. Therefore, the assessment order and the consequential penalty order were liable to be set aside and were accordingly quashed. The matter was remanded to the Faceless Assessing Authority to commence proceedings from the stage of reply to the notice under Section 142 of the Act. The petitioner was not permitted to raise contentions on limitation. The Court explicitly stated it had not expressed any opinion on the merits of the case, and all contentions of the parties were kept open. The ratio decidendi is that an ex parte assessment order passed due to non-service of notice on the assessee, even if due to an incorrect address, warrants setting aside and remand to provide an opportunity for participation.

What were the facts?

The petitioner, Shri Shanmukha Shivappa Yandigeri, filed a writ petition challenging an assessment order dated 23.04.2021 passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961, and a penalty order dated 14.12.2021 passed under Section 270A of the Act, both for Assessment Year 2018-19. The petitioner contended that the assessment order was ex parte due to non-receipt of notice, preventing him from participating in the proceedings. The respondent, represented by the National Faceless Assessment Centre, did not contest this specific point, stating a suitable order could be passed. The High Court noted from the assessment order that the notice had not reached the assessee due to an incorrect address, leading to the ex parte order.

What were the issues?

1. Whether the assessment order dated 23.04.2021, passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961, is liable to be set aside as an ex parte order due to the non-receipt of notice by the assessee, thereby violating principles of natural justice? 2. Whether the penalty order dated 14.12.2021, passed under Section 270A of the Income Tax Act, 1961, which is consequential to the assessment order, is also liable to be set aside? Assessee's contention: The assessment order was ex parte because the assessee did not receive the notice, preventing participation in the proceedings. An opportunity should be granted to the petitioner to participate. The assessee relied on the fact that the notice was not received. Revenue's contention: The revenue stated that a suitable order may be passed.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 270A,Section 142

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC-D:13073 WP No. 105558 of 2022

IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 12TH DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MS. JUSTICE JYOTI MULIMANI WRIT PETITION NO. 105558 OF 2022 (T-IT) BETWEEN:

SHRI. SHANMUKHA SHIVAPPA YANDIGERI, HIREGULABAL, BAGALKOT-587 207, KARNATAKA, AGED ABOUT 56 YEARS. …PETITIONER (BY SRI. ASHOK.A.KULKARNI AND SRI. H.R.KAMBIYAVAR., ADVOCATES)

AND:

CENTRAL BOARD OF DIRECT TAXES, CENTRAL SECRETARIAT, NORTH BLOCK, NEW DELHI-110 001, REPRESENTED BY ADDITIONAL/JOINT/DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX, NATIONAL FACELESS ASSESSMENT CENTRE. …RESPONDENT (BY SRI. M.THIRUMALESH AND SRI. Y.V.RAVIRAJ., ADVOCATES)

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

THIS WRIT PETITION IS LISTED FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, AN ORDER IS MADE AS UNDER:

Digitally signed by THEJASKUMAR N Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC-D:13073 WP No. 105558 of 2022

ORAL ORDER Sri. Ashok A. Kulkarni., counsel for the petitioner has appeared through video conferencing. Sri. M. Thirumalesh., counsel for the respondent has appeared in person. 2. The Assessment order dated 23.04.2021 passed by the respondent under Section 143(3) R/w Section 144B of the Income Tax Act, 1961 in DIN: ITBA/AST/S/143(3)/2021- 22/1032650185(1) for the Assessment Year 2018-19 vide Annexure-A and the penalty order dated 14.12.2021 passed under Section 270A of the Income Tax Act, 1961 in DIN: ITBA/PNL/F/270A/2021-22/1037772393(1) for the Assessment Year 2018-19 vide Annexure-B are called into question in this Writ Petition on several grounds as set-out in the Memorandum of Writ Petition. 3. Counsel appearing for the respective parties urged several contentions. Counsel Sri.Ashok A.Kulkarni., in presenting his arguments strenuously urged that the assessment order is an ex parte order. He argued by saying that due to the non-receipt

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NC: 2024:KHC-D:13073 WP No. 105558 of 2022

of the notice, the assessee could not take part in the proceedings. Hence, he submits that an opportunity may be given to the petitioner to take part in the proceedings by passing a suitable order. By way of reply, counsel Sri.M.Thirumalesh., submits that a suitable order may be passed. 4. Heard the arguments and perused the Writ papers with care. 5. As is clear from Paragraph No.7.1 of the assessment order, the notice has not reached the hands of the assessee. Since the addressee was not found because of the incorrect address, the assessee did not receive the notice. Hence, an ex-parte order was made. Because of the ex parte order, this Court considers it proper to allow the assessee to contest the matter by taking part in the proceedings. Hence, the matter requires a remand. Therefore, the assessment order and the penalty order are liable to be set aside, so they are set aside. 6. The Writ of Certiorari is ordered. The Assessment order dated 23.04.2021 passed by the respondent under

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NC: 2024:KHC-D:13073 WP No. 105558 of 2022

Section 143(3) R/w Section of the Income Tax Act, 1961 in DIN: ITBA/AST/S/143(3)/2021-22/1032650185(1) for the Assessment Year 2018-19 vide Annexure-A and the penalty order dated 14.12.2021 passed under Section 270A of the Income Tax Act, 1961 in DIN: ITBA/PNL/F/270A/2021- 22/1037772393(1) for the Assessment Year 2018-19 vide Annexure-B are quashed. The matter is remanded to the Faceless Assessing Authority. The proceedings shall begin from the stage of reply to the notice under Section 142 of the Act. The petitioner shall not urge the contention on limitation. This Court has not expressed any opinion on the merits of the case. All the contentions of the parties are kept open. 7. Resultantly, the Writ Petition is allowed and remanded. Sd/- (JYOTI MULIMANI) JUDGE TKN LIST NO.: 1 SL NO.: 34

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