VENSAR ENTERPRISES vs. INCOME TAX OFFICER

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WP/22539/2024HC KarnatakaKAHC01046747202411 September 2024Bench: S.R.KRISHNA KUMAR7 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the petition. It noted that it was undisputed that the petitioner had not submitted a reply to the Section 148A(b) notice. Considering the petitioner's assertion of bonafide reasons, unavoidable circumstances, and sufficient cause for their omission, and their willingness to submit a reply if given another opportunity, the Court deemed it just and appropriate to set aside the impugned order dated February 27, 2023, passed under Section 148A(d) and subsequent notices/orders. The matter was remitted back to the Income Tax Officer (Respondent No. 1) for reconsideration from the stage of submitting the petitioner's reply to the Section 148A(b) notice. The petitioner was granted liberty to submit their replies, responses, pleadings, and documents, and the respondent was directed to provide a sufficient and reasonable opportunity before proceeding further in accordance with law. The Court expressly did not decide on the merits of the tax demand itself, but rather on the procedural fairness of the reassessment proceedings.

What were the facts?

The petitioner, Vensar Enterprises, a partnership firm, filed a writ petition before the High Court of Karnataka challenging several orders and notices issued by the Income Tax Department for Assessment Year 2019-20. These included an approval under Section 151, an order under Section 148A(d), an order under Section 147 read with Sections 144 and 144B, and a notice of demand under Section 156. The petitioner contended that they did not receive the notice issued under Section 148A(b) dated January 23, 2023, and therefore could not submit a reply. They claimed this omission was due to bonafide reasons and unavoidable circumstances, and sought an opportunity to respond. The respondents argued that the petition had no merit.

What were the issues?

1. Whether the impugned orders and notices are liable to be quashed and set aside on the ground that the petitioner did not receive the notice under Section 148A(b) of the Income Tax Act, 1961, and consequently could not submit a reply, and if so, whether the matter should be remitted for reconsideration. Assessee's Contentions: The petitioner argued that the notice under Section 148A(b) dated January 23, 2023, was not received, leading to their inability to submit a reply. They asserted that this was due to bonafide reasons, unavoidable circumstances, and sufficient cause, and requested another opportunity to respond. They relied on the principle that a fair opportunity should be provided. Revenue's Contentions: The respondents contended that the petition lacked merit and should be dismissed.

Which sections of the Income-tax Act were involved?

Section 151,Section 148A,Section 148A(b),Section 148A(d),Section 147,Section 144,Section 144B,Section 156,Section 206C

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:37273 WP No. 22539 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO.22539 OF 2024 (T-IT) BETWEEN:

VENSAR ENTERPRISES A PARTNERSHIP FIRM UNDER COMPANIES ACT, 2013 HAVING ITS BUSINESS AT 112, 2ND MAIN, SARASWATHI PURAM, ULSOOR, BENGALURU 560 008. REPRESENTED BY ITS PARTNER VENUGOPAL KUMARESAN S/O VENUGOPAL, AGED ABOUT 57 YEARS, R/A. NO. 112, 1ST FLOOR, 2ND MAIN ROAD, SARASWATHI PURAM, HALASURU, HAL 2ND STAGE, BANGALORE 560 008. …PETITIONER (BY SRI. BALRAM R RAO., ADVOCATE)

AND:

1.

INCOME TAX OFFICER, WARD 1(2)(1), BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU – 560 095.

2.

ADDITIONAL/ JOINT/DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX NATIONAL FACELESS APPEALS CENTRE, INCOME TAX DEPARTMENT, DELHI, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI – 110 003.

Digitally signed by LEELAVATHI S R Location: HIGH COURT OF KARNATAKA

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3.

PRINCIPAL COMMISSIONER OF INCOME TAX, BENGALURU - 1 BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU. …RESPONDENTS (BY SRI.M DILIP., ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO i) CALLING FOR THE RECORDS OF THE PETITIONERS CASE AND AFTER EXAMINING THE LEGALITY AND VALIDITY THEREOF BE PLEASED TO QUASH AND SET ASIDE THE APPROVAL U/S. 151 OF THE ACT ISSUED U/S. 151 OF THE ACT DT. 25.02.2023 IN DIN- ITBA/AST/S/118/2022- 23/150123123(1) (ANNEXURE B), IMPUGNED ORDER U/S. 148A (D) OF THE ACT DT. 27.02.2023 IN DIN- ITBA/AST/F/148A/2022-23/1050155362(1) (ANNEXURE C), ORDER PASSED U/S. 147 R.W.S. 144 R.W.S 144B OF THE ACT DT. 29.03.2024 IN DIN- ITBA/AST/S/147/2023-24/1063612019(1) (ANNEXURE-M) AND NOTICE OF DEMAND ISSUED U/S. 156 OF THE ACT DT.29.03.2024 IN DIN- ITBA/AST/S/156/2023- 24/1063612121(1) (ANNEXURE M1), FOR THE AY 2019-20 AND ETC.,

THIS WRIT PETITION, COMING ON FOR PRELIMINARY HEARING IN B GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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

ORAL ORDER

In this petition, petitioner seeks the following reliefs:

i) Writ of certiorari or writ in the nature of certiorari or any other appropriate writ order or direction under Article 226 of the Constitution of India; calling for the records of the Petitioners case and after examining the legality and validity thereof be pleased to quash and set aside the Approval u/s. 151 of the Act issued u/s. 151 of the Act dated 25.02.2023 in DIN-ITBA/AST/S/118/2022- 23/150123123(1) (Annexure B), impugned order u/s. 148A

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(d) of the Act dated 27.02.2023 in DIN- ITBA/AST/F/148A/2022-23/1050155362(1) (ANNEXURE C), Order passed u/s. 147 r.w.s. 144 r.w.s 144B of the Act dated. 29.03.2024 in DIN- ITBA/AST/S/147/2023- 24/1063612019(1) (ANNEXURE-M) and Notice of Demand issued u/s. 156 of the Act dated 29.03.2024 in DIN- ITBA/AST/S/156/2023- 24/1063612121(1) (ANNEXURE M1), for the AY 2019-20.

ii) Writ of Mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction under Article 226 of Constitution of India ordering and directing the respondents by themselves by their subordinates, servants or agents to withdraw and cancel the approval u/s. 151 of the Act issued u/s. 151 of the Act dated. 25.02.2023 in DIN- ITBA/AST/S/118/2022- 23/150123123(1) (ANNEXURE B), impugned Order u/s.148A(d) of the Act dated 27.02.2023 in DIN- ITBA/AST/F/148A/2022-23/1050155362(1) (ANNEXURE C), Order passed u/s. 147 r.w.s. 144 r.w.s. 144B of the Act dated 29.03.2024 in DIN-ITBA/AST/S/147/2023- 24/1063612019(1) (ANNEXURE M) and Notice of Demand issued u/s. 156 of the Act dated. 29.03.2024 in DIN- ITBA/AST/S/156/2023- 24/1063612121(1) (ANNEXURE M1), for the AY 2019-20 and

iii) A writ of Prohibition or a writ in the nature of Prohibition or any other appropriate writ, order or direction under Article 226 of Constitution of India prohibiting and restraining the respondents by themselves their sub ordinates, servants and agents from taking any action in

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furtherance or consequent to order u/s. 148A(d) of the Act dated. 27.02.2023 in DIN- ITBA/AST/F/148A/2022- 23/1050155362(1) (ANNEXURE-C) Order passed u/s. 147 r.w.s. 144 r.w.s. 144B of the Act dated. 29.03.2024 in DIN- ITBA/AST/S/147/2023-24/1063612019(1) (ANNEXURE M) and Notice of Demand issued u/s. 156 of the Act dated. 29.03.2024 in DIN- ITBA/AST/S/156/2023- 24/1063612121(1) (ANNEXURE M1), for the AY 2019- 20 passed by Respondents.

iv) Writ of Mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction under Article 226 of Constitution of India ordering and directing the Respondents by themselves by their subordinates, servants or agents to extend the benefit of TCS claim u/s. 206C of the Act for the SS Enterprises for the A.Y. 2019- 20.

v) Grant the interim relief in terms of prayer (iii) above, and

vi) Issue such other order, writ or direction as this Hon’ble Court deems fit.”

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 petition and referring to the material on record, learned counsel for the petitioner submits that notice issued by the

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NC: 2024:KHC:37273 WP No. 22539 of 2024

respondents under Section 148A(b) of the Income Tax Act, 1961 (for short, ‘IT Act’), dated 23.01.2023 was not received by petitioner and it was not aware of the notice and consequently, petitioner could not submit its reply / response along with documents to the said notice. It is submitted that the inability and omission on the part of the petitioner to submit reply / response along with documents to the Section 148A(b) notice was due to bonafide reasons, unavoidable circumstances and sufficient cause and as such, if one more opportunity is provided to the petitioner to do so by setting aside the impugned orders and notices, the petitioner would do so and respondents may be directed to proceed further in accordance with law.

4.

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

5.

A perusal of the impugned order will indicate that it is an undisputed fact that petitioner has not submitted reply / response along with documents to Section 148A(b) notice. Under these circumstances, in view of the specific assertion on the part of the petitioner that its inability and omission to submit a reply along

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with documents to Section 148A(b) notice was due to bonafide reasons, unavoidable circumstances and sufficient cause and if one more opportunity is granted, petitioner would submit reply along with documents, I deem it just and appropriate to set aside the impugned order at Annexure-C dated 27.02.2023 passed under Section 148A(d) of the IT Act and subsequent notice / orders, etc., and remit the matter back to respondent No.1 for reconsideration afresh from the stage of submitting of reply by the petitioner to Section 148A(b) notice and to proceed further in accordance with law.

6.

In the result, pass the following:

ORDER

(i) Petition is hereby allowed.

(ii) The impugned notices / orders at Annexures – B, C, M and M1 are hereby set aside.

(iii) Matter is remitted back to respondent No.1 for reconsideration afresh in accordance with law from the stage of submitting of reply to the Show Cause Notice under Section 148A(b) of the IT Act at Annexure-A dated 23.01.2023.

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NC: 2024:KHC:37273 WP No. 22539 of 2024

(iv) Liberty is reserved in favour of the petitioner to submit replies, responses, pleadings, documents, etc., to the respondent, who shall consider the same, provide sufficient and reasonable opportunity to the petitioner and proceed further in accordance with law.

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

Bsv List No.: 2 Sl No.: 18

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