S.P. Traders V. Union of India and Income Tax Officer, Ward No. 7(2)(5), Bengaluru

WP/31617/2024

AI Insights

The case involves M/s. S.P. Traders, a partnership firm, which challenged an ex-parte order under Section 148A(d) of the Income Tax Act, 1961, concerning the assessment year 2019-20. The firm, represented by its partner Mr. Pradeep Kumar Sekar, argued that they were unable to participate in the proceedings due to internal disputes and the dissolution of the partnership prior to the notice. The respondents, including the Union of India and the Income Tax Officer, contended that the petitioner had received the notice but failed to respond. The court found merit in the petitioner's argument, emphasizing the need to uphold substantial rights and provided an opportunity for the petitioner to contest the notice, conditional upon a deposit of Rs. 10,00,000.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 691897 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 07-02-2025
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI; DILIP M
• Assessee Lawyers: BHARATH V
• Keywords: Ex parte order; Income Tax; Opportunity to File Objection; Partnership Dissolution; Writ petition
• Section: 148; 148A(d); 226; 227

Judgement Text

" - 1 - NC: 2025:KHC:5564 WP No. 31617 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7TH DAY OF FEBRUARY, 2025 BEFORE THE HON'BLE MR JUSTICE S.G.PANDIT WRIT PETITION NO. 31617 OF 2024 (T-IT) BETWEEN: M/S. S.P. TRADERS, (A PARTNERSHIP CONCERN) HAVING ITS OFFICE AT NO. 25/1, ASHIRWAD, 26TH MAIN ROAD, 4TH B CROSS, BTM 2ND STAGE, BENGALURU - 560 076, REPRESENTED BY ITS PARTNER, MR. PRADEEP KUMAR SEKAR. …PETITIONER (BY SRI. BHARATH KUMAR V., ADVOCATE) AND: 1. UNION OF INDIA, REPRESENTED BY ITS PRL. SECRETARY, MINISTRY OF FINANCE, 3RD FLOOR JEEVAN DEEP BUILDING, SANSAD MARG, NEW DELHI - 110 001. Digitally signed by KAVYA R Location: High Court of Karnataka - 2 - NC: 2025:KHC:5564 WP No. 31617 of 2024 2. INCOME TAX OFFICER, WARD NO. 7(2)(5), BENGALURU, HAVING OFFICE AT INCOME TAX DEPARTMENT, BMTC BUILDING, 80 FETT ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, BENGALURU 560 095 …RESPONDENTS (BY SRI. E.I. SANMATHI AND SRI. DILIP M., ADVOCATES) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED. 28.03.2023 BEARING DIN AND NOTICE NO. ITBA/AST/F/148A/2022-23/1051469933(1) PASSED BY R-2 UNDER SECTION 148A(D) OF THE INCOME TAX ACT, 1961 (ANNEXURE-A) AND ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.G.PANDIT - 3 - NC: 2025:KHC:5564 WP No. 31617 of 2024 ORAL ORDER The petitioner, a partnership concern is before this Court under Article 226 of the Constitution of India, questioning the correctness or otherwise of the order dated 28.03.2023 bearing DIN & Notice No:ITBA/AST/F/148A/2022-23/1051469933(1) passed under Section 148A(d) of the Income Tax Act, 1961 (for short '1961 Act') at Annexure-A in respect of the petitioner-Firm. 2. Heard Sri. Bharath Kumar.V., learned counsel for the petitioner and Sri. E.I.Sanmathi and Sri. Dilip.M., learned counsels for the respondents. Perused the entire writ petition papers. 3. Learned counsel for the petitioner would submit that the petitioner-Firm consists two partners i.e., Pradeep Kumar Sekar who is before this Court and Shankar Suresh who has filed an affidavit dated 08.01.2025 undertaking to abide by order that would be passed in the present writ petition. Learned counsel would submit that the partnership Firm closed down its business with effect from 10.05.2019 itself and in that regard, learned counsel invites attention of this Court to Deed of - 4 - NC: 2025:KHC:5564 WP No. 31617 of 2024 Dissolution at Annexure-K dated 30.01.2019, by which the partnership got dissolved. The notice was issued under Section 148 of 1961 Act at Annexure-E dated 30.03.2023 for the Assessment Year, 2019-20. It is his submission that since partnership Firm has dissolved and had closed down its business, even though notices were received, in view of the differences between partners, they could not file objection and participate in the proceedings. Thus, he submits that the order passed under Section 148A(d) of 1961 Act and subsequent proceedings are ex-parte. Learned counsel further submits that since substantial right of the parties is involved, he prays for an opportunity to file objection and to participate in the proceedings. 4. Per contra, learned counsel Sri. E.I.Sanmathi for the respondents-Revenue submits that the petitioner received Notice under Section 148 of 1961 Act but failed to file objection and participate in the proceedings. However, he admits that the order passed by the respondents-Authorities is an ex-parte order. Further, he submits that if the Court comes to the conclusion that matter requires remand, appropriate direction may be issued to the petitioner to make some deposit before - 5 - NC: 2025:KHC:5564 WP No. 31617 of 2024 the respondents-Authorities. Thus, he prays for passing an appropriate order. 5. Having heard the learned counsel for the parties and on perusal of the entire writ petition papers, I am of the view that in the facts and circumstances of the present case, the petitioner ought to be provided an opportunity to file objection and participate in the proceedings from the stage of reply to Notice under Section 148 of 1961 Act. 6. Annexure-K dated 30.01.2019, Deed of Dissolution discloses that the petitioner's Firm was dissolved with effect from 10.05.2019 and as stated by the learned counsel for the petitioner, the partnership got dissolved from 10.05.2019 itself. The submission of the learned counsel for the petitioner is that due to differences between the partners, the Firm could not file objection and participate in the proceedings. As could be seen from the order passed under Section 148A(d) of 1961 Act, substantial right of the petitioner is involved. Hence, I deem it appropriate to provide an opportunity to the petitioner to file objection and participate in the proceedings but that would be subject to the petitioner depositing certain amount before the - 6 - NC: 2025:KHC:5564 WP No. 31617 of 2024 respondents-Authorities. The remand cannot be without any deposit. The demand under Assessment Order is about Rs.4,96,22,000/-. 7. Taking note of the above, this Court has come to the conclusion that the petitioner is ought to be provided an opportunity and it would be appropriate to direct the petitioner to deposit Rs.10,00,000/- before respondent No.2-Authority and the same would be subject to the order that would be passed in the proceedings under Section 148A(d) of the 1961 Act. Hence, the following: ORDER (a) Writ petition is allowed; (b) Annexure-A bearing No.DIN & Notice No: ITBA/AST/F/148A/2022-23/1051469933(1) dated 28.03.2023 is quashed; (c) Four weeks time granted to file objection to Annexure-E, Notice issued under Section 148 of 1961 Act, dated 30.03.2023; (d) The petitioner shall deposit a sum of Rs.10,00,000/- before respondent No.2 within four - 7 - NC: 2025:KHC:5564 WP No. 31617 of 2024 weeks from today and shall appear before respondent No.2 on 17.03.2025. Sd/- (S.G.PANDIT) JUDGE SMJ List No.: 1 Sl No.: 0 "