HASSAN CO-OPERATIVE SOCIETY LIMITED vs. INCOME TAX OFFICER

WP/15319/2024HC KarnatakaKAHC01028955202426 June 2024Bench: S SUNIL DUTT YADAV3 pages

AI SummaryRemanded

What did the High Court hold?

The High Court accepted the petitioner's submission that the insufficient time afforded to reply to the show cause notice on variation resulted in prejudice. The Court noted that the revenue did not dispute this aspect. Consequently, the order passed under Section 143(3) of the Income Tax Act, 1961 (Annexure-A) was set aside. The matter was remitted back to the stage of the reply to the show cause notice dated March 1, 2024. The penalty notices (Annexures-A1 and A2) were also set aside. The Court further directed that if the petitioner requests an extension of at least fifteen days for making the reply, considering the bulky records and explanations, the Assessing Authority should consider it appropriately. The writ petition was disposed of accordingly.

What were the facts?

The petitioner, Hassan Co-operative Society Limited, filed a writ petition challenging an order under Section 143(3) of the Income Tax Act, 1961, for Assessment Year 2022-23, and also sought to set aside penalty notices. The petitioner argued that a show cause notice on variation was issued on March 1, 2024, with a reply due on March 5, 2024. This short timeframe, the petitioner contended, violated the Standard Operating Procedure (SOP) requiring at least seven days for a reply, thereby preventing them from adequately responding to the proposed additions. The revenue did not dispute this aspect of the short notice period.

What were the issues?

1. Whether the order under Section 143(3) of the Income Tax Act, 1961, is liable to be quashed on the ground that the assessee was provided insufficient time to reply to the show cause notice on variation, thereby violating the SOP requiring at least seven days for such reply? Assessee's Contention: The petitioner argued that the short notice period of four days (March 1 to March 5, 2024) for replying to the show cause notice on variation was in violation of the SOP, which mandates at least seven days. This insufficient time prejudiced their ability to prepare a proper reply and counter the proposed additions. Revenue's Contention: The revenue did not dispute the fact that the time afforded for reply was less than seven days, nor did they contest the petitioner's submission regarding the violation of the SOP.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

- 1 -

NC: 2024:KHC:23520 WP No. 15319 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF JUNE, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 15319 OF 2024 (T-IT) BETWEEN: HASSAN CO-OPERATIVE SOCIETY LIMITED NO.1, SOCIETY ROAD, GANDHI BAZAR, HASSAN-573201. PAN. AAAAH7251F. ALSO AT: H B SHIVAKUMAR, AGED 55 YEARS, S/O BASAPPA, VISHWESWARAYYA EXTENSION, NEAR YASH INTERNATIONAL ACADEMY, SALAGAME ROAD, HASSAN-573201, REGISTERED UNDER CO-OPERATIVE SOCIETIES ACT 1956. …PETITIONER (BY SRI. RAVI SHANKAR S. V., ADV.) AND: 1. INCOME TAX OFFICER WARD 1 AND TPS, HASSAN-573201. 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-110003. …RESPONDENTS (BY SRI.M THIRUMALESH, ADV.) Digitally signed by VIDYA G R Location: HIGH COURT OF KARNATAKA

- 2 -

NC: 2024:KHC:23520 WP No. 15319 of 2024

THIS PETITION IS FIELD UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA, PRAYING TO I) QUASH THE ORDER UNDER SECTION 143(3) OF THE ACT DATED 26/03/2024, BEARING DIN NO. ITBA/AST/S/143(3)/2023-24/1063422820 (1) ISSUED BY THE R2 FOR THE ASSESSMENT YEAR 2022-23 HEREIN MARKED AS ANNEXURE-A AND ETC.

THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has called in question the validity of the order under Section 143(3) of the Income Tax Act, 1961 (for short, ‘IT Act’) and has also sought for setting aside of the penalty notice at Annexures-A1 and A2. 2. It is the case of the petitioner that during the assessment proceedings, show cause notice on variation was issued on 01.03.2024 with reply to be made on 05.03.2024. It is submitted that such short time afforded is in violation of the SOP that requires at least seven days time being afforded for reply to show cause notice. The said aspect regarding time to be afforded to reply to show cause notice is not in dispute. Learned counsel for the petitioner has contended that in light of insufficient time afforded, they were not in a position to make out a reply to counter the proposed variation and addition.

- 3 -

NC: 2024:KHC:23520 WP No. 15319 of 2024 3. Such submission of prejudice resulting due to the short time made available to the reply requires acceptance. Accordingly, the order at Annexure-A is set aside. Matter is remitted to the stage of reply to the show cause notice dated 01.03.2024. The penalty notice at Annexures-A1 and A2 are also set aside. 4. It is the contention of the petitioner that the time for making out reply to the show cause notice to which stage the matter now stands remitted ought to be extended for at least fifteen days in the peculiar facts of the case. In the light of bulky records that has been produced and explanation made, if such request is made, same to be considered by the Assessing Authority, appropriately. Accordingly, writ petition stands disposed off. Sd/- JUDGE NC CT:bms List No.: 1 Sl No.: 13

Recent GST High Court judgments

Search GST case law →