Essence Reality LLP V. National Faceless Assessment Centre Assessment Unit and Deputy Commissioner of Income Tax Circle 7(1)(1)

WP/16877/2024

AI Insights

The case involves Essence Reality LLP, which filed a writ petition against the National Faceless Assessment Centre and the Deputy Commissioner of Income Tax, challenging an ex-parte assessment order and subsequent penalty notices for the assessment year 2022-23. The petitioner argued that due to bona fide reasons and unavoidable circumstances, they could not respond to earlier notices, leading to the ex-parte order which violated principles of natural justice. The respondents contended that the petition lacked merit. The court found that the petitioner was not given a sufficient opportunity to contest the proceedings and thus allowed the petition, setting aside the orders and remitting the matter for fresh consideration.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 688214 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 25-09-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: BORKAR SUBODH
• Keywords: Bonafide reasons; Ex-parte assessment order; Natural Justice; Sufficient cause; Unavoidable circumstances
• Section: 143(3); 274; 271B; 270A; 144B

Judgement Text

" - 1 - NC: 2024:KHC:39950 WP No. 16877 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO.16877 OF 2024 (T-IT) BETWEEN: ESSENCE REALITY LLP, 52/A, 1/20 2 RAJ COMPLEX, 4TH FLOOR, 7TH B MAIN, 4TH BLOCK, JAYANAGARA, BENGALURU – 560 011. REG. UNDER THE LIMITED LIABILITY PARTNERSHIP ACT, 2008. REP. BY MR. SHAH SANJAY, AGED ABOUT 55 YEARS. (DESIGNATED PARTNER) …PETITIONER (BY SMT. BORKAR SHEETAL SUBODH, ADVOCATE) AND: 1. NATIONAL FACELESS ASSESSMENT CENTRE ASSESSMENT UNIT, ROOM NO.401, 2ND FLOOR, E RAMP, JAWAHARLAL NEHRU STADIUM, DELHI – 110 003. 2. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 7(1)(1), BMTC BUILDING, 80 FT ROAD, KORAMANGALA, BENGALURU – 560 095. …RESPONDENTS (BY SRI.E.I. SANMATHI, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED EX-PARTE ASSESSMENT ORDER PASSED FOR THE ASST. YEAR 2022-23 UNDER SECTION 143(3) READ WITH SECTION 144B OF THE INCOME TAX ACT DATED 23.03.2024 BY THE R-1 BEARING DIN AND ORDER NO.ITBA/AST/S/143(3)/2023- 24/1063278456(1) VIDE ANNX-D AND ETC., Digitally signed by LEELAVATHI S R Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:39950 WP No. 16877 of 2024 THIS WRIT PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR ORAL ORDER In this petition, petitioner seeks the following reliefs: “i) Issue a writ of certiorari or a declaration in the nature of writ of certiorari quashing the impugned ex-parte assessment order passed for the Asst. year 2022-23 under section 143(3) read with section 144B of the Income Tax Act dated 23.03.2024 by the respondent No.1 bearing DIN and order No.ITBA/AST/S/143(3)/2023-24/1063278456(1) vide ANNEXURE-D; ii) Issue a writ of certiorari or a declaration in the nature of writ of certiorari quashing the penalty notice issued for the Asst. year 2022-23 under section 270A, 271B of the Income Tax Act dated 26.04.2024 by the respondent bearing DIN and Order No. ITBA/PNL/F/270A/2024-25/1064394929(1) and ITBA/PNL/F/271B/2024-25/1064394971(1) ANNEXURE- G1 & G2. iii) Issue a writ of certiorari or a declaration in the nature of writ of certiorari quashing the penalty notice issued for the Asst. year 2022-23 under section 274 read with section 271B of the Income Tax Act dated 23.03.2024 by the Respondent No.1 bearing DIN and Order No. ITBA/PNL/S/271B/2023-24/1063278635(1) vide ANNEXURE-F; - 3 - NC: 2024:KHC:39950 WP No. 16877 of 2024 iv) Issue a Writ of Mandamus, directing the concerned respondent authorities to refrain any further activities and such initiatives in respect of coercive recovery in respect of impugned demand under the impugned ex-parte assessment order, under section 143(3) read with section 144B of the Income Tax Act dated 23.03.2024 by the Respondent No.1 bearing DIN and Order No. ITBA/AST/S/143(3)/2023-24/1063278456(1) of the Act in respect of the relevant assessment year 2022-23 under the Income Tax Act, 1961 vide ANNEXURE-D passed by the respondent no.1 authority. v) Issue Writ of Prohibition, prohibiting the concerned respondent authorities in taking further action, measures or steps and such initiatives in respect of recovery in respect of impugned demand under section 143(3) read with section 144B of the Income Tax Act dated 23.03.2024 by the respondent no.1 bearing DIN and Order No. ITBA/AST/S/143(3)/2023-24/1063278456(1) of the Act in respect of the relevant assessment year 2022-23 under the Income Tax Act, 1961 vide ANNEXURE-D passed by the respondent no.1 authority.; vi) Issue any other writ, order or direction in favour of the Petitioner, which this Hon’ble Court may deem fit and proper in the facts and circumstances of the case in the interest of justice.” - 4 - NC: 2024:KHC:39950 WP No. 16877 of 2024 2. Heard the learned counsel for the petitioner and the learned counsel for the respondents and perused the material on record. 3. In addition to reiterating various contentions urged in the petition and referring to the material on record, the learned counsel for the petitioner submitted that pursuant to the notices dated 04.11.2023 and 16.11.2023 issued by the respondents under Section 142(1) of the Income Tax Act, petitioner submitted replies dated 14.11.2023 and 02.02.2024, subsequent to which the respondents issued one more notice dated 22.02.2024 and a Show Cause Notice dated 12.03.2024 calling upon the petitioner to show cause as to why variation proposed in the notice should not be made to its income. It is contended that due to bonafide reasons, unavoidable circumstances and sufficient cause, the petitioner could not submit his reply to the said notice dated 22.02.2024 and show-cause notice dated 12.03.2024, as a result of which, the respondents proceeded to pass the impugned exparte assessment order followed by the impugned notices, etc., without providing sufficient and reasonable opportunity to the petitioner nor hearing it thereby violating principles of natural justice and as such, the petitioner is before this court by way of the present petition. - 5 - NC: 2024:KHC:39950 WP No. 16877 of 2024 4. Per contra, learned counsel for the respondents submits that there is no merit in the petition and the same is liable to be dismissed. 5. A perusal of the material on record will indicate that it is an undisputed fact that the impugned order is an exparte assessment order and the petitioner did not submit its reply to the notice dated 22.02.2024 and show-cause notice dated 12.03.2024 and did not contest the proceedings. Under these circumstances, in the light of the specific assertion on the part of the petitioner that its inability and omission to submit replies to the aforesaid notices and contest the proceedings was due to bonafide reasons, unavoidable circumstances and sufficient cause, I am of the considered opinion that the impugned order, consequential notices, etc., deserve to be set aside by adopting justice oriented approach and to provide one more opportunity to the petitioner to submit replies to the notice and Show Cause Notice and with a direction to the respondents to consider the same and proceed further in accordance with law. 6. In the result, I pass the following: ORDER (i) The petition is hereby allowed. - 6 - NC: 2024:KHC:39950 WP No. 16877 of 2024 (ii) The impugned order at Annexure – D dated 23.03.2024 and the impugned notice at Annexures – F dated 23.03.2024 and the impugned notices at Annexures-G1 and G2 both dated 26.04.2024 are hereby set aside. (iii) The matter is remitted back to concerned respondents for re-consideration afresh to the stage of the petitioner submitting its replies to the notice dated 22.02.2024 and show-cause notice dated 12.03.2024 and in accordance with law. (iv) Liberty is reserved in favour of the petitioner to submit replies to the notice dated 22.02.2024 and show-cause notice dated 12.03.2024, pursuant to which the concerned respondents shall provide sufficient and reasonable opportunity to the petitioner and hear it and proceed further in accordance with law. (v) Liberty is also reserved in favour of the petitioner to submit pleadings, documents, etc., before the concerned respondents, which shall consider the same and proceed further in accordance with law. Sd/- (S.R.KRISHNA KUMAR) JUDGE SV/BMC List No.: 1 Sl No.: 66 "