YASHASWINI GRUHA NIRMANA SAHAKARA SANGHA NIYAMITHA vs. THE INCOME TAX OFFICER

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WP/24708/2025HC KarnatakaKAHC01053786202501 September 2025Bench: M.NAGAPRASANNA7 pages
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What did the High Court hold?

The High Court allowed the writ petition. It held that the proceedings were indeed ex parte from the outset because the petitioner did not receive the Section 142(1) notice due to it being sent to an inactive email ID, and no other mode of communication was used. The Court found that this lack of proper notice deprived the petitioner of an opportunity to respond, rendering the subsequent assessment and penalty orders unsustainable. The Court quashed the assessment order under Section 144 dated 28/12/2019 and the penalty orders under Sections 271F, 272A(1)(d), and 271AAC(1), all for Assessment Year 2017-18. The matter was remitted back to the Assessing Officer (Respondent No.1) from the stage of submitting a reply to the Section 142(1) notice. The petitioner was granted liberty to submit their reply, and the Assessing Officer was directed to proceed in accordance with law. The revenue did not oppose the remission.

What were the facts?

The petitioner, Yashaswini Gruha Nirmana Sahakara Sangha Niyamitha, a cooperative society, did not file a return of income for Assessment Year 2017-18, contending no income had accrued. A notice under Section 142(1) was issued, but the petitioner claims it was sent to an unused email ID and thus not received. Consequently, an ex parte assessment order under Section 144 was passed on 28/12/2019, making an addition of ₹64,28,500/- as unexplained cash deposits. This was followed by penalty orders under Sections 271F, 272A(1)(d), and 271AAC(1). The petitioner later updated their email on the Income Tax Department website on 21/07/2024 and filed a writ petition challenging these orders.

What were the issues?

1. Whether the assessment order passed under Section 144 of the Income Tax Act, 1961, and subsequent penalty orders are vitiated by lack of jurisdiction and procedural impropriety, rendering them ex parte and liable for quashing? (Mixed question of law and fact) Assessee's Contention: The petitioner argues that the entire proceedings, starting from the Section 142(1) notice, were ex parte because the notice was sent to an email ID that was not in use. This prevented them from filing a reply or appearing before the authorities, leading to multiple orders being passed without their participation. They relied on the principle that proceedings conducted without affording an opportunity of being heard are illegal. Revenue's Contention: The revenue contended that the notice was communicated to the email ID available with the Income Tax Department, and therefore, the petitioner cannot claim ignorance. They argued that the High Court should not interfere with the impugned proceedings.

Which sections of the Income-tax Act were involved?

Section 144,Section 142(1),Section 271F,Section 272A(1)(d),Section 271AAC(1)

AI-generated summary — verify with the full judgment below

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HC-KAR NC: 2025:KHC:34007 WP No. 24708 of 2025

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1ST DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 24708 OF 2025 (T-IT) BETWEEN:

YASHASWINI GRUHA NIRMANA SAHAKARA SANGHA NIYAMITHA, REGISTERED U/S 8 OF THE CO-OPERATIVE SOCIETIES ACT, 1959, NO.43, H.D.DEVEGOWDA CIRCLE, BANNUR ROAD, 1ST CROSS, NEAR RING ROAD, MYSORE – 570 012, PAN: AAAAY2408F

REPRESENTED BY ITS CEO, SRIKANTH M, AGED ABOUT 60 YEARS, S/O MADAPPA NANJAIAH, NO.2675, 4TH CROSS, KALIDASA ROAD, V.V.MOHALLA, MYSORE – 570 010. …PETITIONER (BY SRI. RAVISHANKAR S. V., ADVOCATE) AND:

1.

THE INCOME TAX OFFICER, WARD - 2(4), MYSORE – 570 010.

2.

THE INCOME TAX OFFICER, WARD - 2(3), MYSORE – 570 010.

3.

THE INCOME TAX OFFICER, WARD-1(1), MYSORE – 570 008.

Digitally signed by NAGAVENI Location: HIGH COURT OF KARNATAKA

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HC-KAR NC: 2025:KHC:34007 WP No. 24708 of 2025

4.

NATIONAL FACELESS ASSESSMENT CENTRE, REPRESENTED BY 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. …RESPONDENTS (BY SRI. M.TIRUMALESH, ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF CERTIORARI OR DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING THE ORDER PASSED U/S 144 DATED 28/12/2019 BEARING DIN. ITBA/AST/S/144/2019- 20/1023295536(1) PASSED BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2017-18 HEREIN MARKED AS ANNEXURE A; ISSUE A WRIT OF CERTIORARI OR DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING THE PENALTY ORDER DATED 02/08/2021 ISSUED U/S 271F OF THE ACT BEARING DIN AND NOTICE NO. ITBA/PNL/F/271F/2021- 22/1034575783(1) BY THE RESPONDENT NO.4 FOR THE ASSESSMENT YEAR 2017-18 HEREIN MARKED AS ANNEXURE - A1 AND ETC.

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

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HC-KAR NC: 2025:KHC:34007 WP No. 24708 of 2025

CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA

ORAL ORDER

Petitioner is before this Court calling in question, the actions of the respondent No.3 after issuance of notice under Section 142(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act' for short) on the score that they are notices without jurisdiction and all consequent actions taken thereto being illegal.

2.

Heard Sri.Ravishankar S.V., learned counsel appearing for the petitioner, Sri.M.Tirumalesh, learned counsel appearing for the respondents and have perused the material on record.

3.

Facts in brief germane are as follows: (a) The petitioner is a House Building Cooperative Society carrying on the activity of providing residential sites to its members by collecting money from them. For the assessment year 2017-18, no return of income was filed by the

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HC-KAR NC: 2025:KHC:34007 WP No. 24708 of 2025

petitioner. It is the case that no income had been accrued for the said assessment years, as the formation of sites were still underway. Notwithstanding the same, a notice is issued under Section 142(1), which is communicated to a particular mail id available at the office of the respondents. It is the case of the petitioner that said mail id was not in use and therefore, the petitioner did not file his response to the notice so issued. (b) An order of assessment is then passed under Section 144 of the Act, making addition of cash deposits during the period of demonetization, to the tune of ₹64,28,500/-, terming it to be unexplained money. Taking the proceedings further, penalty orders are passed under Sections 271F and 272A(1)(d) of the Act and finally, penalty orders are now passed under Section 271AAC(1) of the Act. On 21.07.2024, the petitioner is said to have consulted the tax practitioner and updated the email on the website of the Income Tax Department. On all the said facts, the learned counsel appearing for the petitioner would contend that the petitioner had no opportunity to submit his reply or appear before the respondents which has led to the impugned proceedings being

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HC-KAR NC: 2025:KHC:34007 WP No. 24708 of 2025

ex parte. Huge burden is now cast upon the petitioner by passing several orders, all in an ex parte proceeding.

4.

Learned counsel appearing for the respondents Sri. Sri.M.Tirumalesh would contend that the notice was communicated to the mail id available at the Income Tax Department and therefore, the petitioner cannot now feign ignorance. Learned counsel would submit that this Court should not interfere with the impugned proceedings.

5.

The afore-narrated facts link in the chain of events, are all a matter of record. It is not in dispute that the proceedings instituted right 'from the word go' have remained ex parte as the genesis is a notice sent in the year 2019 for the assessment year 2017-18 and penalty orders passed subsequently. It is an admitted fact that the petitioner never replied to the notice owing to the fact that they did not get the notice to the appropriate mail and nor the notice was communicated through any other mode. In that light, the proceedings undoubtedly become ex parte. Being ex parte, the result would be obliteration of the proceedings and remitting

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HC-KAR NC: 2025:KHC:34007 WP No. 24708 of 2025

the matter back to the hands of the authority to redo the exercise. Learned counsel for the Revenue would not oppose, if liberty is granted to redo the exercise.

6.

For the aforesaid reasons, the following: ORDER [i] The petition stands allowed. [ii] Order passed U/s 144 dated 28/12/2019 bearing DIN: ITBA/AST/S/144/2019-20/1023295536(1) passed by the Respondent No.2 for the assessment year 2017-18 vide Annexure A, stands quashed. [iii] The penalty order dated 02/08/2021 issued u/s 271F of the Act bearing DIN and Notice No. ITBA/PNL/F/271F/2021- 22/1034575783(1) by the Respondent No.4 for the assessment year 2017-18 vide Annexure - A1, stands quashed. [iv] The penalty order dated 02/08/2021 issued u/s 272A(1)(d) of the Act bearing DIN and Notice No. ITBA/PNL/F/272A(1)(d)/2021-22/1034575782(1) by the

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HC-KAR NC: 2025:KHC:34007 WP No. 24708 of 2025

Respondent No.4 for the assessment year 2017-18 vide Annexure - A2, stands quashed. [v] The penalty order dated 19/01/2022 issued u/s 271AAC(1) of the Act bearing DIN and Notice No. ITBA/PNL/F/271AAC(1)/2021-22/1038858424(1) by the Respondent No.4 for the assessment year 2017-18 vide Annexure - AЗ, stands quashed. [vi] The matter is remitted back to the hands of respondent No.1 from the stage of submission of reply to the notice issued under Section 142(1) of the Income Tax Act, 1961. [vii] Petitioner is at liberty to furnish/submit his reply to the said notices and respondent No.1 shall take the proceedings to its logical conclusion, in accordance with law.

Sd/- (M.NAGAPRASANNA) JUDGE

CBC List No.: 1 Sl No.: 58

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