SRI KULUMEPALYA LENKEGOWDA vs. INCOME TAX OFFICER, WARD 2

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WP/9458/2023HC KarnatakaKAHC01021573202302 February 2024Bench: S.R.KRISHNA KUMAR7 pages
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What did the High Court hold?

The High Court allowed the petition. It noted that the assessment order did not provide details regarding the service of the notice under Section 142(1) of the Act upon the petitioner, nor did it specify when the notice was delivered or served. The Court found that the proceedings culminating in the impugned order were not conducted after providing a sufficient and reasonable opportunity to the petitioner, thus violating the principles of natural justice. Consequently, the Court set aside the impugned assessment order dated 24.08.2019 and remitted the matter back to the first respondent (Income Tax Officer) for reconsideration. The petitioner was granted liberty to submit their response and documents, which the first respondent was directed to consider. The Court also noted that if an order adverse to the petitioner is passed after remand, the first respondent would be entitled to claim interest on the amount as per the demand notice dated 24.08.2019.

What were the facts?

The petitioner, Sri. Kulumepalya Lenkegowda Shivakumar, filed a writ petition before the High Court of Karnataka challenging the assessment order for Assessment Year 2017-18, passed by the Income Tax Officer, Ward 2, Tumkur, under Section 143(3) of the Income Tax Act, 1961. The petition also sought to quash the consequential demand notice and computation sheet, all dated 24.08.2019. Additionally, the petitioner challenged a penalty order under Section 271AAC(1) of the Act and its consequential demand notice, both dated 02.03.2020. The petitioner argued that the assessment order was unreasoned, non-speaking, and passed without providing a reasonable opportunity to submit a reply to a notice dated 17.07.2019 under Section 142(1) of the Act, violating principles of natural justice. The respondents contended that the petition was belated and barred by delay and laches.

What were the issues?

1. Whether the assessment order for Assessment Year 2017-18, passed under Section 143(3) of the Income Tax Act, 1961, is liable to be quashed for being unreasoned, non-speaking, and in violation of principles of natural justice due to lack of sufficient opportunity to the petitioner to respond to the notice under Section 142(1) of the Act? Assessee's Contentions: The petitioner argued that the impugned assessment order was un-reasoned and non-speaking. Crucially, the order lacked details regarding the service of the notice dated 17.07.2019 under Section 142(1) of the Act, and the petitioner was not afforded a sufficient and reasonable opportunity to submit a reply and documents, thereby violating the principles of natural justice. Revenue's Contentions: The respondents argued that the writ petition lacked merit, was highly belated, and filed after almost four years from the date of the impugned order, making it barred by delay and laches.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 142(1),Section 271AAC(1)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:4537 WP No. 9458 of 2023

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF FEBRUARY, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 9458 OF 2023 (T-IT)

BETWEEN:

SRI. KULUMEPALYA LENKEGOWDA SHIVAKUMAR AGED 53 YEARS S/O LATE SRI LENKE GOWDA KULUMEPALYA, KATHRIGHATTA HUTHIDURGA POST, KUNIGAL TUMKUR-572126. …PETITIONER (BY SRI. BALARAM R RAO, ADVOCATE FOR SRI. THIRUMALESH M.,ADVOCATE) AND:

1.

INCOME TAX OFFICER, WARD 2 AAYAKAR BHAVAN, RAMAKRISHNANAGAR KUNIGAL ROAD TUMKUR-572103.

2.

NATIONAL FACELESS APPEAL CENTRE REPRESENTED BY ITS COMMISSIONER, OF INCOME TAX (APPEALS) ROOM NO.356, C R BUILDING I P ESTATE, DELHI-110002.

…RESPONDENTS (BY SRI.M. DILIP.,ADVOCATE)

Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:4537 WP No. 9458 of 2023

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING THE ASSESSMENT ORDER FOR THE ASST YEAR 2017-18 UNDER SECTION 143(3) OF THE INCOME TAX ACT PASSED BY THE R1 INCOME TAX OFFICER WARD2 TUMAKUR, IN ITBA/AST/S/143(3)/2019-20/1017553584(1) ALONG WITH CONSEQUENTIAL DEMAND NOTICE IN ITBA/AST/S/156/2019-20/1017553595(1) AND COMPUTATION SHEET IN ITBA/AST/S/114/2019-20/1017553594(1) ALL DATED 24.08.2019 ANNX-F G AND H AND ETC.

THIS PETITION, COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER

In this petition, the petitioner seeks the following reliefs: (i) Issue a writ of certiorari or a declaration in the nature of writ of certiorari quashing the assessment order for the Asst. Year 2017- 18 under section 143(3) of the Income Tax Act passed by the first respondent, Income Tax Officer, Ward 2, Tumkur, in ITBA/ AST/ S/ 143(3)/ 2019-20/1017553584(1) along with consequential demand notice in ITBA/ AST/S/156/2019-20/1017553595(1) and Computation Sheet in ITBA/AST/

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NC: 2024:KHC:4537 WP No. 9458 of 2023

S/114/2019-20/1017553594 (1), all dated 24-08- 2019-ANNEXURES-F, G & H;

(ii) Issue a writ of certiorari or a declaration in the nature of writ of certiorari quashing the penalty order for the Asst. Year 2017- 18 under section 271AAC(1) of the Income Tax Act passed by the first respondent in ITBA/ PNL/F/271AAC(1)/2019-20/1025963091(1) along with consequential demand notice in ITBA/PNL/S/156/2020-21/1027090921 (1) both dated 02-03-2020-ANNEXURES-L & M.

2.

Heard the learned counsel for the parties and perused the material on record.

3.

In addition to reiterating various contentions urged in the petition and referring to the material on record, the learned counsel for the petitioner invited my attention to the impugned order in order to point out that apart from the fact that the same is un-reasoned and non-speaking order, the details as regards how and when the notice dated 17.07.2019 under Section 142[1] of the Income Tax Act, 1961 [for short, ‘the Act’] was allegedly served upon the

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NC: 2024:KHC:4537 WP No. 9458 of 2023

petitioner are conspicuously absent in the impugned order and the first respondent has proceeded to pass the impugned order without providing sufficient and reasonable opportunity to the petitioner to submit his reply along with the documents thereby violating principles of natural justice, and as such, the petitioner is before this Court by way of present petition.

4.

The learned counsel for the petitioner has filed a memo seeking to unconditionally withdraw the appeal filed by him before the first appellate Authority in relation to the impugned order. Per contra, the learned counsel for the respondents submits that there is no merit in the petition which is highly belated and having been filed after almost four years after the impugned order, the same is barred by delay and laches and deserves to be set aside.

5.

A perusal of the impugned order will indicate that the first respondent has not stated the details as to the service of notice upon the petitioner or as to whether the same was uploaded on the portal or sent to the registered

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NC: 2024:KHC:4537 WP No. 9458 of 2023

e-mail ID of the petitioner. In the paragraph-4 of the impugned order, except stating that notice under section 142[1] of the Act was issued to the petitioner, the first respondent has not stated as to when the said notice was delivered/served upon the petitioner. Under these circumstances, I am of the considered opinion that the impugned notice, proceedings culminating in the impugned order cannot be said to have been done after providing sufficient and reasonable opportunity to the petitioner thereby violating principles of natural justice and consequently the impugned order deserves to be set aside by adopting justice oriented approach and to provide one more opportunity to the petitioner to submit his reply to the said notice under Section 142 of the Act and with the direction to the respondents to proceed further in accordance with law. However, it is to be stated that since indulgence is being shown in favour of the petitioner after a lapse of almost four years from the date of the impugned order, in the event, the first respondent passes an order against the petitioner after remand by virtue of this order,

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NC: 2024:KHC:4537 WP No. 9458 of 2023

the first respondent would be entitled to claim interest on the amount in terms of the Notice of Demand dated 24.08.2019 [Annexure-G]. In the result, the following: ORDER [a] The petition is hereby allowed.

[b] The impugned order dated 24.08.2019 [Annexure-F] of the first respondent is hereby set aside.

[c] The matter is remitted back to the first respondent for reconsideration afresh in accordance with law.

[d] Liberty is reserved in favour of the petitioner to submit his response/reply along with the documents to the first respondent who shall consider the same and proceed further in accordance with law. In the event, the first respondent does not accept the response/reply of the petitioner and passes an order against the petitioner, the first

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NC: 2024:KHC:4537 WP No. 9458 of 2023

respondent would be entitled to claim interest on the amount in terms of the Notice of Demand dated 24.08.2019 [Annexure-G].

Sd/- JUDGE

AN/-

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