RUNWAL AGRITECH vs. INCOME TAX OFFICER

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WP/201583/2025HC KarnatakaKAHC03005405202521 July 2025Bench: M.I.ARUN6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the assessment order, computation sheet, notice of demand, and penalty notice for AY 2023-24 were to be set aside. The Court found that the petitioner was not granted a proper opportunity to present their case, as evidenced by the fact that only one day was given to respond to the show cause notice. This was considered a violation of the principles of natural justice and departmental notifications. The Court reasoned that the interest of justice would be met by relegating the proceedings to the stage of the show cause notice. The petitioner was granted liberty to reply to the show cause notice within three weeks, and the respondents were directed to consider the reply and proceed in accordance with the law. No specific issue was left undecided.

What were the facts?

The petitioner, Runwal Agritech, a partnership firm, filed a writ petition challenging an assessment order under Section 143(3) read with Section 144B of the Income Tax Act, 1961, a computation sheet, a notice of demand under Section 156, and a notice for penalty under Section 274 read with Section 270A, all dated March 16, 2025, for Assessment Year 2023-2024. The petitioner contended that only one day was granted to provide explanations after a show cause notice, violating principles of natural justice and departmental notifications, and that a proper opportunity would demonstrate the falsity of income tax evasion allegations. The respondents, while justifying the assessment order's outcome, could not dispute the one-day notice period, admitting it violated departmental notifications and denied the petitioner a proper opportunity.

What were the issues?

1. Whether the assessment order, computation sheet, notice of demand, and penalty notice passed for AY 2023-24 are liable to be quashed on the grounds of violation of principles of natural justice and inadequate opportunity to the petitioner? (Question of law and fact, turning on Sections 143(3), 144B, 156, 270A, and 274 of the Income Tax Act, 1961). Assessee's Contentions: - The petitioner argued that the respondents' conduct, by granting only one day to respond to a show cause notice, violated principles of natural justice and departmental notifications. - The petitioner asserted that a proper opportunity would have allowed them to prove the income tax evasion allegations false. Revenue's Contentions: - The respondents' counsel justified the assessment order's outcome. - However, the revenue's counsel could not dispute that only one day was granted to the petitioner, admitting it violated departmental notifications and that a proper opportunity was not provided.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 156,Section 270A,Section 274

AI-generated summary — verify with the full judgment below

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HC-KAR NC: 2025:KHC-K:4094 WP No. 201583 of 2025

IN THE HIGH COURT OF KARNATAKA KALABURAGI BENCH DATED THIS THE 21ST DAY OF JULY, 2025 BEFORE THE HON'BLE MR. JUSTICE M.I.ARUN

WRIT PETITION NO.201583 OF 2025 (T-RES) BETWEEN:

RUNWAL AGRITECH NO.284/2, SOLAPUR ROAD, ARAKERI VILLAGE VIJAYAPURA-586104 PAN AAOFR9587K A PARTNERSHIP FIRM REPRESENTED BY PARTNER MR. NIRMAL DEEPCHAND RUNWAL.

…PETITIONER (BY SRI. SUDHEENDRA B. R, ADVOCATE)

AND:

1.

INCOME TAX OFFICER WARD 1 & TPS, AAYAKAR BHAVAN NEAR ALL INDIA RADIO, ATHANI ROAD, VIJAYAPURA, KARNATAKA-586104.

2.

PRINCIPAL COMMISSIONER OF INCOME TAX, CR BUILDING, NAVANAGAR, HUBBALLI, KARNATAKA-580025.

3.

NATIONAL FACELESS ASSESSMENT CENTRE, REP. BY 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. THIRUMALESH , ADVOCATE)

Digitally signed by VARSHA N RASALKAR Location: HIGH COURT OF KARNATAKA

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HC-KAR NC: 2025:KHC-K:4094 WP No. 201583 of 2025

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE A WRIT, ORDER OR DIRECTION: A) QUASHING THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) RWS 144B OF THE INCOME TAX ACT, 1961 DATED 16.3.2025 BEARING DIN ITBA/AST/S/143(3)/2024-25/1074536326(1) FOR THE AY 2023-2024 ISSUED BY THE RESPONDENT NO.3 (ANNEXURE-M1) B) QUASHING THE COMPUTATION SHEET DATED 16.03.2025 BEARING DIN ITBA/AST/S/523/2024- 25/1074536395(1) FOR THE AY 2023-24 ISSUED BY THE RESPONDENT NO.3 (ANNEXURE- M2) C) QUASHING THE NOTICE OF DEMAND UNDER SECTION 156 DATED 16.03.2025 BEARING DIN ITBA/AST/S/156/2024-25/1074536360(1) FOR THE AY 2023-24 ISSUED BY THE RESPONDENT NO.3 ( ANNEXURE-M3) D) QUASHING THE NOTICE FOR PENALTY UNDER SECTION 274 RWS 270A OF THE INCOME TAX ACT, 1961 DATED 16.03.2025 BEARING DIN ITBA/PNL/S/270A/2024-25/1074536383(1) FOR THE AY 2023 - 24 ISSUED BY THE RESPONDENT NO.3 (ANNEXURE-N).

THIS PETITION, COMING ON FOR CONSIDERATION OF INTERIM PRAYER, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE M.I.ARUN

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HC-KAR NC: 2025:KHC-K:4094 WP No. 201583 of 2025

ORAL ORDER (PER: HON'BLE MR. JUSTICE M.I.ARUN)

Petitioner in the instant writ petition has challenged the Assessment of order passed under Section 143(3) read with section 144-B of the Income Tax Act, 1961 (Annexure-M1); Computation sheet dated 16.03.2025 which is issued pursuant to the Assessment order (Annexure-M2); Notice of demand Assessment under Section 156 (Annexure-M3) which is also issued pursuant to Assessment order; and the consequent notice to penalty issued under Section 274 read with Section 270A of the Income Tax Act (Annexure-N).

2.

The case of the petitioner is that, after issuance of show cause notice under Section 144-B of the Income Tax Act only one day time is granted to him to give the necessary explanation and other procedures which resulted in passing of the Assessment order, Computation sheet, Notice of demand and Notice of penalty took place in a very hurried manner. He submits the conduct of

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HC-KAR NC: 2025:KHC-K:4094 WP No. 201583 of 2025

respondents is in violation of the known principles of natural justice and adequate opportunity has not been given to the petitioner. He further submits that if proper opportunity is given, the petitioner will be in a position to show how the allegations pertaining to evasion of income tax made against the petitioner are false. 3. Learned counsel for the respondents though justifies the outcome of the Assessment order passed against the petitioner, he is not in a position to dispute the fact that only one day time has been granted to the petitioner, which is in violation of the notification issued by department itself and no proper opportunity was granted to the petitioner to defend his case.

4.

As it is evident that no proper opportunity was granted to the petitioner, I am of the opinion that interest of justice would be met if the petitioner is relegated to the stage of show cause notice and proceedings are permitted to be initiated against the petitioner from that stage.

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HC-KAR NC: 2025:KHC-K:4094 WP No. 201583 of 2025

5.

Hence, the following:

ORDER

(i) The Assessment order passed against the petitioner for the assessment year 2023-24, dated 16.03.2025 bearing DIN ITBA/AST/S/ 143(3)/2024-25/1074536326(1) vide (Annexure-M1) to the writ petition is hereby set aside. (ii) The Computation sheet against the petitioner dated 16.03.2025 bearing DIN ITBA/AST/S/523/2024-25/1074536395(1) for the assessment year 2023-24 issued by the respondent No.3 vide (Annexure-M2) to the writ petition is hereby set aside. (iii) Notice of demand against the petitioner under section 156 dated 16.03.2025 bearing DIN ITBA/AST/S/156/2024-25/1074536360(1) for the year 2023-24 issued by the respondent No.3 vide (Annexure-M3) to the writ petition is hereby set aside. (iv) Notice of penalty under Section 274 read with section 270A of the Income Tax Act, 1961 dated 16.03.2025 bearing DIN ITBA/PNL/S/270A/2024-25/1074536383(1) for

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HC-KAR NC: 2025:KHC-K:4094 WP No. 201583 of 2025

the year 2023-24 issued by the respondent No.3 vide (Annexure-N) to the writ petition is set aside. (v) Petitioner is given liberty to reply to the show cause notice within a period of three weeks from today and respondents shall consider the same and initiate further proceedings in accordance with law.

Sd/- (M.I.ARUN) JUDGE

SMP List No.: 1 Sl No.: 54 CT:SI

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