SANKURATRI VENKATESHWARA RAO vs. INCOME TAX OFFICER AND ORS

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WP/201026/2024HC KarnatakaKAHC03003115202409 September 2024Bench: SURAJ GOVINDARAJ9 pages
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What did the High Court hold?

The High Court allowed the writ petition. The Court found merit in the petitioner's submission that the assessment order was time-barred. It referred to Section 153(2) of the Income Tax Act, 1961, which stipulates that no order of assessment or reassessment shall be made after nine months from the end of the financial year in which the notice under Section 148 was served. The proviso to this sub-section extends this period to twelve months for notices served on or after April 1, 2019. In this case, the notice under Section 148 was issued on 29.03.2021, making the proviso applicable. Therefore, the reassessment should have been completed by 31.03.2022. The assessment order dated 12.05.2023 was found to be beyond this period. The Court rejected the revenue's contention regarding TOLA, stating that the Act was applicable for the period from 01.04.2021 to 30.06.2021, and while the notice under Section 148 was within this extended limitation period, it did not override the specific time limit for completion of assessment under Section 153(2). Consequently, the assessment order and all subsequent proceedings were held to be non-est. The Court quashed the notice under Section 148A(b), the notice under Section 148, the assessment order, and all penalty orders.

What were the facts?

The petitioner, Sankuratri Venkateswara Rao, filed a writ petition before the High Court of Karnataka, Kalaburagi Bench, challenging several notices and orders issued by the Income Tax Department for the Assessment Year 2013-14. The challenged actions include a notice under Section 148A(b) dated 26.05.2022, a notice under Section 148 dated 21.07.2022, an assessment order under Section 147 read with Section 144B dated 12.05.2023, and penalty orders under Sections 271(1)(c), 271(1)(b), and 271F dated 11.01.2024. The core of the petitioner's argument revolves around the timeliness of the assessment proceedings, specifically whether the assessment order was passed within the prescribed period after the issuance of the notice under Section 148.

What were the issues?

1. Whether the assessment order dated 12.05.2023, passed pursuant to a notice under Section 148 issued on 29.03.2021 for Assessment Year 2013-14, is barred by limitation under Section 153(2) of the Income Tax Act, 1961. Assessee's Contention: The petitioner argued that as per the first proviso to Section 153(2), for notices issued post-April 1, 2019, the assessment must be completed within twelve months of such notice. Since the notice was issued on 29.03.2021, the assessment ought to have been completed by 31.03.2022. The assessment order dated 12.05.2023 is therefore beyond the statutory time limit. Revenue's Contention: The revenue contended that the proceedings were initiated under Section 148 on 29.03.2021, which was within time. They further argued that the Taxation & Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020 (TOLA) provided relaxation and extension of time, making the assessment order of 12.05.2023 valid.

Which sections of the Income-tax Act were involved?

Section 153,Section 148A,Section 148,Section 147,Section 144B,Section 271(1)(c),Section 271(1)(b),Section 271F

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC-K:6767 WP No. 201026 of 2024

IN THE HIGH COURT OF KARNATAKA, KALABURAGI BENCH DATED THIS THE 9TH DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ

WRIT PETITION NO. 201026 OF 2024 (T-IT) BETWEEN:

SANKURATRI VENKATESHWARA RAO AGE. 50 YEARS, H.NO. 1-11-55/138/67, NEAR LINGASUGURU ROAD, VENKATESHWARA COLONY, RAICHUR-584101.

…PETITIONER (BY SRI. ARATI AGNIHOTRI (TIWARI) & SRI. RAVI SHANKAR S.V.,,ADVOCATE)

AND:

1.

INCOME TAX OFFICER WARD-1, OPP. AIYAPPA TEMPLE, UDAYNAGAR, RAICHUR-584101.

2.

NATIONAL FACELESS ASSESSMENT CENTRE ADDITIONAL/JOINT/DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX/ INCOME TAX OFFICER, INCOME TAX DEPARTMENT, MINISTRY OF FINANCE, ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM,

Digitally signed by SHWETHA RAGHAVENDRA Location: HIGH COURT OF KARNATAKA

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DELHI-110003.

3.

THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX C R BUILDING, QUEENS ROAD, BENGALURU-560001.

…RESPONDENTS (BY SRI. M. THIRUMALESH., ADVOCATE FOR R1 TO R3)

THIS WRIT PETITION FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE A WRIT OF CERTIORARI OF DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING THE NOTICE UNDER SECTION 148A(b) OF THE ACT DATED 26.05.2022 BEARING DIN NO. ITBA/COM/F/17/2022-23/1043182901(1) ISSUED BY THE RESPONDENT NO.1 FOR THE ASSESSMENT YEAR 2013-14 HEREIN MARKED AS ANNEXURE-A AND ETC.

THIS WRIT PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE SURAJ GOVINDARAJ

ORAL ORDER (PER: HON'BLE MR. JUSTICE SURAJ GOVINDARAJ)

1.

The petitioner is before this Court seeking for the following reliefs: i) Issue a Writ of Certiorari of direction in the nature of a writ of certiorari quashing the notice under Section 148a(b) of the act dated 26.05.2022 Bearing Din No. ITBA/COM/F/17/2022- 23/1043182901(1) issued by the respondent no.1 for the Assessment year 2013-14 herein marked as Annexure-A.

ii) Issue a Writ of Certiorari or direction in the nature of a writ of certiorari quashing the notice

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under Section 148 of the act dated 21.07.2022 Bearing Din No. ITBA/AST/M/148-1/2022- 23/1043971269(1), issued by the respondent no.1 for the assessment year 2013-14 herein marked as Annexure-A1. iii) Issue a Writ of Certiorari or direction in the nature of a writ of certiorari quashing the order passed u/sec. 147 r.w.s 144B dated 12.05.2023 Bearing ITBA/AST/S/147/2023-24/1052804023(1) issued by the respondent no.2 for the assessment year 2013-14 herein marked as Annexure-A2. iv) Issue a Writ of Certiorari or direction in the nature of a writ of certiorari quashing the penalty order u/sec. 271(1)(c) of the act dated 11.01.2024 Bearing Din No. ITBA/PNL/F/271(1)(c)/ 2023- 24/1059638031(1) by the respondent no.2 for the assessment year 2013-14 herein marked as Annexure-A3. v) Issue a Writ of Certiorari or direction in the nature of a writ of certiorari quashing the penalty order u/sec. 271(1)(b) of the act dated 11.01.2024 Bearing Din No. ITBA/PNL/F/271(1)(b)/2023- 24/1059638008(1) by the respondent no.2 for the assessment year 2013-14 herein marked as Annexure-A4. vi) Issue a Writ of Certiorari or direction in the nature of a writ of certiorari quashing the penalty order dated 11.01.2024 passed u/sec. 271f of the act bearing Din and Notice No. ITBA/PNL/F271F/202-24/1059638007(1) by the respondent no.2 for the assessment year 2013-14 herein marked as Annexure-A5. vii) and pass such other orders as this Honourable court deems fit and proper in the interest of justice and equity.

2.

The short question in the present matter is whether the assessment order dated 12.05.2023 at

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Annexure-A2 and the consequent proceedings taken thereafter could have been so done when the notice under Section 148 of the Income Tax Act, 1961 was issued on 29.03.2021. 3. Sri.Arati Agnihotri Tiwari, learned counsel for the petitioner, by relying on the first proviso to sub- section (2) of Section 153, would submit that as regards any notices issued post 1st April 2019, the assessment is required to be completed within twelve months of such notice. In the present case, the notice having been issued on 29.03.2021, assessment ought to have been completed by 31.03.2022 being the end of the calendar month. The assessment order, having been passed on 12.05.2023, is beyond the said period of twelve months, and on this ground, he submits that the above petition is required to be allowed without prejudice to the other contentions that he has as

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regards the validity or otherwise of the action taken by the respondents. 4. Sri.M.Thirumalesh, learned counsel appearing for the revenue would submit that the proceedings have been initiated under Section 148 on 29.03.2021 for the assessment year 2013-14 being within time, the assessment order passed on 12.05.2023 would have to be considered to be within time and not beyond time, as contended by the learned counsel for petitioner. 5. The further submission of Sri.Thirumalesh, learned counsel for the respondents is that in view of the relaxation granted under the Taxation & Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020, (hereinafter referred to as ‘TOLA’), the relaxation would be applicable to the present case also. The said Act having been brought about during the COVID period, an extension is deemed to apply to the present case also.

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6.

Heard Smt.Arati Agnihotri (Tiwari), learned counsel for the petitioner and Sri.M.Thirumalesh, learned counsel for the respondents and perused papers. 7. Sub-section (2) of section 153, along with the proviso thereof, are reproduced hereunder easy reference:

(2) No order of assessment, reassessment or recomputation shall be made under Section 147 after the expiry of nine months from the end of the financial year in which the notice under section 148 is served. [Provided that where the notice under section 148 is served on or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words “nine months” the words “twelve months" had been substituted]

8.

A perusal of sub-section (2) of Section 153 would indicate that assessment, reassessment, or recomputation shall not be made after the expiry of nine months from the end of the financial year in which the notice under Section 148 was issued. The proviso, however, provides that in respect of notices

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under Section 148 served on or after first day of April 2019, the period of nine months as aforesaid will be substituted by twelve months.

9.

In the present case, notice has been issued on 29.03.2021, thereby making applicable the provisio to sub-section (2) of Section 153 requiring the reassessment to be made within twelve months from that date. Thus, I find credence in the submission made by the learned counsel for the petitioner that the reassessment was required to be completed by 31.03.*2022. In the present case, the reassessment having been done by way of assessment order dated 12.05.2023 is beyond the period of twelve months indicated above.

10.

The submission of Sri.Thirumalesh, learned counsel for the respondents as regards the ‘TOLA’, would be applicable to the present case would be liable to be rejected for the simple reason that the said Act was applicable to the period from 01.04.*2021 to *Corrected vide Court order dated 10.12.2024

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30.06.2021. In the present case, the notice having been issued under Section 148 on 29.03.2021, is within the period of extended limitation and therefore, the notice having been issued under Section 148, the rigor of proviso to sub-section (2) of Section 153 would be equally applicable. I am of the considered opinion that the reassessment order dated 12.05.2023 and all actions taken pursuant thereto would be non-est. As such, the writ petition would be required to be allowed. Hence, I pass the following: ORDER i) The Writ Petition is allowed. ii) A certiorari is issued, the order dated 26.05.2022 issued by respondent No.1 for the assessment year 2013-14 at Annexure-A is quashed. iii) A certiorari is issued, the order dated 21.07.2022 issued by respondent No.1 for the assessment year 2013-14 at Annexure-A1 is quashed.

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iv) A certiorari is issued, the order dated 12.05.2023 issued by respondent No.2 for the assessment year 2013-14 at Annexure-A2 is quashed. v) A certiorari is issued, the order dated 11.01.2024 issued by respondent No.2 for the assessment year 2013-14 at Annexure-A3 is quashed. vi) A certiorari is issued, the order dated 11.01.2024 issued by respondent No.2 for the assessment year 2013-14 at Annexure-A4 is quashed. vii) A certiorari is issued, the order dated 11.01.2024 issued by respondent No.2 for the assessment year 2013-14 at Annexure-A5 is quashed.

Sd/- (SURAJ GOVINDARAJ) JUDGE

PRS List No.: 1 Sl No.: 46

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