SMT. A . SARASWATHI vs. PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX

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WP/15179/2023HC KarnatakaKAHC01035541202327 July 2023Author: S SUNIL DUTT YADAV4 pages
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What did the High Court hold?

The High Court held that an objection relating to the competency for issuing a notice under Section 148A of the Income Tax Act, 1961, can be entertained even at a later stage, provided it goes to the root of the matter and concerns an infirmity in the initial notice which forms the basis for reopening proceedings. The Court found that the notice was issued beyond three years from the end of the assessment year, and the necessary sanction from the authority under Section 151(ii) of the Act was not obtained. Consequently, the Court allowed the petition, setting aside the notice dated 19.04.2021 and other related orders. The respondents were granted liberty to initiate fresh proceedings as permissible in law, with all contentions kept open. The ratio decidendi is that procedural defects in the initiation of reassessment proceedings, particularly the lack of proper sanction for notices issued beyond the three-year period, can be a ground for quashing such proceedings even at a later stage.

What were the facts?

The petitioner, Smt. A. Saraswathi, filed a writ petition challenging a notice dated 19.04.2021 and a subsequent document dated 26.05.2022, both issued by the Income Tax Officer (R-3). The respondents, represented by Sri. Sushal Tiwari, argued that the writ petition was filed belatedly after the assessment order had been passed and that the matter was at the stage of issuing a notice regarding a penalty order. They contended that the petitioner had not challenged the reopening of proceedings earlier and was raising contentions at a late stage. However, the Court noted that objections going to the root of the matter, such as infirmity in the initial notice, could be entertained even at a later stage.

What were the issues?

1. Whether an objection regarding the competency for issuing a notice under Section 148A of the Income Tax Act, 1961, can be entertained at a later stage, even after an assessment order has been passed, if the objection relates to an infirmity in the initial notice which is the premise for reopening proceedings? Assessee's Contention: The petitioner implicitly argued that the initial notice was infirm, warranting intervention by the Court. The specific grounds of infirmity were not detailed in the provided text, but the Court's eventual finding suggests a challenge to the validity of the reopening process. Revenue's Contention: The respondents argued that the writ petition was filed belatedly. They contended that the assessment order had already been passed, and the matter was progressing towards penalty proceedings. They also argued that the petitioner had not challenged the reopening of proceedings at an earlier stage and that the grounds now raised were being advanced belatedly.

Which sections of the Income-tax Act were involved?

Section 148A,Section 151

AI-generated summary — verify with the full judgment below

Before: SMT. A . SARASWATHI

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF JULY, 2023 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 15179 OF 2023 (T-IT) BETWEEN: 1. SMT. A . SARASWATHI WIFE OF MR. K. NARAYANASWAMY, AGED ABOUT 55 YEARS, RESIDING AT NO. 197, SAMETHANAHALLY VILLAGE HOSKOTE TALUK, BANGALORE - 560 067. … PETITIONER (BY SRI. SYED KHAMRUDDIN., ADVOCATE) AND: 1. PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX KARNATAKA AND GOA REGION GROUND FLOOR, CR BUILDING, NO.1, QUEENS ROAD, BENGALURU - 560 001 2. PRINCIPAL COMMISSIONER OF INCOME TAX-2. KORAMANGALA, 3. INCOME TAX OFFICER WARD 4(2) (1), BANGALORE, Digitally signed by VIJAYA P Location: High Court of Karnataka

INCOME TAX DEPARTMENT, KORAMANGALA 4. ASSESSMENT UNIT INCOME TAX DEPARTMENT, KORAMANGALA … RESPONDENTS (BY SRI. SUSHAL TIWARI., ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED NOTICE DTD 19/4/2021 BEARING DIN NO.ITBA/AST/S/148/2021-22/1032518465(1) ISSUED BY THE R-3 (ANNEXURE-A) AND DOCUMENT DTD 26.5.2022 BEARING DIN NO.ITBA/COM/F/17/2022-23 /1043173901(1) ISSUED BY THE R-3 (ANNEXURE-A1) AND ETC.

THIS W.P. COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER

Learned Counsel Sri Sushal Tiwari appearing on behalf of the respondent would submit that the matter is proceeded and assessment order being passed and the present writ petition has been filed at a belated stage and nothing prevented the petitioner from approaching this

Hon'ble court at an earlier point of time if there was any jurisdictional error.

2.

Learned counsel has also submitted that there was no challenge on the ground that is now raised as regards re-opening of the proceedings and accordingly contentions are being advanced at a belated stage after the assessment order is passed and that the matter is at the stage of issuing notice regarding penalty order.

3.

However, any objection which goes to the root of the matter relating to the infirmity in the initial notice which is the premise on which proceedings are sought to be re-opened could be entertained even at a later stage. It is noticed that as notice is issued beyond three years from the end of the assessment year, the sanction however is not obtained of the authority under Section 151 (ii) of the Act. As such, objection relates to the competency for issuing of notice under Section 148A can be entertained even though at a later stage, and accordingly such contention stands rejected.

4.

Accordingly, the petition is allowed. The notice dated 19.04.2021 at Annexure-A, order dated 25.07.2022 at Annexure-B, notice dated 25.07.2022 at Annexure-C and order dated 26.05.2023 at Annexure-F are set aside. Liberty is reserved to the respondents to initiate fresh proceedings as is permissible in law as regards to the subject matter of the present proceedings. All contentions are kept open. Sd/- JUDGE NP

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