M/S RUCHIRA PROJECTS PRIVATE LIMITED vs. OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX

PDF · subscribers
WP/15600/2025HC KarnatakaKAHC01034426202504 June 2025Bench: B M SHYAM PRASAD5 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the petition, quashing the impugned Assessment Order and the consequential Demand Order. The Court reasoned that while the Assessing Officer cited non-compliance, it was undisputed that the petitioner's Books of Accounts for Assessment Years 2020-21 to 2022-23 were accepted, permitting allowance for expenditure. The Court found it imperative for the Assessing Officer to consider why similar treatment should not be extended to the subject Assessment Year 2019-20, especially in light of the Books of Accounts already submitted. The Court directed that the proceedings be restored to the respondent for due consideration, with the petitioner being granted a reasonable opportunity to submit Books of Accounts if not already filed. This opportunity was to be provided without prejudice to any defenses based on limitation. The Court explicitly left open all questions except for the need to consider the consistency in accounting treatment and the opportunity to submit accounts.

What were the facts?

The petitioner, M/s Ruchira Projects Private Limited, filed a writ petition before the High Court of Karnataka challenging an Assessment Order dated March 29, 2025, for Assessment Year 2019-20, passed under Section 147 read with Section 144 of the Income Tax Act, 1961. The Assessment Order, issued by the Assistant Commissioner of Income Tax, Central Circle 2(4), cited repeated non-compliance, failure to substantiate revenue recognition and inventory valuation, and reliance on irrelevant judicial precedents. A consequential demand order dated March 29, 2025, was also challenged. The petitioner is engaged in construction and sale of apartments.

What were the issues?

1. Whether the Assessing Officer was justified in rejecting the petitioner's Books of Accounts for Assessment Year 2019-20, despite accepting them for Assessment Years 2020-21, 2021-22, and 2022-23, without considering the consistency in accounting practices? Assessee's Contention: The petitioner argued that its Books of Accounts have been produced and accepted for other assessment years (2020-21 to 2022-23), allowing expenditure based on these accounts. They emphasized that their earlier correspondence shows the production of Books of Accounts relevant for the subject assessment year. They sought a remand of the proceedings. Revenue's Contention: The respondent submitted that multiple opportunities were granted to the petitioner, starting from October 7, 2024, with either no response or requests for adjournment. However, the respondent conceded that the Books of Accounts for Assessment Years 2020-21 to 2022-23 were accepted, and argued that the Assessing Officer must consider why the same treatment should not be applied to the subject assessment year.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 142(1)

AI-generated summary — verify with the full judgment below

- 1 -

HC-KAR NC: 2025:KHC:18760 WP No. 15600 of 2025

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF JUNE, 2025 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 15600 OF 2025 (T-IT)

BETWEEN:

M/S RUCHIRA PROJECTS PRIVATE LIMITED (A PRIVATE LIMITED COMPANY INCORPORATED UNDER THE COMPANIES ACT), HAVING ITS OFFICE AT NO.31, GCN ENCLAVE, FF2, 15TH CROSS, KUNDANAHALLI, BENGALURU-560037 REPRESENTED BY ITS DIRECTOR, SRI RAMANJULU GONIGUNTLA. …PETITIONER (BY SRI. GAUTAM SHREEDHAR BHARADWAJ, ADVOCATE)

AND:

OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2(4), CENTRAL REVENUE, BUILDING, NO.1, QUEENS ROAD, BANGALORE-560001. …RESPONDENT (BY SRI.M. DILIP., ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSITUTION OF INDIA PRAYING TO QUASH THE ASSESSMENT ORDER DATED. 29.03.2025 BEARING DIN AND ORDER NO. ITBA/AST/S/147/2024- 25/1075256244(1) ISSUED BY RESPONDENT AUTHORITY FOR ASSESSMENT YEAR 2019-20 (ANNX- A).QUASH THE DEMAND ORDER DATED 29.03.2025 BEARING DIN AND NOTICE NO. ITBA/AST/S/156/2024- 25/1075256352(1) ISSUED BY THE RESPONDENT

Digitally signed by VANAMALA N Location: High Court of Karnataka

- 2 -

HC-KAR NC: 2025:KHC:18760 WP No. 15600 of 2025

AUTHORITY FOR ASSESSMENT YEAR 2019-20 (ANNX- B).

THIS PETITION, COMING ON FOR PRELIMINAY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE B M SHYAM PRASAD

ORAL ORDER

The petitioner has called in question the Assessment Order dated 29.03.2025 [Annexure-A which is for the assessment year 2019-20] under Section 147 read with Section 144 of the Income Tax Act, 1961 [for short, 'the IT Act']. The Assessing Officer, in the impugned Assessment Order which has resulted in the impugned demand, has observed that [i] there is repeated non-compliance and [ii] failure to substantiate revenue recognition and inventory valuation. The Assessing Officer has also observed that the petitioner relies upon judicial precedents that are not relevant.

2.

Sri Gautam S. Bharadwaj, the learned counsel for the petitioner, while arguing for a

- 3 -

HC-KAR NC: 2025:KHC:18760 WP No. 15600 of 2025

remand, submits that the petitioner, who is engaged in construction and sale of apartments, has declared income for the assessment years 2018-19 to 2023-24; and that the income declared claiming expenditure for the assessment years 2020-21, 2021-22 and 2022-23 are considered permitting allowance based on Books of Accounts but it is only for the assessment years 2018-19, 2019-20 as also 2023-24 that the Books of Accounts are rejected. The learned counsel also emphasizes that the petitioner’s earlier correspondence shows that the petitioner has produced Books of Accounts even relevant for the subject assessment years .

3.

As against these submissions, Sri M.Dilip, the learned standing counsel for the respondents who is called upon to accept notice, submits that as is stated in paragraph 4 of the impugned assessment order, multiple opportunities have been granted with issuance of notice under Section 142(1) starting from

- 4 -

HC-KAR NC: 2025:KHC:18760 WP No. 15600 of 2025

07.10.2024 either with no response or with a request for adjournment. However, crucially, it is undisputed that Books of Accounts filed for the assessment years 2020-21 to 2022-23 have been accepted permitting allowance for expenditure incurred in construction, and if this is so, the Assessing Officer must consider why the same must not be for the subject assessment year.

Further, the Assessing Officer will also have to consider this question in the light of the Books of Accounts already submitted, and if not submitted, the petitioners must be given a reasonable opportunity to submit such Books of Accounts. This opportunity must foreclose all defenses based on limitation lest it be that there is fortuitous defense based on a default. In the light of afore, the petition must be disposed of quashing the impugned Assessment Order and the consequential Demand [Annexures-A and B] restoring the proceedings to the

- 5 -

HC-KAR NC: 2025:KHC:18760 WP No. 15600 of 2025

respondent for due consideration leaving open all questions except as aforesaid. Hence, the following: ORDER

[a[ The petition is allowed quashing the impugned Assessment Order and the consequential Demand [Annexures-A and B] restoring the proceedings to the respondent.

[b] The petitioner is reserved with liberty to make all submissions once again without any further notice before 07.07.2025, and thereafter, the respondents shall issue further notice to extend an opportunity of personal hearing and conclude the assessment proceedings.

Sd/- (B M SHYAM PRASAD) JUDGE

SA ct:sr

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →