SRI SHIVAKUMARASWAMY CREDIT CO-OPERATIVE SOCIETY LTD., vs. THE INCOME TAX OFFICER

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WP/16175/2024HC KarnatakaKAHC01031069202409 July 2024Bench: S SUNIL DUTT YADAV4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court noted that the petitioner had produced documents to explain the source of cash deposits, while the Assessing Officer had raised doubts about the genuineness of these transactions. Consequently, the Court decided to relegate the matter back to the Assessing Officer. The petitioner was granted liberty to demonstrate the genuineness of the transactions, including the identity and creditworthiness of the members, during the relevant period. The Court set aside the order under Section 148A(d), the notice under Section 148, the assessment order under Section 147 read with Section 144B, and the penalty notices. The matter was remanded to the stage of the reply to the notice under Section 148A(b). All contentions, whether specifically mentioned or not, were kept open for consideration. The operative direction was to set aside the impugned orders and notices and relegate the matter to the Assessing Officer.

What were the facts?

The petitioner, Sri Shivakumaraswamy Credit Co-operative Society Ltd., filed a writ petition challenging notices and orders issued under the Income Tax Act, 1961, for Assessment Year 2016-17. The petitioner argued that it had provided a written reply on January 24, 2024, with relevant documents, including a cash flow chart, bank book, and cash book, to explain the source of cash deposits. However, the Assessing Officer concluded that the petitioner failed to explain the genuineness, identity, and creditworthiness of its members. The petitioner contended that it could demonstrate the genuineness of the transactions if given an opportunity.

What were the issues?

1. Whether the notices and orders issued under Sections 148A(b), 148A(d), 148, 147, and 144B of the Income Tax Act, 1961, and the subsequent penalty notices are valid, considering the petitioner's submission of documents to explain cash deposits. Assessee's Contentions: The petitioner argued that it had furnished a detailed reply with supporting documents, including cash flow charts and books, to explain the source of cash deposits. It contended that the Assessing Officer's conclusion that the genuineness, identity, and creditworthiness of members were not explained was incorrect and that it could further demonstrate the genuineness of transactions if an opportunity was provided. Revenue's Contentions: The judgment does not record specific contentions made by the revenue. However, the Assessing Officer's conclusion, as stated by the petitioner, indicates a doubt regarding the genuineness of the transactions and the identity and creditworthiness of the members.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148A(b),Section 148A(d),Section 148,Section 147,Section 144B

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:26351 WP No. 16175 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9TH DAY OF JULY, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 16175 OF 2024 (T-IT) BETWEEN: 1. SRI SHIVAKUMARASWAMY CREDIT CO-OPERATIVE SOCIETY LTD., REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER SRI NAGARAJA N G OLD ADDRESS: D.NO.1659/1, 1ST FLOOR VIDYANAGAR, SN PLAZA N R 1ST BUST STOP VIDYANAGAR, T B EXTENSION, DAVANAGERE-577 004. NEW ADDRESS: D NO.1660/47-1, 1ST FLOOR, 12TH CROSS, T B BADAVANE, VIDYANAGAR, DAVANAGERE-577 005 REGISTERED UNDER CO-OPERATIVE SOCIETIES ACT, 1959. … PETITIONER (BY SRI. RAMA MURTHY R., ADVOCATE) AND: 1. THE INCOME TAX OFFICER WARD-1, Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:26351 WP No. 16175 of 2024 'SHREE TOWERS', HADAADI MAIN ROAD, DAVANAGERE-577 002. 2. ASSESSMENT UNIT, INCOME TAX DEPARTMENT, REP. BY MINISTRY OF FINANCE, GOVT. OF INDIA, NEW DELHI-110 001. … 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 (A) ISSUE A WRIT OF CERTIORARI OR IN THE NATURE OF WRIT OF CERTIORARI QUASHING THE NOTICES DATED 31.01.2023 AND 13.03.2023 ISSUED U/S 148A(B) OF THE ACT (ANNEXURE-B AND C) [ITBA/AST/F/148A(SCN)/ 2022-23/1049293217(1) AND ITBA/AST/F/148A(SCN)/2022-23/1050707888(1)] ISSUED FOR THE ASSESSMENT YEAR 2016-17 BY THE 1ST RESPONDENT AND ETC.

THIS PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING: ORDER

Petitioner which is a Co-operative Society, has called in question the validity of notice under Section 148-A(b) of the Income Tax Act, 1961 (for short 'the Act') at Annexures-B and C; the order under Section 148-A(d) of the Act at Annexure-E; notice under Section 148 of the Act at Annexure-F; assessment order under Section 147 read

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NC: 2024:KHC:26351 WP No. 16175 of 2024 with Section 144B of the Act at Annexure-H and the penalty notices at Annexures-J and J1. 2. It is the case of the petitioner that insofar as the cash deposits of the Bank are concerned, petitioner had made out a written reply on 24.01.2024 and had placed relevant documents referred to in Paragraph No.4.2 of the Assessment Order including the documents to demonstrate the source of cash deposits. It is submitted that cash flow chart as well as the bank book and cash book with narrations were furnished. It is submitted that however, the conclusion drawn by the Assessing Officer is that the assessee has not explained the genuineness of the transactions and identity and credit worthiness of the members by filing copies of relevant documents and evidence. It is further submitted that insofar as the genuineness of the transaction, petitioner would demonstrate the same if an opportunity is given. 3. Taking note that the petitioner has produced documents to explain the source of cash deposits while the

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NC: 2024:KHC:26351 WP No. 16175 of 2024 assessing officer has doubted the genuineness of such transactions, it would be appropriate to relegate the matter to the Assessing Officer with liberty to the petitioner to demonstrate the genuineness of the transactions including the identity and credit worthiness of the members during the relevant period of time. 4. In light of the same, the order under Section 148-A(d) of the Act at Annexure-E; notice under Section 148 of the Act at Annexure-F; assessment order under Section 147 read with Section 144B of the Act at Annexure-H and the penalty notices at Annexures-J and J1, are set aside. The matter is relegated to the stage of reply to the notice under Section 148-A(b) of the Act. All contentions are kept open including those not adverted to specifically. 5. Accordingly, the petition is disposed off. Sd/- JUDGE VP

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