VENIKA HYDRO PROJECTS PRIVATE LIMITED vs. INCOME TAX OFFICER

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WP/5020/2025HC KarnatakaKAHC01009272202527 March 2025Bench: S.R.KRISHNA KUMAR7 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the petition. It was undisputed that the petitioner had not replied to the show cause notice dated 26.02.2021 and had not complied with notices issued under Section 142(1). However, adopting a justice-oriented approach and to provide one more opportunity, the Court set aside the impugned garnishee notice, assessment order, penalty order, and all subsequent notices and proceedings. The matter was remitted back to the 2nd respondent for reconsideration from the stage of submitting a reply to the show cause notice. Liberty was granted to the petitioner to submit additional pleadings and documents, which the respondents were directed to consider. The ratio is that procedural lapses, even if undisputed, can be rectified by remitting the matter for a fresh consideration when bonafide reasons and sufficient cause are shown, particularly in light of exceptional circumstances like a pandemic.

What were the facts?

The petitioner, Venika Hydro Projects Private Limited, filed a writ petition before the High Court of Karnataka challenging several notices and orders issued by the Income Tax Department for Assessment Year 2018-19. These included a garnishee notice dated 03.01.2025, an assessment order dated 16.03.2021, a penalty order dated 13.09.2021, and associated computation and demand notices. The petitioner contended that notices issued by the 2nd respondent were sent to an inoperative email address and were not physically served. Due to the Covid-19 pandemic, the petitioner could not access the portal to submit replies. Consequently, the petitioner was unaware of a show cause notice dated 26.02.2021, leading to ex-parte orders.

What were the issues?

1. Whether the ex-parte assessment order and subsequent notices/orders for AY 2018-19 should be quashed on the grounds of non-service of notices and lack of opportunity to the petitioner due to bonafide reasons and unavoidable circumstances, including the Covid-19 pandemic? (Question of law and fact, turning on principles of natural justice and procedural fairness under the Income Tax Act, 1961). Assessee's Contention: The petitioner argued that the notices were not properly served, and the inability to reply to the show cause notice was due to bonafide reasons, unavoidable circumstances, and the pandemic. They sought an opportunity to submit their reply and contest the proceedings. Revenue's Contention: The Revenue argued that the petition had no merit and was liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 142(1),Section 143(3A),Section 143(3B),Section 143(3),Section 156,Section 270A

AI-generated summary — verify with the full judgment below

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NC: 2025:KHC:13157 WP No. 5020 of 2025

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO.5020 OF 2025 (T-IT)

BETWEEN:

VENIKA HYDRO PROJECTS PRIVATE LIMITED NO.04, SY. NO. 311/2, 2ND FLOOR, RAJAJINAGAR INDUSTRIAL AREA, BENGALURU - 560 044. PAN. AACCV1127E

A PRIVATE LIMITED COMPANY INCORPORATED UNDER THE COMPANIES ACT, 2013 AND REPRESENTED BY ITS MANAGING DIRECTOR CHANDRASEKHAR D. REDDY S/O LATE D. RAGHUNADHA REDDY AGED 56 YEARS, OCC. BUSINESS / MANAGING DIRECTOR RESIDING AT NO.36, NAMBIAR BELLEZEA VILLA, MUTHANALLUR CIRCLE, BENGALURU - 560 099. …PETITIONER (BY SRI. BALACHANDRAN B. S., ADVOCATE)

AND:

1.

INCOME TAX OFFICER WARD 7(1)(3) BENGALURU BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU - 560 095.

2.

ASSESSMENT UNIT INCOME TAX DEPARTMENT, (ERSTWHILE ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX / INCOME TAX OFFICER NATIONAL E-ASSESSMENT CENTRE)

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

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NC: 2025:KHC:13157 WP No. 5020 of 2025

2ND FLOOR, JAWAHARLAL NEHRU STADIUM, NEW DELHI - 110 003.

3.

PRINCIPAL COMMISSIONER OF INCOME TAX RANGE 7, BENGALURU BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU - 560 095. …RESPONDENTS (BY SRI. E.I.SANMATHI, ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE FOLLOWING: ANNEXURE-E IMPUGNED GARNISHEE NOTICE DTD. 03.01.2025 ISSUED BY THE R-1 TO THE PETITIONERS BANK IN DIN AND NOTICE NO.ITBA/RCV/S/2006(3)-1/2024-25/1071843760(1) AND ETC..

THIS PETITION, COMING ON FOR PRELIMINARY HEARING, 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 or certiorari or any other writ as the Hon’ble High Court may deem fit and quash the following: Annexure ‘E’- Impugned garnishee notice dated 03.01.2025 issued by the Respondent No.1 to the Petitioner’s bank in DIN & Notice No.: ITBA/RCV/S/2006 (3)_1/2024-25/1071843760(1)

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NC: 2025:KHC:13157 WP No. 5020 of 2025

Annexure ‘G’ - Impugned assessment order dated 16.03.2021 passed by the Respondent No.2 under section 143 r.w.s. 143(3A) & 143 (3B) of the IT Act in DIN & Order No. ITBA/AST/S/143(3)/ 2020- 21/1031503630(1) for the AY 2018-19. Annexure ‘G1’- Impugned computation sheet dated 16.03.2021 passed by the Respondent No.2 under section 143(3) of the IT Act in DIN & Document No. ITBA/AST/S/86/2020-21/ 031503674(1) for the AY 2018-19; Annexure ‘G2’ - Impugned demand notice dated 16.03.2021 issued by the Respondent No.2 under section 156 of the IT Act in DIN & Notice No.ITBA/AST/S/156/ 2020-21/1031503671(1) for the AY 2018-19; Annexure ‘H’ - Impugned penalty Order dated 13.09.2021 passed by the Respondent No.2 under section 270A of the IT Act in DIN:ITBA/PNL/F/270A/2021-22/1035502041(1) for the AY 2018-19; Annexure ‘H1’ - Impugned Computation Sheet dated 13.09.2021 issued by the Respondent No.2 under section 270A of the IT Act in DIN & Order No.ITBA/PNL/S/270A/ 2021-22/1031503709(1) for the AY 2018-19;

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NC: 2025:KHC:13157 WP No. 5020 of 2025

Annexure ‘H2’ - Impugned Demand Notice dated 13.09.2021 issued by the Respondent No.2 under section 270A of the IT Act in DIN & Notice No.ITBA/PNL/S/156/ 2021-22/1035501974(1) for the AY 2018-19; (ii) Issue any other writ, order or direction to which the Petitioner is found entitled to in the present facts and circumstances.

2.

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

3.

A perusal of the material on record will indicate that subsequent to the notices and replies exchanged between the respondents and petitioner during the year 2019 in relation to the Assessment year 2018-19, the 2nd respondent issued notices dated 22.01.2020, 03.08.2020, 03.09.2020, 05.10.2020, 30.12.2020 and 05.02.2021 calling upon the petitioner to submit details and documents referred to and mentioned in the said notices. It is contended that apart from the fact that the said Notices were not served physically upon the petitioner, the same were sent to an inoperative email address, to which the petitioner did not have

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NC: 2025:KHC:13157 WP No. 5020 of 2025

access and due to the Covid – 19 pandemic, petitioner could not submit his reply by checking the portal, pursuant to which, the 2nd respondent issued a show cause notice dated 26.02.2021 which was also not within the knowledge of the petitioner, who could not submit a reply to the same, as a result of which, the 2nd respondent proceeded to pass the impugned ex-parte assessment order followed by notices, proceedings etc., which are assailed in the present petition. It is contended that the inability and omission on the part of the petitioner to submit his reply to the notices under Section 142(1) of the I.T. Act as well as to the show cause notice and contest the proceedings was due to bonafide reasons, unavoidable circumstances and sufficient cause and as such, if one more opportunity is provided by setting aside the impugned order and subsequent notices, petitioner would submit his reply to the show cause notice and contest the proceedings in accordance with law.

4.

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

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NC: 2025:KHC:13157 WP No. 5020 of 2025

5.

A perusal of the material on record will indicate that it is an undisputed fact that the show cause notice dated 26.02.2021 was not replied to by the petitioner who also did not comply with the demand made in the notices issued by the respondent under Section 142(1) during the 2020-21, as a result of which, the 2nd respondent proceeded to pass the impugned order and issued further notices to the petitioner. Under these circumstances, by adopting a justice oriented approach and in order to provide one more opportunity to the petitioner, I deem it just and appropriate to set aside the impugned order and all subsequent notices, orders, proceedings etc., and remit the matter back to the 2nd respondent for reconsideration afresh to the stage of the petitioner submitting reply to the show cause notice and to proceed further in accordance with law.

6.

In the result, I pass the following: ORDER

(i) Petition is hereby allowed.

(ii) The impugned Garnishee notice at Annexure-E dated 03.01.2025 issued by the 1st respondent and impugned ex-parte assessment order at Annexure-G dated 16.03.2021 passed by the

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NC: 2025:KHC:13157 WP No. 5020 of 2025

2nd respondent and subsequent notices/orders at Annexures-G1 and G2 dated 16.03.2021 and Annexures-H, H1 and H2 all dated 13.09.2021 are hereby set aside/quashed. (iii) The matter is remitted back to the concerned respondents for reconsideration afresh in accordance with law from the stage of submitting of reply to the Show Cause Notice at Annexure – F dated 26.02.2021. (iv) Liberty is reserved in favour of the petitioner to submit additional pleadings, documents, etc., to the concerned respondents, who shall consider the same and proceed further in accordance with law.

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

NS/SRL List No.: 1 Sl No.: 26

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