SREE FINANCIERS vs. INCOME TAX OFFICER

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WP/26215/2024HC KarnatakaKAHC01054354202425 September 2024Bench: S.R.KRISHNA KUMAR6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court allowed the petition. It noted that it was undisputed that the petitioner had not submitted a reply to the Section 148A(b) notice. However, in view of the petitioner's assertion that the failure to respond was due to bonafide reasons, unavoidable circumstances, and sufficient cause, and their willingness to submit a reply if given another opportunity, the Court found it just and appropriate to set aside the impugned order under Section 148A(d) and subsequent notices/orders. The matter was remitted back to the first respondent (Income Tax Officer) for reconsideration. The Court directed that the reconsideration should commence from the stage of the petitioner submitting their reply to the Section 148A(b) notice. Liberty was granted to the petitioner to submit all necessary replies, responses, pleadings, and documents, which the first respondent was to consider after providing a sufficient and reasonable opportunity to the petitioner, and then proceed in accordance with law. The Court expressly did not decide on the merits of the assessment or penalty.

What were the facts?

The petitioner, Sree Financiers, a registered partnership firm, filed a writ petition before the High Court of Karnataka challenging several notices and orders issued by the Income Tax Department for the assessment year 2018-19. The challenged documents include a notice under Section 148A(b) dated March 26, 2022, an order under Section 148A(d) dated April 30, 2022, a notice under Section 148 dated April 30, 2022, an order under Section 147 read with Section 144 and 144B dated March 19, 2024, and a penalty notice under Section 274 read with Section 272A(1)(d) dated March 19, 2024. The petitioner's primary contention was that the Section 148A(b) notice was not received, preventing them from submitting a response with supporting documents.

What were the issues?

1. Whether the notice issued under Section 148A(b) of the Income Tax Act, 1961, dated March 26, 2022, should be quashed on the grounds that it was not received by the petitioner, thereby preventing them from submitting a reply and supporting documents? (Question of fact and law, concerning Section 148A(b)). Assessee's Contention: The petitioner argued that they did not receive the Section 148A(b) notice and were unaware of it. Consequently, they could not submit their reply and documents. They claimed this omission was due to bonafide reasons, unavoidable circumstances, and sufficient cause, and requested an opportunity to respond. Revenue's Contention: The revenue contended that the petition had no merit and was liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148A(b),Section 148A(d),Section 148,Section 147,Section 144,Section 144B,Section 274,Section 272A(1)(d)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:39864 WP No. 26215 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 26215 OF 2024 (T-IT) BETWEEN:

SREE FINANCIERS REGISTERED PARTNERSHIP FIRM NIO. 45/4, BANNURU ROAD, SIDDARHTA NAGARA POST, YARAGANAHALLI, MYSORE 570 011. PAN: CXSPM4931M. REPRESENTED BY CHIKKARANGE GOWDA VENKATAPPA MANAGING PARTNER, AGED ABOUT 63 YEARS, S/O CHIKKARANGE GOWDA, NO. 165/J, ALANAHALLI, T N PURA MAIN ROAD, SIDDARTHANAGAR S O, MYSORE - 570 011. …PETITIONER (BY SRI. RAVI SHANKAR S V.,ADVOCATE)

AND:

1.

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

2.

NATIONAL FACELESS ASSESSMENT CENTRE 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.

3.

THE PRINCIPAL COMMISSIONER OF INCOME TAX 3 THE OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX -3, BMTC BUILDING, KORAMANGALA, BANGALORE 560 095. …RESPONDENTS (BY SRI.THIRUMALESH M.,ADVOCATE)

Digitally signed by LEELAVATHI S R Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39864 WP No. 26215 of 2024

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO I) QUASHING THE NOTICE UNDER SECTION 148A(B) OF THE ACT, DATED 26/03/2022 BEARING DIN NO.ITBA/AST/F/148A(SCN)/2021-22/1041690489(1), ISSUED BY THE RESPONDENT NO.1 FOR THE ASSESSMENT YEAR 2018-19 HEREIN MARKED AS ANNEXURE – A AND II) QUASHING THE ORDER UNDER SECTION 148A(D) OF THE ACT, DATED 30/04/2022, BEARING, DIN NO.ITBA/AST/F/148A/2022-23/1042918830(1) SUED BY THE RESPONDENT NO.1 FOR THE ASSESSMENT YEAR 2018-19 HEREIN MARKED AS ANNEXURE A1 AND ETC.,

THIS WRIT 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 has sought for the following reliefs:-

“i) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the notice under Section 148A(b) of the Act, dated 26/03/2022 bearing DIN No.ITBA/AST/F/148A(SCN)/2021-22/1041690489(1), issued by the Respondent No.1 for the assessment year 2018-19 herein marked as Annexure - A.

ii) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the order under Section 148A(d) of the Act, dated 30/04/2022, bearing, DIN No.ITBA/AST/F/148A/2022-23/1042918830(1) sued by the Respondent No.1 for the assessment year 2018-19 herein marked as Annexure A1.

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NC: 2024:KHC:39864 WP No. 26215 of 2024

iii) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the notice under Section 148 of the Act dated 30/04/2022 bearing DIN No. ITBA/AST/S/148_1/2022-23/1042918891(1) issued by the Respondent No.1 for the assessment year 2018-19 herein marked as Annexure - A2.

iv) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the order passed Under Section 147 r.w.s 144, 144B dated 19/03/2024 bearing DIN No. ITBA/AST/S/147/2023-24/1062886081(1) issued by the Respondent No. 3 for the assessment year 2018-19 herein marked as Annexure - A3.

v) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the penalty notice under Section 274 r.w.s 272a(1) (d) of the Act dated 19/03/2024 bearing DIN No. ITBA/PNL/S/272A(1)(d).FL/2023- 24/1062883081(1), issued by the Respondent No.2 for the 2018-19 herein marked as Annexure -A4.

vi) 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-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 submits that the Notice issued by the

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NC: 2024:KHC:39864 WP No. 26215 of 2024

respondents under Section 148A(b) of the Income Tax Act, 1961 (for short, ‘IT Act’), dated 26.03.2022 was not received by the 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 Section 148A(b) notice 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-revenue 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 Section 148A(b) notice. Under these circumstances, in view of the specific assertion on the part of the petitioner that its inability and omission to submit a reply along with

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NC: 2024:KHC:39864 WP No. 26215 of 2024

documents to Section 148A(b) notice 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-A1 dated 30.04.2022 passed under Section 148A(d) of the I.T Act and subsequent notices / orders, etc., and remit the matter back to the 1st respondent for reconsideration afresh from the stage of submitting of reply by the petitioner to Section 148A(b) notice and to proceed further in accordance with law. 6. In the result, pass the following:

ORDER

(i) Petition is hereby allowed. (ii) The impugned orders / notices at Annexures-A1, A2, A3 and A4 are hereby set aside. (iii) Matter is remitted back to the 1st respondent for reconsideration afresh in accordance with law from the stage of submitting of reply to the Notice issued under Section 148A(b) of the I.T Act at Annexure-A dated 26.03.2022. (iv) Liberty is reserved in favour of the petitioner to submit replies, responses, pleadings, documents, etc., to the 1st

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NC: 2024:KHC:39864 WP No. 26215 of 2024

respondent, who shall consider the same and provide sufficient and reasonable opportunity to the petitioner and proceed further in accordance with law.

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

Srl.

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