SRI ANDIPAKULA ADIKESAVULU NAIDU vs. THE ASSISTANT COMMISSIONER OF INCOME TAX

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WP/24526/2023HC KarnatakaKAHC01056419202327 November 2023Author: B M SHYAM PRASAD9 pages
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What did the High Court hold?

The High Court held that there was reason for interference concerning the completion of adjudication under Section 148A(d), the assessment under Section 147 read with Section 144, and the consequential notices and demands. The Court found merit in the petitioner's argument that he was not afforded an opportunity to show cause because the notices and orders were sent to the email address of his deceased tax practitioner, despite the petitioner having updated his current practitioner's email ID on the portal. The Court noted that the revenue could not controvert this factual assertion. Consequently, the Court quashed the order dated 31.03.2022 under Section 148A(d), the notice dated 31.03.2022 under Section 148, the order dated 22.03.2023 under Section 147 read with Section 144, and the penalty orders dated 15.09.2023 and 22.09.2023. The proceedings were restored to the stage under Section 148A(b) with liberty to the petitioner to file a response and seek further details.

What were the facts?

The petitioner, Sri Andipacula Adikesavulu Naidu, filed a writ petition challenging several notices and orders related to Assessment Year 2018-19. These included a notice under Section 148A(b) dated 11.03.2022, an order under Section 148A(d) dated 31.03.2022, a notice under Section 148 dated 31.03.2022, an order under Section 147 read with Section 144 dated 22.03.2023, and two penalty orders under Section 271(1)(d) and Section 271AAC(1) dated 15.09.2023 and 22.09.2023 respectively. The petitioner's grievance stemmed from the fact that all communications were sent to the email ID of his former tax practitioner, who passed away in August 2020. The petitioner had updated his current tax practitioner's email ID on the portal.

What were the issues?

1. Whether the notices and orders issued under Sections 148A(b), 148A(d), 148, 147, 144, 271(1)(d), and 271AAC(1) of the Income Tax Act, 1961, are liable to be quashed on the grounds that they were issued without affording the petitioner an opportunity to show cause due to communication being sent to an outdated email address. Assessee's Contention: The petitioner argued that due to the demise of his previous tax practitioner, he updated his current practitioner's email ID on the portal. However, all notices and orders were sent to the old email ID, preventing him from responding and showing cause. He also contended that two of the five transactions cited for reassessment did not pertain to him and that his application for condonation of delay in filing the ITR for AY 2018-19 was rejected and sent to the old email ID. Revenue's Contention: The revenue argued that if the petitioner was aggrieved by the reasons assigned, he should have requested details to file objections. In the absence of such a request, he cannot have a grievance with the additions made in the assessment order. However, the revenue could not controvert the factual assertion that communications were not sent to the updated email ID.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148A(b),Section 148A(d),Section 148,Section 147,Section 144,Section 271(1)(d),Section 271AAC(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF NOVEMBER, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 24526 OF 2023 (T-IT) BETWEEN:

SRI ANDIPAKULA ADIKESAVULU NAIDU FLAT NO.301, VANDANA PARADISE, 3RD CROSS, NGR LAYOUT, BOMMANAHALLI, BANGALORE 560068.

PRESENTLY AT. ANDIPAKULA ADIKESAVULU NAIDU, AGED ABOUT 47 YEARS, S/O LATE KRISHNAMA NAIDU, NO.218, 27TH MAIN, 1ST FLOOR, HSR LAYOUT, SECTOR 2, BANGALORE 562102. …PETITIONER (BY SRI. RAVI SHANKAR S V.,ADVOCATE) AND:

1.

THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4(3)(1), BMTC BUILDING, KORAMANGALA, BANGALORE 560095.

2.

NATIONAL FACELESS ASSESSMENT CENTRE REP BY ADDITIONAL/JOINT/DEPUTY/ ASSISTANT COMMISSIONER OF INCOME

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

TAX/INCOME TAX OFFICER, INCOME TAX DEPARTMENT, MINISTRY OF FINANCE, ROOM NO.401, 2ND FLOOR, E RAMP, JAWAHARLAL NEHRU STADIUM, DELHI 110003.

3.

THE PRINCIPAL COMMISSIONER OF INCOME TAX-2 THE OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX-2, BMTC BUILDING, KORAMANGALA, BANGALORE 560095. …RESPONDENTS (BY SRI.M.DILIP.,ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO-QUASH THE NOTICE U/S 148A(b) OF THE ACT DATED 11.03.2022 BEARING NO.ITBA/ AST/ F/ 148A(SCN)/ 2021-22/1040620208(1) ISSUED BY THE R1 FOR THE ASSESSMENT YEAR 2018-19 HEREIN MARKED AS ANNEXURE-A; QUASH THE ORDER U/S 148A(d) OF THE ACT DATED 31.03.2022 BEARING DIN NO.ITBA/AST/F/148A/2021-22/1042293563(1) ISSUED BY THE R1 FOR THE ASSESSMENT YEAR 2018-19 HEREIN MARKED AS ANNEXURE-A1.

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

ORDER

The petitioner, apart from impugning the notice dated 11.03.2022 in DIN No.ITBA/AST/F/148A(SCN) 2021-22/1010620208 (1) [Annexure – A] issued under Section 148A(b) of the Income Tax Act, 1961 [for short, ‘the IT Act’], has impugned the following orders/notices: • The order dated 31.03.2022 in DIN No.ITBA/ AST/ F/ 2021-22/ 1042293563 under Section 148A(d) of the IT Act [Annexure-A1]; • The notice dated 31.03.2022 in DIN No.ITBA/ AST/S/148-1/2021-22/104230 7776(1) under Section 148 of the IT Act [Annexure-A2]; • The order dated 22.03.2023 in DIN No. ITBA/AST/S/147/2022-23/1051116247 (1) under Section 147 read with Section 144 of the IT Act [Annexure-A3]; • The penalty order dated 15.09.2023 in No.ITBA/PNL/F/272A(1)(d)/2023-

24/1056131037(1) 271(1)(d) of the IT Act; • The penalty order dated 22.09.2023 in No.ITBA/PNL/F/271AAC(1)/2023- 24/1056435541(1) 271AAC(1) of the IT Act.

These proceedings relate to the Assessment Year 2018-19. 2. Sri S. V. Ravi Shankar, the learned counsel for the petitioner, submits that the petitioner has filed ITR for the Assessment Years up to 2017-18 furnishing email details of his tax practitioner, Sri.Ranganath, but with the demise of Sri Ranganath in the month of August 2020 during COVID outbreak, the petitioner has engaged the services of another practitioner, Sri Seshachalapathy; that the petitioner has updated email ID of this practitioner on the portal and has also filed ITR for the year 2019- 20 furnishing such revised details.

3.

As regards the cause for the present petition, Sri. S. V. Ravi Shankar submits that the notices and orders are addressed to the email ID of the earlier practitioner and as such, the petitioner has not had the opportunity of showing cause against the proposed reassessment. The learned counsel emphasizes that:

• the proposed reassessment is because of five transactions as reflected in the annexures appended to the Notice dated 11.03.2022, but the first two transactions viz., deposits made with M/s. Andhra Bank in a sum of Rs.3,89,67,00,000/- and Rs.18,51,076/- do not relate to the petitioner, • the petitioner has not filed ITR for the relevant Assessment Year 2018-19, but has filed an application for condonation of delay on 22.08.2019 stating that because of personal problems ITR is not filed in

time and certain tax liability will be discharged once the delay is condoned, • that the petitioner’s application is rejected on 12.06.2023 and sent to the earlier practitioner’s email ID rather than the petitioner’s current tax practitioner’s email ID which is now updated in the profile.

4.

Sri M.Dilip, the learned counsel for the respondents, submits that if the petitioner is aggrieved by the reasons assigned should have asked for details to file objections, and in the absence thereof, the petitioner cannot have a grievance with the additions made in the impugned assessment order. However, Sri M. Dilip is unable to controvert the factual assertions such as that after the demise of the petitioner’s erstwhile tax practitioner in the month of August 2020, the petitioner has updated the details furnishing the email ID of his current tax

practitioner and that no notice or intimation of the order is sent to such addresses.

5.

In the light of these circumstances, this Court is of the considered view that there is reason for interference insofar as the completion of the adjudication under Section 148A(d) of the IT Act, the assessment under Section 147 read with Section 144 of the IT Act and consequential notices and demands. With these orders/notices being quashed, the proceedings must be restored for continuance from the stage under Section 148A(b) of the IT Act with liberty to the petitioner to file response and also ask for details as regards those additions which are proposed now under Section 148A(b) of the IT Act. Hence, the following: ORDER

The petition is allowed in part, and the following proceedings/notices/demands are quashed and the proceedings are restored to the

stage under Section 148A(b) of the IT Act with liberty to the petitioner to file response/documents and also seek further details as would be permissible in law: • The order dated 31.03.2022 in DIN No.ITBA/ AST/ F/ 2021-22/ 1042293563 under Section 148A(d) of the IT Act [Annexure-A1]; • The notice dated 31.03.2022 in DIN No.ITBA/ AST/S/148-1/2021-22/104230 7776(1) under Section 148 of the IT Act [Annexure-A2]; • The order dated 22.03.2023 in DIN No. ITBA/AST/S/147/2022-23/1051116247 (1) under Section 147 read with Section 144 of the IT Act [Annexure-A3]; • The penalty order dated 15.09.2023 in No.ITBA/PNL/F/272A(1)(d)/2023-

24/1056131037(1) 271(1)(d) of the IT Act; • The penalty order dated 22.09.2023 in No.ITBA/PNL/F/271AAC(1)/2023- 24/1056435541(1) 271AAC(1) of the IT Act.

Sd/- JUDGE

SA ct:sr

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