BEGUR SINAPPA VENKATESH V. THE INCOME TAX OFFICER

WP/20807/2023

AI Insights

The case revolves around a writ petition filed by Begur Sinappa Venkatesh against the Income Tax Officer and the National Faceless Assessment Centre, challenging the validity of several notices and orders issued for the assessment year 2015-16. The petitioner contested the notices and subsequent orders primarily on the grounds that the initial notice under Section 148A(b) of the Income Tax Act, 1961, was not digitally or manually signed, rendering all subsequent actions invalid. The court referenced a similar decision by the Bombay High Court in Prakash Krishnavtar Bhardwaj vs. Income Tax Officer, which supported the petitioner's stance. The petitioner also argued that the income assessed was below the taxable limit and that the authorities lacked jurisdiction to proceed with the assessments.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 751137 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 16-11-2023
• Assessment Year: misc
• Other Referred Cases: Prakash Krishnavtar Bhardwaj vs. Income Tax Officer
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RAVI RAJ V; M DILIP
• Assessee Lawyers: RAVI SHANKAR V
• Keywords: Assessment Year 2015-16; Digital Signature; Income Tax; Jurisdiction; Notice
• Section: 147; 148; 144; 148A(b); 148A(d)

Judgement Text

" - 1 - NC: 2023:KHC:40936 WP No. 20807 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH DAY OF NOVEMBER, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 20807 OF 2023 (T-IT) BETWEEN: BEGUR SINAPPA VENKATESH OPP KAMANNA TEMPLE KUNIGAL, KOTE-572130 ALSO AT BEGAUR SINAPPA VENKATESH, AGED ABOUT 34 YEARS, S/O SRI.SEENAPPA, RESIDING AT, NEAR GOVERNMENT SCHOOL, BEGUR, KASABA HOBLI, KUNIGAL TALUK, TUMKUR DIST-572130. …PETITIONER (BY SRI. RAVI SHANKAR S V.,ADVOCATE) AND: 1. THE INCOME TAX OFFICER WARD-1 AND TPS, OFFICE OF THE INCOME TAX AAYAKAR BHAVAN RAMAKRISHNANAGAR KUNIGAL ROAD RAMAKRISHNA NAGAR TUMKUR, KARNATAKA-572103. 2. NATIONAL FACELESS ASSESSMENT CENTRE ADDITIONAL/JOINT/DEPUTY/ASSISTANT Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2023:KHC:40936 WP No. 20807 of 2023 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. …RESPONDENTS (BY SRI. RAVI RAJ Y V.,ADVOCATE A/W SRI. M. DILIP, ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO-QUASH THE UNSIGNED NOTICE U/S 148A(b) OF THE ACT DATED 17/03/2022 BEARING DIN NO. ITBA/AST/F/148A(SCN)/2021-22/1040975444(1) ISSUED BY THE R-1 FOR THE ASSESSMENT YEAR 2015-16 HEREIN MARKED AS ANNEXURE-A; QUASH THE NOTICE U/S 148A(d) OF THE ACT DATED 30/03/2022 BEARING DIN NO. ITBA/AST/F/148A/2021-22/1042139319(1) ISSUED BY THE R-1 FOR THE AY 2015-16 HEREIN MARKED AS ANNEXURE-A1 AND ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has impugned the notice dated 17.03.2022 [Annexure-A] issued by the first respondent under Section 148A(b) of the Income Tax Act, 1961 [for short, the ‘IT Act’], the subsequent - 3 - NC: 2023:KHC:40936 WP No. 20807 of 2023 adjudication order dated 30.03.2022 under Section 148A(d) of the IT Act [Annexure-A1], the notice dated 31.03.2022 under Section 148 of the IT Act [Annexure–A2], the assessment order dated 24.02.2023 under Section 147 read with Section 144 of the IT Act [Annexure–A3] and the consequential penalty orders and demand notices dated 24.08.2023 and 07.07.2023 [Annexures-A4, A5 and A6]. 2. The petitioner’s primary grievance is with the notice under Section 148A(b) of the IT Act and based on this grievance, it is contended that all further proceedings must fail. Sri Ravishankar S V, the learned counsel for the petitioner, canvasses that the first respondent has caused the aforesaid notice under Section 148A(b) of the IT Act without digital signature and in view of the decision of the High Court of Bombay in Prakash Krishnavtar Bhardwaj - 4 - NC: 2023:KHC:40936 WP No. 20807 of 2023 vs. Income Tax Officer, reported in [2023] 451 ITR 27 [Bombay], all further proceedings must fail. 3. Sri Ravishankar S V, also submits that during the financial year relevant to the assessment year 2015-16, the petitioner was employed with M/s Varshitha Enterprises, Kunigal; that the proprietor of this enterprise was not keeping good health and therefore had issued necessary mandate to the petitioner to operate the concern’s bank account maintained with the Indian Overseas Bank; that the petitioner, bona fide and not intending to disturb the proprietor who was not keeping good health, credited the cash received from the sale of currency to recharge mobiles and utilized the deposits to disburse the same to the Telecom operator, M/s Idea Cellular. 4. Sri Ravishankar S V further submits that the details of these cash deposits and the disbursement to M/s Idea Cellular are reflected in the - 5 - NC: 2023:KHC:40936 WP No. 20807 of 2023 Income-tax returns filed on behalf of the proprietary concern in PAN AJGPV 3120P; that during the subsequent assessment year, the petitioner commenced his own business under the name and style ‘M/s Gagan Enterprises’ selling currency for mobile recharge; that the cash deposits even during this subsequent assessment year is treated as business income; the petitioner’s income is determined at the rate of 3% of the gross turn over; that the petitioner would not be liable for any income tax for the relevant assessment year and even otherwise if cash deposits are treated as gross business turn over, the petitioner’s liability will be below Rs.3,00,000/- at the rate of 3% and hence, the first respondent cannot assume jurisdiction to initiate proceedings. 5. Sri Ravishankar S V, relying upon the aforesaid circumstances, submits that for these reasons and in view of the indisputable fact that the - 6 - NC: 2023:KHC:40936 WP No. 20807 of 2023 notice under Section 148A(b) is not digitally signed, the proceedings must fail. Sri M. Dilip submits that he cannot contest the assertion that 148A(b) notice is not digitally signed especially when the adjudication order under Section 148A(d) and the subsequent proceedings are digitally signed or that in very similar circumstances, the High Court of Bombay in Prakash Krishnavtar Bharadwaj vs. Income Tax Officer supra has held that because the notice is not signed either digitally or manually, the same would be invalid and because such notice is invalid, no jurisdiction would vest with the first respondent to continue the proceedings pursuant to such notice. 6. However, Sri M.Dilip, submits that the authorities must be reserved with liberty to issue fresh notice if it could be permissible given the provisions of Section 149 of the IT Act. In rejoinder, Sri Ravishankar S V, submits that in the event the writ petition is being disposed of on this limited - 7 - NC: 2023:KHC:40936 WP No. 20807 of 2023 ground, this Court may observe that any further proceedings shall be initiated in the light of the defence that is canvassed in this petition. 7. The rival submissions are considered and this Court must opine that with the authorities being unable to dispute that the notice under Section 148A(b) of the IT Act is not either digitally or manually signed and with the proposition enunciated by the High Court of Bombay in the aforesaid decision being applicable on all fours to this case, the petition must be disposed of on the ground that the first respondent could not have continued the proceedings based on 148A(b) notice dated 17.03.2022. However, the authorities must be reserved with liberty, subject to all just exceptions in law, to initiate further proceedings. Hence, the following - 8 - NC: 2023:KHC:40936 WP No. 20807 of 2023 ORDER The petition is allowed and the impugned notice dated 17.03.2022 issued by the first respondent under Section 148A(b) of the Income Tax Act, 1961 [Annexure-A], the subsequent adjudication order dated 30.03.2022 under Section 148A(d) [Annexure- A1] of the IT Act, the notice dated 31.03.2022 under Section 148 of the IT Act [Annexure–A2], the assessment order dated 24.02.2023 under Section 147 read with Section 144 of the IT Act [Annexure– A3] and the consequential penalty orders and demand notices dated 24.08.2023 and 07.07.2023 [Annexures-A4, A5 and A6] are quashed. SD/- JUDGE NV "