MR. NARAYANASETTY SRINIVASA vs. ASSISTANT COMMISSIONER OF INCOME TAX

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WP/23777/2024HC KarnatakaKAHC01049861202403 September 2024Author: S.R.KRISHNA KUMAR7 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the respondents had violated the principles of natural justice. A perusal of the petitioner's reply dated 21.12.2019 indicated a specific request for more time to collate and submit additional replies and documents. However, the respondents proceeded to pass the impugned assessment order dated 26.12.2019 and consequential notices without referring to this reply or providing a sufficient and reasonable opportunity to the petitioner. Considering the justice-oriented approach and to provide one more opportunity to the petitioner, the Court set aside the impugned assessment order dated 26.12.2019 and all consequential notices. The matter was remitted back to the respondents for reconsideration. The petitioner was granted liberty to submit his response/reply along with documents, and the respondents were directed to consider them, provide a sufficient and reasonable opportunity, hear the petitioner, and proceed in accordance with law.

What were the facts?

The petitioner, Mr. Narayanasetty Srinivasa, filed a writ petition before the High Court of Karnataka challenging various notices and orders issued by the Assistant Commissioner of Income Tax and the National Faceless Assessment Centre. The challenge was primarily to show cause notices dated 12.11.2019 and 07.12.2019, an assessment order dated 26.12.2019, consequential demand notices, penalty notices under Sections 270A and 271AAC(1) of the Income Tax Act, 1961, and subsequent orders and demand notices. The petitioner's grievance was that despite requesting further time to submit additional replies and documents, and considering the prevailing Covid-19 pandemic, the respondents proceeded to pass the impugned orders without providing a sufficient and reasonable opportunity to be heard, thus violating the principles of natural justice.

What were the issues?

1. Whether the impugned assessment order and consequential notices were passed in violation of the principles of natural justice, specifically concerning the denial of a reasonable opportunity to the petitioner to submit his replies and documents? (Question of law and fact, concerning the procedure under the Income Tax Act, 1961). Assessee's contention: The petitioner argued that the respondents failed to grant sufficient and reasonable opportunity to submit replies and documents, especially in light of a request for more time and the exigencies of the Covid-19 pandemic, thereby violating principles of natural justice. Revenue's contention: The respondents contended that there was no merit in the writ petition and that it was liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 270A,Section 271AAC(1),Section 274

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 23777 OF 2024 (T-IT) BETWEEN:

MR. NARAYANASETTY SRINIVASA SON OF LATE NARAYANA SETTY, AGED ABOUT 64 YEARS, RESIDING AT NO 296, 16TH CROSS, SADASHIVANAGAR, BENGALURU – 560 080. …PETITIONER (BY SRI.PRADYUMNA HEJIB, ADVOCATE)

AND:

1.

ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 6(2) (2), INCOME TAX DEPARTMENT, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU - 560 095.

2.

ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 6 (2) (1), INCOME TAX DEPARTMENT, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU - 560 095.

3.

NATIONAL E-ASSESSMENT CENTRE INCOME TAX DEPARTMENT, ROOM NO 401, 2ND FLOOR, E - RAMP, JAWARHARLAL NEHRU STADIUM, DELHI – 110 003. REPRESENTED BY ITS ADDITIONAL / JOINT/ DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX

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

4.

NATIONAL FACELESS ASSESSMENT CENTRE INCOME TAX DEPARTMENT, ROOM NO 401, 2ND FLOOR, E - RAMP, JAWARHARLAL NEHRU STADIUM, DELHI – 110 003. REPRESENTED BY ADDITIONAL / JOINT/ DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX …RESPONDENTS (BY SRI.M. DILIP, ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED SHOW CAUSE NOTICE DATED 12.11.2019 BEARING NO. ITBA/AST/F/143(3) (SCN)/20/2019-20/1020244895(1) PASSED BY THE 2(ND) RESPONDENT (ANNEXURE A) AND QUASH THE IMPUGNED SHOW CAUSE NOTICE DATED 07.12.2019 BEARING NO. ITBA/AST/F/143(3) (SCN)/20/2019-20/1021886724(1) PASSED BY THE 2 RESPONDENT (ANNEXURE A1) AND ETC.,

THIS WRIT PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR

ORAL ORDER

In this petition, the petitioner seeks the following reliefs: i) Quash the impugned Show Cause Notice dated 12.11.2019 ITBA/AST/F/143(3) (SCN)/20/2019-20/1020244895(1) passed by the 2nd Respondent (Annexure A);

ii) Quash the impugned Show Cause Notice dated 07.12.2019 ITBA/AST/F/143(3) (SCN)/20/2019-20/1021886724(1) passed by the 2nd Respondent (Annexure A1);

iii) Quash the impugned Assessment Order bearing No.ITBA/AST/S/143(3)/2019-20/1023122595(1) dated 26.12.2019 passed by the 2nd Respondent (Annexure B);

iv) Quash the impugned Notice of Demand passed by the 1st Respondent bearing No. ITBA/AST/S/156/2019- 20/1023122745(1) (Annexure B1) along with Computation Sheet ITBA/AST/S/213/2019- 20/1023122720(1), both dated 26.12.2019 passed by the 2nd Respondent (Annexure B2);

v) Quash the impugned Notice for Penalty dated 26.12.2019 under Section 274 read with Section 270A of Income Tax Act, 1961 ITBA/PNL/S/270A/2019-20/1023122759(1) passed by the 2nd Respondent (Annexure C);

vi. Quash the impugned Notice for Penalty dated 27.12.2019 under Section

read with Section 271AAC(1) of the Income Tax Act, 1961 bearing No. ITBA/PNL/S/271AAC(1)/2019-20/1023230965(1) by the 2nd Respondent (Annexure D)

vii. Quash the impugned Show Cause Notice for Penalty dated 15.03.2021 under Section 270A of the Income Tax Act, 1961 ITBA/PNL/F/270A/2020- 21/1031494859(1) 3rd (Annexure E).

viii. Quash the impugned Show Cause Notice for Penalty dated 15.03.2021 under Section 271AAC(1) of the Income Tax Act, 1961 bearing No. ITBA/PNL/F/271AAC(1)/2020- 21/1031494887(1) 3rd (Annexure F).

ix Quash the impugned Order under Section 270A of the Income Tax Act, 1961 dated 28.01.2022 bearing No.

ITBA/PNL/F/270A/2021- 22/1039162856(1) passed by the 4th Respondent. (Annexure G)

x. Quash the impugned Notice of Demand dated 28.01.2022 No ITBA/PNL/S/156/2021- 22/1039162437(1) Annexure H along with Computation Sheet ITBA/PNL/S/157/2021- 22/1038664104(1) both passed by the 4th Respondent. (Annexure H1).

xi Quash the impugned Order under Section 271AAC (1) of the Income Tax Act, 1961 dated 04.02.2022 bearing ITBA/PNL/F/271AAC(1)/2021-22/1039385597(1) passed by the 4th Respondent. (Annexure J)

xii. Quash the impugned Notice of Demand dated 03.02.2022 ITBA/PNL/S/156/2021- 22/1039383354(1) 4th (Annexure K).

xiii. Pass such other or further order as this Hon’ble Court may deem fit in the facts and circumstances of the case, and in the interests of justice and equity.”

2.

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

3.

A perusal of the material on record will indicate that pursuant to exchange of notices and replies between the petitioner and the respondents, a show cause notice dated 07.12.2019 was issued to the petitioner, who submitted a reply dated 21.12.2019

and sought for further time to submit additional reply and documents to the respondents. It is the grievance of the petitioner that despite making the aforesaid request in his reply dated 21.12.2019 and the subsequent, prevailing Covid-19 pandemic exigency, the respondents have proceeded to pass the impugned assessment order followed by the impugned notices, which are assailed in the present petition on the ground that there was violation of principles of natural justice, since sufficient and reasonable opportunity had not been granted/provided in favour of the petitioner, who is before this Court by way of the present petition.

4.

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

5.

A perusal of the reply dated 21.12.2019 submitted by the petitioner will indicate that despite the specific request made by the petitioner seeking some more time to collate and submit additional reply along with relevant documents, the respondents have proceeded to pass the impugned assessment order at Annexure-B dated 26.12.2019 followed by consequential notices etc., without referring to the said reply dated 21.12.2019 and

without providing sufficient or reasonable opportunity to the petitioner in this regard, thereby violating principles of natural justice coupled with the prevailing Covid-19 pandemic exigency. Under these circumstances, by adopting a justice oriented approach and in order to provide one more opportunity to the petitioner to submit his replies/additional replies along with documents to the show-cause notices dated 12.11.2019 and 07.12.2019, I deem it just and appropriate to set aside the impugned order at Annexure-B dated 26.12.2019 consequential notices etc., and remit the matter back to the respondents for reconsideration afresh in accordance with law. ORDER [a] The petition is hereby allowed.

[b] The impugned order at Annexure-B dated 26.12.2019 as well as the impugned notices at Annexures-B1, B2 and C, all dated 26.12.2019, the impugned notice at Annexure-D dated 27.12.2019, impugned notice at Annexure-E dated 15.03.2021, impugned notice at Annexure-F dated 15.03.2021, impugned order at Annexure-G dated 28.01.2022, impugned notice and computation sheet at Annexures-H and H1 both

dated 28.01.2022, impugned order at Annexure-J dated 04.02.2022 and impugned notice at Annexure- K dated 03.02.2022, are all hereby set aside.

[c] The matter is remitted back to the concerned respondent for reconsideration afresh to the stage of the petitioner submitting his replies/additional replies along with documents to the show-cause notices dated 12.11.2019 and 07.12.2019, in accordance with law.

[d] Liberty is reserved in favour of the petitioner to submit his response/reply along with the documents before the concerned respondents, who shall consider the same provide sufficient reasonable opportunity to the petitioner and hear him and proceed further in accordance with law.

Sd/- (S.R.KRISHNA KUMAR) JUDGE

BMC List No.: 1 Sl No.: 36

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