M/S PRAGATHI DEVELOPERS vs. THE INCOME TAX OFFICER

PDF · subscribers
WP/20113/2021HC KarnatakaKAHC01041370202118 August 2022Bench: S.R.KRISHNA KUMAR5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the impugned assessment order was illegal, arbitrary, opposed to law, and violative of principles of natural justice. The Court noted that an opportunity for personal hearing was not provided to the petitioner prior to passing the order. Furthermore, there was no reference to the mandatory satisfaction note, nor was it indicated that the satisfaction note contained incriminating material found in the search. The order also failed to disclose whether documents recovered during the search belonged to other persons. The petitioner's claim was summarily rejected without an opportunity of hearing under Section 143(3) of the Income Tax Act, and no date was fixed for hearing. Consequently, the Court quashed the assessment order and remitted the matter back to the second respondent for reconsideration. The second respondent was directed to fix a date for hearing, provide a personal hearing to the petitioner, consider all pleadings and documents, and pass appropriate orders after examining the satisfaction note under Section 153C of the Income Tax Act, 1961, bearing in mind the relevant judgments.

What were the facts?

The petitioner, M/s Pragathi Developers, a partnership firm, filed a writ petition before the High Court of Karnataka seeking to quash an assessment order dated July 8, 2021, passed by the Assistant Commissioner of Income Tax (R-2). The petitioner contended that despite submitting a reply on April 12, 2021, to a notice issued by the Assessing Officer on April 5, 2021, the respondents proceeded to pass the impugned order without jurisdiction, contrary to law, and in violation of natural justice. The respondents argued that the petition lacked merit and should be dismissed.

What were the issues?

1. Whether the assessment order dated 08.07.2021 passed by the second respondent is without jurisdiction or authority of law and contrary to statutory provisions, violating principles of natural justice, under Article 226 of the Constitution of India. Assessee's contentions: The petitioner argued that the assessment order was passed without jurisdiction and contrary to law, violating principles of natural justice. They relied on CBDT Circular No. 24/2015, and decisions in Shyamraj Singh vs. DCIT, Prl.CIT vs. Star PVG Exports, Super Malls Pvt. Ltd., vs. PCIT, and Tin Box Co., Vs. CIT. Revenue's contentions: The respondents submitted that there was no merit in the petition and it was liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 153C

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF KARNATAKA, BENGALURU

DATED THIS THE 18TH DAY OF AUGUST, 2022

BEFORE

THE HON'BLE MR.JUSTICE S.R.KRISHNA KUMAR

WRIT PETITION No.20113 OF 2021(T-IT)

BETWEEN:

M/S PRAGATHI DEVELOPERS PARTNERSHIP FIRM NO 257, 1ST FLOOR, 14TH MAIN 24TH CROSS, BANASHANKARI 2ND STAGE BANGALORE 560 070. REP BY ITS PARNER SRI T D RAJEGOWDA …PETITIONER (BY SRI. M.V. SESHACHALA., SENIOR COUNSEL FOR SRI. ARAVIND V. CHAVAN., ADVOCATES)

AND:

1 . THE INCOME TAX OFFICER WARD 4(2), BMTC BUILDING 80 FEET ROAD, KORAMANGALAL BENGLAURU 560 095.

2 . THE ASSISTANT COMMISSINOER OF INCOME TAX CENTRAL CIRCLE 1(2),C R BUILDING QUEENS ROAD, BANGALORE 560 001.

3 . PRL COMMISSIONER OF INCOME TAX CENTRAL CIRCLE,C R BUILDING QUEENS ROAD BANGALORE 560 001.

…RESPONDENTS (BY SRI. M. DILIP., ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ASSESSMENT ORDER DATED: 08.07.2021 PASSED BY R-2 ANNEX-K AND ETC.

THIS W.P. COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING:-

ORDER In this petition, the petitioner has sought for the following reliefs: a. Issue a Writ of certiorari to quash the assessment order dated 08.07.2021 bearing No.ITBA/AST/S/153C/2021-22/1034071418(1) passed by second respondent, Annexure-K.

b. Issue such other Writ or direction as this Hon’ble Court deem fit to grant in the facts and circumstances of the present case.

2.

Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.

3.

In addition to reiterating the various contentions urged in the Memorandum of Petition and referring to the material on record, learned Senior counsel for the petitioner submits that despite the petitioner submitting a reply with details on 12.04.2021 to the Notice issued by the Assessing Officer dated 05.04.2021, the respondents have proceeded to pass the impugned assessment order, which is not only without jurisdiction or authority of law but also contrary to law and the statutory

3 provisions in addition to being violative of principle of natural justice and the same deserves to be quashed. In support of his contentions, learned Senior counsel places reliance upon the following decisions:-

(i) CBDT Circular No.24/2015 dated 31.12.2015 – Shyamraj Singh vs. DCIT (2019) 411 ITR 709 (Kar);

(ii) Prl.CIT vs. Star PVG Exports – (2019) 112 Taxmann. Com 163 (Kar);

(iii) Super Malls Pvt. Ltd., vs.PCIT (2020) 423 ITR 281 (SC) and

(iv) Tin Box Co., Vs. CIT – (2001) 249 ITR 216 (SC)

4.

Per contra, learned counsel for the respondents submit that there is no merit in the petition and the same is liable to be dismissed.

5.

A perusal of the impugned order will indicate that apart from the fact that an opportunity for personal hearing was not provided to the petitioner prior to passing of the impugned order, there is no reference to the mandatory satisfaction note recorded, in addition to there being no reference to the fact that the satisfactory note contains incriminating material found in the search

4 conducted by the respondents. It is relevant to state that the impugned order also does not disclose that the documents recovered during search are the documents that belongs to the other persons and the claim of the petitioner is summarily rejected without granting / giving the petitioner an opportunity of hearing under Section 143(3) of the I.T.Act and no date was fixed for hearing by the respondents prior to passing the impugned order, which is clearly illegal, arbitrary, opposed to law and violative of principles of natural justice and the same deserves to be quashed and the matter remitted back to the respondents for reconsideration afresh in accordance with law.

6.

In the result, I pass the following: ORDER (i) The petition is hereby allowed. (ii) The impugned Assessment Order dated 08.07.2021 vide Annexure-K is hereby quashed.

5 (iii) The matter is remitted back to respondent No.2 for reconsideration afresh in accordance with law. (iv) Respondent No.2 is directed to fix a date for hearing and give personal hearing to the petitioner and also consider the pleadings, documents etc., of the petitioner and proceed to pass appropriate orders after examining the satisfaction note under Section 153C of the Income Tax Act, 1961, bearing in mind, the judgments of this Court and the Apex Court referred to in this order in accordance with law.

Sd/- JUDGE

Bmc/Srl.

More judgments on Section 153C

All 9,619 judgments and leading authorities on Section 153C →

Recent GST High Court judgments

Search GST case law →