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

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WP/24877/2025HC KarnatakaKAHC01053783202516 October 2025Bench: S.R.KRISHNA KUMAR6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court allowed the petition. It noted the undisputed fact that the petitioner had not submitted a reply to the notices issued under Sections 201(1) and 201(1A), as recorded in paragraph 5 of the impugned order. However, considering the petitioner's assertion that this omission was due to bonafide reasons, unavoidable circumstances, and sufficient cause, and that they would submit a reply if given another opportunity, the Court deemed it just and appropriate to set aside the impugned order dated 30.03.2022 (under Sections 201(1) and 201(1A)) and the penalty order dated 03.02.2023 (under Section 271C). The matter was remitted back to Respondent No.2 for reconsideration from the stage of submitting the petitioner's reply to the notices. Liberty was granted to the petitioner to submit additional pleadings and documents, which the respondent was directed to consider. The ratio decidendi is that procedural fairness, including providing an opportunity to be heard, is paramount, and if a party demonstrates sufficient cause for non-compliance, the matter can be remanded for fresh consideration.

What were the facts?

The petitioner, Yashaswini Gruha Nirmana Sahakara Sangha Niyamitha, filed a writ petition before the High Court of Karnataka challenging an order passed by the Income Tax Officer (Respondent No.2) under Sections 201(1) and 201(1A) of the Income Tax Act, 1961, for Assessment Year 2016-17, dated 30/03/2022. The petitioner also challenged a penalty order under Section 271C of the Act, dated 03/02/2023. The petitioner contended that notices dated 13.08.2021 and 15.09.2021, which led to the impugned orders, were not received, and therefore, they could not submit a reply. The petitioner claimed this omission was due to bonafide reasons and unavoidable circumstances, seeking an opportunity to present their case. The respondents argued that the petition lacked merit.

What were the issues?

1. Whether the impugned orders passed under Sections 201(1) and 201(1A) and the penalty order under Section 271C of the Income Tax Act, 1961, are liable to be quashed on the ground that the petitioner did not receive the notices and consequently could not submit a reply? Assessee's Contention: The petitioner argued that notices dated 13.08.2021 and 15.09.2021 under Sections 201(1) and 201(1A) were not received. The inability to submit a reply was due to bonafide reasons, unavoidable circumstances, and sufficient cause. The petitioner sought an opportunity to submit their reply and documents, requesting the setting aside of the impugned orders. The petitioner relied on the principle of natural justice, implicitly arguing for a fair hearing. Revenue's Contention: The respondents submitted that the petition had no merit and was liable to be dismissed. They pointed to the fact recorded in the impugned order that the petitioner had not submitted a reply or substantiated details regarding TDS for the period under consideration.

Which sections of the Income-tax Act were involved?

Section 201,Section 201(1),Section 201(1A),Section 271C

AI-generated summary — verify with the full judgment below

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HC-KAR NC: 2025:KHC:41790 WP No. 24877 of 2025

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH DAY OF OCTOBER, 2025 BEFORE THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 24877 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 TAN: BLRY00904B REPRESENTED BY ITS CEO, SRIKANTH M., AGED 60 YEARS, S/O MADAPPA NANJAIAH, NO.2675, 4TH CROSS, KALIDASA ROAD, V V MOHALLA, MYSORE – 570 010 …PETITIONER (BY SRI. RAVI SHANKAR S. V., ADVOCATE)

AND:

1.

THE INCOME TAX OFFICER TDS, WARD 2(4),

MYSORE – 570 010.

2.

THE INCOME TAX OFFICER, TDS, WARD 1,

MYSORE – 570 008. …RESPONDENTS (BY SRI. ARAVIND V. CHAVAN, ADVOCATE)

THIS W.P. 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 201(1) AND

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

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HC-KAR NC: 2025:KHC:41790 WP No. 24877 of 2025

201(1A) DATED 30/03/2022 BEARING DIN ITBA/COM/F/17/2021- 22/1042120710(1) PASSED BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2016-17 HEREIN MARKED AS ANNEXURE-A AND ETC.,

THIS 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 for the following reliefs:- “i) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the order passed U/s 201(1) & 201(1A) dated 30/03/2022 bearing DIN: ITBA/COM/F/17/2021-22/1042120710(1) passed by the Respondent No.2 for the assessment year 2016- 17 herein marked as Annexure - A. ii) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the penalty order dated 03/02/2023 passed u/s 271C of the Act Vide DIN KAR/181/03022023/00307 by the Respondent No.3 for the assessment year 2016-17 herein marked as Annexure - A1. iii) Issue a writ of Mandamus or direction in the nature of a writ of mandamus, directing the respondent No.1 to summon the recipients in Annexure - L, and secure the manner of treatment of the advances in the books of the recipients.

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HC-KAR NC: 2025:KHC:41790 WP No. 24877 of 2025

iv) And pass such other orders as this Hon'ble Court deems fit and proper 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 notices dated 13.08.2021 and 15.09.2021 issued by the respondent No.2 under Section 201 and 201(1A) of the Income Tax Act, 1961 (for short, ‘IT Act’), was not received by petitioner and he 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 notice under Sections 201(1) and 201(1A) of the Act 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.

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HC-KAR NC: 2025:KHC:41790 WP No. 24877 of 2025

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 notice under Section 201(1) and 201(1A) as can be seen from the paragraph No.5 of the impugned order dated 30.03.2022, which reads as under: “5. Further, in response to this office letters cited above, the Deputy Registrar has neither submitted reply nor substantiated the details of TDS effected in the case of Yashaswini Gruha Nirmana Sahakara Sanga Niyamintha for the year under consideration (period 01.04.2015 to 31.03.2016). The details were verified with respect to available records and the data available in the system for the year under consideration.”

6.

Under these circumstances, in view of the specific assertion on the part of the petitioner that his inability and omission to submit a reply along with documents to notice under Sections 201(1) and 201(1A) was due to bonafide reasons, unavoidable circumstances and sufficient cause and if one more opportunity is

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HC-KAR NC: 2025:KHC:41790 WP No. 24877 of 2025

granted, petitioner would submit reply along with documents, I deem it just and appropriate to set aside the impugned order at Annexure – A dated 30.03.2022 passed under Sections 201(1) and 201(1A) of the Income Tax Act, the penalty order at Annexure-A1 dated 03.02.2023 passed under Section 271C of the Income Tax Act and subsequent notice / orders, etc., and remit the matter back to respondent No.2 for reconsideration afresh from the stage of submitting of reply by the petitioner to notice under Sections 201(1) and 201(1A) of the Income Tax Act and to proceed further in accordance with law. 6. In the result, pass the following: ORDER (i) The petition is hereby allowed. (ii) The impugned order at Annexure – A dated 30.03.2022 passed by respondent No.2 and the impugned penalty order at Annexure- A1 dated 03.02.2023 are hereby set aside. (iii) The matter is remitted back to respondent No.2 for reconsideration afresh in accordance with law

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HC-KAR NC: 2025:KHC:41790 WP No. 24877 of 2025

from the stage of submitting of reply to the Notices under Sections 201(1) and 201(1A) of the IT Act at Annexures – D and D1 dated 13.08.2021 and 15.09.2021 respectively. (iv) Liberty is reserved in favour of the petitioner to submit additional pleadings, documents, etc., to the respondent, who shall consider the same and proceed further in accordance with law.

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

MDS List No.: 2 Sl No.: 0

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