M/S SUVARNA SOUHARDA CREDIT CO OPERATIVE LIMITED vs. THE INCOME TAX OFFICER

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WP/21216/2023HC KarnatakaKAHC01049629202327 September 2023Author: B M SHYAM PRASAD6 pages
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What did the High Court hold?

The High Court allowed the petition in part. It quashed the impugned order dated March 24, 2023, passed under Section 148A(d) and the notice dated March 24, 2023, issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2019-20. The Court held that the petitioner had not been afforded a reasonable opportunity to respond to the notice under Section 148A(b). The petitioner was granted liberty to file an application for additional information with the Income Tax Officer within one week of receiving a certified copy of the order. The Income Tax Officer was directed to complete the proceedings under Section 148A(d) after considering the petitioner's reply in light of the provided information and after giving due opportunity to the petitioner as permissible in law. No specific issue was left undecided; the quashing was based on procedural deficiency.

What were the facts?

The petitioner, M/s Suvarna Souharda Credit Co Operative Limited, filed a writ petition challenging a notice issued under Section 148A(b) of the Income Tax Act, 1961, dated January 31, 2023, and an order passed under Section 148A(d) dated March 24, 2023, both pertaining to Assessment Year 2019-20. The petitioner argued that the notice under Section 148A(b) was initially sent to an incorrect email address and the subsequent notice, sent to the correct email address, provided only four days for a response. The petitioner contended this did not provide a reasonable opportunity to file a response for adjudication under Section 148A(d). The revenue's counsel was unable to controvert this lack of reasonable opportunity.

What were the issues?

1. Whether the petitioner was afforded a reasonable opportunity to file a response to the notice issued under Section 148A(b) of the Income Tax Act, 1961, for the Assessment Year 2019-20, as required for adjudication under Section 148A(d)? Assessee's Contentions: - The notice under Section 148A(b) was initially sent to an incorrect email address. The subsequent notice to the correct email address provided only four days for a response, which is insufficient. - This lack of reasonable opportunity prevented the petitioner from demonstrating that returns were filed for the subject assessment year with the correct PAN number and that the proceedings might be impermissible for other reasons. Revenue's Contentions: - The revenue's counsel was unable to controvert the petitioner's submission regarding the lack of a reasonable opportunity to respond. - The revenue suggested that the petitioner be reserved with liberty to file an application for furnishing of specific information, which would then be considered along with the petitioner's reply.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148

AI-generated summary — verify with the full judgment below

Before: SHRI SAI ESHWARA COMPLEX,

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF SEPTEMBER, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 21216 OF 2023 (T-IT) BETWEEN: M/S SUVARNA SOUHARDA CREDIT CO OPERATIVE LIMITED REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER, SRI VISHWANATH S M S/O LATE SRI S MANJUNATH, AGED ABOUT 51 YEARS, SHRI SAI ESHWARA COMPLEX, CHANDRAYA SHETY, ABOVE GRANDIGE STORES HORAPETEE MAIN ROAD, TUMKUR KARNATAKA-572101 OLA PAN AATCS3934M NEW PAN AAPAS9945N …PETITIONER (BY SRI. ANNAMALAI S., ADVOCATE) AND: 1. THE INCOME TAX OFFICER WARD 1 AND TPS TUMKUR AAYAKAR BHAVAN, RAMAKRISHNA NAGAR, KUNIGAL ROAD, TUMKUR KARNATAKA-572103

2.

THE PRINCIPAL COMMISSIONER OF INCOME TAX BENGALURU-2 BMTC BUILDING, 80 FT ROAD,

Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA

6TH BLOCK, KORAMANGALA BENGALURU-560095 …RESPONDENTS (BY SRI. E.I.SANMATHI, ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE NOTICE ISSUED UNDER SECTION 148A(B) OF THE ACT DATED 31/01/2023 BEARING DIN AND NOTICE NO. ITBA/AST/F/148A(SCN)/2022-23/1049264020(1) ISSUED BY THE R1 FOR THE ASSESSMENT YEAR 2019- 20 HEREIN MARKED AS ANNEXURE-A1; QUASH THE ORDER DATED 24/03/2023 PASSED UNDER SECTION 148A)(D) OF THE ACT BEARING DIN AND NOTICE NO ITBA/AST/F/148A(SCN)/2022-23/1051251720(1) ISSUED BY THE R1 FOR THE ASSESSMENT YEAR 2019- 20 HEREIN MARKED AS ANNEXURE-A2 AND ETC.

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

The petitioner is aggrieved inter alia by the order dated 24.03.2023 [Annexure-A2] under Section 148A(d) of the Income Tax Act, 1961 [for short, ‘the IT Act’] and the simultaneous notice under Section 148 thereof [Annexure-A3] for the assessment year 2019- 20. Sri. S. Annamalai, the learned counsel for the petitioner, and Sri. E.I.Sanmathi, the learned standing counsel for the respondents, are heard for final disposal of the petition.

2.

It is undisputed that notices under Section 148 of the IT Act were issued to the petitioner for the assessment years 2016-17 and 2017-18 and the proceedings thereunder are dropped for similar reasons, and the reasons recorded are as follows:

“In response to this notice, the assessee has submitted copy of return of income filed along with the financials for A.Y:2016-17. It has also filed reply stating that it has duly filed its return of income for A.Y 2016-17 in the new PAN obtained in the status of AJP and all the above cash transactions have been duly accounted for in the said return of income. As regards the PAN AATCS3934M, it had already made a request for deletion of the same since this PAN was issued wrongly in the status of a firm, whereas the assessee being a society.”

3.

It is contended that for the current year, notice under Section 148A(b) of the IT Act was first addressed to the petitioner to the E-mail address negvinu06@gmail.com on 31.01.2023, and later a similar notice is also sent, apart from the aforesaid E-mail address, to nagvinu06@gmail.com, the petitioner’s correct E-mail ID. As only four days were

permitted in the second notice, the petitioner has filed a request for time and without extending such opportunity, the impugned order dated 24.03.2023 is issued resulting in simultaneous notice under Section 148 of the IT Act.

4.

Sri. S. Annamalai submits that, amongst others, the aforesaid circumstance demonstrates that the petitioner did not have a reasonable opportunity to file a response for a complete adjudication under Section 148A(d) of the IT Act; and if such opportunity was really extended, the petitioner could have demonstrated that returns are filed for the subject assessment year with the correct PAN number and also that the proceedings would be impermissible because of other reasons.

5.

Sri. E. I. Sanmathi is unable to controvert that the petitioner has not had a reasonable opportunity to respond to the notice under Section 148A(b) of the IT Act. In which event, this Court

must intervene, and as regards Sri. S. Annamalai’s contention that requisite information has not been furnished, Sri. E. I. Sanmathi submits that the petitioner may be reserved with liberty to file an application with the first respondent – the Income Tax Officer - for furnishing of specific information, and such information will be furnished, and orders passed under Section 148A(d) of the IT Act in the light of the reply filed by the petitioner upon receipt of such information. In the light of the afore, the petition stands disposed of by the following: ORDER a) The petition is allowed in part.

b) The impugned order dated 24.03.2023 [Annexure-A2] under Section 148A(d) of the IT Act and the notice dated 24.03.2023 [Annexure-A3] under Section 148 thereof are quashed.

c) The petitioner is reserved with liberty to file an application with the first respondent – the Income Tax Officer - for additional information within a period of one [1] week from the date of receipt of a certified copy of this order.

d) The first respondent is directed to complete the proceedings under Section 148A(d) of the IT Act after considering the reply that is filed by the petitioner in the light of such information after due opportunity to the petitioner as would be permissible in law.

Sd/- JUDGE

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