SHRI VIJAY SOUHARD CREDIT SAHAKARI LTD V. THE INCOME TAX OFFICER

WP/104559/2022

AI Insights

The case involves Shri Vijay Souhard Credit Sahakari Ltd., a cooperative society registered under the Karnataka Souhard Act, 1997, which sought relief under Articles 226 and 227 of the Constitution of India against the Income Tax Officer, Bagalkot. The petitioner claimed deductions under Section 80(P) of the Income Tax Act, 1961, for the Assessment Year 2013-14. Disputes arose when the Income Tax Officer issued notices alleging that income chargeable to tax had escaped assessment. The petitioner contested the subsequent orders and notices, leading to this writ petition. The court found that the respondent had not adequately considered the petitioner's detailed reply, leading to the setting aside of the impugned order and notice and remanding the matter for re-evaluation.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 747501 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 27-09-2024
• Assessment Year: misc
• Other Referred Cases: Union of India & Others vs Ashish Agarwal
• Laws Referred To: Income Tax Act, 1961, Karnataka Souhard Act, 1997, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M THIRUMALESH; ROOPA ANAVEKAR
• Assessee Lawyers: SANGRAM KULKARNI
• Keywords: Escaped assessment; Exemption Deduction; Income chargeable to tax; Income Tax; Notice; Reassessment
• Section: 147; 148; 68; 69A; 80(P); 148A(b); 148A(d)

Judgement Text

" - 1 - NC: 2024:KHC-D:14161 WP No. 104559 of 2022 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 27TH DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MS. JUSTICE JYOTI MULIMANI WRIT PETITION NO. 104559 OF 2022 (T-IT) BETWEEN: BETWEEN: SHRI VIJAY SOUHARD CREDIT SAHAKARI LTD., VIJAYNAGAR, KULALI CROSS, MUDHOL, DIST: BAGALKOT-587 313, REPRESENTED BY ITS GENERAL MANAGER, SHRI. MALLAPPA.H.PATTENNAVAR, AGE: 53 YEARS, OCC: SERVICE, R/O: MUDHOL, DIST: BAGALKOT. …PETITIONER (BY SRI. SANGRAM.S.KULKARNI., ADVOCATE) AND: THE INCOME TAX OFFICER, WARD 1 AND TPS, BAGALKOT, AAYAKAR BHAVAN, SECTOR 24, NAVANAGAR, BAGALKOT-587 012. …RESPONDENT (BY SRI. M.THIRUMALESH AND MIS. ROOPA ANAVEKAR., ADVOCATES) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, SEEKING CERTAIN RELIEFS. THIS WRIT PETITION IS LISTED FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, AN ORDER IS MADE AS UNDER: Digitally signed by THEJASKUMAR N Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC-D:14161 WP No. 104559 of 2022 ORAL ORDER Sri.Sangram S.Kulkarni., counsel for the petitioner and Ms.Roopa Anavekar., counsel for the respondents have appeared in person. Sri.M.Thirumalesh., counsel for the respondent has appeared through video conferencing. 2. The short facts are these: The petitioner is Souhard Sahakari Ltd., registered under the Karnataka Souhard Act, 1997. It is entitled to claim exemption/deduction under Section 80(P) of the Income Tax Act, 1961. The petitioner filed its income tax return for the Assessment Year 2013-14 claiming a deduction under Section 80(P). The respondent issued a notice on 30.06.2021 calling upon the petitioner to file a return of income in the prescribed form within thirty days from the service of the notice as the respondent has reasons to believe that income chargeable to tax for Assessment Year 2013-14 has escaped assessment within the meaning of Section 147 of the Act. The respondent issued another notice on 29.10.2021 calling upon the petitioner to give accounts and documents - 3 - NC: 2024:KHC-D:14161 WP No. 104559 of 2022 specified in the annexure to the said notice. The petitioner filed a reply to the notice on 10.11.2021 saying that the petitioner is a Souhard Society registered under the Karnataka Souhard Act, 1997 to provide credit facilities to its members. After submission of the reply, the respondent did not continue further with the reassessment proceedings till 24.05.2022. However, on 24.05.2022, the respondent issued a notice to the petitioner under Section 148A(b) of the Act stating that in consequence of the judgment rendered by the Hon'ble Apex Court in the case of UNION OF INDIA & OTHERS V/S ASHISH AGARWAL, the notice dated 30.06.2021 addressed to the petitioner should be treated as a show cause notice and the petitioner was called upon to submit its reply on or before 08.06.2022. The petitioner submitted its reply on 08.06.2022 disclosing the details regarding the amount of Rs.1,47,44,784/- (Rupees One Crore Forty-Seven Lakh Forty Four Thousand Seven Hundred and Eighty-Four only) credited by Shri Renuka Mata Multi-state Urban Co-op. Credit Society Ltd., in the Axis Bank account of the petitioner bearing Account No.414010100037129 through RTGS which was paid to two - 4 - NC: 2024:KHC-D:14161 WP No. 104559 of 2022 members of the petitioner Society. The respondent proceeded to pass an order on 26.07.2022 under Section 148A(d) of the Act by observing that in the absence of details of the nature of the source of the amount received by RTGS from Shri Renuka Mata Multi-state Urban Co-op. Credit Society Ltd., the assessee Society can be treated as a beneficiary and the same can be deemed as income under Sections 68 and 69A of the Act. The order dated 26.07.2022 is followed by a show cause notice under Section 148 of the Act dated 26.07.2022. Hence, the petitioner has filed the captioned Writ Petition under Articles 226 and 227 of the Constitution of India on several grounds as set out in the Memorandum of Writ Petition 3. Counsel Sri.Sangram S.Kulkarni., in presenting his arguments strenuously urged that the respondent has failed to consider the detailed reply that has been given by the petitioner from the right perspective. Hence, he submits that the matter may be remanded with an opportunity for a personal hearing. Counsel, therefore, submits that the petition may be allowed. - 5 - NC: 2024:KHC-D:14161 WP No. 104559 of 2022 By way of reply, counsel Sri.M.Thirumalesh., urged several contentions. He justified the action of the respondent. He vehemently objected to the remand. He submits that the Writ Petition is devoid of merits and the same may be dismissed. 4. Heard the arguments and perused the Writ papers with care. 5. The grievance of the petitioner is that the respondent without considering the detailed reply, has mechanically gone ahead to pass 148A(d) order on 26.07.2022 and issued 148 Notice. The reply given by the petitioner to the 148A(b) notice is furnished along with the Writ Petition and the same is marked as Annexure-F. A perusal of the same reflects that the petitioner has given a detailed reply. However, the 148A(d) order reflects that the respondent has not considered the reply from the right perspective. Hence, the matter requires a remand. The 148A(d) order and 148 Notice are liable to be set aside, so they are set aside. - 6 - NC: 2024:KHC-D:14161 WP No. 104559 of 2022 6. The Writ of Certiorari is ordered. The order dated 26.07.2022 passed by the respondent under Section 148A(d) of the Income Tax Act, 1961 in DIN & Order No: ITBA/COM/F/17/2022-23/1044087479(1) for the Assessment Year 2013-14 vide Annexure-H and the Notice dated 26.07.2022 issued under Section 148 of the Income Tax Act, 1961 in DIN & Notice No: ITBA/AST/M/148_1/2022- 23/1044126655(1) for the Assessment Year 2013-14 vide Annexure-J are quashed. The matter is remanded to the respondent to the stage of giving added/additional reply to 148A(b) notice dated 24.05.2022. The respondent must provide an opportunity of a personal hearing to the petitioner and thereafter, pass orders as per the law. This Court has not expressed any opinion on the merits of the case. 7. Resultantly, the Writ Petition is allowed and remanded. - 7 - NC: 2024:KHC-D:14161 WP No. 104559 of 2022 Because of the disposal of the Writ Petition, pending interlocutory applications if any stand disposed of. Sd/- (JYOTI MULIMANI) JUDGE TKN List No.: 1 Sl No.: 53 "