MRS KARUTURI ANITHA V. THE INCOME TAX OFFICER

WP/17928/2023

AI Insights

The case involves Mrs. Karuturi Anitha, the petitioner, who challenged the orders and notices issued by the Income Tax Department concerning reassessment and penalties for the assessment year 2014-15. The primary contention was the alleged non-service of notices and the lack of opportunity to explain the source of income, which was claimed to have escaped assessment. The petitioner argued that the income was from a loan extended to M/s. Karuturi Foods Private Limited, which was secured against agricultural land and disbursed through a joint account with M/s. ICICI Bank Limited. The court found that the petitioner was not properly served with the initial notice and thus did not have a fair opportunity to present her case, leading to the decision to quash the impugned orders and restore the proceedings for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 751139 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 16-11-2023
• Assessment Year: misc
• Other Referred Cases: Union of India v. Ashish Agarwal [2023] 1 SCC 617
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M DILIP
• Assessee Lawyers: M R VANAJA; NALINI VENKATESH
• Keywords: Assessment Order; Escapement of Tax; Income Tax; Penalty notice; Reassessment; Writ petition
• Section: 147; 144; 271(1)(c); 271(1)(b); 144B; 148A(d); 226; 227

Judgement Text

"- 1 - NC: 2023:KHC:40762 WP No. 17928 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. 17928 OF 2023 (T-IT) BETWEEN: MRS KARUTURI ANITHA W/O SAI RAMAKRISHNA KRUTURI AGED ABOUT 45 YEARS 9/56, 6TH MAIN UPPER PALACE ORCHARDS 1ST CROSS SADASHIVA NAGAR BANGALORE 560080. …PETITIONER (BY SMT. M.R. VANAJA, ADVOCATE A/W SMT.NALINI VENKATESH.,ADVOCATE) AND: 1. THE INCOME TAX OFFICER WARD 6(3)(1), BANGALORE BMTC BUILDING 6TH BLOCK 80 FEET ROAD KORAMANGALA BENGALURU 560095. 2. THE PRINCIPAL COMMISSIONER OF INCOME TAX 2, 5TH FLOOR BMTC BUILDINGS 6TH BLOCK, 80 FEET ROAD KORAMANGALA, BANGALORE 560095. …RESPONDENTS (BY SRI.M.DILIP., ADVOCATE) Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2023:KHC:40762 WP No. 17928 of 2023 THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING THE ORDER PASSED UNDER SECTION 148A CLAUSE (d) DATED 22.07.22 ISSUED BY THE R-1 (ANNEXURE-F). DIRECTION OR ORDER IN THE NATURE OF CERTIORARI QUASHING THE ORDER PASSED U/S 147,144 AND 144B WITH FOLLOWING THE PROPER PROCEDURE IN SERVICE OF NOTICE DATED 12.04.23 ANNEXURE-G; QUASHING THE PENALTY NOTICES U/S 271(1) (b) AND (1) (c) ANNEXURES J AND K FOR THE ASSESSMENT YEARS 2014-15 DATED 12.04.23 BY THE R-1 ON (ANNEXURE-G). THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has impugned the first respondent’s order dated 22.07.2022 [Annexure-F] under Section 148A[d] of the Income Tax Act, 1961 [for short, ‘IT Act’] and the subsequent assessment order dated 12.04.2023 [Annexure-H] under Section 147 read with Sections 144, 144B of the IT Act as also penalty notice dated 12.04.2023 [Annexure-J]. The first respondent has concluded the proceedings - 3 - NC: 2023:KHC:40762 WP No. 17928 of 2023 under Section 148A[d] of the IT Act as seen from the impugned order date 22.07.2022 on the ground that the petitioner has not filed any reply and therefore it would be logical to conclude that the assessee has no explanation with regard to the escapement of tax. 2. The first respondent has initiated proceedings for reassessment on the ground that the income chargeable to tax has escaped assessment observing that the petitioner has not filed returns for the assessment year 2014-15 despite the fact that she has extended a loan of Rs.10,00,60,000/- to M/s. Karuturi Foods Private Limited and that she is a director of this company. The petitioner contends that she and her mother have applied for loan with M/s. ICICI Bank Limited as against the security of agricultural land and with the loan being disbursed to the joint account, the same is transferred to M/s. Karuturi Foods Private Limited. - 4 - NC: 2023:KHC:40762 WP No. 17928 of 2023 3. Smt. M R Vanaja, the learned counsel for the petitioner, submits that the aforesaid circumstances are borne out by the records, and if considered, there would be no occasion for reassessment. The learned counsel emphasizes that the source of income is thus explained and would not be chargeable to tax. Sri M Dilip, the learned counsel for the respondents, is heard in the light of the afore submissions, and from the notice under Section 148A[b] of the IT Act, it is seen that the petitioner is issued with notice on 30.06.2021 and consequent to the Judgment of the Hon’ble Supreme Court in ‘Union of India v. Ashish Agarwal’1, this notice is treated under Section 148A[b] of the IT Act is issued. 4. The petitioner is categorical that she is not served with any notice and that she could access the adjudication order under Section 148A[d] of the IT 1 [2023] 1 SCC 617 - 5 - NC: 2023:KHC:40762 WP No. 17928 of 2023 Act from the portal after service of the penalty notice dated 12.04.2023. The details of service of notice issued on 30.06.2021 are not brought on record, and if the petitioner could indeed justify the source of income, the same must be considered before the assessment proceedings are concluded so that the salient in law is achieved. Hence, there must be interference to the limited extent of quashing the first respondent’s impugned order dated 22.07.2022 [Annexure-F] under Section 148A[d] of the IT Act and the subsequent assessment order dated 12.04.2023 [Annexure-H] under Section 147 read with Sections 144, 144B of the IT Act as also penalty notice dated 12.04.2023 [Annexure-J] restoring the proceedings for reconsideration with due opportunity to the petitioner to file documents leaving open all contentions to be urged. Hence the following: ORDER [a] The petition is allowed, and the first respondent’s impugned order dated - 6 - NC: 2023:KHC:40762 WP No. 17928 of 2023 22.07.2022 [Annexure-F] under Section 148A[d] of the IT Act and the subsequent assessment order dated 12.04.2023 [Annexure-H] under Section 147 read with Sections 144, 144B of the IT Act as also penalty notice dated 12.04.2023 [Annexure-J] are quashed. [b] The proceedings are restored for reconsideration with due opportunity to the petitioner to file documents leaving open all contentions to be urged. Sd/- JUDGE AN/- "