SRI GULAM MUSTAFA vs. THE ASSISTANT COMMISSIONER OF INCOME TAX

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WP/11585/2024HC KarnatakaKAHC01024225202413 June 2024Bench: S SUNIL DUTT YADAV5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the fact that assessment proceedings had to be completed by the end of March 2024 could not be a reason for not affording an opportunity to the petitioner. The Court noted that assessment proceedings had commenced much earlier, and the authority ought to have initiated them on time. In the interest of justice and considering the nature of the request, the Court decided to afford an opportunity to the petitioner to reply to the show-cause notice. Consequently, the assessment order, demand notice, and penalty notice were set aside. The matter was remitted to the stage of the reply to the show-cause notice. The petitioner was directed to appear before the respondent on 10.07.2024 to submit their reply. All contentions were kept open.

What were the facts?

The petitioner, Sri Gulam Mustafa, filed a writ petition challenging an assessment order dated 05.03.2024 passed by the Assistant Commissioner of Income Tax under Section 144 of the Income Tax Act, 1961, for Assessment Year 2022-23. The petitioner also challenged the consequential demand notice and a show-cause notice for penalty under Section 274 r/w Section 271 AAC(1). The petitioner contended that a delay in replying to the notice under Section 144 was due to the resignation of the old auditor and appointment of a new one, and requested two weeks' time to submit documents and explanations. The petitioner also claimed non-receipt of earlier notices regarding penalty proceedings. The respondent revenue argued that opportunities had been granted and the time for assessment completion was limited.

What were the issues?

1. Whether the assessment order passed under Section 144 of the Income Tax Act, 1961, for AY 2022-23 is liable to be quashed on the ground that the petitioner was not afforded a reasonable opportunity to furnish a reply to the notice issued under Section 144. Assessee's contentions: The petitioner argued that a delay in responding to the Section 144 notice was due to a change in auditors and requested two weeks' time. They also contended that earlier notices regarding penalty proceedings were not received. The petitioner argued that the limited time for assessment completion by the end of March 2024 should not have been a reason to reject their request for an opportunity. Revenue's contentions: The revenue submitted that opportunities had been granted to the petitioner and, given the limited time available for assessment completion, the respondent's actions were justified.

Which sections of the Income-tax Act were involved?

Section 144,Section 156,Section 274,Section 271AAC(1),Section 142(1)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:21087 WP No. 11585 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF JUNE, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 11585 OF 2024 (T-IT) BETWEEN: 1. SRI GULAM MUSTAFA S/O LATE SRI GULAM MUSTAFA, AGED ABOUT 54 YEARS, RESIDING AT NO.6 GM PEARL 1ST STAGE, 1ST PHASE, BTM LAYOUT BANGALORE - 560 068 … PETITIONER (BY SMT. VANI H., ADVOCATE) AND: 1. THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(2), CENTRAL REVENUE BUILDING, QUEENS ROAD, BANGALORE - 560 001 … RESPONDENT (V/O DATED 22.04.2024 SRI M. DILIP., ADVOCATE ACCEPT NOTICE FOR RESPONDENT)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH AND SET ASIDE THE IMPUGNED ASSESSMENT ORDER BEARING DIN AND ORDER NO. ITBA/AST/S/144/2023-24/1062001290(1) DTD. 05.03.2024 PASSED BY THE RESPONDENT UNDER SECTION 144 OF THE ACT FOR THE ASSESSMENT YEAR 2022- Digitally signed by PRAKASH N Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:21087 WP No. 11585 of 2024 23 VIDE ANNEXURE-C AND THE DEMAND NOTICE BEARING DIN AND NOTICE NO. ITBA/AST/S/156/2023-24/ 1062001518 (1) DTD. 05.03.2024 ISSUED BY THE RESPONDENT UNDER SECTION 156 OF THE ACT VIDE ANNEXURE-D AND ETC.

THIS PETITION COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING: ORDER

The petitioner has called in question the validity of the assessment order dated 05.03.2024 passed by the respondent under Section 144 of the Income Tax Act, 1961 for the Assessment Year 2022-23 as per Annexure-C as well as Demand Notice at Annexure-D. The petitioner has also sought for setting aside of the show-cause notice dated 05.03.2024 issued by the respondent under Section 274 r/w Section 271 AAC(1) for the Assessment Year 2022-23. The petitioner has sought for consequential relief to direct the respondent to afford reasonable opportunity to the petitioner to furnish reply to the notice under Section 144 of the Act.

2.

Learned counsel appearing for the petitioner Smt.Vani.H submits that the petitioner had sought for

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NC: 2024:KHC:21087 WP No. 11585 of 2024 adjudication in terms of Email dated 28.02.2024 addressed to the Assessing Officer stating that the old Auditor has resigned and a new Auditor was appointed on rotation basis and accordingly there was delay in replying to the said notice. 3. It is submitted that two weeks time was sought for submission of documents and opportunity to submit explanation be afforded and despite such request, same has been rejected on the ground that several opportunities earlier had been given and also that there was only two weeks time in March, 2024 within which time order is to be passed.

4.

Insofar as contention regarding show-cause notice, an opportunity earlier provided as detailed at Sl.No.1 to 6 in the Table annexed in the Email communicated to the petitioner, learned counsel submits that they were not received. It is further submitted that even otherwise the fact of the authority was required to complete the assessment by the end of March, 2024, could

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NC: 2024:KHC:21087 WP No. 11585 of 2024 not be a reason to reject affording of an opportunity as time was still available till the end of March, 2024.

5.

Learned counsel for Revenue submits that opportunities have been granted and in light of the limited time available for assessment to be completed, no fault can be found as regards action of the respondents.

6.

Heard both sides.

7.

It is noticed that an opportunity has been requested as per Email dated 28.02.2024. The fact that assessment proceedings had to be completed by the end of March, 2024 by itself cannot be the reason for not affording an opportunity for the petitioner as time for completion of assessment proceedings having commenced much earlier the authority ought to have commenced proceedings on time.

8.

In the interest of justice and taking note of nature of request made, it would be appropriate to afford an opportunity to the petitioner to reply to the show-cause

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NC: 2024:KHC:21087 WP No. 11585 of 2024 notice issued under Section 142 (1). Accordingly, the order at Annexure-C is set aside as also Demand Notice at Annexure-D and penalty notice at Annexure-E are set aside. The matter is remitted to the stage of reply to the show-cause notice. The petitioner to appear before the respondent on 10.07.2024 and make out reply to the show-cause notice. All contentions are kept open.

9.

Accordingly, the petition is disposed off. Sd/- JUDGE NP

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