M/S. SBR PROMOTERS vs. THE ASSESSMENT UNIT

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WP/2859/2024HC KarnatakaKAHC01005238202420 March 2024Bench: S.R.KRISHNA KUMAR8 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Karnataka held that the impugned directions at Annexure-'A' dated 20.12.2023, issued by the second respondent, were indeed cryptic, laconic, and non-speaking. The Court found that these directions were issued without assigning any reasons, and without considering or appreciating the material on record or the submissions made by the petitioner. Therefore, the Court concluded that the directions fell short of the parameters contained in Section 144A of the Act. Consequently, as the assessment order and subsequent proceedings were based on these flawed directions, they also deserved to be set aside. The Court allowed the petition, set aside the impugned directions at Annexure-'A', and consequently set aside the assessment order at Annexure-'B1' and all further proceedings at Annexures-'B2', 'B3', 'B4', and 'B5'. The matter was remitted back to the second respondent for reconsideration, with liberty to the petitioner to file additional pleadings and documents, and for the second respondent to provide a reasonable opportunity to the petitioner before issuing fresh directions in accordance with Section 144A. The first respondent would then proceed based on these fresh directions.

What were the facts?

The petitioner, M/s. SBR Promoters, a partnership firm, filed a writ petition before the High Court of Karnataka challenging directions issued under Section 144A of the Income Tax Act, 1961, by the Joint Commissioner of Income Tax (Respondent No. 2) for Assessment Year 2020-21. These directions were communicated to the petitioner via a letter dated 20.12.2023 from the Assessment Unit (Respondent No. 1). The petitioner also challenged the subsequent assessment order dated 23.12.2023 passed under Section 143(3) read with Section 260 read with Section 144B, the computation sheet, notice of demand under Section 156, and penalty notices under Section 274 read with Section 270A and Section 271AAC(1), all issued by Respondent No. 1. The petitioner sought to quash these impugned orders and proceedings and have the matter remitted for reconsideration.

What were the issues?

1. Whether the directions issued by the Joint Commissioner of Income Tax under Section 144A of the Income Tax Act, 1961, for Assessment Year 2020-21, communicated to the petitioner, are cryptic, laconic, non-speaking, and issued without application of mind, thereby violating the principles of natural justice and the parameters of Section 144A. Assessee's Contention: The petitioner argued that the directions issued by the second respondent (Joint Commissioner) under Section 144A were cryptic, laconic, and non-speaking. They were issued without considering the petitioner's contentions, submissions, or the material on record, and thus did not conform to the requirements of Section 144A and violated principles of natural justice. Consequently, the subsequent assessment order and other proceedings based on these directions should also be quashed and remitted. Revenue's Contention: The respondents supported the impugned directions, orders, and proceedings, submitting that the petition had no merit and was liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 144A,Section 143(3),Section 260,Section 144B,Section 156,Section 274,Section 270A,Section 271AAC(1)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:11714 WP No. 2859 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF MARCH, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO.2859 OF 2024 (T-IT)

BETWEEN:

1.

M/S. SBR PROMOTERS A PARTNERSHIP FIRM REGISTERED UNDER THE INDIAN PARTNERSHIP ACT, 1932 REPRESENTED BY ITS MANAGING PARTNER SRI A.R. PRASAD S/O. LATE SRI A.G. RATHNAM AGED ABOUT 71 YEARS NO.52, 4TH FLOOR CHAITANYA PLAZA, D.V.G. ROAD BENGALURU-560 004.

…PETITIONER

(BY SRI A. SHANKAR, SENIOR COUNSEL FOR SRI. MADHUSUDHAN U.A., ADVOCATE)

AND:

1.

THE ASSESSMENT UNIT INCOME TAX DEPARTMENT NATIONAL FACELESS ASSESSMENT CENTRE MINISTRY OF FINANCE ROOM NO.401, 2ND FLOOR E-RAMP, JAWARLAL NEHRU STADIUM DELHI-110 003.

2.

THE JOINT COMMISSIONER OF INCOME TAX (ASSESSMENT UNIT) INCOME TAX DEPARTMENT NATIONAL FACELESS ASSESSMENT CENTRE

Digitally signed by V MANJUSHA BAI Location: High Court of Karnataka

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MINISTRY OF FINANCE ROOM NO.401, 2ND FLOOR E-RAMP, JAWARALAL NEHRU STADIUM DELHI-110 003.

3.

THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-3(1)(1), BENGALURU BMTC BUILDING, 80 FEET ROAD 6TH BLOCK, NEAR KHB GAMES VILLAGE KORAMANGALA, BENGALURU-560 095.

…RESPONDENTS (BY SRI E.I. SANMATHI, ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE A WRIT OF CERTIORARI OR DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING THE DIRECTIONS UNDER SECTION 144A OF THE ACT ISSUED BY THE RESPONDENT NO.2, FOR THE ASSESSMENT YEAR 2020-21, COMMUNICATED TO THE PETITIONER VIDE LETTER DATED 20.12.2023 ISSUED BY RESPONDENT NO.1, BEARING DIN & LETTER NO.ITBA/AST/F/17/2023-24/1058940420(1) HEREIN MARKED AS ANNEXURE-A, ETC.

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

In this petition, the petitioner seeks the following reliefs:- a) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the directions under section 144A of the Act issued by the Respondent No.2, for the assessment year 2020-21, communicated to the petitioner vide letter dated 20.12.2023 issued by Respondent No.1, bearing DIN

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& Letter No.ITBA/AST/F/17/2023-24/1058940420(1) herein marked as Annexure- A.

b) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the assessment order dated 23.12.2023 passed under section 143(3) r.w.s 260 r.w.s 144B of the Act for the assessment year 2020-21 passed by the Respondent No.1 bearing DIN No.ITBA/AST/S/143(3)/2023-24/1059031856(1) herein marked as Annexure - B1.

c) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the computation sheet dated 23.12.2023 issued by the Respondent No.1 for the assessment year 2020-21 bearing DIN & Document No.ITBA/AST/S/88/2023-24/1059031873(1) herein marked as Annexure-B2.

d) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the notice of demand dated 23.12.2023 issued under section 156 of the Act by the Respondent No.1 for the assessment year 2020-21 bearing DIN & Notice No. ITBA/AST/S/156/2023-24/1059031874(1) herein marked as Annexure - B3.

e) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the penalty notice dated 23.12.2023 issued under section 274 r.w.s 270A of the

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Act by the Respondent No.1 of the assessment year 2020-21 bearing DIN No.ITBA/PNL/S/270A/2023- 24/1059031871(1) herein marked as Annexure - B4.

f) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the penalty notice dated 23.12.2023 issued under section 274 r.w.s 271AAC(1) of the Act by the Respondent No.1 of the assessment year 2020-21 bearing DIN No.ITBA/PNL/ S/271AAC(1)/2023-24/1059031872(1) herein marked as Annexure - B5.

g) And pass such other orders as this Hon'ble Court deems fit and proper in the interest of justice and equity."

2.

Heard the learned Senior Counsel for the petitioner and perused the material on record.

3.

In addition to reiterating the various contentions urged in the memorandum of petition and referring to the material on record, learned Senior Counsel for the petitioner invited my attention to the letter dated 13.12.2023 issued by the first respondent to the second respondent - Joint Commissioner of Income Tax calling upon the second respondent to issue directions pursuant to the application filed by the petitioner under Section

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NC: 2024:KHC:11714 WP No. 2859 of 2024

144A of the Income Tax Act, 1961 (for short 'the Act'). It is submitted that in pursuance of the same, the second respondent has proceeded to issue the impugned directions at Annexure-'A' dated 20.12.2023 which are cryptic, laconic and non-speaking and without application of mind and without adverting to the various contentions and submissions or the material on record available by the petitioner and as such, the impugned directions at Annexure-'A' are not in conformity with the parameters contained in Section 144A of the Act and the same are violative of the principles of natural justice and deserves to be quashed. It is submitted that based on the aforesaid directions issued by the second respondent under Section 144A of the Act, the first respondent has proceeded to pass the impugned order which also deserves to be quashed along with all further proceedings pursuant thereto and the matter remitted back to the second respondent and thereafter, to the first respondent for reconsideration afresh in accordance with law. 4. Per contra, learned counsel for the respondents would support the impugned directions, orders and proceedings and submit that there is no merit in the petition and the same is liable to be dismissed.

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5.

Perusal of the material on record, in particular, the impugned directions at Annexure-'A' dated 20.12.2023 will clearly indicate as rightly contended by the learned Senior counsel for the petitioner, except stating that the first respondent should proceed in accordance with law, the impugned directions are clearly cryptic, laconic and non-speaking and directions which are issued without assigning any reasons or considering or appreciating the material on record or submissions made on behalf of the petitioner and the impugned order clearly falls short of the parameters contained in Section 144A of the Act. It is needless to state that the impugned order at Annexure-'B1' and subsequent proceedings are consequent upon the directions issued vide Annexure-'A' and upon quashment of Annexure-'A', all further proceedings including Annexure-'B1' deserves to be set aside and the matter is remitted back to the second respondent and thereafter, to the first respondent for reconsideration afresh in accordance with law. 6. In the result, I pass the following: ORDER i. The petition is hereby allowed.

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ii. The impugned directions at Annexure-'A' dated 20.12.2023 are hereby set aside. iii. Consequently, the impugned assessment order at Annexure-'B1' dated 23.12.2023 and all further proceedings pursuant thereto at Annexures-'B2', 'B3', 'B4' and 'B5' are also hereby set aside. iv. oThe matter is remitted back to the second respondent in the first instance to reconsider the matter afresh after providing sufficient and reasonable opportunity to the petitioner. v. Liberty is reserved in favour of the petitioner to file additional pleadings, documents before the second respondent, who shall consider the same and provide opportunity of hearing to the petitioner and proceed further in accordance with law. vi. Upon the second respondent issuing directions pursuant to this order by complying with the parameters contained in Section 144A of the Act, the first respondent shall proceed further and provide an

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opportunity to the petitioner and pass appropriate orders in accordance with law. vii. All contentions before the first and second respondents are kept open and no opinion is expressed on the same. vii. Pending interlocutory applications, if any, stand disposed of.

Sd/- JUDGE

VMB List No.: 1 Sl No.: 47

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