PRATHAMIKA KRISHI PATTINA vs. ASSESSING OFFICER

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WP/104234/2023HC KarnatakaKAHC02010301202305 October 2023Author: SACHIN SHANKAR MAGADUM4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court found the impugned assessment order to be in gross violation of the principles of natural justice. The Court noted the petitioner's submission that it receives funds from NABARD and DCC bank, which are advanced to member farmers at low interest rates, suggesting there might be no taxable income warranting the show-cause notice. Consequently, the Court decided to remit the matter back to the Assessing Officer for a rehearing. The assessment order dated 22.03.2023 was set aside. The Assessing Officer was directed to issue a fresh show-cause notice, granting sufficient opportunity to the petitioner to substantiate its claim. The petitioner was directed to furnish all necessary documents and seek exemption under Section 80P of the Income Tax Act.

What were the facts?

The petitioner, Prathimika Krishi Pattina Sahakara Sangha Niyamita, filed a writ petition challenging an assessment order dated 22.03.2023 for Assessment Year 2018-19, passed by the Assessing Officer (National Faceless Assessment Centre), and an order under Section 148A(d) dated 30.03.2022, passed by the Income Tax Officer. The petitioner claimed it receives funds from NABARD and DCC bank, which are advanced to member farmers at low interest rates, and therefore, it earns no income and carries on no banking activity. The assessment order was also challenged on grounds of violation of principles of natural justice. The petitioner highlighted that a show-cause notice was issued on 08.03.2023, requiring compliance by 10.03.2023, followed by a final show-cause notice on 13.03.2023, requiring compliance by 15.03.2023.

What were the issues?

1. Whether the assessment order dated 22.03.2023 for AY 2018-19, passed by the Assessing Officer, is sustainable in law, considering the petitioner's contention that it earns no taxable income as it merely channels funds from NABARD and DCC bank to member farmers and does not engage in banking activities? (Question of law and fact, concerning the nature of income and activities). 2. Whether the assessment order and the preceding notices were issued in violation of the principles of natural justice, specifically regarding the short timelines provided for compliance? (Question of law). Assessee's Contentions: The petitioner argued that it earns no income as it only facilitates financial transactions between NABARD/DCC bank and its member farmers, advancing funds at low interest. It claimed no credit or banking activity was undertaken by the society. Furthermore, the petitioner contended that the timelines for responding to the show-cause notices were unreasonably short, violating the principles of natural justice. Revenue's Contentions: The judgment does not record specific contentions made by the revenue.

Which sections of the Income-tax Act were involved?

Section 80P

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH

DATED THIS THE 5TH DAY OF OCTOBER, 2023

BEFORE

THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM

WRIT PETITION NO. 104234 OF 2023 (T-IT)

BETWEEN:

PRATHAMIKA KRISHI PATTINA SAHAKARA SANGHA NIYAMITA, VARALAHALLI, PRATHAMIKA KRISHI PATTINA VARALAHALLI, HAGARIBOMMANAHALLI, BALLARI-583212. (REGISTERED UNDER KARNATAKA CO-OPERATIVE SOCIETIES ACT) REPRESENTED BY ITS IN-CHARGE SECRETARY, SRI BASAVARAJ M. S/O. SUBRAMANYA, AGED ABOUT: 42 YEARS. …PETITIONER

(BY SRI M.V. SHESHACHALA SENIOR COUNSEL FOR SRI PRAVEEN P. TARIKAR, ADVOCATE)

AND:

1.

ASSESSING OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, NO.412-413, IST FLOOR, OPP. METRO PILLAR NO.793, DWARKA MOR, NEW DELHI-110059.

2.

INCOME TAX OFFICER, WARD NO.1 & TPS, AYAKAR BHAVAN, M.J. NAGAR, 1ST CROSS, DAM ROAD, HOSAPETE-583203.

3.

PRINCIPAL COMMISSIONER OF INCOME TAX, C.R. BUILDING, NAVANGAR, HUBBALLI-580025.

…RESPONDENTS (BY SRI Y.V. RAVIRAJ, ADVOCATE)

MOHANKUMAR B SHELAR Digitally signed MOHANKUMAR B SHELAR Date: 2023.10.11 16:08:32 +0530

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF CERTIORARI TO QUASH THE ASSESSMENT ORDER DATED 22.03.2023 BEARING NO.ITBA/AST/S/147/2022-23/1051143104(1) ANNEXURE-F FOR THE ASSESSMENT YEAR 2018-19 PASSED BY THE FIRST RESPONDENT; ISSUE A WRIT OF CERTIORARI TO QUASH THE ORDER U/S.148A(d) OF THE IT ACT DATED 30.03.2022 BEARING NO.ITBA/AST/F/148A/2021-22/1042124442(1) ANNEXURE-D1 FOR THE ASSESSMENT YEAR 2018-19 PASSED BY THE SECOND RESPONDENT.

THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:

ORDER

The captioned writ petition is filed assailing the impugned assessment order dated 22.03.2023 passed by respondent No.1 vide Annexure-F. 2. Petitioner-society has questioned the impugned assessment order on two counts. Petitioner claims that it is receiving funds from NABARD and DCC bank which are in turn advanced to member farmers for low interest of 2 to 3% and therefore, a specific contention is taken that no income is earned as no credit or banking activity was carried on by the petitioner. Therefore, the petitioner claims that assessment order is not sustainable. The

impugned assessment order is also challenged on the ground of violation of principles of natural justice. 3. Learned senior counsel appearing for the petitioner referring to the order under challenge would bring to the notice of this court that show-cause notice was issued on 08.03.2023 seeking compliance 10.03.2023, while final show-cause notice was issued on 13.03.2023 and seeking compliance by 15.03.2023. 4. The impugned order under challenge is prima facie found in gross violation of principles of natural justice. Therefore, I am of the view that matter needs to be remitted back to respondent No.1-Assessing Officer to rehear the matter. I am also more than satisfied that the matter needs to be remitted back in the light of the stand taken by the petitioner-society that it is receiving funds from NABARD and DCC bank which are in turn advanced to member farmers for low interest. Therefore, there is no taxable income which would have warranted an impugned show-cause notice as done in the present case on hand.

5.

For the reasons stated supra, I pass the following: ORDER i) The writ petition is allowed. ii) Impugned assessment order dated 22.03.2023 issued by respondent No.1 vide Annexure-F is set aside. iii) Respondent No.1 shall issue fresh show- cause notice granting sufficient opportunity to the petitioner to substantiate its claim. iv) On receipt of notice, petitioner shall furnish all the documents and seek exemption under Section 80P of the Income Tax Act.

Sd/- JUDGE

MBS List No.: 1 Sl No.: 61

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