CHAMARAJANAGAR NAGAPPASHETTIYAR RAJU vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX

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WP/23221/2024HC KarnatakaKAHC01048419202427 March 2025Bench: S.R.KRISHNA KUMAR6 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the petition. It noted the petitioner's assertion that his failure to file replies to subsequent notices was due to bonafide reasons, unavoidable circumstances, and sufficient cause. The Court found it just and appropriate to set aside the impugned ex-parte assessment order dated March 15, 2022, passed under Section 147 read with Section 144 of the IT Act, and all subsequent notices and orders. The matter was remitted back to the Assessing Officer (Respondent No. 2) for reconsideration afresh from the stage of the petitioner filing his return of income in response to the Section 148 notice. The Court directed the respondents to proceed further in accordance with law. The principle is that where an assessee demonstrates sufficient cause for non-compliance, an opportunity to be heard should be granted, and ex-parte orders may be set aside.

What were the facts?

The petitioner, Chamrajanagar Nagappashettiyar Raju, filed a writ petition challenging an ex-parte assessment order and demand notice dated March 15, 2022, passed by the Assessing Officer (Respondent No. 2) under Section 147 read with Section 144B of the Income Tax Act, 1961, for Assessment Year 2014-15. The petitioner also challenged subsequent recovery proceedings, including notices under Section 274 read with Section 270A and a notice under Section 226(3) of the Act. The petitioner stated that while he filed a return of income in response to a Section 148 notice dated March 30, 2021, he could not reply to subsequent notices due to non-service and other unavoidable circumstances. He sought an opportunity to present his case.

What were the issues?

1. Whether the ex-parte assessment order and demand notice passed under Section 147 read with Section 144B of the Income Tax Act, 1961, for AY 2014-15 are liable to be quashed on the grounds of non-service of notices and lack of opportunity to the petitioner. 2. Whether the subsequent recovery proceedings, including notices under Section 274 read with Section 270A and Section 226(3) of the Act, are valid when the primary assessment order is under challenge. Assessee's Contention: The petitioner argued that his inability to respond to subsequent notices was due to bonafide reasons, unavoidable circumstances, and sufficient cause, specifically non-service of notices. He sought one more opportunity to file his reply and have the impugned orders and notices set aside. Revenue's Contention: The respondents argued that there was no merit in the petition and that it was liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 148,Section 274,Section 270A,Section 226(3)

AI-generated summary — verify with the full judgment below

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NC: 2025:KHC:13410 WP No. 23221 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 23221 OF 2024 (T-IT) BETWEEN:

CHAMARAJANAGAR NAGAPPASHETTIYAR RAJU, AGED ABOUT 58 YEARS, NO.11, DAVANGAI 1ST CROSS, CHAMARAJANAGAR, CHAMARAJANAGAR - 5713133 KARNATAKA, INDIA PAN NO. APQPR1805P …PETITIONER (BY SRI. K. MALLAHA RAO, ADVOCATE)

AND:

1.

THE PRINCIPAL COMMISSIONER OF INCOME TAX BENGALURU - 4, 5TH FLOOR,

BMTC BUILDING, 80 FEET ROAD,

6TH BLOCK, KORAMANGALA,

BENGALURU - 560 095.

2.

THE ASSESSMENT OF INCOME TAX, CENTRAL CIRCLE, BANGALORE

THE NATIONAL FACELESS

ASSESSMENT CENTRE – 560 500.

3.

NATIONAL FACELESS APPEAL CENTRE ROOM NO-245A, NORTH BLOCK,

NEW DELHI - 110 001. …RESPONDENTS (BY SRI. M. DILIP, ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLE 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING THE IMPUGNED EX- PARTE ASSESSMENT ORDER AND DEMAND NOTICE PASSED BY THE RESPONDENT THE ASSESSING OFFICER / RESPONDENT NO.2 PASSED ORDER U/S.147 READ WITH 144 R/W 144B OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2014 - 15 BOTH DATED 15.03.2022, BEARING REFERENCE NO. - VIDE ANNEXURE-C AND C1 “BEARING NO. ITBA/AST/S/147/2021-22/1040802908(i) & ITBA/AST/S/S156/2021/22 /1040802947(1)” AND ETC.

Digitally signed by NANDINI D Location: High Court of Karnataka

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NC: 2025:KHC:13410 WP No. 23221 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: “i) Issue a writ of Certiorari or in the like nature of Certiorari quashing the impugned ex-parte assessment order and demand notice passed by the respondent the Assessing Officer / respondent No.2 passed order U/s. 147 read with 144 r/w. 144B of the Income Tax Act, 1961, for the Assessment Year 2014-15 both dated 15.03.2022, vide Annexure-C and C1.

ii) Issue a writ of Certiorari to quash the impugned recovery proceedings initiated upon this petitioner; issued by the respondent No.2 under impugned notice under section 274 r.w.s. 270A of the Act vide Annexure-D & D1 & Annexure-E and E1, in respect of the assessment year 2014-15, under the Act;

iii) Issue a writ of Certiorari quashing the impugned noticed issued under Section 226(3) of the Income Tax Act 1961 by the 2nd respondent vide notice dated 28.03.2024, bearing DIN and Notice No: ITBA/RCV/S/226(3)_1/2023- 24/1063519112(1), vide Annexure-H.

iv) Issue a writ of prohibition, directing the respondent authorities to refrain from initiating recovery proceedings

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NC: 2025:KHC:13410 WP No. 23221 of 2024

against the petitioner under Order vide Annexure-D, D1 and impugned notices, issued under Section 274 r.w.s.270A of the Act vide Annexure-D, D1 & Annexure-E, E1, in respect of assessment year 2019-2020, under the Act.

v) Pass such other or further orders as this Hon’ble Court may deem fit in the facts and circumstances of this case, in the interest of justice and equity.”

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 memorandum of petition and referring to the material on record, learned counsel for the petitioner submits that a notice was issued by respondent No.2 under Section 148 of the Income Tax Act, 1961 (for short, ‘IT Act’), dated 30.03.2021, in response to which the petitioner had filed his return of income on 08.04.2021. It is submitted that thereafter, the respondent issued notices to the petitioner and the petitioner could not reply to the said notices as they were not served upon the petitioner. Thereafter, on 08.03.2022, respondent No.2 issued a show-cause notice under Section 144 of the I.T. Act and subsequently, by placing the petitioner as exparte, respondent No.2 passed the impugned order

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NC: 2025:KHC:13410 WP No. 23221 of 2024

at Annexure-C dated 15.03.2022. Subsequently, on 12.10.2022, the petitioner aggrieved by the aforesaid order filed an appeal before the First Appellate Authority. Subsequently, on 05.12.2023, 15.02.2024 and 01.05.2024, the respondent issued notices to the petitioner directing him to make a deposit of 20% of the disputed demand amount and also on 28.03.2024, respondent No.2 issued a notice under Section 226(3) of the I.T. Act to the banker of the petitioner asking the banker to freeze the bank account of the petitioner. It is submitted that the inability and omission on the part of the petitioner to file his reply to the subsequent notices 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 filed his return of income to

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NC: 2025:KHC:13410 WP No. 23221 of 2024

Section 148 notice, but could not file reply to subsequent notices. Under these circumstances, in view of the specific assertion on the part of the petitioner that his inability and omission to file reply to the subsequent notices 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 15.03.2022 passed under Section 147 r/w. Section 144 of the IT Act and subsequent notice / orders, etc., and remit the matter back to respondent No.2 for reconsideration afresh from the stage of petitioner filing his return of income to Section 148 notice and to proceed further, in accordance with law. 6. In the result, pass the following: ORDER (i) The petition is hereby allowed. (ii) Impugned notices / orders at Annexures C, C1, D, D1, E, E1 and H are hereby set aside. (iii) Matter is remitted back to respondent No.2 for reconsideration afresh, in accordance with law, from the

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NC: 2025:KHC:13410 WP No. 23221 of 2024

stage of petitioner filing his return of income to the Notice under Section 148 of the IT Act.

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

BMC: List No.: 1 Sl No.: 63

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