MOHAMMED MUSTAFA vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX

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WP/2368/2025HC KarnatakaKAHC01003726202526 March 2025Bench: S.R.KRISHNA KUMAR6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Karnataka, in a justice-oriented approach, set aside the impugned ex-parte assessment order dated March 23, 2024. The Court found merit in the petitioner's assertion that their failure to respond to the notices was due to bonafide reasons and unavoidable circumstances. Consequently, the matter was remitted back to the stage of the petitioner submitting a reply to the show cause notice. The petitioner was granted liberty to file their reply, pleadings, and documents before the second respondent (ITO), who was directed to consider them and pass appropriate orders in accordance with the law. The Court explicitly stated that all rival contentions were kept open and no opinion was expressed on the merits of the case. The operative direction was to set aside the order and remit the matter for fresh consideration after providing one more opportunity to the petitioner.

What were the facts?

The petitioner, Mohammed Mustafa, filed a writ petition before the High Court of Karnataka challenging an ex-parte assessment order dated March 23, 2024, passed by the Income Tax Officer (ITO), the second respondent. This order was passed under Section 144 read with Section 144B of the Income Tax Act. The ITO had issued a show cause notice on February 29, 2024, to which the petitioner did not submit a reply. The petitioner contended that their failure to respond was due to bonafide and unavoidable circumstances, and they sought an opportunity to submit their reply and participate in the proceedings. The revenue argued that sufficient opportunities were granted and the petition should be dismissed.

What were the issues?

1. Whether the ex-parte assessment order dated March 23, 2024, passed by the Income Tax Officer under Section 144 read with Section 144B of the Income Tax Act, 1961, is liable to be quashed on the grounds of non-compliance due to bonafide and unavoidable circumstances? Assessee's Contention: The petitioner argued that their inability to submit a reply to the show cause notice and participate in the proceedings was due to bonafide and unavoidable circumstances, constituting sufficient cause. They claimed to have a good case on merits and requested one more opportunity to submit their reply and documents, leading to the setting aside of the impugned order and remittance of the matter. Revenue's Contention: The respondents contended that despite sufficient opportunities being granted, the petitioner failed to send their reply or participate in the proceedings. Therefore, the impugned order does not warrant interference, and the writ petition is liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 144,Section 144B,Section 143(2)

AI-generated summary — verify with the full judgment below

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NC: 2025:KHC:12955 WP No. 2368 of 2025

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 2368 OF 2025 (T-IT) BETWEEN:

MOHAMMED MUSTAFA, AGED ABOUT 24 YEARS, RESIDING AT NO.26, 7TH CROSS, MAHADEVAPURA ROAD,KALYANAGIRI, UDAYAGIRI 1ST STAGE, MYSORE - 560 019, PAN NO. - EUIPM7636A. …PETITIONER (BY SRI. SRI MALLAHA RAO K., ADVOCATE)

AND:

1.

THE PRINCIPAL COMMISSIONER OF

INCOME TAX, REVENUE BUILDING, 22/16,

CENTRAL GOVERNMENT HOUSE RD,

NAZARABAD, MYSORE – 570 010.

2.

THE INCOME TAX OFFICER, REVENUE BUILDING, 22/16, CENTRAL GOVERNMENT HOUSE RD, NAZARABAD, MYSORE-570010 …RESPONDENTS (BY SRI. M. THIRUMALESH AND SRI DILIP M., ADVOCATES)

THIS WRIT PETITION IS FILED UNDER ARTICLE 226 & 227 OF CONSTITUTION OF INDIA PRAYING TO QUASHING THE IMPUGNED ORDER DATED 23.03.2024, PASSED BY 2ND RESPONDENT IN ORDER NO. ITBA/AST/S/144/2023-24/1063251919(1), VIDE ANNEXURE – D AND ETC.

Digitally signed by NANDINI D Location: High Court of Karnataka

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NC: 2025:KHC:12955 WP No. 2368 of 2025

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

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

ORAL ORDER In this petition, petitioner seeks for the following reliefs:

“(i) Issue Writ of Certiorari or in the like nature of Certiorari quashing the impugned order dated 23.03.2024, passed by 2nd respondent in order No.: ITBA/ AST/ S/ 144/ 2023-24/1063251919(1), vide ANNEXURE - D; (ii) Issue Writ of Mandamus or writ of direction to the respondent authorities to refrain from further proceedings and take such necessary measures / steps in respect of the impugned order dated 23.03.2024, passed by 2nd respondent in order No.: ITBA/ AST/S/144/2023- 24/1063251919(1), vide ANNEXURE- D; (iii) Issue Writ of Prohibition, not to proceed with further steps or measures or any such kind of initiatives pertaining to recovery(s) over the impugned demand made thereof vide ANNEXURE D; directing the respondent authorities to refrain from further coercive steps, in any manner of whatsoever in nature, in accordance to the impugned order dated 23.03.2023, passed by 2nd respondent in order No.: ITBA/ AST/ S/ 144/ 2023- 24/1063251919(1), vide ANNEXURE - D;

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NC: 2025:KHC:12955 WP No. 2368 of 2025

(iv) 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. A perusal of the material on record will indicate that the respondent having issued Show Cause Notice dated 29.02.2024, petitioner did not submit any reply to the same and as such, respondent No.2 proceeded to pass the impugned exparte assessment order at Annexure-D dated 23.03.2024 under Section 144 read with Section 144B of the Income Tax Act which is assailed by the petitioner 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 bonafide and unavoidable circumstances and sufficient cause and consequently, 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

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NC: 2025:KHC:12955 WP No. 2368 of 2025

opportunity is granted in favour of the petitioner, the petitioner would submit its reply along with the documents and participate in the proceedings and as such, it is necessary that the impugned order at Annexure –D 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 its 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 – D will clearly indicate that the same was passed in the absence of the 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

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NC: 2025:KHC:12955 WP No. 2368 of 2025

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 impugned assessment order at Annexure – D dated 23.03.2024, is hereby set aside. (ii) Matter is remitted back to the stage of petitioner submitting reply to Show Cause Notice dated 02.06.2023 under Section 143(2) of the Income Tax Act and to proceed further in accordance with law. (iii) Liberty is reserved in favour of the petitioner to file its reply, pleadings, documents, etc., before respondent No.2, who shall consider the same and pass appropriate orders in accordance with law.

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NC: 2025:KHC:12955 WP No. 2368 of 2025

(iv) All rival contentions are kept open and no opinion is expressed on the same.

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

MDS List No.: 2 Sl No.: 17

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