M/S ACE CREATIVE LEARNING PRIVATE LIMITED vs. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1(1)(1)

PDF · subscribers
WP/9821/2025HC KarnatakaKAHC01022493202502 April 2025Bench: S.R.KRISHNA KUMAR6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court, in its discretion, decided to set aside the impugned assessment order, demand notice, and penalty notice. The Court acknowledged the petitioner's assertion of bonafide reasons and unavoidable circumstances for its failure to participate in the assessment proceedings. Adopting a justice-oriented approach, the Court deemed it appropriate to grant the petitioner one more opportunity to present its case. The matter was remitted back to the stage of the respondent issuing notices under Section 142(1) of the Income Tax Act, dated August 6, 2024, and January 27, 2025. The petitioner was granted liberty to file its reply, pleadings, and documents, and to request a personal hearing, which the respondent was directed to consider. All rival contentions were kept open, and no opinion was expressed on the merits of the case.

What were the facts?

The petitioner, M/s Ace Creative Learning Private Limited, filed a writ petition before the High Court of Karnataka challenging an assessment order dated March 19, 2025, passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961, for Assessment Year 2023-24. The petitioner also challenged the consequential demand notice and penalty notice issued on the same date. The assessment order was passed ex-parte because the petitioner failed to submit a reply to a show cause notice dated February 28, 2025, and did not participate in the proceedings. The petitioner claimed this omission was due to bonafide and unavoidable circumstances, and sought an opportunity to present its case.

What were the issues?

1. Whether the ex-parte assessment order, demand notice, and penalty notice passed under Section 143(3) read with Section 144B, Section 156, and Section 274 read with Section 270A of the Income Tax Act, 1961, respectively, for AY 2023-24, are liable to be quashed on the grounds of non-compliance due to bonafide and unavoidable circumstances. (Question of mixed law and fact) Assessee's Contentions: The petitioner argued that its inability to respond to the notices and participate in the proceedings was due to bonafide and unavoidable circumstances, constituting sufficient cause. It contended that it has a strong case on merits and requires one more opportunity to submit its reply and documents, necessitating the setting aside of the impugned order and remittance of the matter. Revenue's Contentions: The respondents argued that despite sufficient opportunities, the petitioner failed to submit its reply or participate in the proceedings. Therefore, the impugned order does not warrant interference, and the petition is liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 156,Section 274,Section 270A,Section 142(1)

AI-generated summary — verify with the full judgment below

- 1 -

NC: 2025:KHC:13794 WP No. 9821 of 2025

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF APRIL, 2025 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 9821 OF 2025 (T-IT) BETWEEN:

M/S ACE CREATIVE LEARNING PRIVATE LIMITED 163-B, DEEKSHA HOUSE, 3RD CROSS, 6TH MAIN, JP NAGAR, 3RD PHASE, BENGALURU - 560 078

(REPRESENTED BY ITS MANAGING DIRECTOR, G SRIDHAR, AGED ABOUT 56 YEARS, S/O. SUBRAMANIAN GANAPATHY)

INCORPORATED UNDER COMPANIES ACT - 2013 …PETITIONER

(BY SRI. K.K.CHYTHANYA, SENIOR COUNSEL FOR SRI. TATA KRISHNA., ADVOCATE)

AND:

1.

THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1(1)(1) BMTC BUILDING, 80 FT ROAD 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA BENGALURU – 560 095

2.

THE ASSESSMENT UNIT INCOME TAX DEPARTMENT (REPRESENTED BY THE PRINCIPAL COMMISSIONER OF INCOME TAX, BENGALURU-1) BMTC BUILDING, 80 FT ROAD 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA BENGALURU – 560 095. …RESPONDENTS (BY SRI. M. DILIP, ADVOCATE)

Digitally signed by NANDINI D Location: High Court of Karnataka

- 2 -

NC: 2025:KHC:13794 WP No. 9821 of 2025

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH AS FAR AS THE PETITIONER IS CONCERNED BY AN APPROPRIATE WRIT OR ORDER IN THE NATURE OF CERTIORARI OR OTHERWISE, THE IMPUGNED ASSESSMENT ORDER BEARING DIN ITBA/AST/S/143(3)/2024-25/1074729748(1) PASSED UNDER 143(3) R.W.S. 144B OF THE IT ACT, DATED 19.03.2025 FOR THE IMPUGNED AY 2023-24, ENCLOSED AS ANNEXURE-A; 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 the following reliefs: “(A) Quash as far as the Petitioner is concerned by an appropriate writ or order in the nature of Certiorari or otherwise, the Impugned Assessment Order bearing DIN ITBA/AST/S/143(3)/2024-25/1074729748(1) passed under 143(3) r.w.s. 144B of the IT Act, dated 19.03.2025 for the Impugned AY 2023-24, enclosed as Annexure A;

(B) Quash as far as the Petitioner is concerned by an appropriate writ or order in the nature of Certiorari or otherwise, the Impugned Demand Notice bearing DIN ITBA/AST/S/156/2024-25/1074729766(1), issued under section 156 of the IT Act, dated 19.03.2025 for the impugned AY 2023-24, enclosed as Annexure B;

- 3 -

NC: 2025:KHC:13794 WP No. 9821 of 2025

(C) Quash as far as the Petitioner is concerned by an appropriate writ or order in the nature of Certiorari or otherwise, the impugned penalty notice bearing DIN ITBA/PNL/S/270A/2024-25/1074729775(1) issued under section 274 r.w.s 270A of the IT Act, dated 19.03.2025 enclosed as Annexure C;

And

(D) Grant such other reliefs as this Honourable High Court may think fit including the costs of this writ petition.”

2.

Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record. 3. A perusal of the material on record will indicate that the respondent having issued Show Cause Notice dated 28.02.2025, petitioner did not submit any reply to the same and as such, respondent No.2 proceeded to pass the impugned exparte assessment order at Annexure-A dated 19.03.2025 under Section 143(3) read with Section 144B of the Income Tax Act, pursuant to which, respondent No.2 issued the impugned demand notice dated 19.03.2025 at Annexure-B under Section 156 of the Act, penalty notice dated 19.03.2025 at Annexure-C under Section 274 read

- 4 -

NC: 2025:KHC:13794 WP No. 9821 of 2025

with Section 270A of the Act and as such, the petitioner is before this Court by way of the present petition. 4. In this context, it is pointed out that inability and omission on the part of the petitioner to submit replies to the notices issued by the respondents and to participate in the proceedings was due to bonafide and unavoidable circumstances and sufficient cause and consequently, the petitioner was not in a position to issue reply or appear before the respondents and participate in the said proceedings. It is submitted that the petitioner has a good case to urge on merits and if one more opportunity is granted in favour of the petitioner, the petitioner would submit its reply along with the documents and participate in the proceedings and as such, it is necessary that the impugned order at Annexure –A be set aside and the matter be remitted back to the respondents by providing one more opportunity to the petitioner to submit its reply to the notices and direct the respondents to proceed further in accordance with law. 5. Per contra, learned counsel for the respondents submits that despite sufficient opportunity being granted in favour of the petitioner, the petitioner did not send its reply nor participated

- 5 -

NC: 2025:KHC:13794 WP No. 9821 of 2025

in the proceedings and consequently, the impugned order does not warrant interference by this Court and the petition is liable to be dismissed. 6. A perusal of the impugned order at Annexure – A will clearly indicate that the same was passed in the absence of the petitioner, who did not avail the opportunity provided by the respondent, who has proceeded to pass the impugned order. In view of the aforesaid facts and circumstances and specific assertions on the part of the petitioner that due to bonafide reasons, unavoidable circumstances and sufficient cause, the petitioner was not in a position to send reply enclosing documents and contest the proceedings and in order to provide one more opportunity to the petitioner, by adopting a justice oriented approach, I deem it just and appropriate to set aside the impugned order and remit the matter back to the respondents for reconsideration afresh in accordance with law after providing one more opportunity to the petitioner in this regard. 7. In the result, I pass the following:

- 6 -

NC: 2025:KHC:13794 WP No. 9821 of 2025

ORDER (i) The impugned assessment order at Annexure-A dated 19.03.2025, impugned demand notice dated 19.03.2025 at Annexure-B and penalty notice dated 19.03.2025 at Annexure-C, are hereby set aside. (ii) Matter is remitted back to the stage of respondent issuing notice under Section 142(1) of Income Tax Act dated 06.08.2024 and 27.01.2025 and to proceed further in accordance with law. (iii) Liberty is reserved in favour of the petitioner to file its reply, pleadings, documents, etc., before respondent No.2, who shall consider the same and pass appropriate orders in accordance with law. (iv) Liberty is reserved in favour of the petitioner to request for personal hearing to respondent No.2. (v) If such request is made, respondent No.2 shall consider the same and provide an opportunity of personal hearing and proceed further in accordance with law. (vi) All rival contentions are kept open and no opinion is expressed on the same.

Sd/- (S.R.KRISHNA KUMAR) JUDGE MDS List No.: 1 Sl No.: 38

More judgments on Section 144B

All 10,521 judgments and leading authorities on Section 144B →

Recent GST High Court judgments

Search GST case law →