SHRI GANESHARAM vs. ASSESSMENT UNIT

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WP/14846/2024HC KarnatakaKAHC01029365202426 June 2024Bench: S SUNIL DUTT YADAV4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the assessment order passed on 16.03.2024, without considering the petitioner's request for adjournment until 24.03.2024, constituted a violation of the principles of natural justice and caused prejudice to the petitioner. The Court noted that the impugned order's reference to the opportunities provided, mentioning a reply by 12.03.2024 and a remark of 'not received,' indicated that the adjournment application was not taken into account. The Court found that the time afforded in the notice was insufficient and the rejection of the adjournment request was detrimental to the petitioner's ability to present their case. Consequently, the order was set aside, and the matter was remitted back to the stage of the reply to the notice under Section 144 of the IT Act dated 14.12.2023. The demand notice and penalty notices were also set aside. All contentions were left open for the Assessing Officer to consider.

What were the facts?

The petitioner, Shri Ganesharam, challenged an order dated 16.03.2024 passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961, for Assessment Year 2022-23. The petitioner received a show cause notice on 09.03.2024, requiring a reply by 12.03.2024. The petitioner requested an adjournment until 24.03.2024, which was evidenced by Annexures-F and F1. Despite this request, the assessment order was passed on 16.03.2024. The petitioner contended that the rejection of the adjournment request deprived them of the opportunity to explain variations related to unexplained expenditure under Section 69C and business income.

What were the issues?

1. Whether the assessment order passed on 16.03.2024, without considering the petitioner's request for adjournment until 24.03.2024, violates the principles of natural justice and causes prejudice to the petitioner, particularly concerning the explanation of variations in unexplained expenditure under Section 69C and business income? (Question of law and fact, concerning Section 144B of the IT Act). Assessee's Contentions: The petitioner argued that the rejection of their adjournment request, despite providing valid reasons and evidence (Annexures-F and F1), led to a violation of natural justice. They contended that they were deprived of a sufficient opportunity to substantiate their case and explain the variations in their income and expenditure, specifically mentioning Section 69C. The voluminous nature of documents also necessitated more time for a proper reply. Revenue's Contentions: The judgment does not record specific contentions from the revenue.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 69C,Section 144

AI-generated summary — verify with the full judgment below

Before: SHRI GANESHARAM

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NC: 2024:KHC:23519 WP No. 14846 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF JUNE, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 14846 OF 2024 (T-IT) BETWEEN: SHRI GANESHARAM AGED ABOUT 39 YEARS NO.03, 1ST FLOOR MOHANA KAVETI ARCADE OLD THARAGUPET, BENGALURU-560053 PAN:ALNPG0641F. …PETITIONER (BY SRI. RAVISHANKAR, SR. ADV.) AND: 1. ASSESSMENT UNIT NATIONAL FACELESS ASSESSMENT CENTRE INCOME TAX DEPARTMENT MINISTRY OF FINANCE ROOM NO.401, 2ND FLOOR, E-RAMP JAWARLAL NEHRU STADIUM DELHI -110 003. 2. THE INCOME TAX OFFICER WARD-1(2)(1), BENGALURU BMTC BUILDING, 80 FEET ROAD 6TH BLOCK, KORAMANGALA BENGALURU- 560 095. …RESPONDENTS (BY SRI.M DILIP, ADV.)

THIS PETITION IS FIELD UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA, PRAYING TO A) QUASHING THE ORDER DATED 16.03.2024 PASSED UNDER SECTION 143(3) R.W.S.144B OF THE ACT FOR THE ASSESSMENT YEAR 2022-23 BY THE RESPONDENT NO.1 BEARING DIN AND NOTICE NO.ITBA/AST/S/143(3)/2023- 24/1062767630(1) HEREIN MARKED AS ANNEXURE-A AND ETC. Digitally signed by VIDYA G R Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:23519 WP No. 14846 of 2024

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

The petitioner has called in question the validity of the order under Section 143(3) read with 144B of the Income Tax Act, 1961 (for short, ‘IT Act’) at Annexure-A as well as the computation sheet at Annexure-A1, the demand notice at Annexure-A2 and the notices at Annexures-B and C. 2. It is the case of the petitioner that during the assessment proceedings, petitioner was issued with a show cause notice on 09.03.2024 and was asked to reply on 12.03.2024. The petitioner had specifically sought for an adjournment till 24.03.2024, as is evidenced from Annexures-F and F1 and despite which the disregarding of such request for adjournment, the order itself has been passed on 16.03.2024. 3. It is submitted that the variation in respect of unexplained expenditure under Section 69C, variation in

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NC: 2024:KHC:23519 WP No. 14846 of 2024 respect of business income would be explained if sufficient opportunity is granted. It is submitted that in light of the request for adjournment having been rejected, petitioner has been deprived of opportunity to substantiate that variation did not exist. 4. Taking note of the observation in the impugned order relating to details of opportunities given which refers to notice being issued on 09.03.2024 and compliance reply by 12.03.2024 and the remark not received clearly shows that the Assessing Officer has not taken note of the adjournment application at Annexures-F and F1. In light of the contentions raised, it could be stated that the time that was afforded in the notice on 09.03.2024 is insufficient and it would cause prejudice that the petitioner insofar as his request for an adjournment has been rejected. 5. Accordingly, taking note of the said contention of violation of principles of natural justice and prejudice caused, the order is set aside and the matter is remitted

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NC: 2024:KHC:23519 WP No. 14846 of 2024 to the stage of reply to the notice under Section 144 of the IT Act dated 14.12.2023. 6. Accordingly, the order at Annexure-A is set aside as well as the demand notice at Annexure-A2 and penalty notice at Annexures-B and C and the matter is remitted to the stage as observed herein above. All contentions are kept open. 7. The contention of learned counsel for the petitioner that documents are voluminous and time beyond seven days for furnishing reply may be granted in the peculiar facts and circumstances of the case is a matter to be taken note of by the Assessing Officer appropriately.

Accordingly, writ petition stands disposed off. Sd/- JUDGE NC CT:bms List No.: 1 Sl No.: 10

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