SRI KRISHNASWAMY SENDILKUMAR vs. ASSESSMENT UNIT

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WP/13159/2024HC KarnatakaKAHC01026305202404 June 2024Bench: S SUNIL DUTT YADAV5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the assessment order, computation sheet, notice of demand, and show cause notices for penalty were liable to be set aside. The Court found that the time granted for reply to the show cause notice was insufficient. Specifically, the SOP at Clause N.1.3 prescribes a period of 7 days from the issuance of a show cause notice. The show cause notice was issued on March 6, 2024, at 17:10:02 hours, meaning the 7-day period would expire on March 13, 2024, at 17:10 hours. However, the extended time for reply was only until March 13, 2024, at 10:48 a.m., which was before the expiry of the 7-day period. Relying on the observations in Chowdapally Dattaprakash Ajay (supra), the petition was allowed. The matter was remitted back to the Assessing Officer with a direction for the petitioner to file a reply to the show cause notice within 7 days of receiving the order, and the department was to facilitate online filing. All contentions were kept open.

What were the facts?

The petitioner, Sri Krishnaswamy Sendilkumar, proprietor of M/s. Nik Enterprises, challenged an assessment order dated March 21, 2024, passed by the Assessment Unit (respondent No. 1) under Section 143(3) read with Section 144B of the Income Tax Act, 1961, for Assessment Year 2022-23. The petitioner also sought to quash the computation sheet, notice of demand, and show cause notices for penalty. The core of the petitioner's grievance was that the time prescribed under the Standard Operating Procedure (SOP) for responding to a show cause notice was not adhered to. A show cause notice was issued on March 6, 2024, at 17:10:02 hours, with a reply deadline of March 11, 2024, at 11:00 hours. While further time was granted until March 13, 2024, at 10:48 a.m., the petitioner argued this was insufficient.

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 non-adherence to the time prescribed in the Standard Operating Procedure (SOP) for replying to a show cause notice? (Question of law and fact, concerning Section 143(3) and 144B of the Act). Assessee's Contentions: The petitioner argued that the time stipulated in the SOP for replying to a show cause notice in proceedings under Section 144B of the Act was not followed. They relied on the case of Chowdapally Dattaprakash Ajay vs. Central Board of Direct Taxes – (2023) 157 taxmann.com 444 (Karnataka). Revenue's Contentions: The judgment does not record specific contentions from the revenue regarding this issue.

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:19106 WP No. 13159 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF JUNE, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 13159 OF 2024 (T-IT) BETWEEN: 1. SRI KRISHNASWAMY SENDILKUMAR SON OF SRI. K. KRISHNASWAMY, AGED ABOUT 47 YEARS, PROPRIETOR, M/S. NIK ENTERPRISES, SY. NO. 100, CHOODAGONDANAHALLI, HOSUR MAIN ROAD, MALUR, KOLAR DISTRICT, KOLAR-563 130. … PETITIONER (BY SRI. VENKATESH. G., ADVOCATE) AND: 1. ASSESSMENT UNIT REP. BY ADDITIONAL/JOINT/DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, INCOME TAX DEPARTMENT, MINISTRY OF FINANCE, ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI-110 003. Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:19106 WP No. 13159 of 2024 2. THE INCOME TAX OFFICER WARD-1, KOLAR, IT OFFICE, NEW EXTENSION, KOLAR-563 101. … RESPONDENTS (BY SRI. Y.V. RAVIRAJ., SENIOR STANDING COUNSEL SRI M. DILIP, JUNIOR STANDING COUNSEL)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ASSESSMENT ORDER PASSED BY THE R-1 UNDER SECTION 143(3) R.W.S 144B OF THE ACT DTD. 21.03.2024 BEARING DIN NO. ITBA/AST/S/143(3)/2023-24/1063069455(1) FOR THE ASSESSMENT YEAR 2022-23 BY THE R-1 HEREIN MARKED AS ANNEXURE-A1 AND ETC.

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

Sri. Y. V. Raviraj and Sri. M. Dilip, learned counsel accept notice for respondents. 2. Petitioner has called in question the validity of the assessment order dated 21.03.2024 passed under Section 143 (3)read with Section 144B of the Income Tax Act, 1961 (for short the Act’) for the assessment year 2022-23 by respondent No.1 at Annexure-A1. Petitioner has also sought for issuance of writ of certiorari to set

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NC: 2024:KHC:19106 WP No. 13159 of 2024 aside the computation sheet at Annexure-A2, notice of demand at Annexure-A3, show cause notice for penalty at Annexure-A4 and the show cause notice for penalty at Annexure-A5. 3. It is the case of the petitioner that as regards the notice issued, time prescribed and contemplated under the Standard Operating Procedure (SOP) has not been adhered to. It is submitted that in case of proceedings under Section 144-B of the Act, the time stipulated in the SOP for reply to the notice ought to be adhered to. Reliance is placed on the order in the case of Chowdapally Dattaprakash Ajay vs. Central Board of Direct Taxes – (2023) 157 taxmann.com 444 (Karnataka). 4. In the present case, it is not in dispute that the show cause notice at Annexure-J came to be issued on 06.03.2024 at 17:10:02 hours. The time given for furnishing reply to the said notice was by 11:00 hours of 11.03.2024. No doubt, request for further time was made

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NC: 2024:KHC:19106 WP No. 13159 of 2024 and the Department by its notice at Annexure-K granted further time for reply on or before 13.03.2024, 10.48 a.m. However, it must be noticed that the time prescribed as regards reply in case of assessment proceedings under Section 144-B as found in SOP at Clause N.1.3 is a period of 7 days from issuance of show cause notice. If that were to be so, the period of 7 days would expire on 17 hours 10 minutes on 13.03.2024 while time that is extended is only till 10.48 a.m. of 13.03.2024. 5. Taking note of the observations made by this Court in the case of Chowdapally Dattaprakash Ajay (supra) referred to above, petition deserves to be allowed and accordingly, assessment order dated 21.03.2024 at Annexure-A1, computation sheet at Annexure-A2, notice of demand at Annexure-A3, show cause notice for penalty at Annexure-A4 and the show cause notice for penalty at Annexure-A5, are set aside. The matter is remitted with a direction that the petitioner has to make out reply to the show cause notice at Annexure-J within a period of 7 days

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NC: 2024:KHC:19106 WP No. 13159 of 2024 from the date of receipt of certified copy of this order. The department is to facilitate online filing of reply by taking appropriate steps. All contentions are kept open. 6. In light of the above, petition is disposed off. Sd/- JUDGE VP

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