KIRAN KUMAR vs. INCOME TAX OFFICER,

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WP/14392/2024HC KarnatakaKAHC01026040202423 October 2024Bench: M.I.ARUN5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Karnataka held that the impugned assessment order dated 09.02.2024, passed by Respondent No. 2, was liable to be set aside. The Court noted that the assessee's reply and the documents produced by him had not been considered by Respondent No. 2 while passing the order. Consequently, the Court set aside the assessment order and remanded the matter back to Respondent No. 2. The direction was for Respondent No. 2 to consider the reply submitted by the petitioner and the documents produced by him, and thereafter pass a speaking order in accordance with the law. The demand notice issued under Section 156 of the Income Tax Act, 1961, for AY 2015-16 was also set aside. All contentions were kept open, and the petitioner was granted liberty to produce additional documents. The writ petition was disposed of accordingly.

What were the facts?

The assessee, Kiran Kumar, filed a writ petition before the High Court of Karnataka challenging an assessment order dated 09.02.2024 passed by the Additional/Joint/Deputy/Assistant Commissioner of Income Tax, National Faceless Assessment Centre (Respondent No. 2) for Assessment Year 2015-16. The assessee contended that he had submitted a reply and provided explanations and documents to prove the identity and creditworthiness of persons from whom he borrowed money. However, Respondent No. 2 allegedly disregarded these submissions and erroneously concluded that the assessee failed to prove the identity and creditworthiness of the lenders, passing an adverse order. The assessee sought to quash the assessment order and the consequent demand notice, requesting a remand for fresh consideration.

What were the issues?

1. Whether the assessment order dated 09.02.2024 passed by Respondent No. 2 for AY 2015-16 is liable to be quashed and set aside on the grounds that the assessee's reply and submitted documents were not considered. Assessee's Contention: The assessee argued that he had provided a reply and submitted documents to establish the identity and creditworthiness of cash lenders. The impugned order was passed without considering this evidence, erroneously holding that the assessee failed to prove these aspects. The assessee prayed for the quashing of the order and remand. Revenue's Contention: The learned counsel for the respondents justified the impugned order and prayed for the dismissal of the writ petition. However, the counsel could not dispute that the assessee had indeed provided a reply and submitted documents, and that the order was passed on the premise of non-compliance and failure to prove identity and creditworthiness without proper reasoning to disbelieve the assessee's submissions.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 254,Section 144B,Section 156

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:42805 WP No. 14392 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23RD DAY OF OCTOBER, 2024 BEFORE THE HON'BLE MR JUSTICE M.I.ARUN WRIT PETITION NO. 14392 OF 2024 (T-IT) BETWEEN:

KIRAN KUMAR S/O NAGARAJA, AGED ABOUT 34 YEARS, R/AT NO 350, 2ND CROSS JAGAJYOTHINAGAR, NAGADEVANAHALLI, JNANABHARATHI POST, BANGALORE 560 056 PAN NO. CGZPK1565M …PETITIONER (BY JEEVAN J NEELANGI, ADVOCATE FOR SRI. BALRAM R RAO, ADVOCATE)

AND:

1.

INCOME TAX OFFICER, WARD 3(2)(3) BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU, KARNATAKA 560 095

2.

ADDITIONAL /JOINT/DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX, NATIONAL FACELESS ASSESSMENT CENTRE INCOME TAX DEPARTMENT, DELHI, 2ND FLOOR, E -RAMP, JAWAHARLAL NEHRU STADIUM,

Digitally signed by CHAITHANYA K Location: High Court of Karnataka

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NC: 2024:KHC:42805 WP No. 14392 of 2024

DELHI 110 003 …RESPONDENTS (BY SRI. THIRUMALESH, ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRYING TO 1. DIRECTION UNDER ARTICLE 226 OF THE CONSTITUTION OF 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 UNDER SECTION 143 (3) R.W.S. 254 R.W.S. 144B OF ACT DATED 09.02.2024 IN DIN.ITBA/AST/S/156/2023- 24/1060686357(1) (ANNEXURE-N) AND NOTICE DEMAND ISSUED U/S 156 OF THE ACT DATED 09.02.2024 IN DIN ITBA/AST/S/156/2023.24/1060686360(1) ANNEXURE(1) FOR THE AY 2015-16. AND ETC.

THIS PETITION, COMING ON FOR ORDERS THROUGH VIDEO CONFERENCING / PHYSICAL HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE M.I.ARUN

ORAL ORDER

1.

Aggrieved by the assessment order for the year 2015-16 (vide Annexure-N to the writ petition) passed by respondent No.2, the present writ petition is filed by the assessee. The case of the assessee is that, he had

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NC: 2024:KHC:42805 WP No. 14392 of 2024

submitted a reply to the notices issued and he produced an explanation and several documents to prove the identity and creditworthiness of the persons from whom he has borrowed the money. However, respondent No.2 disregarding the said reply to the notices and erroneously holding that the assessee has failed to prove the identity and creditworthiness of the persons from whom cash was claimed to have been received, has passed the impugned order adverse to the interest of the assessee. On the said ground, the petitioner prays that the assessment order may be set aside and the matter may be remanded back to respondent No.2 for fresh consideration. 2. Learned counsel appearing for the respondents justifies the impugned order and prays for dismissal of the writ petition. However, he is unable to dispute the fact that subsequent to the notices issued, the assessee has indeed given the reply and also has submitted certain documents and that the impugned order has been passed on the ground that there was no compliance to the notices

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NC: 2024:KHC:42805 WP No. 14392 of 2024

and the assessee failed to prove the identity and creditworthiness of the persons from whom cash was claimed to have been received and that there is no proper reasoning assigned to disbelieve the reply and the documents produced by the assessee. 3. As the reply of the assessee and the documents produced by him have not been considered by respondent No.2 while passing the impugned order, the impugned order dated 09.02.2024 vide Annexure-N to the writ petition, passed by respondent No.2 is hereby set aside and the matter stands remanded back to respondent No.2, to consider the reply submitted by the petitioner as well as the documents produced by him and pass a speaking order in accordance with law. 4. All contentions are kept open. Consequently, demand notice issued under Section 156 of the Income Tax Act, 1961 for the assessment year 2015-16 is hereby set aside. 5. It is needless to state that the petitioner is at liberty to produce such additional documents as he so desires to

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NC: 2024:KHC:42805 WP No. 14392 of 2024

respondent No.2. Accordingly, the Writ Petition is hereby disposed off.

SD/- (M.I.ARUN) JUDGE

CH List No.: 1 Sl No.: 35 SNN

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