THOTADA BELEGARARA SAHAKARA vs. INCOME TAX OFFICER WARD 1

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WP/23905/2024HC KarnatakaKAHC01049194202410 September 2024Bench: S.R.KRISHNA KUMAR6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court allowed the petition. It noted that it was undisputed that the petitioner had not submitted a reply to the Section 148A(b) notice. However, considering the petitioner's assertion that the omission was due to bonafide reasons, unavoidable circumstances, and sufficient cause, and their willingness to submit a reply if given another opportunity, the Court found it just and appropriate to set aside the impugned order under Section 148A(d) dated April 19, 2022, and subsequent notices/orders. The matter was remitted back to the first respondent (Income Tax Officer) for reconsideration. The petitioner was granted liberty to submit their replies and documents, and the first respondent was directed to provide a reasonable opportunity and proceed in accordance with the law. The Court did not expressly leave any issue undecided.

What were the facts?

The petitioner, Thotada Beleagarara Sahakara Sangha Niyamita Gundlupet, a co-operative society, filed a writ petition before the High Court of Karnataka challenging several orders and notices issued by the Income Tax Department. These included an order under Section 148A(d) dated April 19, 2022, an order under Section 147 read with Section 144B dated March 5, 2024, a notice of demand under Section 156 dated March 5, 2024, and a notice under Section 226(3) dated July 11, 2024. The assessment year in question was 2018-19. The petitioner sought to quash these impugned orders and notices. The revenue contended that the petition had no merit.

What were the issues?

1. Whether the petitioner was aware of and received the notice issued under Section 148A(b) of the Income Tax Act, 1961, dated March 21, 2022? Assessee's Contention: The petitioner argued that the notice under Section 148A(b) dated March 21, 2022, was not received, and consequently, they were unaware of it. This prevented them from submitting a reply or response with supporting documents. They claimed this omission was due to bonafide reasons, unavoidable circumstances, and sufficient cause. They requested an opportunity to submit their reply if the impugned orders and notices were set aside. Revenue's Contention: The revenue argued that there was no merit in the petition and that it was liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148A(b),Section 148A(d),Section 147,Section 144B,Section 156,Section 226(3)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:37061 WP No. 23905 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 23905 OF 2024 (T-IT)

BETWEEN: THOTADA BELEGARARA SAHAKARA SANGHA NIYAMITA GUNDLUPET (A CO-OPERATIVE SOCIETY ENGAGED LENDING TO ITS MEMBERS) HAVING ITS BUSINESS AT, TBSS BUILDING CHAMARAJANAGAR, ROAD, GUNDLUPET TOWN, CHAMARAJANGAR 571111. PAN NO. AACAT9287F

REPRESENTED BY ITS SECRETARY, M B SREEKANTAPPA, S/O M BASAVANNA, AGED ABOUT 59 YEARS, R/AT NO. 51 MADAPATTANA VILLAGE, SOMANAHALLI POST, BEGUR, CHAMARAJANAGAR 571 109. …PETITIONER (BY SRI. BALARAM R RAO.,ADVOCATE) AND:

1.

INCOME TAX OFFICER, WARD 1 MPA COMPLEX, CAR STREET, CHAMARAJANAGAR – 571 313.

2.

ADDITIONAL / JOINT / DEPUTY /

ASSISTANT COMMISSIONER OF INCOME TAX NATIONAL FACELESS APPEALS CENTRE, INCOME TAX DEPARTMENT, DELHI, 2ND FLOOR, E RAMP, JAWAHARLAL NEHRU STADIUM, DELHI – 110 003.

3.

BRANCH MANAGER

STATE BANK OF INDIA

Digitally signed by LEELAVATHI S R Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:37061 WP No. 23905 of 2024

PB NO1C382 GUNDLUPET

CHAMARAJANAGAR ROAD

TERAKANAMBI, CHAMARAJANAGAR – 571 123.

…RESPONDENTS

(BY SRI.M. THIRUMALESH, ADVOCATE FOR R-1 & R-2)

THIS W.P IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO WRIT OF CERTIORARI OR WRIT IN THE NATURE OF CERTIORARI OR ANY OTHER APPROPRIATE WRIT ORDER OR DIRECTION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA CALLING FOR THE RECORDS OF THE PETITIONERS CASE AND AFTER EXAMINING THE LEGALITY AND VALIDITY THEREOF BE PLEASED TO QUASH AND SET ASIDE THE IMPUGNED ORDER UNDER SECTION 148A(D) OF THE ACT DT. 19.04.2022 IN DIN. ITBA/AST/F/148A/2022- 23/1042773337(1) (ANNEXURE-B), IMPUGNED ORDER UNDER SECTION 147 R.W.S. 144B OF ACT DATED 05.03.2024 IN DIN.ITBA/AST/S/147/2023- 24/1062036581(1) (ANNEXURE-Y) AND NOTICE OF DEMAND ISSUED U/S. 156 OF THE ACT DATED 05.03.2024 IN DIN. ITBA/AST/S/156/2023- 24/1062036644(1) (ANNEXURE-Y1) AND IMPUGNED NOTICE U/S. 226(3) OF THE ACT 11.07.2024 IN DIN. DATED ITBA/RCV/S/226(3)-1/2024- 25/1066610446(1) (ANNEXURE-ZC) FOR THE AY 2018-19 & ETC.,

THIS PETITION COMING ON FOR ORDERS, THIS DAY ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR

ORAL ORDER

In this petition, petitioner has sought for the following reliefs:-

“ i. Writ certiorari or writ in the nature of certiorari or any other appropriate writ order or direction under Article 226 of the Constitution of India; calling for the records of the Petitioners case and after examining the legality and validity thereof be pleased to quash and set aside the impugned section 148A(d) of the Act dt.: 19.04.2022 in DIN: ITBA/AST/F /148A/2022-23/ 1042773337 (1) (ANNEXURE B),impugned order under Section 147 r.w.s 144B of Act dated: 05.03.2024 in DIN: ITBA/AST/F/147/2023-

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NC: 2024:KHC:37061 WP No. 23905 of 2024

24/1062036581 (1) (ANNEXURE Y),and Notice of Demand issued U/s. 156 of the Act dated: 05.03.2024 in DIN: ITBA/AST/S/156/2023-24/1062036644(1) (ANNEUXRE-Y1) and Impugned Notice U/s. 226(3) of the Act dated: 11.07.2024 in DIN: ITBA/RCV/S/226(3)_1/2024- 25/1066610446(1) (ANNEXURE-ZC) for the AY 2018-19.

ii. Writ of Mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction under Article 226 of Constitution of India ordering and directing the Respondents by themselves by their subordinates, servants or agents to withdraw and cancel impugned order under Section 148A(d) of the Act dt.: 19.04.2022 in DIN: ITBA/AST/F/148A/2022- 23/1042773337(1) (ANNEXURE B), impugned order under Section 147 r.w.s. 144B of Act dated 05.03.2024 in DIN: ITBA/AST/S/147/2023-24/1062036581(1) (ANNEXURE Y), Notice of Demand issued u/s. 156 of the Act dated 05.03.2024 in DIN: ITBA/AST/S/156/2023 24/1062036644(1) (ANNEXURE Y1) and Impugned Notice u/s. 226(3) of the Act dated 11.07.2024 in D BA/RCV/S/226(3)_1/2024- 25/1066610446(1)(ANNEXURE ZC) for the AY 2018-19 and

iii. A writ of Prohibition or a writ in the nature of Prohibition or any other appropriate writ, order or direction under Article 226 of Constitution of India prohibiting and restraining the Respondents by themselves their sub ordinates, servants and agents from taking any action in furtherance or consequent to notice issued u/s. 148A(0) of the Act dt.: 21.03.2022 in ITBA/AST/F/148A(SCN)/2021- 22/1041172672(1) DIN: (ANNEXURE A), impugned order under Section 148A(d) of the Act dt.: 19.04.2022 ) In DIN:

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NC: 2024:KHC:37061 WP No. 23905 of 2024

ITBA/AST/F/148A/2022-23/1042773337(1 (ANNEXURE B), notice u/s. 148 of the dt.: 19.04.2022 in DIN: ITBA/AST/S/148_1/2022-23/1042773567(1) (ANNEXURE C), impugned order under Section 147 r.w.s. 144B of Act 05.03.2024 in DIN: ITBA/AST/S/147/2023-24/1062036581(1) (ANNEXURE Y), Notice of Demand issued u/s. 156 of the Act dated 05.03.2024 in DIN: ITBA/AST/S/156/2023- 24/1062036644(1) (ANNEXURE Y1) and Impugned Notice u/s. 226(3) of the Act dated 11.07.2024 in DIN:

iv. Grant the interim relief in terms of prayer (iii) above, and

v. Issue such other order, writ or direction as this Hon’ble court deems fit.”

2.

Heard learned counsel for the petitioner and learned counsel for the respondents-revenue and perused the material on record.

3.

In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner submits that the Notice issued by the respondents under Section 148A(b) of the Income Tax Act, 1961 (for short, ‘IT Act’), dated 21.03.2022 was not received by petitioner and he was not aware of the notice and consequently, petitioner could not submit its reply / response along with documents to the said Notice. It is submitted that the inability and omission on the

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NC: 2024:KHC:37061 WP No. 23905 of 2024

part of the petitioner to submit reply / response along with documents to the Section 148A(b) notice was due to bonafide reasons, unavoidable circumstances and sufficient cause and as such, if one more opportunity is provided to the petitioner to do so by setting aside the impugned orders and notices, the petitioner would do so and respondents may be directed to proceed further in accordance with law.

4.

Per contra, learned counsel for the respondents-revenue submits that there is no merit in the petition and that the same is liable to be dismissed.

5.

A perusal of the impugned order will indicate that it is an undisputed fact that petitioner has not submitted reply / response along with documents to Section 148A(b) notice. Under these circumstances, in view of the specific assertion on the part of the petitioner that his inability and omission to submit a reply along with documents to Section 148A(b) notice was due to bonafide reasons, unavoidable circumstances and sufficient cause and if one more opportunity is granted, petitioner would submit reply along with documents, I deem it just and appropriate to set aside the impugned order at Annexure-B dated 19.04.2022 passed under

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NC: 2024:KHC:37061 WP No. 23905 of 2024

Section 148A(d) of the I.T Act and subsequent notices / orders, etc., and remit the matter back to 1st respondent for reconsideration afresh from the stage of submitting of reply by the petitioner to Section 148A(b) notice and to proceed further in accordance with law. 6. In the result, pass the following:

ORDER

(i) Petition is hereby allowed.

(ii) The impugned orders / notices at Annexures-B, Y, Y1 and ZC are hereby set aside.

(iii) Matter is remitted back to the 1st respondent for reconsideration afresh in accordance with law from the stage of submitting of reply to the Show Cause Notice issued under Section 148A(b) of the I.T Act at Annexure-A dated 21.03.2022.

(iv) Liberty is reserved in favour of the petitioner to submit replies, responses, pleadings, documents, etc., to the 1st respondent, who shall consider the same and provide sufficient and reasonable opportunity to the petitioner and proceed further in accordance with law.

Sd/-

(S.R.KRISHNA KUMAR) JUDGE

Srl.

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