SRS SHELTERS vs. INCOME TAX OFFICER

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WP/2245/2025HC KarnatakaKAHC01004736202505 February 2025Bench: S.G.PANDIT8 pages
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What did the High Court hold?

The High Court allowed the writ petitions in part. The Court held that the petitioner, represented by one of its partners, should be granted an opportunity to file objections to the notice issued under Section 148A(b) of the Income Tax Act, 1961, and participate in the proceedings. While acknowledging that the notices were served and the firm failed to appear due to partner disputes, the Court considered that substantial rights of the petitioner were involved and the orders passed were ex-parte. Therefore, the Court quashed the notices and subsequent orders (Annexures A1 to A5 in both petitions) and remanded the matters to the stage of filing objections to the notice under Section 148A(b). The petitioner was granted three weeks to file objections and directed to appear before the respondent on March 6, 2025, for further proceedings in accordance with law.

What were the facts?

The petitioner, SRS Shelters, a partnership firm, filed two writ petitions challenging notices issued under Section 148A(b) of the Income Tax Act, 1961, for assessment years 2018-19 and 2019-20. The petitioner contended that due to an internal dispute among partners, they could not participate in the proceedings initiated by the notice. One partner, Sri Vuppala Srinivas Reddy, filed an affidavit expressing the firm's intention to clear liabilities and participate in the assessment. The petitioner argued that the subsequent orders and penalty were ex-parte due to their inability to participate. The revenue acknowledged that the non-participation was due to internal disputes rather than non-receipt of notices, but argued that an opportunity should not be granted without conditions.

What were the issues?

1. Whether the petitioner, SRS Shelters, should be granted an opportunity to file objections to the notice issued under Section 148A(b) of the Income Tax Act, 1961, and participate in the assessment proceedings, despite failing to do so earlier due to internal partner disputes? Assessee's Contention: The petitioner argued that due to internal disputes among partners, they were unable to participate in the proceedings initiated by the notice under Section 148A(b). They expressed an intention to clear liabilities and sought an opportunity to file objections and participate in the assessment, highlighting that the subsequent orders were ex-parte. An affidavit from one partner was filed to this effect. Revenue's Contention: The revenue acknowledged that the non-participation was due to internal disputes. However, they argued that the petitioner should not be granted an opportunity without imposing conditions.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148,Section 147,Section 144,Section 144B

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

WP No. 2245 of 2025
WP No. 2367 of 2025

Read from the judgment's own cause title. This page is filed under one of them.

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NC: 2025:KHC:5299 WP No. 2245 of 2025 C/W WP No. 2367 of 2025

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 5TH DAY OF FEBRUARY, 2025 BEFORE THE HON'BLE MR JUSTICE S.G.PANDIT WRIT PETITION NO. 2245 OF 2025 (T-IT) C/W WRIT PETITION NO. 2367 OF 2025 (T-IT)

IN WP No. 2245/2025 BETWEEN:

S R S SHELTERS, A PARTNERSHIP FIRM REGISTERED UNDER INDIAN PARTNERSHIP ACT 1932, NO.5/6 AND 5/7, HALEHALLI VILLAGE, KITHAGANNUR ROAD, BIDARAHALLI HOBLI, BANGALORE EAST-560 049, PAN. ADAFS3350G.

REPRESENTED BY ITS PARTNER, SRI. VUPPALA SRINIVAS REDDY, AGED 59 YEARS, S/O V VENKAT REDDY, NO.5/6 AND 5/7, HALEHALLI VILLAGE, KITHAGANNUR ROAD, BIDARAHALLI HOBLI, BANGALORE EAST-560 049 …PETITIONER (BY SRI. RAVI SHANKAR S.V., ADVOCATE)

Digitally signed by MARIGANGAIAH PREMAKUMARI Location: HIGH COURT OF KARNATAKA

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NC: 2025:KHC:5299 WP No. 2245 of 2025 C/W WP No. 2367 of 2025

AND:

1.

INCOME TAX OFFICER, WARD - 4(2)(1), BANGALORE - 560 095.

2.

NATIONAL FACELESS ASSESSMENT CENTRE, 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 110 003.

3.

THE PRINCIPAL COMMISSIONER OF INCOME TAX - 2, THE OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX - 2, BMTC BUILDING, KORAMANGALA BANGALORE - 560 095 …RESPONDENTS (BY SRI. E.I. SANMATHI AND SRI. M. DILIP, ADVOCATES)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE NOTICE UNDER SECTION 148A(b) OF THE ACT, DATED. 04.03.2023 BEARING DIN NO. ITBA/AST/F/148A(SCN)/2022- 23/1050411478(1) ISSUED BY THE R-1 FOR THE ASSESSMENT YEAR 2019-20 HEREIN MARKED AS ANNEXURE-A AND ETC.

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NC: 2025:KHC:5299 WP No. 2245 of 2025 C/W WP No. 2367 of 2025

IN WP NO. 2367/2025 BETWEEN: 1. S R S SHELTERS, A PARTNERSHIP FIRM REGISTERED UNDER INDIAN PARTNERSHIP ACT 1932, NO.5/6 AND 5/7, HALEHALLI VILLAGE, KITHAGANNUR ROAD, BIDARAHALLI HOBLI, BANGALORE EAST-560 049, PAN. ADAFS3350G.

REPRESENTED BY ITS PARTNER, SRI. VUPPALA SRINIVAS REDDY, AGED 59 YEARS, S/O V VENKAT REDDY, NO.5/6 AND 5/7, HALEHALLI VILLAGE, KITHAGANNUR ROAD, BIDARAHALLI HOBLI, BANGALORE EAST-560 049 ...PETITIONER (BY SRI. RAVI SHANKAR S V, ADVOCATE) AND: 1. INCOME T AX OFFICER WARD 4(2)(1), BANGALORE - 560 095

2.

INCOME TAX OFFICER, WARD 4(3)(3), BANGALORE 560 095

3.

NATIONAL FACELESS ASSESSMENT CENTRE, ADDITIONAL/JOINT/DEPUTY/ASSISTANT

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NC: 2025:KHC:5299 WP No. 2245 of 2025 C/W WP No. 2367 of 2025

COMMISSIONER OF INCOME TAX/ INCOME TAX OFFICER, INCOME TAX DEPARTMENT, MINISTRY OF FINANCE, ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI - 10 003.

4.

THE PRINCIPAL COMMISSIONER OF INCOME TAX - 2, THE OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX - 2, BMTC BUILDING, KORAMANGALA BANGALORE - 560 095 ...RESPONDENTS (BY SRI. E.I. SANMATHI AND SRI. M. DILIP, ADVOCATES)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO I) QUASH THE NOTICE UNDER SECTION 148A(B) OF THE ACT, DATED 17/03/2022 BEARING DIN NO.ITBA/AST/F/148A(SCN)/2021-22/1040977536(1), ISSUED BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2018-19 HEREIN MARKED AS ANNEXURE - A AND ETC.

THESE PETITIONS, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE S.G.PANDIT

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NC: 2025:KHC:5299 WP No. 2245 of 2025 C/W WP No. 2367 of 2025

COMMON ORAL ORDER 1. Both the above petitions relate to the same petitioner and for assessment years 2018-2019 and 2019-2020 respectively. Both the petitions are taken up together and disposed of by this common order.

2.

Petitioner a partnership firm is before this Court under Article 226 of the Constitution of India, questioning the order passed under Section 148A(b) of the Income Tax Act, 1961 (for short 'the Act') and notice issued under Section 148 of the Act and also the order passed under Sections 147 r/w 144, 144B of the Act along with the order of penalty. 3. Heard learned counsel Sri Ravi Shankar S.V. for the petitioner and learned counsel Sri E.I. Sanmathi, for the respondents/revenue. 4. Learned counsel for the petitioner would submit that the petitioner/Partnership firm consists of three partners and one of the partner is before this Court praying for an opportunity to participate in the proceedings initiated by

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NC: 2025:KHC:5299 WP No. 2245 of 2025 C/W WP No. 2367 of 2025

issuance of notice under Section 148A(b) of the Act. Learned counsel would submit that the petitioner/firm could not participate in the proceedings on issuance of notice under Section 148A(b) of the Act, due to internal dispute of the partners. However, he submits that the firm through the partner, who is before this Court intends to clear the liability and the partner, who is before this Court undertakes to participate in assessment proceedings and also undertakes to file documents on behalf of the firm. Learned counsel would submit that in that regard, the affidavit of one of the Partners i.e.,Sri Vuppala Srinivas Reddy is filed. Learned counsel would submit that the order passed under Section 148A(d) and subsequent penalty order is ex-parte order as the petitioner had no opportunity, in view of their default. It is prayed for an opportunity to participate in the proceedings and thereafter, it is prayed to pass an order in accordance with law. 5. On the other hand, Learned counsel for the respondent/revenue would submit that this is not a case of

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NC: 2025:KHC:5299 WP No. 2245 of 2025 C/W WP No. 2367 of 2025

not receiving notices, but they could not participate in the proceedings due to their internal dispute. Learned counsel Sri Sanmathi, would further submit that though the order is an ex-parte order, the petitioner cannot be given an opportunity without their being any condition. Thus he prays for passing appropriate order in the matter. 6. Having heard the learned counsels for the parties and on perusal of the entire writ petition papers, I am of the view, that the petitioner/firm represented by one of the partner Sri Vuppala Srinivas Reddy ought to be given an opportunity to file objection to notice issued under Section 148A(b) of the Act and to participate in the proceedings. No doubt the notices issued by the respondent/authority under Section 148A(b) of the Act was served on the firm and firm failed to appear before the respondent/authority, for their non-appearance, the partners of the firm themselves are responsible. Since substantial right of the petitioner is involved and the order passed against the firm is exparte order, I deem it appropriate to provide an opportunity to the petitioner-Sri Vuppala Srinivas Reddy to

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NC: 2025:KHC:5299 WP No. 2245 of 2025 C/W WP No. 2367 of 2025

file objection and participate in the proceedings. Hence the following :- ORDER a. Both the above writ petitions are allowed in part.

b. Annexures A1 to A5 in both the above petitions are quashed and the matters are remanded to the stage of filing objection to Annexure-A Notice issued under clause (b) of Section 148A of the Act.

c. Three weeks time granted to the petitioner to file objection to the notice at Annexure-B dated 04.03.2023.

d. The petitioner shall appear before the 1st respondent on 06.03.2025 and the respondent shall proceed in accordance with law. Sd/- (S.G.PANDIT) JUDGE

NG List No.: 1 Sl No.: 42 CT:SNN

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