MRS KARUTURI ANITHA vs. THE INCOME TAX OFFICER

PDF · subscribers
WP/17928/2023HC KarnatakaKAHC01041687202316 November 2023Author: B M SHYAM PRASAD6 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the petition. It quashed the order dated 22.07.2022 passed under Section 148A(d) of the IT Act, the assessment order dated 12.04.2023 passed under Section 147 read with Sections 144 and 144B, and the penalty notices dated 12.04.2023 under Section 271(1)(b) and (1)(c). The Court reasoned that the petitioner claimed she was not served with any notice and could only access the adjudication order from the portal after the penalty notice was served. The details of the service of the notice dated 30.06.2021 were not brought on record. The Court found that if the petitioner could justify the source of income, it must be considered before concluding assessment proceedings to achieve salience in law. Therefore, interference was warranted to the extent of quashing the impugned orders and restoring the proceedings for reconsideration, providing the petitioner with a due opportunity to file documents and leaving all contentions open to be urged.

What were the facts?

The assessee, Mrs. Karuturi Anitha, is challenging orders passed by the Income Tax Officer (ITO), Ward 6(3)(1), Bangalore. The assessment year in question is 2014-15. The challenge is to an order dated 22.07.2022 under Section 148A(d) of the Income Tax Act, 1961, a subsequent assessment order dated 12.04.2023 under Sections 147, 144, and 144B, and penalty notices dated 12.04.2023 under Section 271(1)(b) and (1)(c). The reassessment was initiated on the grounds that income had escaped assessment because the petitioner had not filed a return for AY 2014-15, despite extending a loan of Rs. 10,00,60,000/- to M/s. Karuturi Foods Private Limited, of which she is a director. The petitioner claims the loan originated from a bank loan taken against agricultural land, disbursed to a joint account, and then transferred to the company.

What were the issues?

1. Whether the order passed under Section 148A(d) of the Income Tax Act, 1961, dated 22.07.2022, is liable to be quashed, considering the petitioner's claim of not being properly served with notices and the explanation for the source of funds. 2. Whether the subsequent assessment order dated 12.04.2023 under Sections 147, 144, and 144B, and the penalty notices dated 12.04.2023 under Section 271(1)(b) and (1)(c) are liable to be quashed on procedural grounds and lack of proper consideration of the assessee's explanation. Assessee's Contentions: The petitioner contends that the circumstances surrounding the loan are borne out by the records and, if considered, would negate the need for reassessment. She emphasizes that the source of income is explained and not chargeable to tax. She further states she was not served with any notice and accessed the adjudication order from the portal only after receiving the penalty notice. The details of service of the notice dated 30.06.2021 are not on record. Revenue's Contentions: The revenue, through the learned counsel, was heard in light of the submissions. The notice under Section 148A(b) was issued on 30.06.2021, and consequent to the Supreme Court's judgment in 'Union of India v. Ashish Agarwal', this notice was treated under Section 148A(b) of the IT Act.

Which sections of the Income-tax Act were involved?

Section 148A,Section 147,Section 144,Section 144B,Section 271(1)(b),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH DAY OF NOVEMBER, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 17928 OF 2023 (T-IT) BETWEEN:

MRS KARUTURI ANITHA W/O SAI RAMAKRISHNA KRUTURI AGED ABOUT 45 YEARS 9/56, 6TH MAIN UPPER PALACE ORCHARDS 1ST CROSS SADASHIVA NAGAR BANGALORE 560080.

…PETITIONER (BY SMT. M.R. VANAJA, ADVOCATE A/W SMT.NALINI VENKATESH.,ADVOCATE) AND:

1.

THE INCOME TAX OFFICER WARD 6(3)(1), BANGALORE BMTC BUILDING 6TH BLOCK 80 FEET ROAD KORAMANGALA BENGALURU 560095.

2.

THE PRINCIPAL COMMISSIONER OF INCOME TAX 2, 5TH FLOOR BMTC BUILDINGS 6TH BLOCK, 80 FEET ROAD KORAMANGALA, BANGALORE 560095. …RESPONDENTS (BY SRI.M.DILIP., ADVOCATE)

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

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASHING THE ORDER PASSED UNDER SECTION 148A CLAUSE (d) DATED 22.07.22 ISSUED BY THE R-1 (ANNEXURE-F). DIRECTION OR ORDER IN THE NATURE OF CERTIORARI QUASHING THE ORDER PASSED U/S 147,144 AND 144B WITH FOLLOWING THE PROPER PROCEDURE IN SERVICE OF NOTICE DATED 12.04.23 ANNEXURE-G; QUASHING THE PENALTY NOTICES U/S 271(1) (b) AND (1) (c) ANNEXURES J AND K FOR THE ASSESSMENT YEARS 2014-15 DATED 12.04.23 BY THE R-1 ON (ANNEXURE-G).

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

petitioner has impugned first respondent’s order dated 22.07.2022 [Annexure-F] under Section 148A[d] of the Income Tax Act, 1961 [for short, ‘IT Act’] and the subsequent assessment order dated 12.04.2023 [Annexure-H] under Section 147 read with Sections 144, 144B of the IT Act as also penalty notice dated 12.04.2023 [Annexure-J]. The first respondent has concluded the proceedings

under Section 148A[d] of the IT Act as seen from the impugned order date 22.07.2022 on the ground that the petitioner has not filed any reply and therefore it would be logical to conclude that the assessee has no explanation with regard to the escapement of tax.

2.

first respondent has initiated proceedings for reassessment on the ground that the income chargeable to tax has escaped assessment observing that the petitioner has not filed returns for the assessment year 2014-15 despite the fact that she has extended a loan of Rs.10,00,60,000/- to M/s. Karuturi Foods Private Limited and that she is a director of this company. The petitioner contends that she and her mother have applied for loan with M/s. ICICI Bank Limited as against the security of agricultural land and with the loan being disbursed to the joint account, the same is transferred to M/s. Karuturi Foods Private Limited.

3.

Smt. M R Vanaja, the learned counsel for petitioner, submits that aforesaid circumstances are borne out by the records, and if considered, there would be no occasion for reassessment. The learned counsel emphasizes that the source of income is thus explained and would not be chargeable to tax. Sri M Dilip, the learned counsel for the respondents, is heard in the light of the afore submissions, and from the notice under Section 148A[b] of the IT Act, it is seen that the petitioner is issued with notice on 30.06.2021 and consequent to the Judgment of the Hon’ble Supreme Court in ‘Union of India v. Ashish Agarwal’1, this notice is treated under Section 148A[b] of the IT Act is issued.

4.

The petitioner is categorical that she is not served with any notice and that she could access the adjudication order under Section 148A[d] of the IT

1 [2023] 1 SCC 617

Act from the portal after service of the penalty notice dated 12.04.2023. The details of service of notice issued on 30.06.2021 are not brought on record, and if the petitioner could indeed justify the source of income, the same must be considered before the assessment proceedings are concluded so that the salient in law is achieved. Hence, there must be interference to the limited extent of quashing the first respondent’s impugned order dated 22.07.2022 [Annexure-F] under Section 148A[d] of the IT Act and the subsequent assessment order dated 12.04.2023 [Annexure-H] under Section 147 read with Sections 144, 144B of the IT Act as also penalty notice dated 12.04.2023 [Annexure-J] restoring the proceedings for reconsideration with due opportunity to the petitioner to file documents leaving open all contentions to be urged. Hence the following: ORDER [a] The petition is allowed, and the first respondent’s impugned order dated

22.07.2022 [Annexure-F] under Section 148A[d] of the IT Act and the subsequent assessment order dated 12.04.2023 [Annexure-H] under Section 147 read with Sections 144, 144B of the IT Act as also penalty notice dated 12.04.2023 [Annexure-J] are quashed. [b] proceedings are restored for reconsideration with due opportunity to the petitioner to file documents leaving open all contentions to be urged.

Sd/- JUDGE

AN/-

More judgments on Section 148A

All 3,543 judgments and leading authorities on Section 148A →

Recent GST High Court judgments

Search GST case law →