RAGHAVENDRA MUNISWAMY vs. THE INCOME TAX OFFICER

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WP/14692/2024HC KarnatakaKAHC01028491202425 June 2024Bench: S SUNIL DUTT YADAV5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the notice dated 22.03.2022 issued under Section 148A(b) of the Income Tax Act, 1961, was contrary to the statutory mandate. Section 148A(b) requires the Assessing Officer to provide an opportunity of being heard by serving a notice to show cause within a time not less than seven days and not exceeding thirty days from the date of issuance. The notice in question provided only three days for the petitioner to reply, which is less than the statutory minimum of seven days. Therefore, the Court found that the petitioner was prejudiced by the prescribed time. Consequently, the notice under Section 148A(b), the subsequent order under Section 148A(d), the notice under Section 148, the assessment order under Section 147 read with Section 144B, the order under Section 271AAC(1), and the penalty notice under Section 272A(1)(d) were all set aside. The Revenue was granted liberty to take appropriate action as permissible in law, and all contentions were kept open.

What were the facts?

The petitioner, Raghavendra Muniswamy, challenged several notices and orders issued by the Income Tax Department for the assessment year 2018-19. These included a notice dated 22.03.2022 under Section 148A(b), an order dated 01.04.2022 under Section 148A(d), a notice dated 01.04.2022 under Section 148, an assessment order dated 24.11.2023 under Section 147 read with Section 144B, an order dated 01.05.2024 under Section 271AAC(1), and a penalty notice dated 01.05.2024 under Section 272A(1)(d). The challenge was filed as a Writ Petition before the High Court of Karnataka.

What were the issues?

1. Whether the notice dated 22.03.2022 issued under Section 148A(b) of the Income Tax Act, 1961, providing a reply period of less than seven days, is contrary to the statutory mandate? (Question of law) The petitioner argued that the notice under Section 148A(b) was issued on 22.03.2022, requiring a reply by 25.03.2022. This period of three days is contrary to Section 148A(b) of the Act, which mandates a minimum of seven days to be provided for the assessee to show cause. The petitioner contended that this short notice period prejudiced them. The revenue did not record any specific arguments in the judgment regarding this issue.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:23401 WP No. 14692 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. 14692 OF 2024 (T-IT) BETWEEN: 1. RAGHAVENDRA MUNISWAMY S/O. MUNISWAMY, AGED ABOUT 46 YEARS, 2/A, GRAMADEVATHA CROSS, CHICKMAVALLI, BANGALORE-560 004. NOW AT: C/O. MADHAV NAIDU, KUMURI NARAYANAPURA, THALLI KATTE POST-577 277 BHADRAVATHI TALUK, SHIMOGGA DISTRICT. … PETITIONER (BY SRI. CHANDRASHEKAR R., ADVOCATE FOR SRI RAMA MURTHY R., ADVOCATE) AND: 1. THE INCOME TAX OFFICER WAR-2(1), C.R. BUILDING, NAVANAGAR, HUBBALI-580 025. 2. ASSESSEMENT UNIT INCOME TAX DEPARTMENT, REP. BY MINISTRY OF FINANCE, Digitally signed by VIDYA G R Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:23401 WP No. 14692 of 2024 GOVT. OF INDIA, NEW DELHI-110 001. … RESPONDENTS (BY SRI. M. THIRUMALESH, ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO A) QUASH THE NOTICES DATED 22/03/2022 ISSUED U/S 148A(b) OF THE ACT (ANNEXURE-A) (ITBA/AST/F/148A(SCN)/2021-22/1041249161 (1) ISSUED FOR THE ASSESSMENT YEAR 2018-19 BY THE R1 AND ETC.

THIS PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has challenged the notice at Annexure-'A' dated 22.03.2022 issued under Section 148A(b) of the Income Tax Act, 1961 ('the Act' for brevity), the Order at Annexure-'B' dated 01.04.2022 passed under Section 148A(d), the notice at Annexure-'C' dated 01.04.2022 issued under Section 148, the Assessment Order at Annexure-'D' dated 24.11.2023 passed under Section 147 read with Section 144B, the order at Annexure-'F' dated 01.05.2024 passed under Section 271AAC(1), the penalty notice at Annexure-'G'

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NC: 2024:KHC:23401 WP No. 14692 of 2024 dated 01.05.2024 issued under Section 272A(1)(d) of the Act. 2. Learned counsel for the petitioner submits that the notice under Section 148A(b) is issued on 22.03.2022 calling upon the petitioner to make out a reply on or before 25.03.2022, which time that is afforded to the petitioner to make out a reply is contrary to the statutory mandate under Section 148A(b) which provides a period of not less than seven days which is to be afforded to make out a reply. The details regarding the date of issuance of notice and time afforded to make out the reply, are matters of record. 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

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NC: 2024:KHC:23401 WP No. 14692 of 2024 which such notice is issued, or such time, as 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, the time afforded to the petitioner to make out a reply is contrary to the statutory mandate and accordingly, the assertion of learned counsel that the petitioner has been prejudiced by the time prescribed in the notice, requires acceptance. 4. Accordingly, the notice at Annexure-'A' dated 22.03.2022, the Order at Annexure-'B' dated 01.04.2022, the notice at Annexure-'C' dated 01.04.2022, the Assessment Order at Annexure-'D' dated 24.11.2023, the order at Annexure-'F' dated 01.05.2024, the penalty notice at Annexure-'G' dated 01.05.2024 are set aside.

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NC: 2024:KHC:23401 WP No. 14692 of 2024 5. 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, as is permissible in law. All contentions are kept open. Accordingly, the petition is disposed off. Sd/- JUDGE VGR

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