RAMESH RAMANA GOWDA V. THE ADDITIONAL /JOINT/DEPUTY/ASST. COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER

WP/22993/2022

AI Insights

The case involves Ramesh Ramana Gowda, the petitioner, who challenged the reassessment order and penalty imposed by the Income Tax Department for the assessment year 2016-17. The petitioner did not file tax returns for the specified year, leading to a notice under Section 148 of the IT Act and subsequent reassessment. The reassessment treated loans and their deposits as income, resulting in a significant tax demand and penalty. The petitioner argued that he did not have taxable income and that the reassessment was unjust as it considered loan deposits as income without an opportunity for a proper hearing. The respondents contended that the petitioner was given an opportunity to respond to the electronic notice sent to his email. The court found merit in the petitioner's argument, leading to the quashing of the reassessment and penalty orders but with conditions for reassessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 693726 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 12-01-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND; M DILIP KUMAR
• Assessee Lawyers: R MURTHY
• Keywords: Faceless assessment; Income Tax; Penalty; Reassessment; Writ petition
• Section: 147; 148; 144; 144B; 271(c); 226; 227

Judgement Text

"IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF JANUARY 2023 BEFORE THE HON’BLE MR. JUSTICE B. M. SHYAM PRASAD WRIT PETITION NO.22993/2022 (T-RES) BETWEEN : RAMESH RAMANA GOWDA S/O SRI RAMANA GOWDA AGED ABOUT 38 YEARS NO.6, 80 FEET ROAD MARUTHINAGAR, CHANDRA LAYOUT BANGALORE-560040. ... PETITIONER (BY SRI. R. RAMA MURTHY , ADVOCATE) AND : 1 . THE ADDITIONAL /JOINT/DEPUTY/ASST. COMMISSIONER OF INCOME TAX/ INCOME TAX OFFICER NATIONAL FACELESS ASSESSMENT CENTER DELHI-110001. 2 . THE INCOME TAX OFFICER WARD -3(2)(1) BMTC BUILDING 80 FEET ROAD, 6TH BLOCK KORAMANGALA, BANGALORE-560095. ... RESPONDENTS (BY SRI.K.V. ARAVIND, ADVOCATE AND SRI. M. DILIP KUMAR, ADVOCATE) 2 THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING THE EX-PARTY ORDER OF RE-ASSESSMENT DATED 21.03.2022 MADE U/S 147 R.W.S 144 R.W.S 144B OF THE ACT DIN NO.ITBA/AST/S/147/2021.22/10411133124 BY THE R1 (ANNEXURE-A) TO THIS WRIT PETITION; QUASHING THE EX-PARTY ORDER OF PENALTY DATED 21.09.2022 MADE U/S 271(c) OF THE ACT NO.ITBA/PNL/F/ 271(A)(c)/ 2022.23/ 1045751413 (1) PASSED BY THE R2 (ANNEXURE-B) TO THIS WRIT PETITION. THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: O R D E R The petitioner has impugned the respondent’s reassessment order dated 21.03.2022 under Section 147 read with Sections 144 and 144B of the Income Tax Act, 1961 [for short, the ‘IT Act’] in DIN No.ITBA/AST/ S/147/2021-22/1041133124(1) [Annexure-A] and the second respondent’s subsequent penalty order dated 21.0.9.2022 [Annexure-B] under Section 271(1) (c) of the IT Act. Sri R. Rama Murthy, the learned counsel for the 3 petitioner, and Sri K.V. Aravind, the learned counsel for the respondent, are heard for final disposal of the writ petition. 2. The petitioner has not filed Returns for the assessment year 2016-17 and hence, notice under Section 148 of the IT Act is issued culminating in the impugned best judgment assessment order dated 21.03.2022 and the subsequent demand [Annexures-A and B]. The petitioner’s case is that during this assessment year he did not have taxable income from his business as a trader in certain vegetables and cereals, but he availed loans, including home loan from his banker, for the purpose of purchase of an immovable property and the loan is also utilized to purchase such property. He could not place necessary materials because he did not have the advantage of an opportunity of hearing, and consequently, the respondent has treated even the deposit of home loan 4 from a Bank and withdrawal of the same for purchase of the property as income. 3. While Sri R.Rama Murthy, relying upon these circumstances, argues that this Court must intervene quashing the impugned assessment and the consequential penalty order providing for re- assessment, Sri K.V. Aravind draws the attention of this Court to the reference in the assessment order [Annexure – A] to the notice being generated through ITBA and issuance of such notice electronically to the petitioner’s email ID as mentioned in the latest IT Returns. Sri K.V. Aravind argues that the petitioner, who has not availed the opportunity of hearing extended, cannot complain of denial of opportunity. As such, this Court may not interfere with the impugned assessment order and the penalty order. 5 4. The petitioner to substantiate his case against the impugned order and the subsequent penalty order has produced his bank statement; and one of the entries pointed out by Sri R.Rama Murthy, the learned counsel for the petitioner, is the deposit of Rs.45,00,000/- on 27.11.2015 by DD. It is argued that this is one of the deposits received as loan, and computation of this and other receipts as income has resulted in determination of income in a sum of Rs.1,78,87,570/- and penalty in a sum of Rs.61,55,540/- . 5. This Court, given the aforesaid determination and liabilities and the peculiarities of this case such as the petitioner’s business, is of the considered view that there will have to be re- examination of the assessment in the backdrop of the petitioner’s case that even receipts as loans from bank 6 are computed as income. However, the petitioner must be put on terms, and hence the following: ORDER The petition is allowed, and the impugned Assessment Order dated 21.03.2022 and the subsequent penalty order dated 21.09.2022 [Annexure A and B] are quashed restoring assessment but on the condition that the petitioner shall deposit 5% of the amount as mentioned in the computation sheet annexed to Annexure – A within [4] weeks subject to set off on reassessment and with liberty to the respondent to re-issue demand on completion of the assessment consequent to this order. Sd/- JUDGE SA* Ct:sr "