KODAGU DAKSHINA KANNADA GOWDA SOUHARDA CREDIT CO OPERATIVE LIMITED vs. THE INCOME TAX OFFICER

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WP/8165/2024HC KarnatakaKAHC01015005202420 March 2025Bench: S.R.KRISHNA KUMAR6 pages
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What did the High Court hold?

The High Court allowed the petition, setting aside the impugned orders at Annexures-A, A1, and A2. The matter was remitted back to the Income Tax Officer (Respondent No.1) for reconsideration. The Court found it just and appropriate to grant the petitioner one more opportunity to submit its reply and documents to the notice under Section 143(2) of the Income Tax Act, 1961. The Court acknowledged the petitioner's assertion that the inability to respond was due to bonafide reasons, unavoidable circumstances, and sufficient cause. The proceedings were to recommence from the stage of submitting the reply to the Section 143(2) notice. Liberty was granted to the petitioner to submit additional pleadings and documents, which the respondent was directed to consider. The ratio decidendi is that procedural fairness requires an opportunity to respond when a party can demonstrate bonafide reasons for non-compliance with a notice, especially when such non-compliance stems from a technical issue like an incorrect communication address.

What were the facts?

The petitioner, Kodagu Dakshina Kannada Gowda Souharda Credit Co-operative Limited, filed a writ petition challenging orders passed by the Income Tax Officer for Assessment Year 2020-21. The challenged orders include an assessment order under Section 143(3) r.w.s 144B dated August 30, 2022, a penalty order under Section 270A dated December 20, 2022, and a penalty order under Section 272A(1)(d) dated September 14, 2022. The petitioner's primary contention was that a notice issued under Section 143(2) of the Income Tax Act, 1961, was sent to an old email ID, making the petitioner unaware of it. Consequently, the petitioner could not submit its reply and supporting documents. The petitioner claimed this omission was due to bonafide reasons, unavoidable circumstances, and sufficient cause, and sought an opportunity to respond.

What were the issues?

1. Whether the assessment order dated 30.08.2022 passed under Section 143(3) r.w.s 144B, the penalty order dated 20.12.2022 passed under Section 270A, and the penalty order dated 14.09.2022 passed under Section 272A(1)(d) for Assessment Year 2020-21 are liable to be quashed on the grounds of procedural irregularity, specifically the non-receipt of a crucial notice under Section 143(2) due to an outdated email address. Assessee's Argument: The petitioner contended that the notice under Section 143(2) was sent to an old email ID, leading to the petitioner's unawareness and inability to respond. This failure to respond was due to bonafide reasons, unavoidable circumstances, and sufficient cause. The petitioner requested an opportunity to submit its reply and documents, arguing that setting aside the impugned orders would allow for this. Revenue's Argument: The respondent revenue argued 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:11843 WP No. 8165 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO.8165 OF 2024 (T-IT) BETWEEN:

KODAGU DAKSHINA KANNADA GOWDA SOUHARDA CREDIT CO-OPERATIVE LIMITED NO.16/11, 1ST ‘C’ MAIN ROAD GANGANAGAR EXTENSION, BENGALURU – 560 032 PAN AABAK7838G REGISTERED U/S THE KARNATAKA SOUHARDHA SAHAKARI ACT, 1997

REPRESENTED BY BHAGYA LAKSHMI N., D/O NARASIMHAIAH, AGED ABOUT 37 YEARS SECRETARY A-107, LAKSHMIDEVI ENCLAVE, 1ST MAIN, GANGANAGAR, EXTENSION, R T NAGAR POST BENGALURU – 560 032. …PETITIONER (BY SRI. RAVI SHANKAR S.V., ADVOCATE) AND:

1.

THE INCOME TAX OFFICER INCOME TAX DEPARTMENT WARD-6(3)(1), B.M.T.C. BUILDING, KORAMANGALA, BENGALURU – 560 032.

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

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NC: 2025:KHC:11843 WP No. 8165 of 2024

2.

NATIONAL FACELESS ASSESSMENT CENTRE, ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX / INCOME TAX OFFICER (“NFAC” FOR THE SAKE OF CONVENIENCE) INCOME TAX DEPARTMENT, MINISTRY OF FINANCE, ROOM NO.401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM DELHI – 110 003. …RESPONDENTS (BY SRI. M. DILIP, ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER UNDER SECTION 143(3) R.W.S 144B OF THE ACT DATED 30.08.2022 BEARING DIN NO.ITBA/AST/S/143(3)/2022-23/ 1045066403(1) ISSUED BY RESPONDENT NO.1 FOR THE ASSESSMENT YEAR 2020-21 HEREIN MARKED AS ANNEXURE-A; AND ETC.

THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, 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 under Section 143(3) r.w.s 144B of the Act dated 30.08.2022 bearing DIN No.ITBA/AST/S/143(3)/2022-23/1045066403(1)issued by the Respondent No.1 for the assessment year 2020-21 herein marked as Annexure-A.

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NC: 2025:KHC:11843 WP No. 8165 of 2024

ii) Issue a writ of Certiorari or direction in the nature of a writ of Certiorari quashing the penalty order u/S 270A of the Act dated 20.12.2022 bearing DIN No.ITBA/PNL/F/270A/2022-23/1048120152(1)by the Respondent No.1 for the assessment year 2020-21 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 dated 14.09.2022 issued u/s 272A(1) (d) of the Act bearing DIN and Notice No. ITBA/PNL/F/272A(1)(d)/2022-23/ 1045466041(1) by the Respondent No.1 for the assessment year 2020-21 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 notice issued by the respondents under Section 143(2) of the Income Tax Act, 1961 (for short, ‘IT Act’) was sent to the petitioner’s old e-mail Id and petitioner was not aware of the notice and consequently, petitioner could not submit its reply / response along with

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NC: 2025:KHC:11843 WP No. 8165 of 2024

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 Section 143(2) 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 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 143(2) 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 documents to Section 143(2) 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

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NC: 2025:KHC:11843 WP No. 8165 of 2024

the impugned order at Annexure – A dated 30.08.2022 passed under Section 143(3) r.w.s. 144B of the Income Tax Act, the order at Annexure – A1 dated 20.12.2022 passed under Section 270A & the order at Annexure – A2 dated 14.09.2022 passed under Section 272A(1)(d) of the Income Tax 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 Section 143(2) notice 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, 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 29.06.2021.

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NC: 2025:KHC:11843 WP No. 8165 of 2024

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

SV List No.: 1 Sl No.: 105

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