SADASHIVANAGAR YOUTH ASSOCIATION vs. INCOME TAX OFFICER WARD 6(3)(1)

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WP/10973/2025HC KarnatakaKAHC01022904202525 April 2025Bench: SURAJ GOVINDARAJ5 pages
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What did the High Court hold?

The High Court of Karnataka allowed the writ petition. The court issued a writ of certiorari, quashing the impugned order dated January 6, 2025 (Annexure-M), the demand notice dated January 6, 2025 (Annexure-M1) passed by the Second Respondent, and the notice dated March 10, 2025 (Annexure-N) passed by the First Respondent. The matter was remitted to the Second Respondent to consider it from the stage of issuing a notice under Section 142(1) of the Income Tax Act, 1961. The Petitioner was directed to submit their reply to the Section 142(1) notice on or before May 9, 2025, along with all supporting documents. The court's reasoning was based on the petitioner's grievance that the Section 142(1) notice was not served, and the absence of any record of such service before the court, leading to a violation of natural justice. The ratio decidendi is that an assessment order passed without proper service of mandatory notices, like Section 142(1), is unsustainable in law and warrants quashing, with a direction for de novo consideration from the stage of proper notice issuance.

What were the facts?

The petitioner, Sadashivanagar Youth Association, filed a writ petition before the High Court of Karnataka challenging an order passed under Section 147 read with Sections 144 and 144B of the Income Tax Act, 1961, dated January 6, 2025, and a demand notice dated January 6, 2025, both issued by the Second Respondent (National Faceless Assessment Centre). The petitioner also challenged a notice dated March 10, 2025, issued under Section 226(3) by the First Respondent (Income Tax Officer). The assessment year in question is 2017-18. The petitioner's primary grievance was that a notice under Section 142(1) of the Act was not served upon them, preventing them from responding, which led to the ex-parte assessment order. The court noted that no record of service of the Section 142(1) notice was placed before it.

What were the issues?

1. Whether the assessment order passed under Section 147 read with Sections 144 and 144B of the Income Tax Act, 1961, and the consequential demand notice, are liable to be quashed on the ground of non-service of a notice under Section 142(1) of the Act, thereby violating the principles of natural justice? The Petitioner's contention was that the assessment order was passed without proper service of the notice under Section 142(1), which prevented them from filing a reply and thus violated principles of natural justice. They sought to quash the impugned orders and notices. The Revenue's contention was not recorded in the judgment. The court noted that learned AGA accepted notice for Respondents No. 1 and 2, and notice to Respondent No. 3 (Bank of India) was dispensed with as it was a formal party.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 156,Section 226(3),Section 142(1)

AI-generated summary — verify with the full judgment below

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NC: 2025:KHC:17253 WP No. 10973 of 2025

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF APRIL, 2025 BEFORE THE HON'BLE MR JUSTICE SURAJ GOVINDARAJ WRIT PETITION NO. 10973 OF 2025 (T-IT) BETWEEN:

SADASHIVANAGAR YOUTH ASSOCIATION 30/A, 8TH A MAIN RAJMAHAL VILAS, SADASHIVANAGAR S.O BANGALORE - 560080.

REPRESENTED BY ITS PRESIDENT MR. W.P. SHIVAKUMAR, AGED ABOUT68 YEARS, PAN NO AAITS6160R

…PETITIONER (BY SRI. BALRAM R RAO., ADVOCATE)

AND:

1.

INCOME TAX OFFICER WARD 6(3)(1), BANGALORE BMTC BUILDING, KORAMANGALA, BENGALURU-560095.

2.

ADDITIONAL/JOINT/DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX, NATIONAL FACELESS ASSESSMENT CENTRE, INCOME TAX DEPARTMENT, DELHI II FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI-110003.

3.

BANK OF INDIA SANJAY NAGAR BRANCH, BENGALURU - 560094. REP BY ITS MANAGER. …RESPONDENTS (BY SRI. DELIP M., ADVOCATE)

Digitally signed by SHWETHA RAGHAVENDRA Location: HIGH COURT OF KARNATAKA

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NC: 2025:KHC:17253 WP No. 10973 of 2025

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF CERTIORARI OR ANY OTHER APPROPRIATE WRIT, ORDER OR DIRECTION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA CALLING FOR THE RECORDS OF THE PETITIONER’S CASE AND AFTER EXAMINING THE LEGALITY AND VALIDITY THEREOF BE PLEASED TO QUASH AND SET ASIDE THE IMPUGNED ORDER PASSED UNDER SECTION 147 R.W.S. 144 R.W.S. 144B OF THE ACT DATED 06.01.2025 IN DIN AND ORDER NO ITBA/AST/S/147/2024- 25/1071910040(1) ANNEXURE - M AS WELL AS NOTICE OF DEMAND NOTICE DATED 06.01.2025 ISSUED UNDER SECTION 156 OF THE ACT IN DIN AND NOTICE NO. ITBA/AST/S/156/2024- 25/1071911154(1) ANNEXURE M PASSED BY THE 2ND RESPONDENT AS WELL AS THE NOTICE ISSUED UNDER SECTION 226(3) OF THE ACT, DATED N10.03.2025 IN DIN AND NOTICE NO ITBA/RVC/S/226(3),1/2024- 25/1074261712 (ANNEXURE-N) PASSED BY THE 1ST RESPONDENT FOR THE ASSESSMENT YEAR 2017-18, AND ETC.

THIS WRIT PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE SURAJ GOVINDARAJ

ORAL ORDER

1.

Learned AGA accepts notice for Respondents No.1 and 2. Notice to Respondent No.3 is dispensed with since Respondent No.3 is a formal party.

2.

The Petitioner is before this Court seeking for the following reliefs: a. Issue a writ of certiorari or a writ in the nature of Certiorari or any other appropriate writ, order or direction under article 226 of the Constitution of

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NC: 2025:KHC:17253 WP No. 10973 of 2025

India calling for the records of the Petitioners case and after examining the legality and validity thereof be pleased to quash and set aside the impugned order passed under section 147 r.w.s. 144 r.w.s. 144b of the Act dated 06.01.2025 in Din & Order No. ITBA/AST/S/147/2024-25/1071910040(1) (Annexure-M) as well as notice of demand notice dated 06.01.2025 issued under Section 156 of the Act in Din & Notice No. ITBA/AST/S/156/2024- 25/1071911154(1) (Annexure-M1) passed by the 2nd Respondent as well as the notice issued under Section 226(3) of the Act, dated 10.03.2025 in DIN and notice No; ITBA/RVC/S/226(3)_1/2024- 25/1074261715(1) (Annexure-N) passed by the R1 for the assessment year 2017-18, and

b. A writ of mandamus or a writ in the nature of Mandamus, or any other appropriate writ, order or direction under Article 226 of the Constitution of India ordering and directing the Respondents by themselves, their sub-ordinate, servants, and agents to withdraw and cancel the impugned order passed under Section 147 r.w.s. 144 r.w.s. 144b of the Act dated 06.01.2025 in Din & Order No. ITBA/AST/S/147/2024-25/1071910040(1) (Annexure-M) as well as notice of demand notice dated 06.01.2025 issued under Section 156 of the Act in Din & Notice No. ITBA/AST/S/156/2024- 25/1071911154(1) (Annexure-M1) passed by the 2nd Respondent as well as the notice issued under Section 226(3) of the Act, dated 10.03.2025 in DIN and notice No; ITBA/RVC/S/226(3)_1/2024- 25/1074261715(1) (Annexure-N) passed by the R1 for the assessment year 2017-18 and

c. A writ of prohibition or a writ in the nature of Prohibition or any other appropriate writ, order or direction under Article 226 of the Constitution of India prohibiting and restraining the Respondents by themselves, their subordinate, servants, and agents to withdraw and cancel the impugned order passed under Section 147 r.w.s. 144 r.w.s. 144b of the Act dated 06.01.2025 in Din & Order No. ITBA/AST/S/147/2024-25/1071910040(1) (Annexure-M) as well as notice of demand notice dated 06.01.2025 issued under Section 156 of the

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NC: 2025:KHC:17253 WP No. 10973 of 2025

Act in Din & Notice No. ITBA/AST/S/156/2024- 25/1071911154(1) (Annexure-M1) passed by the 2nd Respondent as well as the notice issued under Section 226(3) of the Act, dated 10.03.2025 in DIN and notice No; ITBA/RVC/S/226(3)_1/2024- 25/1074261715(1) (Annexure-N) passed by the R1 for the assessment year 2017-18 and

d. Grant the interim relief in terms of prayer (iii) above and

e. Issue such other order, writ or direction as this Hon’ble Court deems fit; and

f. Direct the Respondents to pay the costs of this Writ Petition.

3.

The grievance of the Petitioner is that the notice under Section 142(1) of the Income Tax Act, 1961 was not served on the petitioner and as such, the Petitioner could not reply to the same resulting in the assessment order having been passed vide Annexure-M. There is nothing placed on record that the Petitioner has been served with a notice. 4. In that view of the matter, in the interest of justice I'm of the considered opinion that the petitioner should be provided an opportunity to reply to 142(1) notice which could be considered by the respondent. As such, I pass the following:

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NC: 2025:KHC:17253 WP No. 10973 of 2025

ORDER i) The Writ Petition is allowed. ii) A certiorari is issued, the impugned order dated 6.1.2025 at Annexure-M, demand notice dated 6.1.2025 at Annexure-M1 passed by respondent No.2 and notice dated 10.3.2025 at Annexure-N passed by respondent No.1 are hereby quashed. iii) The matter is remitted to Respondent No.2 to consider from the stage of issuance of notice under Section 142(1) of the Income Tax Act, 1961. Reply to the said notice to be submitted by the Petitioner on or before 9.5.2025 accompanied by all the supporting documents.

Sd/- (SURAJ GOVINDARAJ) JUDGE

PRS, List No.: 2 Sl No.: 12

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