GANAPATHI AGRICULTURAL CO-OPERATIVE vs. ASSESSING OFFICER

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WP/20029/2021HC KarnatakaKAHC01041296202120 August 2024Bench: S.R.KRISHNA KUMAR5 pages
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What did the High Court hold?

The High Court allowed the petition. It held that the Assessment Order dated 20.09.2021 was an ex-parte order passed without providing sufficient and reasonable opportunity to the petitioner. The Court noted that the notice issued under Section 142(1) provided an extremely short period of three days for the petitioner to submit a reply. Consequently, the impugned Assessment Order was set aside. The matter was remitted back to Respondent No. 1 to the stage of the petitioner submitting a reply to the notice. The Court directed that the petitioner be provided with sufficient and reasonable opportunity and be heard in accordance with law. Liberty was also reserved for the petitioner to submit a reply and additional documents, which would be considered by Respondent No. 1. The ratio decidendi is that an assessment order passed without affording a reasonable opportunity to the assessee, especially when the notice period is unreasonably short, is unsustainable and liable to be quashed.

What were the facts?

The petitioner, Ganapathi Agricultural Co-operative Society Ltd., is challenging an Assessment Order dated 20.09.2021 and a Demand Notice dated 20.09.2021, both issued by the Assessing Officer, National Faceless Assessment Centre, Delhi (Respondent No. 1). The assessment year in question is 2016-17. The petitioner's grievance is that a notice under Section 142(1) of the Income Tax Act, 1961, was issued on 31.08.2021, requiring a reply by 04.09.2021, a period of only three days. The petitioner claims that due to bonafide reasons and unavoidable circumstances, they could not reply within this short timeframe. Their subsequent reply dated 06.09.2021 was allegedly not considered, leading to an ex-parte assessment order without a reasonable opportunity being provided.

What were the issues?

1. Whether the Assessment Order dated 20.09.2021, passed under Section 143(3) of the Income Tax Act, 1961, is liable to be quashed for being an ex-parte order passed without providing sufficient and reasonable opportunity to the petitioner? Assessee's Contention: The petitioner argued that the notice issued under Section 142(1) provided an extremely short period of three days for filing a reply. Due to bonafide reasons and unavoidable circumstances, the petitioner could not meet this deadline. The subsequent reply submitted was not considered, and the assessment order was passed ex-parte, violating the principle of natural justice by denying a reasonable opportunity to be heard. Revenue's Contention: The learned counsel for the respondents submitted that there is no merit in the petition.

Which sections of the Income-tax Act were involved?

Section 142(1),Section 143(3)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:33293 WP No. 20029 of 2021

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF AUGUST, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO.20029 OF 2021 (T-IT) BETWEEN: 1. GANAPATHI AGRICULTURAL CO-OPERATIVE SOCIETY LTD., ‘SAHAKARI SADANA’, MAIN ROAD, KEMMANNU, UDUPI-576 115, REPRESENTED BY ITS C.E.O. MR. MAHESH SALIAN, AGED ABOUT 41 YEARS …PETITIONER

(BY SRI. MAHESH R. UPPIN, ADVOCATE)

AND:

1.

ASSESSING OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI-110001.

2.

INCOME TAX OFFICER, WARE-1 AND TPS, AAYAKAR BHAVAN, ADI-UDUPI MALPE ROAD, UDUPI-576103. …RESPONDENTS

(BY SRI RAVI RAJ Y.V., ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ASSESSMENT ORDER DATED 20.09.2021 ISSUED BY THE R1 MARKED AS ANNEXURE-G AND TO QUASH THE DEMAND

Digitally signed by DEVIKA M Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:33293 WP No. 20029 of 2021

NOTICE DATED 20.09.2021 ISSUED BY THE R1 MARKED AS ANNEXURE-H.

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

CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR

ORAL ORDER

In this petition, the petitioner seeks the following reliefs: (i) Quash the Assessment Order dated 20.09.2021 bearing DIN No.ITBA/AST/S/ 143(3)/2021-22/1035717215(1) issued by the 1st respondent marked as Annexure ”G” by issuing a writ in the nature of certiorari; (ii) Quash the Demand Notice dated 20.09.2021 bearing DIN No.ITBA/AST/S/156/2021-22- 1035717244(1) issued by the 1st respondent marked as Annexure “H” by issuing a writ in the nature or certiorari; (iii) Grant such other relief as may be deemed fit to grant under the circumstances of the case in the interest of equity and justice.

2.

Heard the learned counsel for the petitioner and the learned counsel for the respondents and perused the material on record. A perusal of the material on record would

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NC: 2024:KHC:33293 WP No. 20029 of 2021

indicate that on 31.08.2021, respondent No.1 issued a notice to the petitioner under Section 142(1) of the Income Tax Act, 1961 (for short ‘IT Act’) in relation to assessment proceedings in respect of assessment year 2016-17 under Faceless Assessment Scheme. Under the said notice, the petitioner was directed to furnish reply on or before 04.09.2021 i.e., within a period of three days from the date of the said notice. It is the grievance of the petitioner that due to bonafide reasons, unavoidable circumstances and sufficient cause, the petitioner could not issue a reply within an extremely short period of three days and the reply dated 06.09.2021 submitted by him was not considered by respondent No.1, who proceeded to pass the impugned exparte Assessment Order at Annexure-G dated 20.09.2021 without providing sufficient or reasonable opportunity to the petitioner, who is before this Court by way of present petition.

3.

Per contra, the learned counsel for the respondents submits that there is no merit in the petition.

4.

As rightly contended by the learned counsel for the petitioner, a perusal of the material on record, including the notice dated 31.08.2021 and the impugned Assessment

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NC: 2024:KHC:33293 WP No. 20029 of 2021

Order would indicate that apart from the fact that the notice provides only an extremely short period of three days for the petitioner to submit his reply, the impugned Assessment Order is clearly an exparte order which has been passed before providing sufficient or reasonable opportunity to the petitioner and as such, the same deserves to be quashed and the matter remitted back to respondent No.1 for re- consideration from the stage of issuance of notice at Annexure-E dated 31.08.2021 and to proceed further in the mater. 5. In the result, I pass the following:

ORDER (i) The petition is hereby allowed.

(ii) The impugned Assessment Order at Annexure-G dated 20.09.2021, is hereby set aside.

(iii) The matter is remitted back to respondent No.1 to the stage of the petitioner submitting the reply to the notice and to proceed further in the matter after providing sufficient and reasonable opportunity to the petitioner and hearing him in accordance with law.

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NC: 2024:KHC:33293 WP No. 20029 of 2021

(iv) Liberty is reserved in favour of the petitioner to submit reply, additional reply, documents, etc. which shall be considered by respondent No.1 who shall proceed further in accordance with law.

Sd/- (S.R.KRISHNA KUMAR) JUDGE

MD List No.: 1 Sl No.: 3

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