M/S TEAM ONE vs. INCOME TAX OFFICER

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WP/30244/2024HC KarnatakaKAHC01064304202412 December 2025Bench: S.R.KRISHNA KUMAR4 pages
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What did the High Court hold?

The High Court held that the very basis for the proceedings under Section 270A of the Income Tax Act, 1961, no longer survived after the rectification of the assessment order. The Court found that the mistake in the original assessment order was apparent on the face of the record, and the petitioner had paid the additional sum of Rs. 12,760/- pursuant to the rectification. Therefore, the petitioner was entitled to immunity under Section 270AA of the Act. The Court reasoned that once the assessment order is rectified, the foundation for penalty proceedings under Section 270A is undermined. The ratio decidendi is that if an assessment order is rectified, subsequent penalty proceedings initiated based on the original, unrectified order may be unsustainable. The impugned order dated 30.09.2024 passed by the respondent was quashed, and the application filed by the petitioner under Section 270AA(2) for Assessment Year 2018-19 was allowed.

What were the facts?

The petitioner, M/s Team One, a registered partnership firm, filed a writ petition before the High Court of Karnataka challenging an order dated 30.09.2024 passed by the Income Tax Officer, Ward 1(1), Mangalore, under Section 270AA of the Income Tax Act, 1961, for Assessment Year 2018-19. The proceedings under Section 270A were initiated following an assessment order dated 12.12.2023. The petitioner had filed an appeal against this assessment order on 10.01.2024, which was pending. Subsequently, the petitioner filed an application for rectification under Section 154, which was allowed on 02.07.2024. Following the rectification, the petitioner paid an additional sum of Rs. 12,760/- on 17.07.2024. The petitioner contended that the basis for the Section 270A proceedings no longer existed due to the rectification and that they were entitled to immunity under Section 270AA. The respondent argued that the petition lacked merit.

What were the issues?

1. Whether the proceedings under Section 270A of the Income Tax Act, 1961, for Assessment Year 2018-19 survive after the rectification of the original assessment order, thereby impacting the petitioner's eligibility for immunity under Section 270AA of the Act? The petitioner contended that the rectification of the assessment order rendered the original assessment order, which formed the basis for initiating proceedings under Section 270A, invalid. Consequently, the proceedings under Section 270A should not continue, and the petitioner should be granted immunity under Section 270AA, especially after paying the additional tax due to rectification. The petitioner relied on the principle that the basis for penalty proceedings must be a valid and subsisting assessment order. The respondent contended that the writ petition lacked merit and should be dismissed, without specifying any particular legal provisions or precedents relied upon.

Which sections of the Income-tax Act were involved?

Section 270AA,Section 270A,Section 154

AI-generated summary — verify with the full judgment below

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HC-KAR NC: 2025:KHC:53119 WP No. 30244 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF DECEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO.30244 OF 2024 (T-IT) BETWEEN:

M/S TEAM ONE REGISTERED PARTNERSHIP FIRM REP. BY ITS PARTNER SRI PAUL MASCARENHAS SON OF SRI LATE S T MASCARENEHAS AGED ABOUT 59 YEARS 17-18-1366/1, ALBERT MANSION STURROCK ROAD, FALNIR MANGALORE – 575 001. …PETITIONER (BY SRI. ANNAMALAI S., ADVOCATE) AND:

INCOME TAX OFFICER WARD 1(1), MANGALORE C R BUILDING, N G ROAD ATTAWARA MANGALORE – 575 001. …RESPONDENT (BY SRI. THIRUMALESH M., ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 PRAYING TO QUASH THE ORDER UNDER SECTION 270AA OF THE INCOME TAX ACT, 1961 PASSED BY THE RESPONDENT BEARING DIN AND ORDER NO. ITBA/PNL/F/270AA/2024-25/1069264962(1) DATED 30.09.2024 FOR THE A.Y. 2018-19 AS REFERRED AS ANNEXURE-A AND ETC.

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

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

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

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HC-KAR NC: 2025:KHC:53119 WP No. 30244 of 2024

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

“a) Issue a writ in the nature of certiorari quashing the order under section 270AA of the Income Tax Act, 1961 passed by the Respondent bearing DIN & Order No.ITBA/PNL/F/270AA/2024-25/1069264962(1) dated 30.09.2024 for the A.Y.2018-19 as referred as Annexure-A.

b) Issue a writ in the nature of mandamus directing the Respondent to allow the application filed by the petitioner under Section 270AA of the Act for the assessment year 2018-19.

c) And pass such other order 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 respondent and perused the material on record. 3. A perusal of the material on record will indicate that pursuant to the Assessment order dated 12.12.2023 passed by the respondent – revenue, proceedings under Section 270A of the Income Tax Act, 1961, were invoked and notice under Section 270AA of the Act was issued by the respondent to the petitioner. Petitioner filed an appeal against the said order on 10.01.2024 within time and the said appeal is pending. The petitioner also filed

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HC-KAR NC: 2025:KHC:53119 WP No. 30244 of 2024

an application under Section 154 of the Act on 22.04.2024 seeking rectification, which was ultimately allowed by the rectification order dated 02.07.2024 pursuant to which, the assessment order was passed by the respondent, who paid a sum of Rs.12,760/- on 17.07.2024. In view of the original assessment order having been passed by the respondent, petitioner filed a memo seeking dismissal of the appeal as having become infructuous and also contended that the very basis for issuance of Notice under Section 270A of the Act was original assessment order, which was subsequent to the rectification order and hence, continuation of proceedings under Section 270A of the Act would not arise and petitioner would be entitled to immunity under Section 270AA of the Act. The said application under Section 270A having been dismissed by the respondent, the petitioner is before this Court by way of the present petition. 4. Per contra, learned counsel for the respondent submits that there is no merit in the petition and the same is liable to be dismissed. 5. The aforesaid facts and circumstances and the undisputed material on record clearly establishes that the very

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HC-KAR NC: 2025:KHC:53119 WP No. 30244 of 2024

basis for the proceedings under Section 270A of the Act do not survive any longer upon rectification of the assessment order, which mistake was apparent on the face of the record and the petitioner having paid an additional sum of Rs.12,760/- on 17.07.2024, the petitioner would be entitled to immunity, hence, the impugned order deserves to be quashed and the application filed by the petitioner deserves to be allowed. 6. In the result, I pass the following: ORDER

(i) The petition is hereby allowed.

(ii) The impugned order at Annexure – A dated 30.09.2024 passed by the respondent is hereby quashed. (iii) The application filed by the petitioner under Section 270AA(2) of the Act for the Assessment year 2018- 19 stands allowed.

Sd/- (S.R.KRISHNA KUMAR) JUDGE SV List No.: 2 Sl No.: 45

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