Mahaveer Co-op. Credit Society Ltd. V. The Chief Commissioner of Income Tax, Karnataka and Goa and The Income Tax Officer, Ward 1 and TPS

WP/101756/2022

AI Insights

The case involves Mahaveer Cooperative Credit Society Limited, which is contesting actions taken by the Income Tax Department regarding the non-filing of tax returns for the Assessment Year 2015-16. The Society, although it had no taxable income, regularly filed returns but failed to do so for the specified year. Consequently, the Income Tax Officer issued a notice under Section 148 A(b) of the Income Tax Act, which the Society responded to, but the officer erroneously concluded that there was no response. This led to the issuance of a notice under Section 148. The Society challenged these actions in the High Court of Karnataka, which found that the officer had indeed failed to consider the Society's response and thus set aside the subsequent orders.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 804852 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 29-08-2024
• Assessment Year: misc
• Laws Referred To: Karnataka Cooperative Societies Act, 1956, Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M THIRUMALESH; ROOPA ANAVEKAR
• Assessee Lawyers: P V GUNJAL
• Keywords: Income Tax; Income Tax Officer; Non-filing of returns; Notice under section 148; Writ petition
• Section: 148; 80(P); 148A(d); 148(A)(b)

Judgement Text

" - 1 - NC: 2024:KHC-D:12380 WP No. 101756 of 2022 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 29TH DAY OF AUGUST, 2024 BEFORE THE HON'BLE MS. JUSTICE JYOTI MULIMANI WRIT PETITION NO. 101756 OF 2022 (T-IT) BETWEEN: MAHAVEER CO-OP. CREDIT SOCIETY LTD., 1, MAIN ROAD, ALGUR, JAMAKHANDI - 587 301. BY ITS CHAIRMAN, MR.SHANTAPPA ESAPPAKHIDRAPUR. …PETITIONER (BY SRI.P.V.GUNJAL., ADVOCATE) AND: 1. THE CHIEF COMMISSIONER OF INCOME TAX, KARNATAKA AND GOA, QUEENS ROAD, BENGALURU-560 001. 2. THE INCOME TAX OFFICER, WARD 1 AND TPS, AAYAKAR BHAVAN, SECTOR 24, NAVANAGAR, BAGALKOT-587 102. …RESPONDENTS (BY SRI.M.THIRUMALESH., AND SMT.ROOPA ANAVEKAR., ADVOCATES) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, SEEKING CERTAIN RELIEFS. Digitally signed by THEJASKUMAR N Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC-D:12380 WP No. 101756 of 2022 THIS WRIT PETITION IS LISTED FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, AN ORDER IS MADE AS UNDER: ORAL ORDER Sri.P.V.Gunjal., learned counsel for the petitioner has appeared in person. Sri.M.Thirumalesh., learned counsel for the respondents has appeared through video conferencing. 2. The short facts are these: Mahaveer Cooperative Credit Society Limited is a Society registered under the Karnataka Cooperative Societies Act, 1956 and is engaged in accepting deposits from its members and disbursing loans to them. Net interest income is entitled to deduction under Section 80 P of the Income Tax Act (for short ‘the Act’). Though the taxable income of the Petitioner Society is nil, it has been filing its Income Tax Returns regularly. Due to several reasons, the petitioner had failed to file its Income Tax Returns for the Assessment Year 2015-16. However, there was no tax payable for that year also as it had no taxable income after deduction as provided under Section 80 P of the Act. On 23.03.2022, a notice under Section 148 A(b) of the Act was issued by the Income Tax Officer – second respondent calling - 3 - NC: 2024:KHC-D:12380 WP No. 101756 of 2022 upon the petitioner Society as to why notice under Section 148 of the Act should not be issued as certain income chargeable tax had escaped assessment due to non-filing of the returns. The petitioner replied to the notice and sought the dropping of further proceedings. On 01.04.2022, an order was passed under Section 148A(d) holding that it is a fit case for issuing notice under Section 148 for the Assessment Year 2015-16. On 07.04.2022, a notice was issued under Section 148 of the Act calling upon the petitioner to furnish returns for the A.Y 2015- 16 within thirty days. The order dated 01.04.2022 and the notice dated 07.04.2022 are called into question in this Writ Petition on several grounds as set out in the Memorandum of Writ Petition. 3. Learned counsel for the respective parties urged several contentions. Sri.P.V.Gunjal., learned counsel for the petitioner in presenting his arguments strenuously urged that the petitioner had filed a detailed reply on 30.03.2022. He argued by saying that the officer concerned while passing the order under Section 148A(d) of the Act erroneously concluded that the assessee had not responded to the show cause notice. Learned - 4 - NC: 2024:KHC-D:12380 WP No. 101756 of 2022 counsel vehemently contended that there is no application of mind. Hence, he submits that an appropriate order may be passed. By way of reply, learned counsel Sri.M.Thirumalesh., justified the action of the officer concerned. He submits that the Writ Petition is devoid of merits and the same may be dismissed. 4. Heard the contentions and perused the Writ papers with utmost care. 5. The facts are sufficiently stated and do not require reiteration. The issue revolves around a narrow compass and relates to the action of the officer concerned. A notice under Section 148 A(b) was issued and the petitioner filed a detailed reply. The reply submitted by the petitioner is furnished along with the Writ Petition and the same is marked as Annexure-B. A perusal of the same reveals that the petitioner replied to the notice. However, the officer concerned while passing the order under Section 148A(d) of the Act at Paragraph No.6 concluded that the assessee had not responded to the show-cause notice. This is incorrect. The reason is apparent. The petitioner had filed its reply to the show cause notice. However, the same was - 5 - NC: 2024:KHC-D:12380 WP No. 101756 of 2022 not noticed. There is no application of mind by the officer concerned. Therefore, the order passed by the Income Tax Officer is liable to be set aside. Accordingly, it is set aside. The matter requires a remand. 6. The Writ of Certiorari is ordered. The order dated 01.04.2022 passed by the Income Tax Officer, Ward 1 & TPS, Bagalkot vide Annexure-D is quashed. Consequently, the Notice dated 07.04.2022 issued under Section 148 of the Income Tax Act, 1961 is also quashed. The matter is remanded to the Income Tax Officer. The Income Tax Officer is hereby directed to consider the reply that has been submitted by the petitioner to the notice issued under Section 148A(b) of the Act and give a reasonable opportunity for the petitioner to have its say and then proceed further in the matter following the law. 7. Resultantly, the Writ Petition is allowed and remanded. Sd/- (JYOTI MULIMANI) JUDGE TKN List No.: 2 Sl No.: 52 "