R R TRADERS vs. NATIONAL FACELESS ASSESSMENT CENTRE

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WP/12324/2024HC KarnatakaKAHC01024159202404 September 2024Bench: S.R.KRISHNA KUMAR6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court allowed the petition, setting aside the impugned ex-parte assessment order dated March 11, 2024. The Court noted that only a small period of five days was granted to reply to the Show Cause Notice, and it was undisputed that the petitioner did not submit any reply to it. The Court also observed that only a part of the petitioner's reply to earlier notices was considered. Adopting a justice-oriented approach to provide one more opportunity, the Court remitted the matter back to the respondent for reconsideration from the stage of the petitioner submitting a reply to the Show Cause Notice. The petitioner was directed to submit the reply within one month, after which the respondent was to provide a reasonable opportunity, including a personal hearing, and proceed according to law. All rival contentions were kept open.

What were the facts?

The petitioner, R.R. Traders, filed a writ petition before the High Court of Karnataka challenging an ex-parte assessment order dated March 11, 2024, passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961, for Assessment Year 2022-23. The petitioner contended that due to technical glitches on the respondent's portal, they could not submit complete replies to notices dated August 7, 2023, September 18, 2023, and January 8, 2024. Furthermore, the petitioner claimed they did not receive the Show Cause Notice dated February 23, 2024, on their registered email, preventing them from submitting a reply and violating principles of natural justice. The respondents supported the impugned order, arguing the petition lacked merit.

What were the issues?

1. Whether the ex-parte assessment order dated March 11, 2024, passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961, for AY 2022-23, is liable to be quashed on the grounds of violation of principles of natural justice? Assessee's Contention: The petitioner argued that technical glitches prevented timely and complete submission of replies to earlier notices. Crucially, they contended that non-receipt of the Show Cause Notice dated February 23, 2024, on their registered email prevented them from submitting a response, leading to an ex-parte order and a violation of natural justice principles. Revenue's Contention: The respondents supported the impugned order, submitting that the petition had no merit and ought to be dismissed.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:36039 WP No. 12324 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 12324 OF 2024 (T-IT) BETWEEN:

R.R. TRADERS 101, JASMINE BLOCK D NO.4-5-484/33 PRESIDENCY PARK KARANGALPADY MANGALORE KARNATAKA INDIA - 575 003 PAN-ABCFR1850J PARTNER-H RAMESH SHENOY REGISTERED UNDER PARTNERSHIP ACT …PETITIONER (BY SMT. SHEETAL BORKAR, ADVOCATE) AND:

1.

NATIONAL FACELESS ASSESSMENT CENTRE INCOME TAX DEPARTMENT BANGALORE - 560 500

2.

INCOMET TAX OFFICER WARD-1(1) MANGALORE - 575 001 …RESPONDENTS (BY SRI. M. THIRUMALESH, ADVOCATE AND SRI. Y.V. RAVIRAJ, ADVOCATES FOR R1 AND R2)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO-QUASH THE IMPUGNED EX-PARTE ASSESSMENT ORDER DATED 11.03.2024 BEARING DIN AND ORDER NO ITBA/AST/S/143(3)/2023- 24/1062393028(1) PASSED UNDER SECTION 143(3) READ WITH

Digitally signed by MADHURI S Location: High Court of Karnataka

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NC: 2024:KHC:36039 WP No. 12324 of 2024

SECTION 144B OF THE ACT IN RESPECT OF THE RELEVANT AY 2022-23, UNDER THE INCOME TAX ACT, 1961 VIDE ANNEXURE-K PASSED BY THE R-1 AUTHORITY DIRECT, DIRECTING THE RESPONDENT AUTHORITIES TO REFRAIN FROM INITIATING ANY KIND OF PROCEEDINGS, WITH RESPECT TO THE IMPUGNED EX- PARTE ASSESSMENT ORDER DATED 11.03.2024 BEARING DIN AND ORDER NO. ITBA/AST/S/143(3)/2023-24/1062393028(1) PASSED UNDER SECTION 143(3) READ WITH SECTION 144B OF THE ACT, IN RESPECT OF THE RELEVANT AY 2022-23 UNDER THE INCOME TAX ACT, 1961 VIDE ANNEXURE-K PASSED BY THE R-1 AUTHORITY.

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 for the following reliefs: (i) Issue a Writ of Certiorari or in the like nature of quashing the impugned ex-parte assessment order dated 11.03.2024, bearing DIN & Order ITBA/AST/S/143(3)/2023-24/1062393028(1); No.: passed U/s.143(3) R/w. Section 144B of the Act, in respect of the relevant assessment year 2022-23, under the Income Tax Act, 1961, vide ANNEXURE - K, passed by the respondent No.1 authority;

(ii) Issue Writ of Mandamus or in the like nature of writ of direction, directing the respondent authorities to refrain from initiating any kind of proceedings, with respect to the impugned ex-parte assessment order dated 11.03.2024, bearing DIN & Order No.: ITBA/AST/S/143(3)/2023-24/1062393028(1);passed U/s.143(3) R/w. Section 144B of the Act, in respect of the relevant assessment year 2022-23, under the Income Tax Act, 1961, vide ANNEXURE- K, passed by the respondent No.1 authority;

(iii) Issue Writ of Mandamus, directing the concerned respondent authorities to refrain any further activities and such initiatives in respect of coercive

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NC: 2024:KHC:36039 WP No. 12324 of 2024

recovery in respect of impugned demand under the impugned ex-parte assessment order dated 11.03.2024, bearing DIN & Order ITBA/AST/S/143(3)/2023-24/1062393028(1); No.: passed U/s.143(3) R/w. Section 1448 of the Act, in respect of the relevant assessment year 2022-23, under the Income Tax Act, 1961, vide ANNEXURE - K, passed by the respondent No.1 authority;

(iv) Issue Writ of Prohibition, prohibiting the concerned respondent authorities in taking further action, measures or steps and such initiatives in respect of recovery in respect of impugned demand under the impugned ex-parte assessment order dated 11.03.2024, bearing DIN & Order ITBA/AST/S/143(3)/2023-24/1062393028(1); No.: passed U/s.143(3) R/w. Section 144B of the Act, in respect ofthe relevant assessment year 2022-23, under the Income Tax Act, 1961, vide ANNEXURE - K, passed by the respondent No.1 authority;

(v) Issue any other writ, order or direction in favour of the Petitioner, which this Hon'ble Court may deem fit and proper in the facts and circumstances of the case in the interest of justice.

2.

Heard learned counsel for the petitioner and learned counsel for the respondent and perused the material on record. 3. A perusal of the material on record will indicate that it is the specific contention of the petitioner that due to technical glitch in the website/portal of the respondent, petitioner could not submit detailed reply to the notices dated 07.08.2023, 18.09.2023 and 08.01.2024 and only part/portion of reply was sent and only

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NC: 2024:KHC:36039 WP No. 12324 of 2024

part/portion of the reply was taken up by the respondent. It is also contended that Show Cause Notice dated 23.02.2024 was not received by the petitioner in its registered email on account of which the petitioner was not in a position to submit a reply along with documents to the said Show Cause Notice, which culminated in the impugned order, which is violation of the principles of natural justice warranting interference of this Court in the present petition. 4. Per contra, learned counsel for the respondents would support the impugned order and submit that there is no merit in the petition and the same is liable to be dismissed. 5. A perusal of the material on record will indicate that apart from the fact that an extremely short/small period of five days was granted to the petitioner to submit reply to the Show Cause Notice, the impugned order reveals that the only a part/portion of reply was considered/taken into account by the respondent to the notices dated 07.08.2023, 18.09.2023 and 18.01.2024. It is also an undisputed fact that the petitioner did not submit any reply to the Show Cause Notice dated 23.02.2024, which culminated in the impugned order.

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NC: 2024:KHC:36039 WP No. 12324 of 2024

6.

Under these circumstances, in the light of the fact that the petitioner did not contest Show Cause Notice or the impugned proceedings, by adopting justice oriented approach and in order to provide one more opportunity to the petitioner to submit reply and contest the proceedings, I deem it just and appropriate to set aside the impugned assessment order at Annexure-K dated 11.03.2024 and remit the matter back to the respondent for reconsideration afresh from the stage of petitioner submitting reply/response to the Show Cause Notice. 7. In the result, I pass the following: ORDER i) The petition is hereby allowed. ii) Impugned assessment order at Annexure-K dated 11.03.2024 is hereby set aside. iii) The matter is remitted back to respondent No.1 for reconsideration afresh in accordance with law to the stage of petitioner submitting reply to the Show Cause Notice at Annexure-J dated 23.02.2024.

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NC: 2024:KHC:36039 WP No. 12324 of 2024

iv) The petitioner shall submit reply along with documents to the Show Cause Notice within a period of one month from today. v) Upon the petitioner submitting a reply/documents etc., the respondent shall provide sufficient and reasonable opportunity to the petitioner and grant personal hearing and proceed further in accordance with law. vi) All rival contentions on all aspects of the matter are kept open and no opinion is expressed on the same.

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

MDS List No.: 1 Sl No.: 9

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