MR. NARAYANASETTY SRINIVASA vs. INCOME TAX OFFICER

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WP/23728/2024HC KarnatakaKAHC01050365202430 August 2024Author: S.R.KRISHNA KUMAR6 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court allowed the petition. The Court observed that the assessment order did not specify the details of service of notice upon the petitioner or whether it was uploaded on the portal or sent to the registered e-mail ID. Paragraph 3 of the assessment order merely stated that a show cause notice under Section 143(2) was issued but did not mention when it was delivered or served. Consequently, the Court found that the impugned notices and the assessment order were not issued after providing sufficient and reasonable opportunity to the petitioner, violating the principles of natural justice. Therefore, the impugned assessment order was set aside. The matter was remitted back to the 4th respondent for reconsideration. Liberty was granted to the petitioner to submit a response/reply along with documents, which the 4th respondent was directed to consider. The Court also noted that if an order was passed against the petitioner after remand, the 4th respondent would be entitled to claim interest on the amount in terms of the Notice of Demand dated 30.12.2018.

What were the facts?

The petitioner, Mr. Narayanasetty Srinivasa, filed a writ petition before the High Court of Karnataka challenging several notices and an assessment order issued by the Income Tax Department. The impugned orders included a show cause notice dated 24.12.2018, notices under Section 274 read with Section 271(1)(c) dated 29.12.2018 and 30.12.2018, an assessment order dated 30.12.2018, a notice of demand under Section 156 dated 30.12.2018, and subsequent penalty notices dated 17.01.2022 and 22.08.2022. The petitioner contended that the assessment order was unreasoned, non-speaking, and passed without providing sufficient opportunity to submit a reply, violating principles of natural justice. The petitioner also stated an unconditional withdrawal of an appeal filed before the appellate authority concerning the impugned order.

What were the issues?

1. Whether the impugned assessment order and related notices were passed in violation of the principles of natural justice due to lack of sufficient opportunity to the petitioner to submit a reply and the absence of details regarding the service of the show cause notice under Section 143(2) of the Income Tax Act, 1961? Assessee's Contention: The petitioner argued that the assessment order was unreasoned and non-speaking. Crucially, the details of how and when the show cause notice dated 24.12.2018 under Section 143(2) was served were absent. The petitioner claimed that the assessment order was passed without providing a sufficient and reasonable opportunity to submit a reply, thereby violating the principles of natural justice. Revenue's Contention: The learned counsel for the respondents-revenue submitted 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 143(2),Section 271(1)(c),Section 274,Section 156

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30TH DAY OF AUGUST, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 23728 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. ALOKE MADAPPA, ADVOCATE)

AND:

1.

INCOME TAX OFFICER, WARD 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 FACELESS ASSESSMENT CENTRE INCOME TAX DEPARTMENT, ROOM NO.401, 2ND FLOOR, E RAMP, JAWARHARLAL NEHRU STADIUM, DELHI 110 003. REP BY ADDITIONAL/JOINT/DEPUTY/ ASST. COMMISSIONER OF INCOME TAX.

4.

DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(3) BLR, CENTRAL REVENUE BUILDING, QUEENS ROAD, BENGALURU 560 001. …RESPONDENTS (BY SRI.M. DILIP, ADVOCATE)

Digitally signed by LEELAVATHI S R Location: High Court of Karnataka

THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED SHOW CAUSE NOTICE DTD. 24.12.2018 BEARING NO. ITBA/AST/F/143(3) (SCN)/20/18-19/1014554659(1) ISSUED BY THE R-2 (ANNX-A) 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, petitioner seeks for the following reliefs:-

“i) Quash the impugned Show Cause Notice dated. 24.12.2018 No.ITBA/AST/F/143(3) (SCN)/20/18- 19/1014554659(1) issued by the 2nd Respondent (ANNXURE- A).

ii) Quash the impugned Notice issued under Section 274 read with Section 271 (1)(c) dated 29.12.2018 bearing No. ITBA/PNL/S/271(1)(c)/2018-19/1014661568(1) issued by the 2nd Respondent (ANNEXURE-B).

iii) Quash the impugned Notice issued under Section 274 read with Section 271 (1)(c) dated 30.12.2018 bearing No. ITBA/PNL/S/271(1)(c)/2019-20/1016294781(1) issued by the 2nd Respondent (ANNEXURE-C).

iv) Quash the impugned Assessment Order bearing No. ITBA/AST/S/143(3)/2018-19/1014661559(1) (ANNEXURE-D) along with Computation sheet No. ITBA/AST/S/114/2018-19/1014661564(1) both dated 30.12.2018 (ANNEXURE-D1) both passed by the 2nd Respondent.

v) Quash the impugned Notice of Demand under Section 156 dated 30.12.2018 bearing No. ITBA/AST/S/156/2018-

19/1014661565(1) issued by the 2nd Respondent (ANNEXURE- D2). vi) Quash the impugned Show Cause Notice for Penalty dated 17.01.2022 under Section 271(10(c) of the Income Tax Act, 1961 No. ITBA/PNL/F/271(1)(c)/2021- 22/1038779328(1) issued by the 3rd Respondent (ANNEXURE- E).

vii) Quash the impugned Notice for Penalty dated 22.08.2022 under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 bearing No. ITBA/PNL/F/271(1)(C)/2022- 23/1044843934(1) issued by the 4th Respondent (ANNEXURE-- F).

viii) quash the impugned Notice for Penalty dated 22.08.2022 under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 bearing No. ITBA/PNL/F/271(1)9C)/2022- 23/1044847719(1) issued by the 4th Respondent (ANNEXURE-- G).

ix) 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 parties and perused the material on record.

3.

In addition to reiterating various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner invited my attention to the impugned order in order to point out that apart from the fact that the same is un-reasoned and

non-speaking order, the details as regards how and when the show cause notice dated 24.12.2018 under Section 143(2) of the Income Tax Act, 1961 (for short, ‘the I.T.Act’) was allegedly served upon the petitioner are conspicuously absent in the impugned order and the 2nd respondent has proceeded to pass the impugned assessment order without providing sufficient and reasonable opportunity to the petitioner to submit his reply along with the documents, thereby violating principles of natural justice and as such, the petitioner is before this Court by way of present petition.

3.1 Learned counsel for the petitioner submits that he would unconditionally withdraw the appeal filed by him before the appellate authority in relation to the impugned order. The said submission is placed on record.

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 the 2nd respondent has not stated the details as to the service of notice upon the petitioner or as to whether the same was uploaded on the portal or sent to the registered e-mail ID of the petitioner. In

paragraph-3 of the impugned assessment order, except stating that the show cause notice under Section 143(2) of the I.T. Act was issued to the petitioner, the 2nd respondent has not stated as to when the said notice was delivered/served upon the petitioner. Under these circumstances, I am of the considered opinion that the impugned notices, proceedings culminating in the impugned assessment order cannot be said to have been done after providing sufficient and reasonable opportunity to the petitioner, thereby violating the principles of natural justice and consequently, the impugned order deserves to be set aside by adopting justice oriented approach and to provide one more opportunity to the petitioner to submit his reply to the said notice issued under Section 143(2) of the I.T.Act and with a direction to the respondents to proceed further in accordance with law. However, it is to be stated that since indulgence is being shown in favour of the petitioner after a lapse of almost six years from the date of the impugned order, in the event, the 2nd respondent passes an order against the petitioner after remand by virtue of this order, the 2nd respondent would be entitled to claim interest on the amount in terms of the Notice of Demand at Annexure-D2 dated 30.12.2018.

6.

In the result, I pass the following:- ORDER

(i) Petition is hereby allowed.

(ii) The impugned assessment order at Annexure-D dated 30.12.2018 passed by the 2nd respondent is hereby set aside.

(iii) The matter is remitted back to the *4th respondent for reconsideration afresh in accordance with law.

(iv) Liberty is reserved in favour of the petitioner to submit his response/reply along with the documents to the *4th respondent, who shall consider the same and proceed further in accordance with law.

(v) In the event, the *4th respondent does not accept the response/reply of the petitioner and passes an order against the petitioner, the *4th respondent would be entitled to claim interest on the amount in terms of the Notice of Demand at Annexure-D2 dated 30.12.2018.

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

Srl.

*Corrected vide court order dated 17.01.2025.

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