SITHAPPANA HALLI BYCHAPPA PADMANABHA GOWDA vs. THE INCOME-TAX OFFICER

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WP/15831/2024HC KarnatakaKAHC01033931202425 July 2024Bench: S SUNIL DUTT YADAV5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court noted that the petitioner's assertion regarding the non-service of the Section 148A(b) notice remained uncontroverted by the revenue. The Court also observed that the assessment order (Annexure-D) was passed in the absence of any response from the assessee, who had not filed a return or responded to the show-cause notice. The assessment order recorded that the cash deposit of Rs. 63,70,000/- was unexplained. Considering the petitioner's submission that he could explain the source of the deposit if given an opportunity, the Court found it appropriate to set aside the assessment order (Annexure-D) and the penalty notices (Annexures-H, J, and K). The matter was restored to the stage of a reply to the Section 148A(b) notice. The ratio decidendi is that if a statutory notice is not demonstrably served and the assessee claims to have a valid explanation for the additions made in ex-parte assessment, the proceedings should be reopened to provide an opportunity of being heard.

What were the facts?

The petitioner, S B Padmanabha Gowda, filed a writ petition challenging several notices and orders related to his income tax assessment for Assessment Year (AY) 2016-17. The challenged documents include a notice under Section 148A(b) dated 16.02.2023, an order under Section 148A(d), a notice under Section 148, an assessment order under Section 147 read with 144 and 144B, and penalty orders. The petitioner's primary contention was that the show-cause notice under Section 148A(b) was not served on him, and he only became aware of the assessment order when he received penalty notices. He asserted that he had a valid explanation for the cash deposit of Rs. 63,70,000/- in his bank account, which formed the basis of the assessment.

What were the issues?

1. Whether the notice under Section 148A(b) of the Income Tax Act, 1961, was validly served on the petitioner, and if not, whether the subsequent proceedings are vitiated? (Mixed question of law and fact) 2. Whether the assessment order passed under Section 147 read with 144 and 144B of the Act is sustainable in the absence of proper opportunity to the petitioner to explain the cash deposit? Assessee's Contentions: The petitioner argued that the Section 148A(b) notice was not served, and he became aware of the assessment order only upon receipt of penalty notices. He claimed to have a strong case on merits and would be able to explain the source of the cash deposit if given an opportunity to reply to the Section 148A(b) notice. The petitioner sought an opportunity to respond to the Section 148A(b) notice. Revenue's Contentions: The judgment does not record specific contentions from the revenue regarding the service of the notice or the merits of the assessment. However, the assessment order itself noted that the cash deposit of Rs. 63,70,000/- was unexplained as the assessee had not filed a return nor responded to the show-cause notice.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148A(b),Section 148A(d),Section 148,Section 147,Section 144,Section 144B

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:29366 WP No. 15831 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF JULY, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 15831 OF 2024 (T-IT) BETWEEN: 1. SITHAPPANA HALLI BYCHAPPA PADMANABHA GOWDA SRI VENKATESHLAKA NILAYA, 2ND FLOOR, 11TH CROSS, SHANTHI LAYOUT MAIN ROAD, AKSHAYA NAGAR, BANGALORE-560 016 PRESENTLY KNOWN AS: S B PADMANABHA GOWDA, NO. 16,10TH CROSS, 2ND BLOCK, AKSHAYA NAGAR RAMAMURTHY NAGAR BANGALORE NORTH, BANGALORE-560 016 PAN: CDTPP1923K AADAAR NO. 2008 8297 0361 … PETITIONER (BY SRI. S PARTHASARATHI., ADVOCATE) AND: 1. THE INCOME-TAX OFFICER WARD 4(1)(1) BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, Digitally signed by PRAKASH N Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:29366 WP No. 15831 of 2024 KORAMANGALA, BANGALORE-560 095. 2. THE ASSESSMENT UNIT INCOME-TAX DEPARTMENT, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI-110 001. … RESPONDENTS (BY SRI. SANMATHI E.I. ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLES PRAYING TO A) ISSUE A WRIT OF CERTIORARI OR A DIRECTION IN THE NATURE OF WRIT OF CERTIORARI QUASHING THE NOTICE UNDER SECTION 148A(B) DATED 16.02.2023 IN NO.ITBA/AST/F/148A(SCN)2022-23/1049823291(1) ISSUED BY 1ST RESPONDENT FOR AY 2016-17 (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 SUNIL DUTT YADAV ORAL ORDER

The petitioner has called in question the validity of the notice under Section 148A(b) of the Income Tax Act, 1961 ("the Act", for short) at Annexure-A.

2.

The petitioner has also sought for setting aside of the order under Section 148A(d) of the Act at Annexure-B.

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NC: 2024:KHC:29366 WP No. 15831 of 2024

3.

The petitioner has also sought for setting aside of the notice under Section 148 of the Act at Annexure-C. 4. The petitioner has also sought for setting aside of the assessment order under Section 147 r/w 144 r/w 144B of the Act at Annexure-D. 5. The petitioner has also sought for setting aside of the penalty order at Annexure-H, J and K and sought for writ of prohibition restraining the respondents to take out proceedings pursuant to notice under Section 148 of the Act. Certain allied reliefs are also sought for in the petition. 6. It is the case of the petitioner that show-cause notice has not been served on the petitioner and it is only at the stage of service of show-cause notice for levy of penalty, petitioner became aware of the assessment order passed. Petitioner submits that he has a good case on merits and if an opportunity is granted, he would be in a position to demonstrate that 148A(b) notice itself ought

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NC: 2024:KHC:29366 WP No. 15831 of 2024 not to have been passed. Accordingly, it is prayed that opportunity may be given to reply to Section 148A(b) notice. 7. Taking note that the assertion of the petitioner regarding non-service remains uncontroverted and also noticing that the order at Annexure-D has been passed in the absence of any stand by the respondent while recording a finding that variations could be made on the basis of inference drawn as the assessee has not filed return nor responded to the show-cause notice and accordingly, recording a finding that cash deposit of Rs.63,70,000/- noticed in the bank account has not been explained by any source of such deposit, it would be appropriate in light of such finding and in light of the stand of the learned counsel for petitioner that he would be in a position to explain the source of deposit, to set aside at the order at Annexure-D and penalty notices at Annexure- H, J and K.

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NC: 2024:KHC:29366 WP No. 15831 of 2024 8. Accordingly, the impugned order at Annexure-A, B, notices at Annexure-C and D and penalty notices at Annexure-H, J and K are set aside. The matter is restored to the stage of reply to Section 148A(b) notice. Sd/- (S SUNIL DUTT YADAV) JUDGE NP

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