ANAND KUMAR SOMASHESHEKARAYYA LONARMATH V. THE INCOME TAX OFFICER AND ORS

WP/201029/2024

AI Insights

The case involves Anand Kumar Somasheshekarayya Lonarmath, a retired teacher, who challenged multiple notices and orders issued by the Income Tax Department concerning the assessment year 2015-16. The notices were based on alleged unexplained cash deposits exceeding Rs. 50 lakhs in his bank account. The petitioner contended that the total deposit was Rs. 27,45,000, which was a return of hand loans and did not exceed the threshold for reopening the assessment under Section 149 of the Income Tax Act. The revenue argued that the case was appealable under Section 246, suggesting an alternative remedy. However, the court found that the threshold limit for issuing notices under Section 148 was not met, leading to the quashing of all related notices and orders.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 747557 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 27-09-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M THIRUMALESH
• Assessee Lawyers: RAVI S V
• Keywords: Assessment Year 2015-16; Income Tax; Penalty notice; Threshold Limit; Unexplained cash deposit; Writ of Certiorari
• Section: 147; 148; 271(1)(c); 149; 271F; 144B; 148A(b); 148A(d); 226; 227

Judgement Text

" - 1 - NC: 2024:KHC-K:7469 WP No. 201029 of 2024 IN THE HIGH COURT OF KARNATAKA, KALABURAGI BENCH DATED THIS THE 27TH DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ WRIT PETITION NO. 201029 OF 2024 (T-IT) BETWEEN: ANAND KUMAR SOMASHESHEKARAYYA LONARMATH NO.157 TEACHERS COLONY NEAR ASHRAM B L D E ROAD BIJAPUR-586103 PREVIOUSLY AT SAVANAHALLI BIJAPUR BIJAPUR-586148. …PETITIONER (BY SRI. RAVI SHANKAR S. V., ADVOCATE) AND: 1. THE INCOME TAX OFFICER WARD -1 AND TPS ATHANI ROAD VIJAYAPURA-586104. 2. NATIONAL FACELESS ASSESSEMENT CENTRE ADDITIONAL/ JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER INCOME TAX DEPARTMENT MINISTRY OF FINANCE ROOM NO.401 2ND FLOOR E-RAMP JAWAHARLAL NEHRU STADIUM DELHI-110003. 3. THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX C R BUILDING QUEENS ROAD, BENGALURU-560001. …RESPONDENTS (BY SRI. M THIRUMALESH, ADVOCATE) ® Digitally signed by BASALINGAPPA SHIVARAJ DHUTTARGAON Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC-K:7469 WP No. 201029 of 2024 THIS WRIT PETITION FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE A WRIT OF CERTIORARI OR DIRECTION IN THE NATURE OF WRIT OF CERTIORARI QUASHING THE NOTICE UNDER SECTION 148A(b) OF THE INCOME TAX ACT, 1961 DATED 20.03.2022 BEARING DIN ITBA/AST/ F/ 148(A)(SCN)/ 2021-22/ 104109477(1) ISSUED BY THE RESPONDENT NO.1 FOR THE ASSESSMENT YEAR 2015-16 WHICH IS ENCLOSED AS ANNEXURE-A AND ETC. THIS WRIT PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE SURAJ GOVINDARAJ ORAL ORDER (PER: HON'BLE MR. JUSTICE SURAJ GOVINDARAJ) 1. The petitioner is before this Court seeking for the following reliefs: 1. Issue a writ of Certiorari or direction in the nature of a writ of Certiorari quashing the notice under Section 148(b) of the Act dated 20.03.2022 bearing DIN No. ITBA/AST/F/148A(SCN)/2021- 22/101094771(1) issued by the Respondent No.1 for the assessment year 2015-16 herein marked as Annexure-A; 2. Issue a Writ of Certiorari or direction in the nature of writ of Certiorari quashing the order under Section 148A(d) of the Act dated 06.04.2022 bearing DIN No.ITBA/AST/F/148A/2022- 23/1042547184(1) issued by the respondent No.1 for the assessment year 2015-16 herein marked as Annexure-A1. 3. Issue a writ of certiorari or direction in the nature of writ of Certiorari quashing the notice under Section 148 of the Act dated 07.04.2022 bearing DIN - 3 - NC: 2024:KHC-K:7469 WP No. 201029 of 2024 No.ITBA/AST/S/148_1/2022-23/1042609600(1) issued by the respondent No.1 for the assessment year 2015-16 herein marked as Annexure-A2. 4. Issue a writ of Certiorari or direction in the nature of writ of Certiorari quashing the order passed U/s 147 r.w.s 144B dated 20.02.2024 bearing No. ITBA/AST/S/147/2023-24/1061227696(1) issued by the respondent No.2 for the assessment year 2015- 16 herein marked as Annexure-A3. 5. Issue a writ of Certiorari or direction in the nature of writ of Certiorari quashing the penalty notice under Section 271(1)(c) of the Act dated 20.02.2024 bearing DIN No.ITBA/PNL/S/271(1)(c)/2023- 24/1061227719(1) issued by the respondent No.2 for the assessment year 2015-16 herein marked as Annexure-A4. 6. Issue a writ of Certiorari or direction in the nature of writ of Certiorari quashing the penalty notice dated 20.02.2024 passed u/s 271F of the Act bearing DIN and Notice No. ITBA/PNL/S/271F/2023- 24/1061227720(1) by the Respondent No.2 for the Assessment year 2015-16 herein marked as Annexure-A5. 7. Pass such other orders as this Hon’ble Court deems fit and proper in the interest of justice and equity. 2. The petitioner claims to be an individual presently a retired teacher. During the assessment year 2015- 16; he had offered an income of Rs.2,78,620/- after deduction. However, the assessment for the year 2015-16 was sought to be reopened on the ground that as per the information made available to the - 4 - NC: 2024:KHC-K:7469 WP No. 201029 of 2024 revenue, there is a cash deposit made in excess of Rs.50 lakhs. The petitioner replied to the same on 23.3.2022 within three days and submitted all the documents including the statement of account of the particular bank account as regards which the allegation was made, contending that it is only one bank account that the petitioner has and operates and the cash deposit made in the said account is only a sum of Rs.27,45,000/- which is on account of the return of hand loans made earlier. 3. In the assessment order which has been passed on 20.2.2024, after taking into account all the submissions and the documents submitted by the petitioner, the final computation of taxable income which has been arrived at even after taking into account the cash deposit of Rs.27,45,000/- is a grand total of Rs.30,23,623/- which has been assessed under Section 147 read with Section 144B of the Income Tax Act 1981 and as such, penalty proceedings under Section 274 read with Section 271 - 5 - NC: 2024:KHC-K:7469 WP No. 201029 of 2024 (1)(c) and Section 274 read with Section 271(f) were initiated and notices were issued separately. It is challenging same, that the petitioner is before this Court seeking for the aforesaid reliefs. 4. The submission of Sri.Ravi Shankar.S.V., learned counsel for the petitioner is that; 4.1. In terms of Section 149 of the Income Tax Act, any notice issued or proceedings initiated under Section 148 for the relevant assessment year within a period of three years from the end of the relevant assessment year, unless the same would come under clause (b) of sub Section (1) of Section 149 thereof which provides for extended period of ten years in the event of the documents or evidence revealing that the income chargeable represent in form of an asset in respect of a transaction or entry in the books of accounts is available with the revenue. 4.2. Even if, assuming that the statement of account of the bank account maintained by the - 6 - NC: 2024:KHC-K:7469 WP No. 201029 of 2024 petitioner would qualify clause (b) of sub Section (1) of Section 149. The said power under the said provision could be only exercised, if the escaped assessment amount is more than Rs.50 lakh of rupees, if so done beyond 3 years. 4.3. In the present case, the assessment order itself reflecting the assessment made to be Rs.30,23,623/- by including the escaped assessment of Rs.27,45,000/- on account of an alleged unexplained cash deposit being within the threshold limit of Rs.50 lakhs, no proceedings under Section 148, let alone penalty proceedings, could have been initiated by the revenue. On that ground, he submits that the above petition is required to be allowed and the relief sought for granted. 5. Sri.Thirumalesh.M., learned counsel for revenue would submit that the order is an appealable order under Section 246 and therefore the petitioner - 7 - NC: 2024:KHC-K:7469 WP No. 201029 of 2024 having alternative efficacious remedy could always approach the appellate authority challenging the order, if he has any grievance. 6. Heard Sri.Ravi Shankar.S.V., Learned counsel for the petitioner and Sri.Thirumalesh.M., learned counsel for revenue and perused papers. 7. Insofar as the alternative efficacious remedy is concerned, Sri.Ravi Shankar.S.V., learned counsel for the petitioner submits that in order to avail the said remedy, the petitioner would have to make deposit of 20% of the amount demanded when in fact on merits it is not due. Therefore, he submits that the said a remedy under Section 246 though maybe an alternative remedy is not an efficacious remedy for a person like the petitioner who is a retired teacher who does not have any amounts left with him after a gap of nearly eight years, his submission is accepted. 8. On merits, what is required to be seen is the applicability of Section 149 of Income Tax Act, which relates to the time limit for issuance of notice. The - 8 - NC: 2024:KHC-K:7469 WP No. 201029 of 2024 said Section 149 is reproduced hereunder for easy reference; 149. Time limit for notice: (1)No notice under section 148 shall be issued for the relevant assessment year,— (a)if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of— (i)an asset; (ii)expenditure in respect of a transaction or in relation to an event or occasion; or (iii)an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more: Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if [a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be], as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read - 9 - NC: 2024:KHC-K:7469 WP No. 201029 of 2024 with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded: Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly. Explanation.—For the purposes of clause (b) of this subsection, \"asset\" shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account. (1A) Notwithstanding anything contained in sub-section (1), where the income chargeable to tax represented in the form of an asset or expenditure in relation to an event or occasion of the value referred to in clause (b) of sub-section (1), has escaped the assessment and the investment in such asset or expenditure in relation to such event or occasion has been made or incurred, in more than one previous years relevant to the assessment years within the period referred to in clause (b) of sub-section (1), a notice under section 148 shall be issued for every such assessment year for assessment, reassessment or recomputation, as the case may be. - 10 - NC: 2024:KHC-K:7469 WP No. 201029 of 2024 (2)The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151. 9. In terms of clause (a) of sub-Section (1) of Section 149 a period of three years has been fixed from the end of the relevant assessment year for initiating proceedings under Section 148. However, an exception has been carved out under clause (b) of sub-Section (1) of Section 149 extending the 1said period by up to ten years, if there is a document or evidence which reveals escaped assessment as detailed under sub-Clause (i), (ii) and (iii) of clause (b) of sub Section (1) of Section 149. 10. In the present case, though it can be said that the entry in this statement of bank account, is a document which would satisfy Clause (b) of sub- section 1 of Section 149. The powers which can be excised in a said clause are injuncted and restricted by imposing a minimum threshold limit of Rs.50 lakhs of rupees. - 11 - NC: 2024:KHC-K:7469 WP No. 201029 of 2024 11. Admittedly, the assessment order has been passed for a sum of Rs.30,23,623/- which is much less than the threshold limit of Rs.50 lakhs. The revenue would not have any authority or jurisdiction to issue a notice under Section 148 if the threshold limit of Rs.50 lakhs is not shown to have escaped assessment beyond 3 years of the assessment. The assessment order in the present case showing the escaped assessment to be Rs.30,23,623/- being within the threshold limits as held supra. No powers under Section 148 could be exercised. 12. In that view of the matter, I pass the following; ORDER i. The writ petition is allowed. ii. A Certiorari is issued, the notice under Section 148(b) of the Act dated 20.03.2022 bearing DIN No. ITBA/AST/F/148A(SCN)/2021-22/ 101094771(1) issued by the Respondent No.1 for the assessment year 2015-16 at Annexure- - 12 - NC: 2024:KHC-K:7469 WP No. 201029 of 2024 A, the order under Section 148A(d) of the Act dated 06.04.2022 bearing DIN No.ITBA/AST/F/ 148A/2022-23/1042547184(1) issued by the respondent No.1 for the assessment year 2015- 16 at Annexure-A1, the notice under Section 148 of the Act dated 07.04.2022 bearing DIN No.ITBA/AST/S/148_1/2022-3/1042609600(1) issued by the respondent No.1 for the assessment year 2015-16 at Annexure-A2, the order passed U/s 147 r.w.s 144B dated 20.02.2024 bearing No.ITBA/AST/S/147/2023- 24/1061227696(1) issued by the respondent No.2 for the assessment year 2015-16 at Annexure-A3, the penalty notice under Section 271(1)(c) of the Act dated 20.02.2024 bearing DIN No.ITBA/PNL/S/271(1)(c)/2023-24/ 1061227719(1) issued by the respondent No.2 for the assessment year 2015-16 herein marked as Annexure-A4 and the penalty notice dated 20.02.2024 passed u/s 271F of the Act - 13 - NC: 2024:KHC-K:7469 WP No. 201029 of 2024 bearing DIN and Notice No. ITBA/PNL/S/271F/2023-24/1061227720(1) by the Respondent No.2 for the Assessment year 2015-16 at Annexure-A5 are hereby quashed. Sd/- (SURAJ GOVINDARAJ) JUDGE SR List No.: 2 Sl No.: 21 "