SRI YUVARAJ vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX

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WP/25843/2023HC KarnatakaKAHC01060231202313 August 2024Bench: S.R.KRISHNA KUMAR5 pages
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What did the High Court hold?

The High Court allowed the petition. It set aside the impugned Assessment Order dated March 30, 2023, passed by the Assistant Commissioner of Income Tax. The matter was remitted back to the respondents for reconsideration afresh, starting from the stage of submitting replies to the notices issued under Section 142(1) of the Income Tax Act, 1961. The Court granted liberty to the petitioner to submit his response and documents to the Section 142(1) notices, which the respondents are to consider in accordance with the law. The Court adopted a justice-oriented approach, providing one more opportunity to the petitioner, acknowledging his assertion of bonafide reasons for the omission. The ratio is that where an assessee demonstrates bonafide reasons for non-compliance with Section 142(1) notices, and seeks an opportunity to present their case, the principles of natural justice may warrant setting aside the assessment order and remitting the matter for reconsideration.

What were the facts?

The petitioner, Sri. Yuvraj, filed a writ petition before the High Court of Karnataka challenging an assessment order dated March 30, 2023, passed by the Assistant Commissioner of Income Tax (R-2). The petitioner contended that due to bonafide reasons, unavoidable circumstances, and sufficient cause, he could not submit his replies and documents in response to notices issued by the respondents under Section 142(1) of the Income Tax Act, 1961. This omission led to the passing of the impugned assessment order, which the petitioner argued violated principles of natural justice. He sought an opportunity to submit his replies and have the matter reconsidered. The respondents argued that the petition lacked merit and should be dismissed.

What were the issues?

1. Whether the impugned Assessment Order dated 30.03.2023, passed by the Assistant Commissioner of Income Tax, is violative of the principles of natural justice due to the petitioner's inability to submit replies to Section 142(1) notices? Assessee's Contention: The petitioner argued that his failure to respond to the Section 142(1) notices was due to bonafide reasons, unavoidable circumstances, and sufficient cause. He contended that the assessment order passed without considering his response violated principles of natural justice and should be set aside, with the matter remitted for fresh consideration. Revenue's Contention: The respondents argued that the writ petition had no merit and was liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 142(1)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:32504 WP No. 25843 of 2023

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF AUGUST, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 25843 OF 2023 (T-RES) BETWEEN:

SRI. YUVARAJ S/O RAMADAS, AGED ABOUT 50 YEARS, NO. 161, 8TH MAIN,4TH CROSS, 14TH BLOCK, NAGARABHAVI, BENGALURU-560 071.

…PETITIONER (BY SRI. MALLAHAR RAO.,ADVOCATE)

AND:

1.

THE PRINCIPAL COMMISSIONER OF INCOME TAX OF KARNATAKA AND GOA, QUEENS ROAD, BANGALORE-560 001.

2.

THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -2(4), BENGALURU-560 001.

…RESPONDENTS

(BY SRI.M DILIP.,ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASHING THE ORDER DTD 30.03.2023 PASSED IN ORDER BEARING NO. ITBA/AST/S/147/2022- 23/1051665403 (1) PASSED BY R-2 VIDE ANNX-A AND ETC.,

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

Digitally signed by Vandana S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:32504 WP No. 25843 of 2023

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

ORAL ORDER

In this petition, petitioner has sought for the following reliefs:-

“(i) Issue writ of Certiorari or in the like nature of certiorari or in the like nature of Certiorari quashing the order dated: 30.03.2023, passed in order bearing DIN No.: ITBA/AST/S/147/2022-23/1051665403(1), passed by respondent No.2, vide ANNEXURE-A;

(ii) Issue a writ of Mandamus or writ of direction to the respondent authorities to refrain from further proceedings in respect of the order dated: 29.09.2023, passed in order bearing DIN No. ITBA/PNL/F/271(1) (C)/2023- 24/1056662677(1), passed by respondent No.2, vide ANNEXURE-B; and order dated: 29.09.2023, passed in order bearing DIN No.: ITBA/PNL/F/271(1)(C)/2023- 24/1056662679(1), passed by respondent No.2, vide ANNEXURE-C.

(iii) Issue writ of Prohibition, not to proceed further steps or measure or any such kind of initiatives pertaining to recovery(s), directing the respondent authorities to refrain from further coercive steps against the order dated: 30.03.2023, passed in order bearing DIN No.: ITBA/AST/S/147/2022-23/1051665403(1), passed by respondent No.2., vide Annexure-A;

(iv) Pass such other 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.”

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NC: 2024:KHC:32504 WP No. 25843 of 2023

2.

Heard learned counsel for the petitioner and learned counsel for the respondents – revenue and perused the material on record.

3.

In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner submitted that due to bonafide reasons, unavoidable circumstances and sufficient cause, the petitioner could not submit his replies along with documents to the notices issued by the respondents under Section 142(1) of the Income Tax Act, 1961, resulting in passing of the impugned Assessment Order dated 30.03.2023 and consequent orders, notices etc., which are violative of principles of natural justice and the same deserve to be set aside. It is submitted that if one more opportunity is provided, the petitioner would submit his replies to the notices under Section 142(1) of the I.T.Act along with documents and as such, the impugned order is to be set aside and the matter be remitted back to the respondents for reconsideration afresh in accordance with law.

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NC: 2024:KHC:32504 WP No. 25843 of 2023

4.

Per contra, learned counsel for the respondents submits that there is no merit in the petition and the same is liable to be dismissed.

5.

A perusal of the material on record will indicate that though several contentions have been urged by both sides, in the light of the specific assertion on the part of the petitioner that his inability and omission to submit reply / response to Section 142(1) notices was due to bonafide reasons, unavoidable circumstances and sufficient cause, in order to provide one more opportunity to the petitioner and 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.

6.

In the result, I pass the following: ORDER

(i) The petition is hereby allowed.

(ii) The impugned Assessment Order dated 30.03.2023 at Annexure – A passed by the 2nd respondent is hereby set aside.

(iii) Matter is remitted back to the respondents for reconsideration afresh from the stage of submitting replies to the

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NC: 2024:KHC:32504 WP No. 25843 of 2023

Notices under Section 142(1) of the Income Tax, 1961 to proceed further in accordance with law.

(iv) Liberty is reserved in favour of the petitioner to submit his response / documents, etc., to Section 142(1) Notices, which shall be considered by the respondents, in accordance with law.

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

Srl. List No.: 1 Sl No.: 72

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