GUTHU RITHESH RAI vs. DY. COMMISSIONER OF INCOME TAX

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WP/22249/2022HC KarnatakaKAHC01051745202215 December 2022Bench: S.R.KRISHNA KUMAR6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court, without expressing any opinion on the merits or demerits of the rival contentions, found merit in the petitioner's assertion that his inability to contest the proceedings was due to bona fide reasons. The Court deemed it just and appropriate to set aside the impugned orders and notices. The matter was remitted back to the respondent to proceed from the stage of the issuance of the Show Cause Notice. The petitioner was directed to file a response to the Show Cause Notice within four weeks, which the respondent was to consider after providing an opportunity for a personal hearing. The ratio decidendi is that where an assessee demonstrates bona fide reasons for not responding to notices, the proceedings can be set aside and the matter remanded to provide an opportunity to be heard.

What were the facts?

The petitioner, Guthu Ritesh Rai, filed a writ petition before the High Court of Karnataka challenging notices and orders issued by the Deputy Commissioner of Income Tax, Central Circle-2(4), Bengaluru. The assessment year in question is 2018-19. The impugned actions include a notice under Section 153C dated 13.10.2021, an assessment order under Section 143(3) read with Section 153C dated 30.03.2022, a notice of demand under Section 156 dated 30.03.2022, an order levying penalty under Section 271AAC(1) dated 27.09.2022, and a notice of demand under Section 156 dated 27.09.2022. The petitioner contended that while a search was conducted at his Bengaluru premises, prior notices were sent to his Bantwal address, which he could not respond to due to bona fide, reasonable, and unavoidable circumstances. He sought an opportunity to contest the proceedings.

What were the issues?

1. Whether the notice under Section 153C of the Income Tax Act, 1961, dated 13.10.2021, issued for Assessment Year 2018-19, is liable to be quashed? 2. Whether the assessment order under Section 143(3) read with Section 153C of the Income Tax Act, 1961, dated 30.03.2022, is liable to be quashed? 3. Whether the notice of demand under Section 156 of the Income Tax Act, 1961, dated 30.03.2022, is liable to be quashed? 4. Whether the order levying penalty under Section 271AAC(1) of the Income Tax Act, 1961, dated 27.09.2022, is liable to be quashed? 5. Whether the notice of demand under Section 156 of the Income Tax Act, 1961, dated 27.09.2022, is liable to be quashed? Assessee's Contention: The petitioner argued that notices were sent to an incorrect address (Bantwal) despite a search at his Bengaluru premises, preventing him from responding due to bona fide reasons. He sought an opportunity to contest the proceedings on merits. Revenue's Contention: The respondent 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 153C,Section 143(3),Section 156,Section 271AAC(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 15TH DAY OF DECEMBER, 2022 BEFORE

THE HON’BLE MR.JUSTICE S.R.KRISHNA KUMAR WRIT PETITION No.22249/2022 (T-IT) BETWEEN:

GUTHU RITHESH RAI SON OF NARAYANA RAI, AGED ABOUT 48 YEARS, ALIKE GUTHU HOUSE, ALIKE POST AND VILLAGE, VIA S.S. VIHAR BANTWAL TALUKA, DAKSHINA KANNADA-574 235, PRESENTLY RESIDING AT FLAT NO. T 302, ENN AAR KAY SADAN, 5/1-7, 4TH CROSS, KALPANA CHAWLA ROAD, CENTRAL EXCISE COLONY, SANJAY NAGAR, BENGALURU-560094. ...PETITIONER (BY SRI. SHREEHARI K., ADV., )

AND:

DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2(4), BENGALURU, THE ASSESSING OFFICER UNDER INCOME TAX ACT, 1961, CENTRAL REVENUE BUILDING, QUEENS ROAD, BENGALURU-560 001. …RESPONDENT (BY SRI. M. DILIP, ADV.,)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE

NOTICE UNDER SECTION 153C OF THE INCOME TAX ACT, 1961 DATED 13.10.2021 ISSUED BY RESPONDENT NO.1 FOR THE ASSESSMENT YEAR 2018-19 WHICH BEARS THE DIN VIZ ITBA/AST/S/153C/2021-22/1036355877 (1) WHICH IS ENCLOSED AS ANNEXURE-A AND ETC.

THIS PETITION COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:

ORDER

1.

In this writ petition, petitioner has sought for the following reliefs: "a. Issue a Writ of Certiorari or direction in the nature of writ of certiorari quashing the notice under section 153C of the Income Tax Act, 1961 dated 13.10.2021 issued by respondent No.1 for the Assessment Year 2018-19 which bears the DIN viz., ITBA/AST/S/153C/2021-22/1036355877 (1) which is enclosed as Annexure A. b. Issue a Writ of Certiorari or direction in the nature of writ of certiorari quashing the order of assessment under section 143(3) read with Section 153C of the Income Tax Act,1961 dated 30.03.2022 issued by respondent No.1 for the Assessment Year 2018-19 which bears the DIN viz, ITBA/AST/M/153C/2021-22/1042099857(1) which is enclosed as Annexure B. c. Issue a Writ of Certiorari or direction in the nature of writ of certiorari quashing the notice of demand under section 156 of Income Tax Act,1961 dated

30.03.2022 issued by respondent No.1 for the Assessment Year 2018-19 which bears the DIN viz, ITBA/AST/M/153C/2021-22/1042099857(1) which is enclosed as Annexure B1. d. Issue a Writ of Certiorari or direction in the nature of writ of certiorari quashing the order levying penalty under section 271AAC(1) of the Income Tax Act, 1961 dated 27.09.2022 issued by respondent No.1 for the Assessment Year 2018-19 which bears the DIN viz., IBTA/PNL/F/271AAC(1)/2022-23/1046033716(1) which is enclosed as Annexure C. e. Issue a Writ of Certiorari or direction in the nature of writ of certiorari quashing the notice of demand under section 156 of the Income Tax Act, 1961 dated 27.09.2022 issued by respondent No.1 for the Assessment Year 2018-19 which bears the DIN viz, IBTA/PNL/S/156/2022-23/1046033662(1) which is enclosed as Annexure C1. f. And pass such other orders as this Hon’ble Court deems fit and proper in the interest of justice and equity."

2.

Heard learned counsel for the petitioner and learned counsel for the respondent 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 counsel for the petitioner submits that while respondent conducted a search of the petitioner's premises situated at Bengaluru, all the notices issued prior to the impugned order were sent to the address of the petitioner at Bantwal and the same could not be responded to on account of bona fide, reasonable, unavoidable circumstances and sufficient cause. It is submitted that the petitioner has a good case to urge on merits and as such, it is necessary that the petitioner is afforded one more opportunity to contest the proceedings by setting aside the impugned order and remitting the matter back to the respondents for reconsideration afresh in accordance with law.

4.

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

5.

Though several contentions have been urged, in view of the specific assertions on the part of the petitioner that the

inability and omission on the part of the petitioner to contest the proceedings by filing replies, documents, etc., to the Show Cause Notice was for bona fide reasons, without expressing any opinion on the merits / demerits of the rival contentions of the parties, I deem it just and appropriate to dispose of the matter by setting aside the impugned order and remit the matter back to the respondent for reconsideration afresh in accordance with law after providing opportunity to submit a reply to the Show Cause Notice and thereafter, proceed in accordance with law.

6.

In the result, I pass the following: ORDER (i) The Writ Petition is hereby allowed.

(ii) The impugned notice dated 13.10.2021 at Annexure 'A', the Assessment Order dated 30.03.2022 and Notice of Demand dated 30.03.2022 at Annexures 'B' and 'B1' respectively, impugned order of penalty dated 27.09.2022 and Notice of Demand at Annexures 'C' and 'C1' respectively,, issued by respondent No.1, are hereby set aside.

(iii) Matter is remitted back to the respondent to proceed from the stage of issuance of Show Cause Notice.

(iv) Petitioner is directed to file response / reply along with documents to the Show Cause Notice, within a period of four weeks from the date of receipt of a copy of this order, which shall be considered by the respondent, who shall provide an opportunity of personal hearing to the petitioner and proceed thereafter in accordance with law.

SD/- JUDGE

RK CT:AKR

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