Karnataka High Court
The Deputy Commissioner Of Income Tax vs Hewlett Packward Financial on 12 February, 2025
Author: Krishna S Dixit
Bench: Krishna S Dixit
-1-
NC: 2025:KHC:6210-DB
WA No. 989 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF FEBRUARY, 2025
PRESENT
THE HON'BLE MR JUSTICE KRISHNA S DIXIT
AND
THE HON'BLE MR JUSTICE G BASAVARAJA
WRIT APPEAL NO. 989 OF 2023 (T-IT)
BETWEEN:
1. THE DEPUTY COMMISSIONER OF INCOME TAX
CIRCLE - 3(A)(2), BMTC BUILDING,
80N FEET ROAD, KORAMANGALA,
BENGALURU-560 095.
2. THE ASST. COMMISSIONER OF INCOME TAX
CIRCLE-2(1)(2),
AAYKAR BHAVANA, MUMBAI,
MAHARISHI KARVE ROAD, MUMBAI,
MAHARASTHTRA-400 020.
3. THE PR. COMMISSIONER OF INCOME TAX
CIRCLE-3,BMTC BUILDING, 80 FEET ROAD,
KORAMANGALA, BENGALURU-560 095.
Digitally signed ...APPELLANTS
by SHARADA (BY SRI. RAVI RAJ Y V., ADVOCATE &
VANI B
SRI. M DILIP.,ADVOCATE)
Location: HIGH
COURT OF
KARNATAKA AND:
HEWLETT PACKWARD FINANCIAL
SERVICES (INDIA) PVT LTD
24, SALARPURIA ARENA,
HOSUR MAIN ROAD, ADUGODI,
BENGALURU-560 030.
...RESPONDENT
(BY SRI. T SURYANARAYANA., SENIOR COUNSEL A/W
MISS. MAHIMA GOUD.,ADVOCATE)
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THIS WRIT APPEAL FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO A) SET ASIDE THE ORDER
PASSED BY THE LEARNED SINGLE JUDGE IN WP NO.2392/2019
DATED 01/06/2023 AND B) PASS SUCH OTHER SUITABLE
ORDERS.
THIS WRIT APPEAL, COMING ON FOR ORDERS THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE KRISHNA S DIXIT
and
HON'BLE MR JUSTICE G BASAVARAJA
ORAL JUDGEMENT
(PER: HON'BLE MR JUSTICE KRISHNA S DIXIT)
The Revenue is in Intra-Court Appeal for laying a
challenge to a learned Single Judge's order dated
01.06.2023 whereby Respondent - Assessee's
W.P.No.2392/2019 (T-IT) having been favorued, the
following relief has been accorded:
"13.Accordingly, the order of reassessment
dated 30.12.2018 vide Annexure-K is set aside.
Consequently, the notice dated 30.12.2018 at
Annexure-L and the notice dated 30.12.2018 at
Annexure-M are set aside. Further the notice
issue under Section 148 at Annexure-D is also
set aside."
2. Learned Sr. Panel Counsel appearing for the
Revenue submits that non-passing of orders on Assessee's
objection to reopening of Assessment proposal is only a
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curable irregularity as distinguished from legal illegality
and therefore, the Assessment Order could not have been
voided once for all; instead, according to him, the matter
ought to have been remitted for consideration afresh. He
further submits that not passing the order rejecting the
objections cannot render the Assessment Order itself null
& void especially when the Assessee had failed to file
return of income in response to Notice issued under
Section 148 of the Income Tax Act, 1961 nor filed
Reply/Preliminary Objection in time. He also falters in the
learned Single Judge placing reliance on the decisions
namely DEEPAK EXTRUSIONS (P) LTD., v. DEPUTY
COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE1 &
GKN DRIVESHAFTS (INDIA) LTD., v. INCOME TAX
OFICER2.
3. Learned Sr. Advocate Mr. T Suryanarayan
appearing for the Assessee resists the Appeal making
submission in justification of the impugned order and the
80 TAXMANN.COM 77 (KAR)
259 ITR 19 (Sc)
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reasons on which it has been constructed. He points out
that passing of order on the Preliminary Objections is a
sine qua non for making the Assessment Order in the light
of Apex Court decision in GKN DRIVESHAFTS. He opposes
even the proposal of the Revenue for remand on the
ground that the prescribed limitation period has expired on
31.03.2018.
4. Having heard the learned counsel for the parties
and having perused the Appeal Papers, we decline
indulgence in the matter broadly agreeing with the views
of learned Single Judge. The submission of learned Sr.
Advocate appearing for the Assessee that the reasons for
issuing Notice under Section 143(2) of the 1961 Act are
once communicated and Objections filed by the Assessee
have not been considered, then the proceedings of re-
Assessment are liable to be voided, is supported by the
decision in GKN DRIVESHAFTS supra, wherein the Apex
Court has observed as under:
"We see no justifiable reason to interfere with
the order under challenge. However, we clarify
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that when a notice under Section 148 of the
Income tax Act is issued, the proper course of
action for the noticee is to file return and if he
so desires, to seek reasons for issuing notices.
The assessing officer is bound to furnish
reasons within a reasonable time. On receipt of
reasons, the noticee is entitled to file objections
to issuance of notice and the assessing officer
is bound to dispose of the same by passing a
speaking order. In the instant case, as the
reasons have been disclosed in these
proceedings, the assessing officer has to
dispose of the objections, if filed, by passing a
speaking Order before proceeding with the
assessment in respect of the abovesaid five
assessment years."
5. Learned Single Judge at Paragraph Nos. 11 &
12 of the impugned order has rightly observed as follows:
"11. In the present case, it needs to be kept in
mind that the proceedings under Section 148
will have the effect of reopening the
assessment. It is in this context, the Court has
to decide while construing the effect of non-
following of the procedure under GKN
Driveshafts (supra). Admittedly, the reasons
for reopening having been communicated as
per Annexure-F and reply to such reasons
having been furnished by the petitioner, the
Assessing Officer is bound to dispose off the
same by passing a speaking order before
proceeding to pass an order under Section
143(3) read with Section 147 of the Act. In
light of the limitation expiring on 31.12.2018,
the practical difficulties of the Assessing Officer
could be of no reason to condone the non-
adherence to the procedure in GKN
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Driveshafts (supra). The effect of non-
following such procedure has been dealt with
by the judgment of the Division Bench of this
Court in Deepak Extrusions, wherein the
Division Bench of this Court has rightly held
that the mandatory procedure of disposal of
objections by the Assessing Officer not having
been followed, the order of assessment cannot
be sustained. If that were to be so, the
assessment order issued under Section 143(3)
read with Section 147 requires to be set aside
and the question of issuing notice under
Section 148 would not arise.
12. The contention of the learned counsel for
the revenue relying on the judgment of the
Madras High Court in the case of Home
Finders (supra) cannot be accepted in light of
the declaration of the Division Bench of this
Court in the case of Deepak Extrusions
stating that the procedure prescribed in GKN
Driveshafts (supra) is a mandatory
procedure which would vitiate the assessment
order and the same having been concurred with
in another judgment of the Division Bench in
W.A.No.919/2019 disposed off on
24.01.2023. It is impermissible for this Court to
accept the contention of the revenue and pass
orders contrary to that of the Division Bench
orders referred to above. Even otherwise, a
perusal of the observations made by the Apex
Court in GKN Driveshafts (supra) clearly
records a finding that the Assessing Officer is
bound to dispose off the objections filed by
passing a speaking order."
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In the above circumstances, this Appeal being devoid
of merits is liable to be rejected and accordingly it is, costs
having been made easy.
Sd/-
(KRISHNA S DIXIT)
JUDGE
Sd/-
(G BASAVARAJA)
JUDGE
Bsv
