SRI AROON RAMAN vs. UNION OF INDIA

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WP/13326/2014HC KarnatakaKAHC01012740201409 March 2021Bench: S SUNIL DUTT YADAV4 pages
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What did the High Court hold?

The High Court held that a notice under Section 143(2) is mandatory before initiating proceedings under Section 148, especially when income has escaped assessment. The communication rejecting the petitioner's objections was set aside as it was contrary to the Supreme Court's judgment.

What were the facts?

The petitioner challenged a communication rejecting their objections to a notice under Section 148 of the Income Tax Act. The petitioner argued that proceedings under Section 148 were unsustainable without a prior notice under Section 143(2).

What were the issues?

Whether a notice under Section 143(2) is mandatory before issuing a notice under Section 148 when income has escaped assessment. Whether the Revenue's stand that Section 143(2) notice is not required is legally tenable.

Which sections of the Income-tax Act were involved?

Section 148,Section 143(2),Section 143(1)

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1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 9TH DAY OF MARCH 2021

BEFORE

THE HON'BLE MR.JUSTICE S. SUNIL DUTT YADAV

WRIT PETITION No.13326/2014 (T-IT)

BETWEEN:

Sri Aroon Raman, S/o V. Raman, Aged about 53 years, Residing at No.100, Paramahamsa Road, Yadavagiri, Mysore - 570 020.

… Petitioner

(By Sri S.S. Naganand, Senior Advocate for Sri Prashanth Murthy, Advocate)

AND:

1.

Union of India,

Department of Revenue,

Ministry of Finance,

Government of India,

North Block,

New Delhi - 110 00

Through the Secretary.

2.

The Deputy Commissioner of Income Tax,

Circle - 1(2), No.55/1, 2nd Floor,

'Shilpashree', Opp. Sterling Talkies,

Vishweshwaranagar,

Mysore - 570 008.

… Respondents

(By Sri Jeevan J. Neeralgi, Advocate)

2 This Writ Petition is filed under Articles 226 & 227 of the Constitution of India, praying to quash communication dated 10.03.2014 vide Annexure-Y issued by the R-2 and etc.

This Writ Petition coming on for orders this day, the Court made the following: ORDER

The petitioner has called into question the communication at Annexure-Y dated 10.03.2014 whereby the objections of petitioner relating to the issuance of notice under Section 148 of the Income Tax Act, 1961 ('I.T. Act' for brevity) on the ground that no notice issued under Section 143(2) of I.T. Act has been rejected.

2.

Sri S.S.Naganand, learned Senior Counsel appearing for Sri Prashanth Murthy for the petitioner would submit that the initiation of proceedings under Section 148 is not sustainable and draws attention to the intimation under Section 143(1) of I.T. Act as made at an earlier point of time as regards to the Assessment Year 2007-2008.

3.

It is further submitted that the question of initiating proceedings under Section 148 is not sustainable and that notice under Section 143(2) is required to have

3 been issued so also the procedure of regular assessment ought to have been followed insofar as the Department seeks to treat the income which the petitioner has not made subject matter for assessment as one which is undisclosed income.

4.

Insofar as the requirement of issuance of notice under Section 143(2) of I.T. Act, the attention is drawn to the judgment of Apex Court in the case of Assistant Commissioner of Income-Tax v. Hotel Blue Moon reported in (2010) 321 ITR 362 (SC) and it is pointed out that in case of income escaped from assessment, the procedure, including notice under Section 143(2) of I.T. Act ought to have been issued.

5.

Learned counsel appearing for the Revenue does not dispute the position as regards to the law laid down by the Apex Court in the case of Hotel Blue Moon (supra).

6.

Without adverting to the other facts in issue while noting that the time prescribed under the Proviso to

4 Section 143(2) of I.T.Act being mandatory and noticing that admittedly, as per the communication at Annexure-Y dated 10.03.2014, the Authority has taken a stand that notice under Section 143(2) of I.T. Act is not required, the same being contrary to the judgment of Apex Court in the case of Hotel Blue Moon (supra), the communication at Annexure-Y dated 10.03.2014 is set aside.

The petition is disposed off accordingly.

Sd/- JUDGE

VGR

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