Rolla Muddarangaiah Shantha Kumara V. Assessment Unit Income Tax Officer, National Faceless Assessment Centre and The Income Tax Officer Ward-4(3)(3), Bengaluru

WP/12447/2024

AI Insights

The case involves Rolla Muddarangaiah Shantha Kumara, the petitioner, challenging the assessment order for the assessment year 2022-23 passed by the Income Tax Officer under the Income Tax Act, 1961. The petitioner argued that the entire proceedings following the show cause notice were in violation of the principles of natural justice, primarily due to the insufficient time provided to respond to the show cause notice, which was only about one day. This was contrary to the 7-day response time prescribed in the SOP by the Central Board of Direct Taxes. The court's decision focused on the procedural impropriety of the notice, leading to the setting aside of all subsequent proceedings.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 799791 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 31-05-2024
• Assessment Year: misc
• Other Referred Cases: Chowdapally Dattaprakash Ajay v. Central Board of Direct Taxes - (2023) 157 taxmann.com 444 (Karnataka)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: DILIP
• Assessee Lawyers: MADHUSUDHAN
• Keywords: Faceless assessment; Natural Justice; Show cause notice; Violation of SOP
• Section: 143(3); 144B

Judgement Text

" - 1 - NC: 2024:KHC:18566 WP No. 12447 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 31ST DAY OF MAY, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 12447 OF 2024 (T-IT) BETWEEN: 1. ROLLA MUDDARANGAIAH SHANTHA KUMARA NO. 149/A, BIKASIPURA UTTARAHALLI BENGALURU - 560 078 AGED ABOUT 55 YEARS SON OF ROLLA MUDDARANGAIAH … PETITIONER (BY SRI. MADHUSUDHAN U A., ADVOCATE) AND: 1. ASSESSMENT UNIT INCOME TAX OFFICER INCOME TAX DEPARTMENT NATIONAL FACELESS ASSESSMENT CENTRE MINISTRYOF FINANCE ROOM NO. 401, 2ND FLOOR, E-RAMP JAWARLAL NEHRU STADIUM DELHI - 110 003 2. THE INCOME TAX OFFICER WARD-4(3)(3), BENGALURU BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE KORAMANGALA BENGALURU - 560 095 … RESPONDENTS (BY SRI. DILIP M., JUNIOR STANDING COUNSEL) Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:18566 WP No. 12447 of 2024 THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ASSESSMENT ORDER DATED 19.03.2024 PASSED UNDER SECTION 143(3) R.W.S 144B OF THE ACT FOR THE ASSESSMENT YEAR 2022-23 BY THE R-1 BEARING DIN AND ORDER NO. ITBA/AST/S/143(3)/2023-24/1062938604(1) HEREIN MARKED AS ANNEXURE-A1 AND ETC. THIS PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING: ORDER Petitioner has called in question the correctness of the assessment order passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 (for short 'the Act') for the assessment year 2022-23 by respondent No.1. Petitioner has also sought for quashing of the computation sheet at Annexure-A2, demand notice at Annexure-A3 and the penalty notice at Annexure-A4. 2. Learned counsel for the petitioner submits that the proceedings in its entirety subsequent to the show cause notice are liable to be set aside on the sole ground that the same are in violation of the principles of natural justice. It is submitted that the show cause notice as to why proposed variation should not be made was issued on - 3 - NC: 2024:KHC:18566 WP No. 12447 of 2024 11.03.2024, which was digitally signed by the concerned at 13:17:42 hours with a direction to submit reply by 12:41 hours of 12.03.2024. 3. It is submitted that the said time period of about one day is in gross violation of the principles of natural justice as also in violation of the time prescribed in the Standard Operating Procedure (for short 'SOP') dated 03.08.2022 issued by the Central Board of Direct Taxes. It is further submitted that even otherwise the said show cause notice was not received and the Department has proceeded ex-parte and concluded the proceedings without any reply. Nevertheless on the sole ground of the notice being in violation of the SOP, it is submitted that the entirety of proceedings is required to be set aside and reliance is placed on the order in the chase of Chowdapally Dattaprakash Ajay v. Central Board of Direct Taxes - (2023) 157 taxmann.com 444 (Karnataka). - 4 - NC: 2024:KHC:18566 WP No. 12447 of 2024 4. Learned counsel for the revenue submits that technical contentions have been raised, but however, he leaves it to the Court to pass appropriate orders only on the aspect raised regarding violation of principles of natural justice. 5. It is noticed that the present proceedings are one under Section 143(3) read with Section 144B of the Act. Admittedly, the show cause notice at Annexure-B as to why proposed variation should not be made was issued on 11.03.2024 which is signed digitally at 13:17:42 hours. The time afforded in the said notice for response is by 12:41 hours of 12.03.2024. Clearly such time granted is on the face of it 'insufficient'. Further, it must be noted that the Government of India, Ministry of Finance, Central Board of Direct Taxes, National Faceless Assessment Centre at New Delhi, has issued SOP for assessment proceedings under the Faceless Assessment provisions of Section 144B of the Act, which provides at Clause N.1.3 that the response time must be 7 days from issuance of - 5 - NC: 2024:KHC:18566 WP No. 12447 of 2024 show cause notice and in the present case, in light of such violation, all subsequent proceedings shall stand vitiated as the assessee was not in a position to put forth his case in response to the show cause notice. Even otherwise, show cause notice is in violation of the SOP in terms of the time that must be made available for making out reply. 6. Accordingly, while protecting the validity of the show cause notice, all further proceedings at Annexures- A1 to A4 post show cause notice are set aside. In light of the order passed, the respondent - authority to take appropriate steps to enable e-filing of reply to the show cause notice. All contentions are kept open. Petitioner to make use of the opportunity and co-operate in speedy disposal of the proceedings. 7. In light of the above, petition is allowed. Sd/- JUDGE VP "