P C A AND R D BANK LTD V. THE ASSESSMENT UNIT INCOME TAX DEPARTMENT and THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX KARNATAKA AND GOA and THE INCOME TAX OFFICER

WP/381/2025

AI Insights

The case involves P C A AND R D BANK LTD, a cooperative society, challenging the ex-parte assessment order and penalty imposed by the Income Tax Department under Sections 144 and 270A of the Income Tax Act, 1961, for the assessment year 2021-22. The petitioner argued that as a cooperative society, it is eligible for deductions under Section 80P(2) and (4) of the Income Tax Act, 1961, and sought to quash the assessment and penalty orders. The respondents contended that the petitioner had failed to adequately respond to the notices issued under Section 142(1) and 144 of the Act. The court found that the petitioner should be given an opportunity to file a detailed reply to the notice under Section 144, subject to the condition of depositing 25% of the demanded amount.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 808448 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 22-01-2025
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: Y V RAVIRAJ; DILIP
• Assessee Lawyers: K M SHIVAYOGI SWAMY
• Keywords: Assessment Order; Cooperative Society; Ex parte assessment; Opportunity to file objections; Writ petition; Income Tax Deductions
• Section: 144; 142(1); 270A; 144B; 80P(2); 80P(4)

Judgement Text

" - 1 - NC: 2025:KHC:2691 WP No. 381 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22ND DAY OF JANUARY, 2025 BEFORE THE HON'BLE MR JUSTICE S.G.PANDIT WRIT PETITION NO. 381 OF 2025 (T-IT) BETWEEN: P C A AND R D BANK LTD CHENNAGIRI ROAD, BHADRAVATHI - 577 301 SHIMOGA DISTRICT (REP. BY ITS MANAGER ARTHIK H R AGED 34 YEARS) …PETITIONER (BY SRI. K M SHIVAYOGISWAMY, ADV.) AND: 1. THE ASSESSMENT UNIT INCOME TAX DEPARTMENT 2ND FLOOR, JAWAHARLAL NEHRU STADIUM, NEW DELHI - 110 003. 2. THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX KARNATAKA AND GOA, CENTRAL REVENUE BUILDING, QUEEN’S ROAD, BANGALORE - 560001. 3. THE INCOME TAX OFFICER INCOME TAX DEPARTMENT, NO.75, 100FT ROAD, Digitally signed by MARIGANGAIAH PREMAKUMARI Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:2691 WP No. 381 of 2025 GOPAL GOWDA EXTENSION, SHIVAMOGA – 577401. …RESPONDENTS (BY SRI.Y.V. RAVIRAJ AND SRI DILIP M., ADVS.) THIS PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO A) DECLARE AND HOLD THAT THE PETITIONER BEING A COOPERATIVE SOCIETY AND ELIGIBLE FOR DEDUCTIONS UNDER SECTION 80 P (2) AND (4) OF THE INCOME TAX ACT ON THE ENTIRE PROFITS EARNED BY IT IN SO FAR AS IT PERTAINS TO THE ASSESSMENT YEAR 2021-22 AND ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.G.PANDIT ORAL ORDER Sri.Y.V.Ravi Raj and Sri.M.Dilip, learned counsel accepts notice for respondents. Heard learned counsel Sri.K.M.Shivayogiswamy for petitioner and learned counsel Sri.M.Dilip for respondents. Perused the writ petition papers. 2. Learned counsel Sri.Shivayogiswamy for petitioner would submit that the petitioner a co-operative society, registered under the provisions of Co-operative Societies Act, 1959 is before this Court seeking for declaration to - 3 - NC: 2025:KHC:2691 WP No. 381 of 2025 declare that the petitioner being a co-operative society eligible for certain deductions under Section 80 P (2) and (4) of the Income Tax Act, 1961 (for short “1961 Act”) and also writ of certiorari to quash the impugned ex-parte assessment order passed by the first respondent under Section 144 of 1961 Act for the assessment year 2021-22 dated 07.12.2022 (Annexure-F) and also computation sheet issued by the first respondent for the assessment year 2021-22 dated 07.12.2022 (Annexure-F1) and Penalty order passed by the first respondent under Section 270A of 1961 Act in relation to the assessment year 2021- 22 dated 19.05.2023 (Annexure-H) and the Computation Sheet issued by the first respondent for the assessment year 2021-22 dated 19.05.2023 (Annexure-H1). 3. Learned counsel for the petitioner would submit that the petitioners are entitled for certain benefits being co- operative Society. The petitioner was issued with show- cause notice under Section 144 of 1961 Act dated 17.12.2022, as the petitioner had failed to comply the - 4 - NC: 2025:KHC:2691 WP No. 381 of 2025 terms of notice issued under Section 142(1) of 1961 Act. Thereafter the assessment order under Section 144 read with Section 144B of 1961 Act was passed on 07.12.2022. He submits that respondent No.1/Assessing Authority failed to provide proper opportunity to the petitioner to file detailed objections and further submits that the petitioner had filed reply dated 22.11.2022 which was ignored by the respondent-Assessing Authority. Further, learned counsel would pray for an opportunity to put forth its case before the first respondent-Assessing Authority to the effect that the petitioner being a co-operative Society is entitled for certain benefits under the provisions of 1961 Act. 4. Per contra, learned counsel Sri.Dilip would submit that the petitioner failed to utilize the opportunity provided by filing objections. The objections filed by the petitioner on 22.11.2022 was considered and the assessment order is passed. Thus, learned counsel would pray for passing appropriate order. - 5 - NC: 2025:KHC:2691 WP No. 381 of 2025 5. Having heard the learned counsel for the parties and on perusal of the writ petition papers, I am of the view that in the fact situation of the present case, the petitioner ought to be provided an opportunity to file detailed reply to the notice issued under Section 144 of 1961 Act and thereafter, the respondents could proceed further. 6. Admittedly, the petitioner, on receiving notice under Section 144 of 1961 Act filed reply on 22.11.2022, but the said reply was a cryptic reply. The petitioner claims certain benefits under Section 83(2) and (4) of 1961 Act. The assessment order relates to the assessment year 2021-22. When the petitioner was unable to file detailed objections and when the petitioner claims certain benefits under Section 83(2) and (4) of 1961 Act, the petitioner ought to be given an opportunity to file detailed objections to the notice issued under Section 144 of 1961 Act, with certain conditions. The petitioner cannot have the benefit of opportunity to file objections without making any deposit, - 6 - NC: 2025:KHC:2691 WP No. 381 of 2025 since the assessment order is passed in pursuance of the assessment order, demanding a sum of Rs.1,50,29,320/-. 7. Taking note of the above, the following order: (i) The writ petition is allowed in part,. (ii) The assessment order (Annexure-F) and consequential Computation Sheet dated 07.12.2022 (Annexure-F1) and order passed under Section 270A of 1961 Act and consequential Computation sheet dated 19.05.2023 (Annexures-H and H1) are quashed. (iii) The petitioner is provided three weeks time from today to file objections to Annexure-C/show-cause notice dated 17.11.202. Thereafter, the first respondent to proceed further, in accordance with law. (iv) The petitioner is granted three weeks time to deposit 25% of the demand as at Annexure-G dated 07.12.2022. Sd/- (S.G.PANDIT) JUDGE MPK CT:bms "