K J FOUNDATION V. ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX

WP/1369/2022

AI Insights

K.J. Foundation, represented by its trustee Mr. Darayus Keki Palia, filed a writ petition against various income tax authorities challenging the assessment order dated 30.03.2021 for the assessment year 2018-19. The petitioner contended that they had filed 'Nil' returns and argued that the procedure under Section 144B of the Income Tax Act, specifically Clause (xiv), which involves passing a draft assessment order, was not followed by the Assessing Officer. The court found that the procedure was indeed not followed, leading to the setting aside of the assessment order and related notices, and remitting the matter back for a proper assessment following the correct procedure.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 754232 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 02-02-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: BALACHANDRAN
• Keywords: Assessment Order; Draft Assessment Order; NIL returns; Procedure; Writ petition
• Section: 143(3); 144B; 143(3A); 143(3B)

Judgement Text

"1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF FEBRUARY, 2022 BEFORE THE HON'BLE MR.JUSTICE S. SUNIL DUTT YADAV WRIT PETITION No.1369/2022 (T-IT) BETWEEN: K.J. FOUNDATION 58/1, THUBARAHALLI BEHIND SRIRAM SAMRUTHI APARTMENTS, WHITEFIELD ROAD, BANGALORE - 400 067. PAN: AABTK1178N REPRESENTED BY ITS TRUSTEE MR. DARAYUS KEKI PALIA. … PETITIONER (BY SRI BALACHANDRAN B.S., ADVOCATE) AND: 1. ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/ INCOME-TAX OFFICER NATIONAL E-ASSESSMENT CENTRE, E RAMP, JAWAHARLAL NEHRU STADIUM NEW DELHI - 110 003. 2. ASSISTANT COMMISSIONER OF INCOME TAX EXEMPTION CIRCLE-1, BANGALORE, UNITY BUILDING ANNEXE, MISSION ROAD, BENGALURU - 560 027. 3. PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, EXEMPTION UNITY BUILDING ANNEXE, MISSION ROAD, BENGALURU - 560 027. 2 4. THE CENTRAL BOARD OF DIRECT TAXES THROUGH THE CHAIRPERSON DEPARTMENT OF REVENUE GOVERNMENT OF INDIA NORTH BLOCK, NEW DELHI - 110 001. 5. UNION OF INDIA THROUGH ITS FINANCE SECRETARY DEPARTMENT OF REVENUE MINISTRY OF FINANCE, 3RD FLOOR, JEEVAN DEEP BUILDING, SANSAD MARG, NEW DELHI - 100 001. … RESPONDENTS (BY SRI K.V.ARAVIND, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED ASSESSMENT ORDER DATED 30.03.2021 PASSED BY THE R-1 FOR THE AY-2018-19 UNDER SECTION 143(3) R.W.S.143(3A) AND 143(3B) OF THE ACT ALONG WITH THE COMPUTATION SHEET DEMAND NOTICE AND PENALTY NOTICE VIDE ANNEXURE-G TO F3 AND ETC. THIS WRIT PETITION COMING ON FOR ORDERS THIS DAY, THE COURT, MADE THE FOLLOWING: ORDER Petitioner has filed the present writ petition seeking issuance of appropriate writ to set aside the assessment order dated 30.03.2021 passed by the 1st respondent for the assessment year 2018-19 under Section 143(3) read with Sections 143(3A) and 143(B) of the Income Tax Act 3 and has also sought for setting aside of the computation sheet, demand notice and penalty notice at Annexures - G1, G2 and G3 respectively. 2. Petitioner has contended that he has filed 'Nil' returns and the procedure prescribed under Section 144(B) of the Income Tax Act ought to have been followed and Section 144(B) Clause (xiv) contemplates passing of a draft assessment order and procedure to be followed thereon in the event of any variation. It is further submitted that in light of the 'Nil' returns filed by the petitioner and the Assessing Officer having rejected exemption and passed an assessment order, ought to have followed the procedure under Section 144B(xiv) of the Income Tax Act and ought to have been forwarded the draft assessment order and followed the procedure thereon. 3. Insofar as the said procedure not having been followed, learned counsel for the Department is unable to controvert the said contention. 4 4. Noticing that the petitioner had filed 'Nil' Returns and also noticing the order passed whereby demand has been raised on the basis of variation, it could be said that if there was variation, procedure of draft assessment order as contemplated under Section 144B(xiv) of the Income Tax Act ought to have been made and procedure prescribed ought to have been followed for completing the assessment proceedings. 5. In light of the above, assessment order at Annexure-G is set aside. So also the computation sheet, demand notice and penalty notice at Annexures - G1, G2 and G3 respectively are set aside. The matter is remitted back to respondent No.1 with a direction to redo the assessment proceedings in light of the procedure under Section 144B(xiv) of the Income Tax Act. The writ petition is disposed off. Sd/- JUDGE VP "