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1 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 4TH DAY OF NOVEMBER, 2022
BEFORE
THE HON'BLE MR.JUSTICE S.R.KRISHNA KUMAR
WRIT PETITION No.1508 OF 2022 (T-IT)
BETWEEN:
DODDAGULI KENCHE GOWDA RAJU S/O KENCHEGOWDA, AGED 42 YEARS, R/AT NO.21/1, D.K.CHICKEN CENTRE, VASANTHAPURA MAIN ROAD, KONANAKUNTE, BENGALURU-560 062. …PETITIONER (BY SRI. M.V. SESHACHALA, SERNIOR COUNSEL FOR SRI. ARAVIND.V. CHAVAN., ADVOCATE)
AND:
1 . ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 3(1) (1) BMTC BUILDING, 80 FEET ROAD, KORAMANGALA
BENGALURU-560 095.
2 . PRINCIPAL COMMISSIONER OF INCOME TAX-3 BMTC BUILDING, 80 FEET ROAD, KORAMANGALA
BENGALURU-560 095.
3 . NATIONAL E ASSESSMENT CENTRE NO.412-413 1ST FLOOR,OPP. METRO PILLAR NO.793 DWARAKA MOR, NEW DELHI-110059.
…RESPONDENTS (BY SRI. E.I. SANMATHI., ADVOCATE)
THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE RECOVERY NOTICE DTD 04.01.2022 VIDE ANNX-G AND ASSESSMENT ORDER PASSED BY R-1 DTD 04.12.2019 VIDE ANNX-F1 FOR A.Y. 2017-18 AND ETC.
2 THIS W.P. COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER
In this petition, the petitioner has sought for the following reliefs: a. Issue a writ of certiorari to quash the recovery notice dated 04.01.2022 bearing No.ITBA/RCV/F/17/2021-22/1038420008(1) Annexure-G and assessment order passed by first respondent dated 04.12.2019 bearing No.ITBA/AST/S/143(3)/2019-20/1021681851(1) Annexure-F1 for A.Y. 2017-18. b. Issue a writ of declaration or writ of mandamus or writ of certiorari or such other writ holding that CBDT Circulars dated 20.01.2017 and 19.06.2019 produced as Annexures-J2 & J3 as not being applicable to the previous year 01.04.2016 to 31.03.2017 as Section 115BBE of the IT Act came into effect from 01.04.2017. c. Issue such other Writ or direction as this Hon’ble Court deem fit to grant in the facts and circumstances of the present case.
Heard Sri. M.V. Seshachala, learned Senior counsel appearing on behalf of learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.
In addition to reiterating the various contentions urged in the Memorandum of Petition and referring to the documents produced by the petitioner, learned Senior Counsel for the petitioner submits that though the impugned proceedings culminating in the impugned order dated 04.12.2019 were initiated prior to 12.09.2019 when the E-Assessment Scheme, 2019 (for short “the said Scheme of 2019) came into force, having regard to the undisputed fact that the said scheme of 2019 came into force during the pendency of the proceedings, it was essential that the respondents followed the mandatory procedure in terms of the said Scheme of 2019, which has not been done by the respondents. In this context, it is pointed out that the scheme envisages that the draft assessment order has to be passed by the respondent and served upon the assessee as per the procedure prescribed under Clause (5) as well as Clause 5(xiv) of the said Scheme of 2019. It is also submitted that every communication, notice or order under the said Scheme of 2019 shall not only be delivered to the petitioner-assessee by forwarding an authenticated copy thereto to the
4 assessee’s registered e-mail address but the same shall also be followed by a real time alert and service of notice/communication shall become complete and complied with only after issuing a real time alert. It is also submitted that the show cause notices were not received by the petitioner, who was not aware of the same and as such, it was not possible for the petitioner to submit replies to the said show-cause notices and consequently, the impugned assessment orders, which proceeded on the basis that the petitioner has not submitted his reply to the show-cause notices dated 18.09.2018, 28.09.2018, 30.10.2019 and 05.11.2019 are violative of principles of natural justice and the same deserves to be quashed. It is also submitted by learned Senior Counsel that a perusal of the impugned Assessment Order will indicate that the respondents have invoked Section 68 of the Income Tax Act, 1961, which mandates that before accepting or rejecting the explanation offered by the petitioner, it is incumbent upon the respondent to examine the creditors which are named and disclosed in the documents and disclosures by the petitioner/assessee as held by the Apex Court in the case
5 of the Commissioner of Income Tax Vs. Orissa Corporation – (1986) 159 ITR 0078. It is submitted that if an opportunity is given to the petitioner to submit his reply to the notices and if personal hearing is provided to the petitioner, petitioner would be in a position to substantiate his contentions and as such, it is necessary that the impugned order is set aside and the matter is remitted back to the respondents for reconsideration afresh in accordance with law.
Per contra, learned counsel for the respondents submits that the petitioner was duly intimated about the proceedings and show-cause notices received by him and the impugned order does not warrant interference by this Court in the present petition. It is also contended that the objections regarding non-compliance of the said scheme was never raised by the petitioner-assessee and he is estopped from putting forth the said contention before this Court in the present petition, which is liable to be dismissed.
A perusal of the material on record including the impugned order discloses that the respondents have proceeded to pass the impugned order on the premise that the petitioner has not submitted his response/reply or documents to the show-cause notices dated 18.09.2018, 28.09.2018, 30.10.2019 and 05.11.2019. In this regard, in the light of the specific assertion on the part of the petitioner that the said notices were not received by him, though the said contention is opposed by the respondents, by adopting a justice oriented approach and to provide one more opportunity to the petitioner to submit his reply to the show-cause notices along with the documents in support of his claim, I deem it just and appropriate to set aside the impugned order and remit the matter back to the respondent for reconsideration afresh in accordance with law.
In so far as the contention urged by the petitioner with regard to applicability of the said Scheme of 2019 is concerned, in view of my findings above that the impugned assessment order deserves to be set aside and the matter be remitted back to the respondents for
7 reconsideration afresh, the issue / question regarding the requirement of following the scheme in respect of the proceedings, which were initiated after to coming into force of the said Scheme of 2019 may not be relevant for adjudication of present petition. In so far as the contention urged by the petitioner, the judgment of the Apex Court in the case of the Commissioner of Income Tax (supra), it is needless to state that after providing an opportunity to the petitioner to submit its reply and documents to the aforesaid show-cause notices, the respondents would necessarily have to follow the procedure prescribed in law bearing in mind the judgment of the Apex Court in the case of Commissioner of Income Tax (supra) and other judgments of the Apex Court rendered in relation to Section 68 of the Income Tax Act, 1961.
7 In the result, I pass the following: ORDER (i) The petition is hereby allowed. (ii) The impugned assessment order at Annexure-F1 dated 04.12.2019 passed by respondent No.1 is set aside; consequently,
8 the impugned recovery notice at Annexure-G dated 04.01.2022 is also set aside. (iii) The matter is remitted back to the concerned respondents for reconsideration afresh in accordance with law. (iv) Liberty is reserved in favour of the petitioner to submit response, submission etc., along with relevant documents to the show-cause notices, which shall be considered by the respondents, who shall proceed to pass orders in accordance with law and the prescribed procedure and bearing in mind the provisions of Section 68 of the Income Tax Act as well as the judgment of the Apex Court in the case of the Commissioner of Income Tax Vs. Orissa Corporation – (1986) 159 ITR 0078 and other judgments of the Apex Court rendered in the said context.
Sd/- JUDGE Bmc