Karnataka High Court
Sri. Basavaprabhu Sirnadgouda vs The Assessment Unit on 21 March, 2025
Author: Jyoti Mulimani
Bench: Jyoti Mulimani
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NC: 2025:KHC-D:5193
WP No. 107426 of 2023
IN THE HIGH COURT OF KARNATAKA,
DHARWAD BENCH
DATED THIS THE 21ST DAY OF MARCH, 2025
BEFORE
THE HON'BLE MS. JUSTICE JYOTI MULIMANI
WRIT PETITION NO. 107426 OF 2023 (T-RES)
BETWEEN:
SRI. BASAVAPRABHU SIRNADGOUDA,
AGED 47 YEARS,
PAN: AHHPS7517A,
S/O: APPASAHEB,
504, MAIN ROAD, KILLA,
BAGALKOT-587 101.
... PETITIONER
(BY SMT. JINITA CHATERJEE AND
SRI. H.R. KAMBIYAVAR, ADVOCATES)
AND:
1. THE ASSESSMENT UNIT,
INCOME TAX DEPARTMENT,
NFAC, DELHI-110 001.
Digitally signed by
PREMCHANDRA M R 2. CENTRAL PROCESSING CENTRE (CPC) BENGALURU,
Location: HIGH 1ST FLOOR, PRESTIGE ALPHA NO.48/1, 48/2,
COURT OF
KARNATAKA BERATENAAGRAHARA BEGUR,
HOSUR ROAD, UTTARAHALLI HOBLI,
BENGALURU, KARNATAKA-560 100.
... RESPONDENTS
(BY SRI. M. THIRUMALESH, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, SEEKING CERTAIN
RELIEFS.
THIS WRIT PETITION IS LISTED FOR ORDERS, THIS DAY,
AN ORDER IS MADE AS UNDER:
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NC: 2025:KHC-D:5193
WP No. 107426 of 2023
ORAL ORDER
Smt.Jinita Chaterjee., counsel for the petitioner has
appeared through video conferencing.
Sri.H.R.Kambiyavar., counsel for the petitioner and
Sri.M.Thirumalesh., counsel for the respondents have appeared
in person.
2. The brief facts are these:
The petitioner is a regular income tax assessee, assessed
to the tax under the Income Tax Act, 1961. For the Assessment
Year 2021-2022, the petitioner filed return of income on
29.03.2022 declaring an income of Rs.67,64,967/- on which
the tax was duly paid. The case was selected for complete
scrutiny for the following issue "Large Cash Deposits in Bank
Account and Assessee has also purchased/ sold one or more
property/ ies during the year (both buying and selling
transactions are to be considered)".
The petitioner was issued with notices under Section
143(2) and 142(1) from the first respondent on various dates,
since there was no response, a show cause notice
dated:23.11.2022 under Section 144 was issued and a reply to
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the show cause notice was made by the petitioner on
24.11.2022 stating that earlier notices were not received by
him on his e-mail ID nor the postal address. It is only when the
penalty notice was served, the petitioner was informed of the
said notices and necessary modifications were made to the e-
mail ID and after obtaining the details, a reply was uploaded on
the portal. The petitioner filed a reply along with Annexures on
24.11.2022 and 25.11.2022.
Further, a show cause notice dated:14.12.2022 was
issued to the petitioner as to the proposed variation should not
be made. A reply was made by the petitioner. However, the
Assessing Authority concluded the assessment under Section
143(3) r/w. Section 144B on 24.12.2022 determining a total
income of Rs.7,42,08,744/- as against the returned income of
Rs.67,64,970/-. The petitioner contends that the assessment
order and the demand notice under Section 156 were not
served to him till date. Consequently, the penalty proceedings
were initiated separately. A show cause notice under Section
272A(1)d for not responding to the notices was issued on
22.12.2022 and the petitioner vide reply dated:24.12.2022
submitted his reply and sought fifteen days time. However, the
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assessing authority passed the penalty order on 20.03.2023
stating that the petitioner has furnished his reply and the
assessment was completed under Section 143(3) of the Act and
not ex-parte under Section 144 of the Income Tax Act which
implies that the assessee made compliance at later stage of
assessment proceedings and furnished documents/ details as
called by the A.O. However, taking note of the judgment
dated:28.10.2020 in ITA No.6305-6308/Del/2017, the penalty
proceedings were dropped.
The petitioner raised the grievance with the second
respondent on 24.03.2023 stating that the assessment order
under Section 143(3) and the demand notice were not served
and the assessee was unable to know the reason for making
additions to the tune of Rs.6,69,07,806/- and to upload the
said order and demand notice on the I.T. Portal. The petitioner
got a reply from the second respondent on 30.05.2023. Further
on the very same day, the petitioner checked his I.T. Portal and
still he could not find the assessment order and the demand
notice. Hence, the petitioner filed another grievance with the
second respondent mentioning that the assessment order and
the demand notice are served to him to take further course of
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action and also requested for the service of the assessment
order and the demand notice. He also requested that the
penalty cannot be enforced.
A show cause notice under Section 271AAC(1) was issued
and the petitioner filed a response on 26.05.2023. However, a
penalty order was passed on 22.06.2023. For a show cause
notice issued under 270A, the petitioner filed a reply on
21.06.2023 stating that he was served with the assessment
order and the demand notice. However, a penalty order was
passed on 27.06.2023. Under these circumstances the
petitioner is before this Court.
3. Counsel for the respective parties urged several
contentions. Heard the arguments and perused the Writ papers
with care.
4. The principal ground on which this court is asked to
quash the assessment order and the penalty orders is that the
petitioner was not accorded an opportunity. The proceedings
are in gross violation of natural justice. It is significant to note
that the petitioner was not provided with the assessment order
and the demand notice. There is no valid service of the order as
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prescribed under Section 282 of the Act. Needless to say, when
the service assessment order under Section 143(3) is
incomplete in law and without specific direction to levy penalty
in the assessment order, no penalty proceedings can be
initiated. There is catena of decisions to support the same. A
perusal of the writ papers reveal that the authorities have failed
to consider the reply that was submitted by the petitioner.
Hence, this Court deems it appropriate to quash the
assessment order dated 24.12.2022 and consequently the
penalty orders dated 22.06.2023 vide Annexure-K and
27.06.2023 vide Annexure-M and hence, the matter requires
remand.
5. The Writ of Certiorari is ordered. The assessment
order dated 24.12.2022 and consequently the penalty orders
dated 22.06.2023 vide Annexure-K and 27.06.2023 vide
Annexure-M are quashed. The matter is remanded to the
respondents to the stage of reply to the notice dated
11.11.2022.
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Needless to say that, before passing the order, the
respondents shall issue notice to the petitioner calling for the
information. All contentions of the parties are left open.
6. Resultantly, the Writ Petition is allowed and
remanded.
Sd/-
(JYOTI MULIMANI)
JUDGE
MRP/RH
