Kundapura Souharda Credit Co-operative Ltd. V. Assessing Officer, Room No.356, C.R.Building, I. P. Estate, National Faceless Assessment Centre, Delhi and Commissioner of Income Tax (Appeals), National Faceless Assessment Centre, Delhi and Income Tax Officer, Ward 2, Aayakar Bhavan, Adi-Udupi Malpe Road, Udupi

WP/12970/2023

AI Insights

The case involves Kundapura Souharda Credit Co-operative Ltd., which filed a writ petition against the penalty and demand notice issued by the Income Tax authorities. The petitioner contested the penalty imposed following an initial assessment, which was later partially overturned by an appellate authority and remanded back to the assessing officer by the Tribunal. The petitioner argued that the penalty should not have been imposed as the assessment order, which was the basis for the penalty, had been set aside. The court agreed with the petitioner, noting that the penalty was improperly based on an outdated assessment order, leading to the setting aside of both the penalty and the demand notice.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 798524 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 13-07-2023
• Assessment Year: misc
• Laws Referred To: Articles 226 and 227 of the Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: MAHESH UPPIN
• Keywords: Appeal; Assessment Order; Demand notice; Penalty order; Remand; Show cause notice; Tribunal
• Section: ITBA/PNL/F/270A/2022-23/1051460419(1); ITBA/PNL/S/156/2022-23/1051453743(1)

Judgement Text

" - 1 - NC: 2023:KHC:24301 WP No. 12970 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF JULY, 2023 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 12970 OF 2023 (T-IT) BETWEEN: KUNDAPURA SOUHARDA CREDIT CO-OPERATIVE LTD., VENKATRAMANA ARCADE, KUNDAPURA TALUK, UDUPI DISTRICT – 576 201. REP.BY ITS C.E.O. MR.SHIVANANDA, AGE: 51 YEARS, (REG. UNDER CO-OP. SOCIETIES ACT). …PETITIONER (BY SRI. MAHESH R UPPIN., ADVOCATE) AND: 1. ASSESSING OFFICER, ROOM NO.356, C.R.BUILDING, I. P. ESTATE, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI – 110 002. 2. COMMISSIONER OF INCOME TAX (APPEALS), NATIONAL FACELESS Digitally signed by SUCHITRA M J Location: High Court of Karnataka - 2 - NC: 2023:KHC:24301 WP No. 12970 of 2023 ASSESSMENT CENTRE, DELHI – 110 002. 3. INCOME TAX OFFICER, WARD 2, AAYAKAR BHAVAN, ADI-UDUPI MALPE ROAD, UDUPI – 576 101. …RESPONDENTS (BY SRI. E.I.SANMATHI, ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE PENALTY ORDER DATED 28/03/2023 PASSED IN DIN NO ITBA/PNL/F/270A/2022-23/1051460419(1) BY THE R1 MARKED AS ANNEXURE-E AND THE DEMAND NOTICE DATED 28/03/2023 PASSED IN DIN AND NOTICE NO ITBA/PNL/S/156/2022-23/1051453743(1) ISSUED BY R1 MARKED AS ANNEXURE - F BY ISSUING A WRIT IN THE NATURE OF CERTIORARI AND ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: - 3 - NC: 2023:KHC:24301 WP No. 12970 of 2023 ORDER The petitioner has sought for setting aside of the order of penalty dated 28.03.2023 passed by respondent No.1 at Annexure-E and demand notice dated 28.03.2023 at Annexure-F. 2. Learned counsel for the petitioner submits that assessment order was passed on 05.12.2019 and show- cause notice regarding penalty was also issued. It is submitted that in response to the show-cause notice for penalty, reply was made out at Annexure-D. As against assessment order, appeal was filed and it was allowed in part as per the order dated 30.03.2022 and subsequently, second appeal was preferred before the Tribunal, which by its order dated 20.07.2022 at Annexure-B, has remanded the matter back to the Assessing Officer for fresh consideration. It is however submitted that ignoring the proceedings which is culminated in order of Second Appellate Authority before the Tribunal as per the order at Annexure-B, order of penalty at Annexure-E has been passed relying on dismissal of the first appeal. It is further submitted that once the assessment - 4 - NC: 2023:KHC:24301 WP No. 12970 of 2023 order is set aside and the matter remanded for fresh consideration in terms of the order of Tribunal at Annexure-B, question of passing penalty order on a non- existent assessment order does not arise. 3. The facts made out are not in dispute. The assessment order dated 05.12.2019 was the subject matter of first appeal, which came to be disposed of on 30.03.2022. Only on the basis of the order of first appeal, the penalty proceedings have continued culminating in the order at Annexure-E dated 28.03.2023. However, the Authority has failed to take note of the order in second appeal of the Tribunal, which has set aside the assessment order and remanded the matter back for fresh consideration. If that were to be so, there was no assessment order available as on the date of passing of penalty order at Annexure-E. Accordingly, order at Annexure-E is set aside. Consequently, demand notice at Annexure-F is set aside. It is needless to state that if fresh assessment order is passed, power to pass order of penalty would revive. - 5 - NC: 2023:KHC:24301 WP No. 12970 of 2023 In view of the above, petition is disposed off. All contentions are kept open. Sd/- JUDGE SMJ List No.: 1 Sl No.: 11 "