SMT. LAKSHMI vs. THE INCOME TAX OFFICER,

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WP/22874/2023HC KarnatakaKAHC01052956202306 November 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 held that the Adjudication Order dated 31.03.2022 under Section 148A(d), the Assessment Order dated 14.02.2023 under Section 147 read with Sections 144 and 144B, and the Demand Notice dated 14.02.2023 under Section 156 were liable to be quashed. The Court found it undisputed that the notice under Section 148A(b) was issued on 22.03.2022, requiring a response by 26.03.2022, which is a period of only four days, falling short of the general minimum seven-day notice period. The Court opined that the petitioner was not granted a reasonable opportunity to explain the material circumstances, especially given the short notice period without any assigned reasons. Therefore, the proceedings were restored to the stage of the notice under Section 148A(b), with liberty granted to the petitioner to file a detailed response. All other questions were kept open for consideration.

What were the facts?

The petitioner, Smt. Lakshmi, is challenging notices and orders issued by the Income Tax Department for assessment year 2018-19. Specifically, she is aggrieved by a notice under Section 148A(b) dated 22.03.2022, an adjudication order under Section 148A(d) dated 31.03.2022, an assessment order under Section 147 read with Sections 144 and 144B dated 14.02.2023, and a demand notice under Section 156 dated 14.02.2023. The core of her grievance is that she was given only four days to respond to the Section 148A(b) notice, which is contrary to the general requirement of a minimum seven-day notice period. Due to this short notice, she did not file a response, leading to the subsequent orders being passed ex-parte.

What were the issues?

1. Whether the Adjudication Order passed under Section 148A(d) of the Income Tax Act, 1961, is liable to be set aside on the ground that the petitioner was granted an unreasonably short period of four days to show cause against the proposed adjudication, thereby violating principles of natural justice? Assessee's contention: The petitioner argues that the notice under Section 148A(b) provided only four days for her to respond, which is insufficient and contrary to the statutory requirement of a minimum seven-day notice period. This lack of adequate opportunity to present her case led to the subsequent orders being passed without her input. The petitioner also asserts that her income is not chargeable to tax as she utilized sale proceeds of a property to discharge a joint loan after her husband's death and purchased another property. Revenue's contention: The judgment records that the learned counsel for the respondents was heard in the light of the petitioner's submissions. No specific arguments or reliance on authorities by the revenue are detailed in the judgment.

Which sections of the Income-tax Act were involved?

Section 148A(b),Section 148A(d),Section 147,Section 144,Section 144B,Section 156

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6TH DAY OF NOVEMBER, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 22874 OF 2023 (T-IT)

BETWEEN:

SMT. LAKSHMI W/O LATE .L.R. JAYARAM, AGED ABOUT 53 YEARS, NO. 24, 6TH CROSS, MANJUNATH NAGAR MAIN ROAD, BSK 3RD STAGE, BANGALORE-560085.

…PETITIONER (BY SRI.CHIDANANDA URS B G., ADVOCATE) AND:

1.

THE INCOME TAX OFFICER, OFFICE OF THE INCOME TAX OFFICER, WARD 7(2)(5) BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORMANGALA, BANGALORE-560095.

2.

NATIONAL FACELESS ASSESSMENT CENTRE INCOME TAX DEPARTMENT, GOVERNMENT OF INDIA, MINISTRY OF FINANCE, NEW DELHI-110001.

3.

THE PRINCIPAL COMMISSIONER OF INCOME TAX

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

OFFICE OF THE INCOME TAX DEPARTMENT, C.R. BUILDING, NO. 1 QUEENS ROADS, BANGALORE-560001.

…RESPONDENTS (BY SRI.Y.V. RAVIRAJ., ADVOCATE A/W SRI. M. DILIP, ADVOCATE)

THIS WP IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF CERTIORARI OR A WRIT IN THE NATURE OF CERTIORARI TO SET ASIDE THE NOTICE UNDER SECTION 148A(b) IN DIN AND NOTICE NO. ITBA/ AST/ F/ 148A(SCN)/ 2021-11/ 1041268665(1) ISSUED BY INCOME TAX DEPARTMENT, OFFICE OF THE INCOME TAX OFFICER, WARD 7 (2) (5), BANGALORE WHICH IS HEREWITH ENCLOSED AS ANNEXURE-D; SET ASIDE THE ORDER PASSED UNDER SECTION 148A (d) OF THE ACT IN DIN AND NOTICE NO. ITBA/AST/F/148A/2021- 22/1042245518(1) DATED 31.03.22 BY INCOME TAX OFFICER, WARD 7(2) (5), BANGALORE WHICH IS HEREWITH ENCLOSED AS ANNEXURE-E.

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

ORDER

The petitioner is aggrieved by the notice dated 22.03.2022 [Annexure-D] issued under Section 148A[b] of the Income Tax Act, 1961 [for short, ‘the IT Act’], the Adjudication Order dated 31.03.2022 [Annexure-E] under Section 148A[d] of the IT Act, the Assessment Order dated 14.02.2023 [Annexure-J] under Section 147 read with Section 144 and 144B of the IT Act and the Demand Notice dated 14.02.2023 [Annexure-K] under Section 156 of the IT Act.

2.

The assessment relates to the assessment year 2018-19. The petitioner, amongst others, contends that the order under Section 148A[d] of the IT Act must fail because the petitioner, without any reasons being assigned, is given only four days to show cause against adjudication. Sri Chidananda Urs B G, the learned counsel for the petitioner, and Sri M Dilip, the learned counsel for the

respondents, are heard in the light of this canvass.

3.

It remains undisputed that the notice is issued on 22.03.2022 permitting the petitioner to file response with supporting documents on or before 26.03.2022 when generally, a notice period of minimum seven days must be given. The petitioner has not filed her response, and the proceedings have culminated with the impugned assessment order and the demand notice without response from the petitioner.

4.

The petitioner relies upon the assertion such as that because she was unable to clear the joint loan, after the death of her husband, she has sold the property; that she has utilized the compensation received and the sale proceeds to discharge the loan and purchase another property, and as such, her income is not chargeable to tax. This Court is of the considered view that the

petitioner must have a reasonable opportunity to explain the aforesaid circumstances that are material because the petitioner is only granted four days without any reasons. Hence this Court is of the opinion that this calls for interference. Hence the following: ORDER [a] The petition is allowed in part quashing the Adjudication Order dated 31.03.2022 [Annexure-E] under Section 148A[d] of the IT Act, the Assessment Order dated 14.02.2023 [Annexure-J] under Section 147 read with Section 144 and 144B of the IT Act and the Demand Notice dated 14.02.2023 [Annexure-K] under Section 156 of the IT Act. [b] The proceedings are restored for consideration from the stage of notice under Section 148A[b] of the IT Act with liberty to the petitioner to file a detailed

response with all other questions kept open for consideration.

SD/- JUDGE

AN/-

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