BANGALORE THULASEEDAS SRINATH vs. INCOME TAX OFFICER

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WP/14325/2024HC KarnatakaKAHC01028837202425 June 2024Bench: S SUNIL DUTT YADAV5 pages
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What did the High Court hold?

The High Court held that the notice issued under Section 148A(b) of the Income Tax Act, 1961, dated 11.03.2023, which provided a reply period of only four days (from 11.03.2023 to 15.03.2023), was in violation of Section 148A(b) itself. This section mandates that the show-cause notice must be served with a time period of not less than seven days and not exceeding thirty days. The Court found that the non-adherence to this minimum period resulted in prejudice to the assessee and a violation of the principles of natural justice, as the proceedings were initiated without affording the assessee adequate opportunity to respond. Consequently, the Court quashed the impugned notices and consequential orders, including the assessment order and penalty notices. However, liberty was granted to the Revenue to initiate appropriate action in accordance with law.

What were the facts?

The petitioner, Bangalore Thulaseedas Srinath, filed a writ petition challenging notices issued under Section 148A(b) of the Income Tax Act, 1961, dated 02.02.2023 and 11.03.2023, for Assessment Year 2019-20. The petitioner also challenged the consequential order under Section 148A(d), notice under Section 148, assessment order under Section 147 read with Section 144 read with Section 144B, and penalty notices under Sections 274 read with 272A(1)(d), 270A, and 271B. The core of the petitioner's argument was that the notice dated 11.03.2023 required a reply by 15.03.2023, which provided less than the statutorily mandated minimum of seven days.

What were the issues?

1. Whether the notice issued under Section 148A(b) of the Income Tax Act, 1961, dated 11.03.2023, which required a reply by 15.03.2023, violated the statutory requirement of providing not less than seven days for the assessee to show cause, thereby vitiating the proceedings? (Question of law) Assessee's Contention: The assessee argued that the notice dated 11.03.2023 provided a reply period of only four days (11th to 15th March 2023), which is less than the minimum seven days stipulated in Section 148A(b) of the Act. This failure to provide the statutory minimum time resulted in prejudice and a violation of the principles of natural justice. Revenue's Contention: The judgment does not record any specific contentions from the revenue regarding this issue.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148A(b),Section 148,Section 147,Section 144,Section 144B,Section 274,Section 272A(1)(d),Section 270A,Section 271B

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:23405 WP No. 14325 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF JUNE, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 14325 OF 2024 (T-IT) BETWEEN: 1. BANGALORE THULASEEDAS SRINATH 47 YEARS NO.180, 4TH MAIN, BEML LAYOUT, BASAVESWRANAGAR BANGALORE-560 079 PAN: GRMPS1178C … PETITIONER (BY SRI. RAVI SHANKAR S V., ADVOCATE) AND: 1. INCOME TAX OFFICER WARD 6 (2)(1) BANGALORE-560 095 2. NATIONAL FACELESS ASSESSMENT CENTRE ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX / INCOME TAX OFFICER, INCOME TAX DEPARTMENT, MINISTRY OF FINANCE ROOM NO.401, 2ND FLOOR, E RAMP JAWAHARLAL NEHRU STADIUM DELHI-110 003 3. THE PRINCIPAL COMMISSIONER OF INCOME TAX-1 THE OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX-1 Digitally signed by VIDYA G R Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:23405 WP No. 14325 of 2024 BMTC BUILDING, KORAMANGALA BANGALORE-560 095 … RESPONDENTS (BY SRI. M. DILIP., JUNIOR STANDING COUNSEL)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO i) DIRECT, QUASH THE NOTICE UNDER SECTION 148A(b) OF THE ACT, DTD 02/02/2023 AND 11/03/2023 BEARING DIN NO. ITBA/AST/F/148A(SCN)/2022-23/1049368698(1) AND ITBA/AST/F/148A(SCN)/2022-23/1050630319(1), ISSUED BY THE R-1 FOR THE ASSESSMENT YEAR 2019-20 HEREIN MARKED AS ANNEXURE-A AND A1 RESPECTIVELY AND ETC.

THIS PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has challenged the notices issued under Section 148A(b) of the Income Tax Act, 1961 ('the Act' for brevity) at Annexures-'A' and 'A1' dated 02.02.2023 and 11.03.2023 respectively. The petitioner has also challenged the order passed under Section 148A(d) at Annexure-'A2' dated 27.03.2023, the notice issued under Section 148 at Annexure-'A3' dated 27.03.2023 and the Assessment Order passed under Section 147 read with Section 144 read with Section 144B at Annexure-'A4' dated 13.03.2024, penalty notice issued

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NC: 2024:KHC:23405 WP No. 14325 of 2024 under Section 274 read with Section 272A(1)(d) at Annexure-'A5' dated 13.03.2024, penalty notice issued under Section 274

read with Section 270A at Annexure-'A6' dated 13.03.2024 and the penalty notice issued under Section 274 read with Section 271B at Annexure-'A7' dated 13.03.2024. 2. The case of the petitioner is that the notices issued under Section 148A(b) of the Act was issued on 11.03.2024 and was directed to make out a reply on 15.03.2023, which time period is less than the time stipulated under Section 148A(b). 3. Section 148A(b) of the Act reads as follows:- "148A. The Assessing Officer shall, before issuing any notice under section 148.- (a) xxx (b) Provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as

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NC: 2024:KHC:23405 WP No. 14325 of 2024 may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); In light of the same, it is clear that not less than seven days ought to be provided for making out a reply to the notice. 4. The assertion of learned counsel for the petitioner that non-affording of time period of seven days has resulted in prejudice and violation of principles of natural justice requires acceptance, as it is noticed that the proceedings have been initiated in the absence of objections. 5. Accordingly, as the notices at Annexures-'A' and 'A1' itself are vitiated, the consequential orders and notices also require to be set aside.

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NC: 2024:KHC:23405 WP No. 14325 of 2024 6. Accordingly, the petition is allowed. The notices at Annexures-'A' and 'A1' dated 02.02.2023 and 11.03.2023 respectively, the order at Annexure-'A2' dated 27.03.2023, the notice at Annexure-'A3' dated 27.03.2023, the Assessment Order at Annexure-'A4' dated 13.03.2024, penalty notices at Annexures-'A5', 'A6' and 'A7', all dated 13.03.2024, are set aside. 7. However, liberty is reserved to the Revenue to take appropriate action as regards the subject matter of notice issued under Section 148A(b) of the Act, in accordance with law. Sd/- JUDGE VGR

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