URBAN DEVELOPMENT AUTHORITY KOPPAL, vs. THE COMMISSIONER OF INCOME TAX

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WP/7434/2025HC KarnatakaKAHC01016059202519 March 2025Bench: S.R.KRISHNA KUMAR10 pages
AI SummaryAllowed

What did the High Court hold?

The Court allowed the petition. Regarding the prayer for exemption under Section 10(46), the Court directed the concerned respondent to consider and pass appropriate orders on the petitioner's application at Annexure-B dated March 31, 2022, in accordance with law, referencing a previous judgment in Mysore Palace Board. For the ex-parte assessment orders for AY 2013-14 to 2018-19, the Court set them aside. For AY 2013-14 and 2014-15, the matter was remitted back to the stage of initiating proceedings under the amended Section 148A. For AY 2015-16 to 2018-19, the matter was remitted back to the stage of the petitioner filing its return of income in response to the notice under Section 148. Liberty was granted to the petitioner to submit additional pleadings and documents. The Court noted the petitioner's assertion of bonafide reasons for not filing returns and contesting proceedings.

What were the facts?

The petitioner, Urban Development Authority Koppal, filed a writ petition seeking a mandamus to direct the Commissioner of Income Tax (Exemptions) and the Central Board of Direct Taxes to consider its application for exemption under Section 10(46) of the Income Tax Act, 1961, for the period June 1, 2011, to March 31, 2024. The petitioner also sought a mandamus to direct respondents 3 to 6 to initiate proceedings under the amended Section 148A before proceeding under Section 148 for Assessment Years (AY) 2013-14 to 2018-19, by accepting its returns. Additionally, the petitioner sought to quash ex-parte assessment orders and consequential penalty orders for the same AYs, passed by the Assessment Unit and Income Tax Officer, alleging lack of jurisdiction and opportunity to be heard.

What were the issues?

1. Whether the petitioner is entitled to a writ of mandamus directing the respondents to consider its application for exemption under Section 10(46) of the Income Tax Act, 1961, for the period June 1, 2011, to March 31, 2024. The petitioner argued that as a statutory board not engaged in commercial activity, it is entitled to such exemption, which has not been considered. The revenue contended there is no merit in the petition. 2. Whether the ex-parte assessment orders passed for AY 2013-14 to 2018-19 are liable to be quashed for being passed without providing an opportunity to the petitioner to submit replies to show cause notices. The petitioner argued that these orders should be set aside and the matter remitted for reconsideration. The revenue argued there is no merit in the petition. 3. Whether reassessment proceedings initiated for AY 2013-14 and 2014-15, by notices under Section 148 issued on July 21, 2022, are valid, or if proceedings should have been initiated under the amended Section 148A. The petitioner argued that proceedings should be under the amended Section 148A. The revenue argued there is no merit in the petition. 4. Whether reassessment proceedings initiated for AY 2015-16 to 2018-19, by notices under Section 148 issued on March 31, 2021, prior to the amendment effective April 1, 2022, are valid. The petitioner argued that these should be set aside and remitted back for reply submission. The revenue argued there is no merit in the petition.

Which sections of the Income-tax Act were involved?

Section 10(46),Section 148A,Section 148

AI-generated summary — verify with the full judgment below

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NC: 2025:KHC:11601 WP No. 7434 of 2025

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO.7434 OF 2025 (T-IT) BETWEEN:

URBAN DEVELOPMENT AUTHORITY KOPPAL, B.C. PATIL LAYOUT, HOSPET ROAD, KOPPAL – 583 231. REP. BY ITS COMMISSIONER SRI. R. YOGANANDA, S/O. DR. MOHAN KUMAR, AGED ABOUT 49 YEARS, R/AT NO.36, HASIRU, GOKULAM, 3RD STAGE, GOKULAM, MYSURU – 570 002. …PETITIONER (BY SRI. M V SHESHACHALA, SENIOR ADVOCATE FOR SRI. NAGHARISH G.S., ADVOCATE)

AND:

1.

THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) UNITY BUILDING (ANNEX) MISSION ROAD, BANGALORE – 560 027.

2.

CENTRAL BOARD OF DIRECT TAXES, CENTRAL GOVERNMENT NORTH BLOCK, CENTRAL SECRETARIAT, NEW DELHI – 110 001 REP. BY ITS CHAIRMAN

3.

ASSESSMENT UNIT, FACELESS ASSESSMENT CENTRE NORTH BLOCK, NEW DELHI – 110 001 REP. BY ASSESSING OFFICER

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

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4.

NATIONAL FACELESS ASSESSMENT CENTRE, NO.412-413, 1ST FLOOR, OPP. METRO PILLAR NO.793 DWARKA MOR, NEW DELHI – 110 059. REP. BY ASSESSING OFFICER

5.

INCOME TAX OFFICER, WARD-1, SHIVABELAGU BUILDING, 1ST FLOOR, MUNICIPALITY, HOSPET ROAD, KOPPAL – 583 231.

6.

PRINCIPAL COMMISSIONER OF INCOME TAX, AAYAKAR BHAVAN, SEDAM ROAD, KALABURAGI – 585 105.

7.

THE MANAGER, KARNATAKA GRAMEENA BANK EXTENSION BRANCH, DC OFFICE COMPLEX, KOPPAL – 583 231. …RESPONDENTS

(BY SRI. M DILIP AND SRI Y.V. RAVIRAJ, ADVOCATES)

THIS W.P. IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT THE R-1 AND R-2 TO CONSIDER THE APPLICATION DATED 31.03.2022 ANNX-B FILED BY THE PETITIONER FOR GRANT OF EXEMPTION U/S 10(46) OF THE IT ACT AND NOTIFY THE SAME FOR THE PERIOD 01.06.2011 TO 31.03.2024 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

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ORAL ORDER In this petition, petitioner seeks the following reliefs: “a. Issue a writ of mandamus directing the first and second respondents to consider the application dated 31.03.2022 Annexure-B filed by the petitioner for grant of exemption u/s.10(46) of the IT Act and notify the same for the period 01.06.2011 to 31.03.2024.

b. Issue a writ of mandamus directing the respondents 3 to 6 to initiate proceedings under amended Section 148A of the IT Act, before proceedings u/s. 148 of the IT Act for A.Y. 2013-14, 2014-15, 2015-16, 2016-17, 2017-18 & 2018-19 by accepting the return as per Annexures-F to F5.

c. Issue a Writ of certiorari to quash exparte assessment orders passed by third respondent as being without jurisdiction:-

Assessment Year Date Bearing No Annexure 2013-14 27.03.2023 ITBA/AST/S/147/2022-23/1051441367(1) C 2014-15 29.03.2023 ITBA/AST/S/147/2022-23/1051605057(1) C1 2015-16 30.03.2022 ITBA/AST/S/147/2021-22/1042099035(1) C2 2016-17 30.03.2022 ITBA/AST/S/147/2021-22/1042098675(1) C3 2017-18 30.03.2022 ITBA/AST/S/147/2021-22/1042098503(1) C4 2018-19 30.03.2022 ITBA/AST/S/147/2021-22/1042097410(1) C5

d. Issue a Writ of certiorari to quash penalty orders passed by third and fifth respondent

Assessment Year Date Bearing No Annexure 2013-14 19.03.2023 ITBA/PNL/F/271(1)(c)/2023-24/1056279343(1) H 2014-15 27.07.2023 ITBA/PNL/F/271(1)(c)/2023-24/1054660798(1) H1 2015-16 21.09.2022 ITBA/PNL/F/271(1)(c)/2022-23/1045750870(1) H2

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2016-17 23.09.2022 ITBA/PNL/F/271(1)(c)/2022-23/1045904769(1) H3 2017-18 23.09.2022 ITBA/PNL/F/270A/2022-23/1045904770(1) H4 2018-19 23.09.2022 ITBA/PNL/F/270A/2022-23/1045904771(1) H5

e. Issue such other Writ or direction as this Hon'ble Court deem fit to grant in the facts and circumstances of the present case.”

2.

Heard learned Senior 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 petition and referring to the material on record, learned Senior Counsel for the petitioner invited my attention to the application at Annexure – B dated 31.03.2022 filed by the petitioner seeking exemption under Section 10(46) of the Income Tax Act, 1961, in order to contend that the petitioner being a statutory board and not engaged in commercial activity, petitioner was entitled to such exemption, which has not been considered by respondent Nos.1 and 2, who have to be directed to consider the said application in this regard.

4.

It is also pointed out that the impugned Assessment orders at Annexures– C, C1, C2, C3, C4 and C5 being the ex-parte

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orders, the same were passed without providing an opportunity to the petitioner to submit replies to the Show Cause Notice and consequently, the impugned ex-parte assessment order may be set aside and matter remitted back to the respondent for reconsideration afresh from the stage of submitting reply to the aforesaid Show Cause Notice.

5.

It is further submitted that insofar as prayer (b) is concerned, for the A.Y. for the Assessment year 2013-14 and 2014-15, since notices were issued by the respondent on 21.07.2022 and 21.07.2022, respectively, the impugned ex-parte assessment orders deserve to be quashed as the said proceedings should be initiated under the amended section 148A of the IT Act and hence the matter should be remitted back to the stage of the respondent issuing Notice u/s. 148A(b) of the IT Act and to proceed further in accordance with law. It is also submitted that insofar as the Assessment years 2015-16, 2016-17, 2017-18 and 2018-19 are concerned since the Notice u/s. 148 of the IT Act were issued on 31.03.2021 prior to amendment which came into effect from 01.04.2022, the impugned assessment orders deserve to be set aside and matter be remitted back to the stage of the petitioner

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submitting reply to the aforesaid notice dated 31.03.2021 with liberty to file returns.

6.

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.

7.

A perusal of the material on record will indicate that insofar as prayer No.(a) is concerned, the same is covered by the judgment of this Court in the case of Mysore Palace Board and another Vs. The Central Board of Direct Taxes and others – W.P.No.5772/2025 dated 06.03.2025, wherein it is held as under:

“The petitioner is seeking for the following reliefs in the present writ petition. “(i) Issue a writ of mandamus or any other writ as the Hon’ble Court may deem fit to respondent No.1 directing to dispose of the application No.MPB/EO/DD/AS/2023-24 dated 02.08.2023 (Annexure-E) filed by the petitioner seeking renewal of exemption under Section 10(46) of the I.T.Act for the AY 2024-25 and subsequent AY;

(ii)Issue a writ of mandamus or any other writ as the Hon’ble High Court may deem fit to respondent No.1 directing to allow the exemption under Section 10(46) of the I.T.Act to the petitioner for the AY 2024-25 and subsequent AY;

(iii) pass such other or further order as this Hon’ble Court may deem fit in the facts and circumstances of the case, in the interests of justice and equity.”

2.

Learned counsel for the petitioner submits that the application vide Annexure-E dated 02.08.2023 filed by the petitioner

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seeking the relief of exemption under Section 10(46) of the Income Tax Act for the Assessment Year 2024-25 and subsequent Assessment Year has not been considered by the respondents and as such, petitioner is before this Court by way of the present writ petition.

3.

Per contra, learned counsel for the respondents submits that if reasonable time is granted, respondents shall consider the application and take appropriate decision/ pass appropriate orders on the application, in accordance with law.

4.

In the aforesaid facts and circumstances, I deem it just and proper to direct the concerned respondent to address the grievances of the petitioner and consider and pass appropriate orders/take appropriate decision on the petitioner’s application at Annexure-E dated 02.08.2023, in accordance with law, within a period of six weeks from the date of receipt of certified copy of this Order.”

8.

In so far as prayer (b) is concerned, for the Assessment year 2013-14 and 2014-15, since the reassessment proceedings were initiated by notices u/s. 148 issued by the respondent on 21.07.2022 and 21.07.2022, respectively and since the respondents ought to have initiated proceedings under the amended 148A section post 01.04.2022, the impugned ex-parte assessment orders are hereby quashed and matter is remitted back to the stage of the respondent issuing notice u/s. 148A(b)of the IT Act as per the amended section 148A of the IT Act and to proceed further in accordance with law. It is also submitted that insofar as the Assessment years 2015-16, 2016-17, 2017-18 and

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2018-19 are concerned since they were issued on 30.03.2022 prior to amendment which came into effect from 01.04.2022, the impugned assessment orders deserve to be set aside and matter remitted back to the stage of the petitioner submitting reply to the aforesaid notice dated 31.03.2021 with liberty to file returns.

9.

In view of the aforesaid facts and circumstances and the aforesaid judgment, ex-parte assessment orders and consequential penalty orders are concerned, in the light of the specific assertion on the part of the petitioner that its inability and omission to file returns and also contest the proceedings was due to bonafide reasons, unavoidable circumstances and sufficient cause, I deem it just and appropriate to set aside the ex-parte assessment orders and pass the following orders.

10.

In the result, I pass the following: ORDER

(i) The petition is hereby allowed.

(ii) The concerned respondent is directed to address the grievance of the petitioner and consider and pass appropriate orders / take appropriate decision on

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the petitioner’s application at Annexure – B dated 31.03.2022, in accordance with law.

(iii) The impugned ex-parte assessment orders at Annexures – C, C1, C2, C3, C4 and C5 dated 27.03.2023, 29.03.2023, 30.03.2022, 30.03.2022, 30.03.2022 and 30.03.2022, respectively, are hereby set aside.

(iv) Matter is remitted back to the concerned respondent for reconsideration afresh in accordance with law. (v) For the A.Y. 2013-14 and A.Y. 2014-15, the matter is remitted back to the concerned respondent from the stage of initiating proceedings under the amended 148A section with effect from 01.04.2022. (vi) For the A.Y.’s 2015-16, 2016-17, 2017-18 and 2018-19 the matter is remitted back to the stage of petitioner filing its return of income to the notice issued under Section 148 of the Act. (vii) Liberty is reserved in favour of the petitioner to submit additional pleadings, documents, etc., to the

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respondent, who shall consider the same and proceed further in accordance with law.

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

SV; List No.: 2 Sl No.: 47

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