GNANASHALE SOUHARDA CO OPERATIVE LIMITED vs. INCOME TAX OFFICER

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WP/7387/2025HC KarnatakaKAHC01014273202514 March 2025Bench: S.R.KRISHNA KUMAR5 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the petition. It was an undisputed fact that the petitioner had not submitted a reply to the notice under Section 143(2) of the Income Tax Act. However, considering the petitioner's assertion that this omission was due to bonafide reasons, unavoidable circumstances, and sufficient cause, and that they would submit the reply if granted another opportunity, the Court deemed it just and appropriate to set aside the impugned orders. These included the order under Section 143(3) read with Section 144B, the penalty order under Section 270A, and the penalty order under Section 272A(1)(d). The matter was remitted back to the Income Tax Officer (Respondent No. 1) for reconsideration. The petitioner was granted liberty to submit additional pleadings and documents, which the respondent was directed to consider before proceeding in accordance with the law. The Court's reasoning was based on providing a fair opportunity to the assessee to present their case, given the circumstances leading to the non-response.

What were the facts?

The petitioner, Gnanashale Souharda Co-operative Limited, a co-operative society registered under the Karnataka Souharda Sahakari Act, 1997, filed a writ petition challenging orders passed by the Income Tax Department for Assessment Year 2022-23. The petitioner sought to quash an order passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961, and two penalty orders under Section 270A and Section 272A(1)(d) of the Act. The core of the petitioner's grievance was that a notice issued under Section 143(2) of the Act, dated 01.06.2023, was not received by them. This was because the notice was allegedly sent to the email ID of a retired Director, who was unaware of it. Consequently, the petitioner could not submit a reply or necessary documents.

What were the issues?

1. Whether the order passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961, and the subsequent penalty orders under Section 270A and Section 272A(1)(d) are liable to be quashed on the grounds of non-receipt of the notice under Section 143(2) of the Act and the petitioner's inability to respond due to bonafide reasons and sufficient cause. Assessee's Contentions: The petitioner argued that the notice under Section 143(2) was not received as it was sent to the email of a retired Director who was unaware of it. The petitioner claimed that their failure to respond was due to bonafide reasons, unavoidable circumstances, and sufficient cause. They sought an opportunity to submit their reply and documents, requesting the setting aside of the impugned orders and a remand of the matter. Revenue's Contentions: The respondent revenue contended that there was no merit in the petition and that it was liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 270A,Section 272A(1)(d),Section 143(2)

AI-generated summary — verify with the full judgment below

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NC: 2025:KHC:10776 WP No. 7387 of 2025

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 7387 OF 2025 (T-IT)

BETWEEN:

GNANASHALE SOUHARDA CO-OPERATIVE LIMITED NO.147/4, LAKSHMINIVAS, NEAR RADHAKRISHNA TEMPLE, SANJAYNAGAR, BANGALORE – 560 094. REGISTERED UNDER THE KARNATAKA, SOUHARDA SAHAKARI ACT 1997. PAN: AABAG0631P.

REPRESENTED BY, NAGARAJA R, CEO OF THE PETITIONER, AGED ABOUT 53 YEARS, S/O LATE C. RAMASHETTY, NO.130, 24TH MAIN ROAD, PIPE LINE ROAD, BANASHANKARI TEMPLE, J C NAGAR, KURUBARAHALLI, MAHALAKSHMIPURAM LAYOUT, BANGALORE – 560 086. …PETITIONER (BY SRI. RAVI SHANKAR S.V., ADVOCATE)

AND:

1.

INCOME TAX OFFICER WARD 6(3)(1), BANGALORE – 560 095.

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,

Digitally signed by CHANDANA B M Location: HIGH COURT OF KARNATAKA

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NC: 2025:KHC:10776 WP No. 7387 of 2025

E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI – 110 003. …RESPONDENTS (BY SRI. M. DILIP, ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO 1) QUASHING THE ORDER PASSED U/S 143(3) R.W.S 1448 OF THE ACT DATED:21/03/2024 BEARING ITBA/AST/S/143(3)/2023-24/1063104369(1) ISSUED BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2022-23 HEREIN MARKED AS ANNEXURE - A.

THIS 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 seeks 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 143(3) r.w.s 144B of the Act dated 21/03/2024 bearing ITBA/AST/S/143(3)/2023-24/1063104369(1) issued by the Respondent No. 2 for the assessment year 2022-23 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 under section 270A of the Act, dated 18/09/2024 bearing DIN No. ITBA/PNL/F/270A/2024-25/1068813210(1) by the Respondent No. 2 for the assessment year 2022-23 herein marked as Annexure - A1.

iii) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the penalty order u/s 272A(1)(d)

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NC: 2025:KHC:10776 WP No. 7387 of 2025

of the Act dated 18/09/2024 bearing DIN No.ITBA/PNL/F/272A(1)(d)/2024-25/1068796926(1) by the Respondent No. 2 for the assessment year 2022-23 herein marked as Annexure - A2.

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 the petitioner is a Co-operative Society carrying on the business of offering credit and banking facilities. Learned counsel submits that notice issued by the respondents under Section 143(2) of the Income Tax Act, 1961 (for short, ‘IT Act’), dated 01.06.2023 was not received by petitioner as the said Notice was sent to the E-mail Id of the petitioner’s retired Director 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 Section 143(2) of the IT

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NC: 2025:KHC:10776 WP No. 7387 of 2025

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. 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 the Notice under Section 143(2) of the IT Act. 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 Section 143(2) of the IT Act 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 – A dated 21.03.2024 passed under Section 143(3) of the IT Act, order at Annexure - A1 dated 18.09.2024 passed under

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NC: 2025:KHC:10776 WP No. 7387 of 2025

Section 270A of the IT Act and Order at Annexure – A2 dated 18.09.2024 passed under Section 272A(1)(d) of the IT Act and subsequent notice / orders, etc., and remit the matter back to respondent No.1 for reconsideration afresh from the stage of submitting of reply by the petitioner to Notice under Section 143(2) of the IT Act and to proceed further in accordance with law. 6. In the result, pass the following: ORDER (i) The petition is hereby allowed. (ii) Impugned notices / orders at Annexures A, A1, and A2 are hereby set aside. (iii) Matter is remitted back to respondent No.1 for reconsideration afresh in accordance with law from the stage of submitting of reply to the Show Cause Notice under Section 143(2) of the IT Act dated 01.06.2023 (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 BMC:List No.: 1 Sl No.: 100 CT:SK

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