M/S. ASHOK LOGISTICS SYSTEMS vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX

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WP/101209/2024HC KarnatakaKAHC02002179202420 March 2024Author: M.G.UMA8 pages
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What did the High Court hold?

The High Court, while perusing the materials on record, noted that the petitioner's contention regarding non-service of notices could not be accepted in view of the specific averments made in the assessment order regarding service of notices. Consequently, the argument that the petitioner was not given a sufficient opportunity of being heard and that the order was ex-parte was also not accepted. The Court observed that several notices were issued to the petitioner before the assessment order dated March 19, 2022, was passed, and despite these notices, the petitioner did not appear before the authority or comply with the demands. The ground that the order was passed during COVID-19 was also not accepted. However, despite finding no reason to entertain the petition, the Court, in the interest of justice, decided to quash the assessment order (Annexure-D) and demand notice (Annexure-F) to afford one more opportunity to the petitioner to be heard. The petitioner was directed to file income tax returns for AY 2014-15 within 30 days and cooperate with the procedure.

What were the facts?

The petitioner, M/s. Ashok Logistics Systems, a partnership firm, is challenging a notice issued under Section 148 of the Income Tax Act, 1961, dated March 29, 2021, and an ex-parte assessment order and demand notice both dated March 19, 2022. The petitioner states that for Assessment Year 2014-15, they could not file their income tax returns due to the second wave of COVID-19. They claim that notices under Section 142(1) were not served, and they were not given an adequate opportunity to present their case before the ex-parte assessment order was passed. The respondents contend that multiple notices were issued and served, including under Sections 142(2) and 143(1), and a show-cause notice under Section 144 was issued on March 8, 2022, to which there was no response.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, dated March 29, 2021, and the subsequent ex-parte assessment order and demand notice dated March 19, 2022, are liable to be quashed on the grounds of non-service of notices and denial of adequate opportunity to the petitioner. Assessee's contentions: - The petitioner, a partnership firm engaged in logistics services, could not file income tax returns for AY 2014-15 due to the second wave of COVID-19. - Notices under Section 142(1) were not served. - The ex-parte assessment order and demand notice were passed without providing an adequate opportunity to represent their case. - If granted a reasonable opportunity, the petitioner will file returns and cooperate with the authorities. Revenue's contentions: - The petitioner has admittedly not submitted returns for AY 2014-15. - Several notices were issued in accordance with law, including under Sections 142(2) and 143(1), and were served on the petitioner via speed post, but there was no compliance. - A show-cause notice under Section 144 was issued on March 8, 2022, fixing a hearing for March 13, 2022, cautioning about ex-parte assessment, but there was no response. - The notice under Section 148 was issued on March 30, 2021, and duly served, with no response. - There was no waiver of COVID-19 during the relevant period, hence no grounds for relief.

Which sections of the Income-tax Act were involved?

Section 148,Section 142(1),Section 142(2),Section 143(1),Section 144,Section 147

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH

DATED THIS THE 20TH DAY OF MARCH, 2024

BEFORE

THE HON'BLE MRS. JUSTICE M.G.UMA

WRIT PETITION NO.101209 OF 2024 (T-IT)

BETWEEN:

M/S. ASHOK LOGISTICS SYSTEMS. A PARTNERSHIP FIRM, FORMED AS PER THE PROVISIONS OF PARTNERSHIP ACT 1932, REP. BY SRI. ASHOK C. JALAGAR, AGE: 49 YEAR, PARTNER ADDRESS: 08-A-47, 2ND CROSS, SIDDHART COLONY, NEAR NEW BUS STAND, PB ROAD, DHARWAD, KARNATAKA – 580 008. …PETITIONER (BY SRI MALLAHARAO K., AND SRI H. R. KAMBIYAVAR, ADVOCATE)

AND:

1.

THE PRINCIPAL COMMISSIONER OF INCOME TAX, C R BUILDING, NAVANAGAR, HUBBALLI, KARNATAKA – 580 025.

2.

GOVERNMENT OF INDIA, MINISTRY OF FINANCE, INCOME TAX DEPARTMENT, NATIONAL FACE LESS E - ASSESSMENT CENTRE, INSIDE JAWAHARLAL NEHRU STADIUM, NEW DELHI – 110 001.

Digitally signed by MANJANNA E Location: High Court of Karnataka

3.

THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1) AND TPS, C. R. BUILDING, NAVANAGR, HUBBALLI, KARNATAKA – 580 025. …RESPONDENTS (BY SRI THIRUMALESH M., AND SMT. ROOPA ANVEKAR, ADVOCATES)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO, ISSUE WRIT OF CERTIORARI OR IN THE LIKE NATURE OF CERTIORARI QUASHING THE NOTICE ISSUED UNDER SECTION 148 OF THE INCOME TAX ACT DATED 29.03.2021 BEARING DIN NO.ITBA/AST/S/148/2020-21/1031866996(1) VIDE ANNEXURE-A, ISSUED BY RESPONDENT-3. ISSUE WRIT OF CERTIORARI OR IN THE LIKE NATURE OF CERTIORARI QUASHING THE EX-PARTE ASSESSMENT ORDER AND DEMAND NOTICE BOTH DATED 19.03.2022, BEARING DIN- ITBA/AST/S/147/2021-22/1041072324(1), AND DIN- ITBA/AST/S/156/2021-22/1041072378(1) AT ANNEXURE-D AND ANNEXURE-F. PASSED BY THE RESPONDENT NO.2. ISSUE WRIT OF PROHIBITION, DIRECT THE RESPONDENT AUTHORITY NOT TO TAKE ANY FURTHER STEPS PURSUANT TO IMPUGNED EX-PARTE ASSESSMENT ORDER DATED 19.03.2022, BEARING DIN-ITBA/AST/S/147/2021-22/1041072324(1), AND DEMAND NOTICE DATED 19.03.2022 VIDE DIN-ITBA/AST/S/156/2021- 22/1041072378(1) AT ANNEXURE-D AND ANNEXURE-F PASSED BY R2 AND ETC.,

THIS PETITION, COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING:

ORDER

The petitioner filed this petition impugning the assessment order and demand notice dated 19.03.2022 issued by respondent No.3 produced as per Annexures-D and F. 2. Heard the learned counsel Sri.Mallaharao K for learned counsel Sri.H.R.Kambiyavar for the petitioner and learned counsel Sri.Thirumalesh M. for learned counsel Smt.Roopa Anvekar for the respondents. 3. Learned counsel for the petitioner contended that petitioner is a partnership firm and is an assessee under the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ for short). It engaged in the business of logistics services. For the assessment year 2014-15, the petitioner could not file its income tax returns. Respondent No.3 issued notice under Section 148 of the Act on 29.03.2021 directing the petitioner to file its returns within a period of 35 days. Since it was during second waive of Covid-19, the petitioner could not approached his auditor

or tax consultant for the purpose of filing the returns. The respondents proceeded to issue notices calling for the petitioner to produce documents and information under Section 142(1) of the Act. Notices as per Annexures-B, B1 and B2 were issued, but notices were not served on the petitioner and he could not give any reply. In the meantime, respondent No.2 passed ex-parte assessment order, pursuant to the show-cause notice dated 08.03.2022, without providing adequate opportunity to the petitioner to represent his case. On the basis of the assessment order, the demand notice was also issued as per Annexure-F, on the basis of the computation sheet produced as per Annexure-E. Therefore, the learned counsel submitted that, if reasonable opportunity is granted to the petitioner by quashing the assessment order and demand notice produced as per Annexures-D and F, the petitioner will make necessary arrangements to appear before the respondents and to submit his income tax returns. Therefore, he prays for allowing the petition.

4.

Per contra, learned counsel appearing for the respondents opposing the petition submitted that, admittedly, petitioner has not submitted returns for the assessment year 2014-15. Several notices were issued, in accordance with law, calling upon the petitioner to submit his returns. In spite of that, there was no response. Notices under Sections 142(2) and 143(1) of the Act were also issued. However, once again hard copies of the notices were sent to the petitioner through speed post. Even the said notices were served on the petitioner, but there was no compliance by the petitioner. Finally, show- cause notice under Section 144 of the Act was issued on 08.03.2022 fixing the date of hearing on 13.03.2022 cautioning the petitioner that, if he failed to show-cause as to why the assessment should not be completed under Section 144 of the Act, the authority will proceed to pass necessary assessment order. In spite of that, there was no response. Annexure-D is the assessment order, which discloses that assessee has escaped assessment within the meaning of Section 147 of the Act and notice under

Section 148 of the Act was issued on 30.03.2021. The notice was duly served on the petitioner, but there was no response. 5. During all these period, there was no waive of Covid-19 and therefore, no grounds are made out by the petitioner for granting the relief in his favour. Accordingly, he prays for dismissal of the writ petition. 6. However, learned counsel for the respondents submitted that if the court finds it necessary to afford one more opportunity to the petitioner, he may be directed to appear before the respondents, to enable the respondents to complete the procedure within the time bound manner. 7. Perused the materials on record. 8. The documents that are relied on by the petitioner disclose that respondent had issued various notices to the petitioner calling upon him to file his returns for the year 2014-15. Even though it is contended that notices were not served on the petitioner, the same

cannot be accepted, in view of the specific averment made in the assessment order regarding service of notices. Therefore, the contention taken by the petitioner is that, he was not given sufficient opportunity of being heard and the order in question is an ex-parte order, also cannot be accepted. 9. Annexure-D was came to be passed on 19.03.2022 and before passing the order, several notices were issued to the petitioner. In spite of that, he has not chosen to appear before the authority and not complied the demand made therein. The next ground urged by the petitioner that the order in question was passed during Covid-19 also cannot be accepted. Under such circumstances, even though I do not find any reason to entertain the petition, only to afford one more opportunity to the petitioner of being heard, I deem it appropriate to quash the assessment order produced as per Annexure-D and demand notice as per Annexure-F, in the interest of justice. Accordingly, I proceed to pass the following:

ORDER i) The writ petition is allowed. ii) The impugned assessment order and demand notice dated 19.03.2022 issued by respondent No.3 produced as per Annexures-D and F are quashed. iii) The petitioner is directed to file income tax returns for the assessment year 2014-15 with respondent No.3 within 30 days from today and to cooperate in compliance of the procedure in terms of the Act.

SD/- JUDGE

MBS/CT-ASC List No.: 1 Sl No.: 15

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