NATARAJ S L vs ASSISTANT COMMISSIONER OF INCOME TAX

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF DECEMBER 2019 BEFORE THE HON’BLE MRS. JUSTICE S. SUJATHA WRIT PETITION NO.51583 OF 2019 (T IT)

BETWEEN:

Nataraj S.L., Son of S.N.Lakshminarayana Deekshith, Aged about 49 years, Residing at No.468, 12th Main, 11th Cross, A Sector, Yelahanka New Town, Yelahanka, Bengaluru-560010.

…Petitioner (By Sri. Gautam Shreedhar Bharadwaj, Advocate)

AND:

Assistant Commissioner of Income Tax, Circle 3(2) (1), BMTC Building, 80 Feet Road, 6th Block, Near KHB Games Village, Koramangala, Bengaluru-560095.

…Respondent (By Sri. K.V.Arvind, Advocate)

This Writ Petition is filed under Articles 226 and 227 of the Constitution of India praying to quash the impugned order dated 26.09.2019 passed by the assistant commissioner of Income Tax Annexed as Annexure-A and etc.

This Writ Petition coming on for Preliminary Hearing this day, the Court made the following:

ORDER

Learned counsel Sri. K.V. Aravind accepts notice for the respondent.

The petitioner has assailed the order dated 26.09.2019 passed by the Assistant Commissioner of Income Tax at Annexure ‘A’ to the writ petition relating to the assessment year 2016-2017. The petitioner is assessed under the income tax Act, 1961, (“Act” for short).

The petitioner is engaged in the business of bar and restaurant in the name and style of “Aruna Bar and Restaurant”. For the assessment year 2017-18, the petitioner had filed the return of income declaring the tax liability of Rs.4,14,890/-. The respondent-authority has issued a notice under Section 133(6) of the Act to the Bankers of the petitioner calling upon them to

furnish the bank statements of the petitioner relating to the period 01.04.2016 to 31.03.2017, which has been complied by the bankers. The respondent – authority considering the same proceeded to pass the assessment order under Section 144 of the Act which is impugned herein.

The learned counsel for the petitioner would submit that the respondent-authority has wrongly adopted the figure of Rs.3,79,70,200/- as the income and added the same under Section 69A of the Act to compute the total tax liability. The learned counsel made an endeavour to contend that in terms of the VAT returns submitted by the petitioner, the net profit was turnover Rs.19,34,871/-; total turnover was Rs.3,95,77,814/- and total purchase was Rs.3,76,42,943/-.

That being the situation, Rs.3,79,70,200/- cannot be construed as the income of

the petitioner. No reasonable opportunity was provided to the assesse to put forth the explanation.

The learned counsel for the Revenue justifying the order impugned submitted that the factual aspects in as much as the VAT returns and the tax liability to which the petitioner is subjected, cannot be adjudicated in the writ jurisdiction.

Having regard to the facts and circumstances of the case as aforesaid, it is ex-facie apparent that no reasonable opportunity was provided to the petitioner to put forth his explanation. Moreover, no show cause notice under Section 144 of the Act was issued to the petitioner. In such circumstances, this court is of the considered opinion that the order impugned dated 26.06.2019 at Annexure ‘A’ shall be treated as show cause notice. The petitioner shall put forth his reply/objections within a period of two weeks from the date of receipt of the certified copy of the order. On

receipt of such reply/objections, the respondent- authority shall conclude the assessment after providing an opportunity of hearing to the petitioner. Demand notice which is part of Annexure ‘A’ dated 26.09.2019 issued under Section 156 of the Act is set aside.

Writ petition stands disposed of in terms of the above.

Sd/- JUDGE

NATARAJ S L vs. ASSISTANT COMMISSIONER OF INCOME TAX