M/S MADEENA CO-OPERATIVE CREDIT SOCIETY LIMITED ( A COOPERATIVE SOCIETY REGISTERED UNDER vs. CENTRAL BOARD OF DIRECT TAXES

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WP/105582/2022HC KarnatakaKAHC02017841202220 September 2024Author: JYOTI MULIMANI5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court allowed the Writ Petition and remanded the matter. The Court noted that notices were issued to the petitioner, but due to the shift in procedure from physical to virtual (faceless) mode, the petitioner was unable to provide suitable replies. Consequently, an ex-parte order was passed. The Court found it proper to provide the petitioner an opportunity to reply to the show cause notice and contest the matter by participating in the proceedings. Therefore, the assessment order and demand notice were set aside and quashed. The matter was remanded to the assessing authority to the stage of reply to the show cause notice. The Court explicitly stated that it had not expressed any opinion on the merits of the case.

What were the facts?

The petitioner, M/s. Madeena Co-operative Credit Society Limited, filed a Writ Petition before the High Court of Karnataka, Dharwad Bench. The petition sought to quash an assessment order dated April 19, 2021, passed under Section 144 read with Section 144B of the Income Tax Act, 1961, and a demand notice dated April 19, 2021, issued under Section 156 of the Act. These orders were for the Assessment Year 2018-19 and were issued by the National E-Assessment Centre, Delhi, and the Income Tax Officer, Ward-2(1), Hubballi, respectively. The petitioner contended that due to the shift from physical to virtual (faceless) assessment procedures, they were unable to provide suitable replies to notices issued by the department, resulting in an ex-parte order.

What were the issues?

1. Whether the assessment order and demand notice dated April 19, 2021, passed under Section 144 read with Section 144B and Section 156 of the Income Tax Act, 1961, for Assessment Year 2018-19, are liable to be quashed due to the petitioner's inability to respond to notices owing to the procedural shift to virtual (faceless) assessment. Assessee's Contention: The assessment order was ex-parte because the transition from physical to virtual (faceless) assessment procedures prevented the petitioner from adequately replying to departmental notices. Therefore, the matter should be remanded to allow the petitioner to participate in the proceedings. Revenue's Contention: The revenue reiterated its objections, justified the department's actions, strongly objected to a remand, and argued that the Writ Petition was devoid of merits and should be dismissed.

Which sections of the Income-tax Act were involved?

Section 144,Section 144B,Section 156

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 20TH DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MS. JUSTICE JYOTI MULIMANI WRIT PETITION NO. 105582 OF 2022 (T-IT) BETWEEN:

M/S. MADEENA CO-OPERATIVE CREDIT SOCIETY LIMITED (A CO-OPERATIVE SOCIETY REGISTERED UNDER KARNATAKA CO-OPERATIVE SOCIETIES ACT, 1959), AZAD ROAD, TQ. ALNAVAR, DHARWAD-581 103. KARNATAKA, REPRESENTED BY ITS CHAIRMAN, SHRI. NADEEM.M.CONTRACTOR, MAJOR. …PETITIONER (BY SRI. ASHOK.A.KULKARNI AND SRI. H.R.KAMBIYAVAR., ADVOCATES)

AND:

1.

CENTRAL BOARD OF DIRECT TAXES CENTRAL SECRETARIAT, NORTH BLOCK, NEW DELHI-110 001. REPRESENTED BY THE ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/ INCOME TAX OFFICER, NATIONAL E-ASSESSMENT CENTRE, DELHI.

2.

INCOME TAX OFFICER WARD-2(1), AYAKAR BHAVAN, NAVANAGAR, HUBBALLI, KARNATAKA-580 025. …RESPONDENTS (BY SRI. M.THIRUMALESH., ADVOCATE FOR R1-2)

Digitally signed by THEJASKUMAR N Location: HIGH COURT OF KARNATAKA

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, SEEKING CERTAIN RELIEFS.

THIS WRIT PETITION IS LISTED FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, AN ORDER IS MADE AS UNDER: ORAL ORDER Sri.Ashok A.Kulkarni., counsel for the petitioner and Sri.M.Thirumalesh., counsel for the respondents have appeared through video conferencing. 2. The captioned Writ Petition is filed seeking a Writ of Certiorari to quash the Assessment order dated 19.04.2021 passed by the first respondent under Section 144 R/w Section 144B of No.ITBA/AST/S/144/2021-22/1032508342(1) Assessment Year 2018-19 vide Annexure-C and the demand notice dated 19.04.2021 issued under Section 156 of the & Notice No: ITBA/AST/S/156/2021-22/1032508378(1) Assessment Year 2018-19 vide Annexure-D.

3.

Counsel Sri.Ashok A.Kulkarni., in presenting his arguments strenuously urged that the assessment order is an ex-parte order. He argued by saying that due to the shift in the procedure from physical to virtual (faceless) mode, the petitioner was unable to give a suitable reply to the notices that were issued by the department. Hence, he submits that the matter may be remanded and an opportunity may be given to the petitioner to take part in the proceedings by passing a suitable order. Counsel Sri.M.Thirumalesh., reiterated the statement of objections and urged several contentions. He justified the action of the department. He strongly objected to a remand. He submits that the Writ Petition is devoid of merits and the same may be dismissed. 4. Heard the arguments and perused the Writ papers with care. 5. Suffice it to note that notices were issued to the petitioner from time to time. However, there is a shift in the procedure from physical to virtual (faceless) mode, hence, the petitioner was unable to give a suitable reply to the notices.

Therefore, an ex-parte order was made. Because of the ex- parte order, this Court considers it proper to provide an opportunity to give a reply to the show cause notice and contest the matter by taking part in the proceedings. Hence, the matter requires a remand. Therefore, the assessment order and the demand notice are liable to be set aside, so they are set aside. 6. The Writ of Certiorari is ordered. The Assessment order dated 19.04.2021 passed by the first respondent under Section 144 R/w Section 144B of the Income Tax Act, 1961 in No.ITBA/AST/S/144/2021-22/1032508342(1) Assessment Year 2018-19 vide Annexure-C and the demand notice dated 19.04.2021 issued under Section 156 of the & Notice No: ITBA/AST/S/156/2021-22/1032508378(1) Assessment Year 2018-19 vide Annexure-D are quashed. The matter is remanded to the assessing authority to the stage of reply to the show cause notice.

7.

Resultantly, the Writ Petition is allowed and remanded. This Court has not expressed any opinion on the merits of the case.

Sd/- (JYOTI MULIMANI) JUDGE MRP List No.: 1 Sl No.: 17

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