M/S. STERLING URBAN VENTURES PRIVATE LIMITED vs. ASSESSMENT UNIT

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WP/13061/2024HC KarnatakaKAHC01027374202425 June 2024Bench: S SUNIL DUTT YADAV4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the facts regarding the notice being issued on March 16, 2024, and the reply being due by March 20, 2024, were borne out on record. The Court noted that Clause N.1.3 of the SOP for faceless income tax assessment under Section 144B mandates a period of 7 days to be afforded for making a reply. Consequently, the Court found that the impugned assessment order, computation sheet, demand notice, and penalty notice were issued in violation of the prescribed procedure and principles of natural justice. The Court set aside these orders and remitted the matter back to the stage of the petitioner's reply to the show cause notice dated March 16, 2024. All contentions were kept open for further proceedings.

What were the facts?

The petitioner, M/s. Sterling Urban Ventures Private Limited, filed a writ petition before the High Court of Karnataka challenging an assessment order passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961, for Assessment Year 2022-23. The petitioner contended that a show cause notice proposing variations was issued on March 16, 2024, with a reply deadline of March 20, 2024. This, the petitioner argued, violated the Standard Operating Procedure (SOP) for faceless assessments, which mandates a 7-day period for reply, thereby breaching the principles of natural justice. The revenue was represented by the Assessment Unit and the Deputy/Assistant Commissioner of Income Tax.

What were the issues?

1. Whether the assessment order passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961, is liable to be quashed on the grounds of violation of principles of natural justice due to insufficient time provided to the assessee to reply to the show cause notice. Assessee's Contention: The petitioner argued that the show cause notice dated March 16, 2024, requiring a reply by March 20, 2024, was in violation of the SOP for faceless assessments, which stipulates a minimum of 7 days for a reply. This violation prejudiced the petitioner and warranted setting aside the assessment order and granting a fresh opportunity. Revenue's Contention: The judgment does not record any specific contentions made by the revenue.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Before: SMT SHWETA RAMANI SASTRI,

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NC: 2024:KHC:23326 WP No. 13061 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF JUNE, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 13061 OF 2024 (T-IT) BETWEEN: 1. M/S. STERLING URBAN VENTURES PRIVATE LIMITED COMPANY INCORPORATED UNDER THE COMPANIES ACT, 2013, REPRESENTED BY ITS MANAGING DIRECTOR, SMT SHWETA RAMANI SASTRI, W/O KIRAN JOHN, AGED ABOUT 40 YEARS, NO. 8, PRESTIGE NEBULA, LEVEL - 5, CUBBON ROAD, OPP TO IT OFFICE BUILDING, BENGALURU - 560 001. … PETITIONER (BY SRI. ANNAMALAI S., ADVOCATE) AND: 1. ASSESSMENT UNIT INCOME TAX DEPARTMENT, NATIONAL FACELESS ASSESSMENT CENTRE, REP. BY ADDITIONAL/JOINT/DEPUTY/ ASSISTANT COMMISSIONER OF INCOME - TAX/ INCOME TAX OFFICER, MINISTRY OF FINANCE, ROOM NO. 401, 2ND FLOOR, E-RAMP, Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:23326 WP No. 13061 of 2024 JAWAHARLAL NEHRU STADIUM, DELHI - 110 003. 2. THE DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX CURCLE 6(1)(1) BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU - 560 095. … RESPONDENTS (BY SRI. E.I. SANMATHI., ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO i) QUASH THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 144B OF THE ACT DATED 29/03/2024 BEARING DIN NO. ITBA/AST/S/143(3)/2023-24/1063597240(1) FOR THE ASSESSMENT YEAR 2022-23 BY THE R1 HEREIN MARKED AS ANNEXURE-A1 AND ETC.

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

Petitioner has sought for setting aside of the assessment order under Section 143(3) read with Section 144-B of the Income Tax Act, 1961 (for short 'the Act') at Annexure-A1; computation sheet dated 29.03.2024 at Annexure-A2; demand notice issued under Section 156 of the Act at Annexure-A3 and the penalty notice issued

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NC: 2024:KHC:23326 WP No. 13061 of 2024 under Section 274 read with Section 270-A of the Act at Annexure-A4. 2. Petitioner has contended that the show cause notice at Annexure-G1 regarding proposed variation was issued on 16.03.2024 and was required to be replied by 20.03.2024. It is submitted that the same is in violation of the Standard Operating Procedure (SOP) prescribing time to be afforded for making out reply and accordingly, the petitioner having been prejudiced while such violation of the principles of natural justice, the impugned assessment order is required to be set aside and fresh opportunity be afforded to the petitioner. 3. The facts regarding the notice being issued on 16.03.2024 and reply having to be made out by 20.03.2024 are borne out on record. The SOP regarding procedure for faceless income tax assessment under Section 144-B at Clause N.1.3 provides that a period of 7 days is required to be afforded. In light of the same, the impugned order at Annexure-A1; computation sheet at

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NC: 2024:KHC:23326 WP No. 13061 of 2024 Annexure-A2; demand notice at Annexure-A3 and the penalty notice at Annexure-A4, are all set aside. The matter is remitted back to the stage of reply to the show cause notice at Annexure-G1 dated 16.03.2024. All contentions are kept open. 4. Accordingly, the petition is disposed off. Sd/- JUDGE VP

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