YASHASWINI BUILDER PRIVATE LTD vs. THE INCOME TAX OFFICER

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WP/23133/2024HC KarnatakaKAHC01048026202402 April 2025Bench: S.R.KRISHNA KUMAR6 pages
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What did the High Court hold?

The High Court allowed the petition, setting aside the impugned assessment order dated 07.12.2019 passed under Section 143(3), the rectification order dated 04.08.2020 under Section 154, and the penalty orders dated 22.02.2022 and 15.03.2022. The matter was remitted back to the stage of the petitioner submitting a reply to the Show Cause Notice dated 21.11.2019. The Court reasoned that the assessment order was passed ex-parte due to the petitioner's non-participation. Acknowledging the petitioner's assertions of bonafide reasons, unavoidable circumstances, and sufficient cause for non-compliance, and adopting a justice-oriented approach, the Court deemed it appropriate to grant one more opportunity. The petitioner was granted liberty to file its reply, pleadings, and documents before the respondent No.1, who was directed to consider them and pass appropriate orders. All rival contentions were kept open, and no opinion was expressed on the merits of the case.

What were the facts?

The petitioner, Yashaswini Builder Private Ltd., filed a writ petition challenging orders passed by the Income Tax Officer (ITO) and the Assessment Unit. The challenges were to an assessment order dated 07.12.2019 under Section 143(3) for AY 2017-18, a rectification order dated 04.08.2020 under Section 154, and penalty orders dated 22.02.2022 and 15.03.2022. The petitioner contended that its failure to respond to notices and participate in proceedings was due to the ill health of its Managing Director, constituting bonafide and unavoidable circumstances. The petitioner sought an opportunity to submit its reply and participate in the proceedings. The revenue argued that sufficient opportunities were given and the petition should be dismissed.

What were the issues?

1. Whether the ex-parte assessment order dated 07.12.2019 passed under Section 143(3) of the Income Tax Act, 1961, for Assessment Year 2017-18, the rectification order dated 04.08.2020 under Section 154, and the penalty orders dated 22.02.2022 and 15.03.2022, are liable to be quashed on the grounds of bonafide reasons, unavoidable circumstances, and sufficient cause preventing the petitioner from participating in the proceedings. Assessee's Contentions: The petitioner argued that its inability to submit replies and participate was due to the ill health of its Director, leading to a lack of knowledge of the notices. It claimed bonafide reasons and sufficient cause, and sought one more opportunity to submit its reply and documents. The petitioner contended that it has a good case on merits and requested the matter be remitted back to the respondents. Revenue's Contentions: The respondent submitted that despite sufficient opportunities, the petitioner failed to send any reply or participate in the proceedings. Therefore, the impugned orders do not warrant interference, and the petition is liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 154,Section 271AAC,Section 270A

AI-generated summary — verify with the full judgment below

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NC: 2025:KHC:13953 WP No. 23133 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF APRIL, 2025 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 23133 OF 2024 (T-IT) BETWEEN:

YASHASWINI BUILDER PRIVATE LTD., REPRESENTED BY ITS MANAGING DIRECTOR, SRI MAHESH GURAJAPALLI, S/O BALASUBRAMANIACHAR, NO. 40 AND 416, 6TH CROSS, BHUVANESHWARI NAGAR, BANGALORE – 560 024. …PETITIONER (BY SRI. R. CHANDRASHEKAR AND SRI. KASHINATH KALMATH FOR SRI RAMA MURTHY R., ADVOCATES)

AND:

1.

THE INCOME TAX OFFICER, WARD - 7(1)(3), BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KORAMANAGALA, BANGALORE - 560 095.

2.

ASSESSMENT UNIT, REPRESENTED BY THE ASSESSING OFFICER, INCOME TAX DEPARTMENT, NEW DELHI - 110 001. …RESPONDENTS (BY SRI. M. DILIP, ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLE 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 07.12.2019 PASSED U/S 143(3) OF THE ACT, FOR THE ASSESSMENT YEAR 2017-18 (ANNEXURE-A) (ITBA/AST/S/2019- 20/1021868802(1) AND THE RECTIFICATION ORDER DATED 04.08.2020 U/S 154 OF THE ACT (ANNEXURE-D) (ITBA/RECS/154_1/2020-21/1027219052(1) PASSED BY THE 1ST RESPONDENT AND ETC.

Digitally signed by CHANDANA B M Location: High Court of Karnataka

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NC: 2025:KHC:13953 WP No. 23133 of 2024

THIS PETITION, COMING ON FOR ORDERS, 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: “A. The Petitioner humbly pray this Hon'ble Court may be pleased to issue a Writ of Certiorari or in the nature of Writ of Certiorari quashing the order dated 07-12-2019 passed u/s 143(3) of the Act, for the assessment year 2017- 18 (Annexure-A) (ITBA/AST/S//2019-20/10218688802(1)] and the rectification order dated 04-08-2020 u/s.154 of the Act (Annexure-D) [ITBA/RECS/154_1/2020- 21/1027219052(1)] passed by the 1 Respondent.

B. The Petitioner humbly pray this Hon'ble Court may be pleased to issue a Writ of Certiorari or in the nature of Writ of Certiorari quashing the order dated 22-02-2022 passed u/s 2 of the Act, for the assessment year 2017-18 (Annexure-E) [ITBA/PNL/271AAC/2021-104078836001) 22/1039976786]-passed by 2nd Respondent;

C. The Petitioner humbly pray this Hon'ble Court may be pleased to issue a Writ of Certiorari or in the nature of Writ of Certiorari quashing the 271 AACC order dated 15- 03-2022 passed u/s the Act, for the assessment year 2017- 18 (Annexure-F) [ITBA/PNL/F/270A/2021-22/1040780360] passed by 2nd Respondent;

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NC: 2025:KHC:13953 WP No. 23133 of 2024

This Hon'ble Court may be pleased to issue such other relief or reliefs as this Hon'ble Court deems fit, in the interest of justice, in the Petitioner's case.”

2.

Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record. 3. A perusal of the material on record will indicate that the respondent having issued notice under Section 143(2) and other show cause notices, petitioner did not submit any reply to the same and as such, respondent No.1 proceeded to pass the impugned exparte assessment order at Annexure-A dated 07.12.2019 under Section 143(3) of the Income Tax Act, pursuant to which, respondent No.1 passed Rectification Order dated 04.06.2020 under Section 154 of the I.T. Act. Thereafter, respondent No.2 passed Penalty Orders dated 22.02.2022 and 15.03.2022 at Annexures-E and F and as such, the petitioner is before this Court by way of the present petition.

4.

In this context, it is pointed out that inability and omission on the part of the petitioner to submit replies to the notices issued by the respondents and to participate in the proceedings was due to ill health of the Director of the Company

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NC: 2025:KHC:13953 WP No. 23133 of 2024

and hence, the petitioner had no knowledge of the said notice and due to bonafide and unavoidable circumstances and sufficient cause, the petitioner was not in a position to issue reply or appear before the respondents and participate in the said proceedings. It is submitted that the petitioner has a good case to urge on merits and if one more opportunity is granted in favour of the petitioner, the petitioner would submit his reply along with the documents and participate in the proceedings and as such, it is necessary that the impugned order at Annexure-A be set aside and the matter be remitted back to the respondents by providing one more opportunity to the petitioner to submit its reply to the notices and direct the respondents to proceed further in accordance with law.

5.

Per contra, learned counsel for the respondents submits that despite sufficient opportunity being granted in favour of the petitioner, the petitioner did not send any reply nor participated in the proceedings and consequently, the impugned order does not warrant interference by this Court and the petition is liable to be dismissed. 6. A perusal of the impugned order at Annexure – A will clearly indicate that the same was passed in the absence of the

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NC: 2025:KHC:13953 WP No. 23133 of 2024

petitioner, who did not avail the opportunity provided by the respondent, who has proceeded to pass the impugned order. In view of the aforesaid facts and circumstances and specific assertions on the part of the petitioner that due to bonafide reasons, unavoidable circumstances and sufficient cause, the petitioner was not in a position to send reply enclosing documents and contest the proceedings and in order to provide one more opportunity to the petitioner, by adopting a justice oriented approach, I deem it just and appropriate to set aside the impugned order and remit the matter back to the respondents for reconsideration afresh in accordance with law after providing one more opportunity to the petitioner in this regard.

7.

In the result, I pass the following: ORDER

(i) The petition is allowed.

(ii) The impugned assessment order at Annexure – A dated 07.12.2019 passed by respondent No.1 followed by rectification order/orders at Annexures-D, E and F, are hereby set aside.

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NC: 2025:KHC:13953 WP No. 23133 of 2024

(iii) Matter is remitted back to the stage of petitioner submitting reply to Show Cause Notice dated 21.11.2019 and proceed further in accordance with law. (iv) Liberty is reserved in favour of the petitioner to file its reply, pleadings, documents, etc., before respondent No.1, who shall consider the same and pass appropriate orders in accordance with law. (v) All rival contentions are kept open and no opinion is expressed on the same.

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

BMC List No.: 1 Sl No.: 0

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