Shri Vitthalray Souharda Pattin Sahakari Niyamit, Harugeri V. Union of India Ministry of Finance and The Income Tax Officer, Ward-1, Belagavi and The State of Karnataka

WP/103658/2024

AI Insights

The case involves Shri Vitthalray Souharda Pattin Sahakari Niyamit, a cooperative society engaged in banking and credit facilities, which did not file a tax return for the Assessment Year 2019-20. The Income Tax Department issued several notices due to suspected income escapement, but the society did not respond, leading to an ex-parte assessment order. The society filed a writ petition under Articles 226 and 227 of the Constitution of India, seeking to set aside the assessment order and participate in the proceedings. The court, considering the principles of natural justice, set aside the ex-parte order and remanded the case for further proceedings.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 693866 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 26-09-2024
• Assessment Year: misc
• Laws Referred To: Karnataka Souharda Sahakari Act, 1997, Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SHIVRAJ BALLOLLI; M THIRUMALESH; SHIVAPRABHU HIREMATH
• Assessee Lawyers: J M ANIL KUMAR
• Keywords: Escapement of income; Ex-parte assessment order; Income tax assessee; Non-responsive; Remand
• Section: 147; 148; 144; 143(3); 142(1); 144B

Judgement Text

" - 1 - NC: 2024:KHC-D:14093 WP No. 103658 of 2024 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 26TH DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MS. JUSTICE JYOTI MULIMANI WRIT PETITION NO. 103658 OF 2024 (T-RES) BETWEEN: SHRI. VITTHALRAY SOUHARDA PATTIN SAHAKARI NIYAMIT, HARUGERI, RAYABHAGA TALUK, BELAGAVI DISTRICT-591 220, EARLIER HAVING OFFICE AT POST KONNUR, JAMKHANDI POST, BAGALKOT TALUK, REPRESENTED BY ITS PRESIDENT, SHRI. VITHAL S/O LAXMAN HALLUR, AGED ABOUT 57 YEARS, R/O: HARUGERI VILLAGE, RAIBAG TALUK, BELAGAVI DISTRICT-591 220. …PETITIONER (BY SRI. J.M.ANIL KUMAR., ADVOCATE) AND: 1. UNION OF INDIA MINISTRY OF FINANCE, RAJPATH MARG, CENTRAL SECRETARIAT, NEW DELHI-110 011, REPRESENTED BY ITS SECRETARY. 2. THE INCOME TAX OFFICER, WARD-1, BELAGAM, FEROJ KHIMJI BHAI COMPLEX, OPPOSITE CIVIL HOSPITAL, DR. AMBEDKAR ROAD, BELAGAVI-590 001. Digitally signed by THEJASKUMAR N Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC-D:14093 WP No. 103658 of 2024 3. THE STATE OF KARNATAKA REPRESENTED BY ITS SECRETARY OF DEPARTMENT OF CO-OPERATION, M.S. BUILDING, AMBEDKAR VEEDHI, BENGALURU-560 001. …RESPONDENTS (BY SRI. SHIVARAJ.S.BALLOLI., ADVOCATE FOR R1; SRI. M.THIRUMALESH., ADVOCATE FOR R2; SRI. SHIVAPRABHU.S.HIREMATH., AGA FOR R3) 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: ORAL ORDER Sri.J.M.Anil Kumar., counsel for the petitioner, Sri.M.Thirumalesh., counsel for respondent No.2 and Sri.Shivaprabhu S.Hiremath., AGA for respondent No.3 have appeared in person. 2. The petition averments are stated as under. It is said that Shri Vitthalray Souharda Pattin Sahakari Niyamit – petitioner is a Souharda Cooperative Society registered in the year 2007 under the Karnataka Souharda Sahakari Act, 1997. It is engaged in the business of banking and providing credit facilities to its members. It is contended that the Petitioner Society is an income tax assessee and did not file a return for the Assessment Year - 3 - NC: 2024:KHC-D:14093 WP No. 103658 of 2024 2019-20. Based upon the information that there is an escapement of income, the department issued several notices. The assessee did not offer a reply. Hence, the department concluded that it was logical to conclude that the assessee had no proper explanation for the escapement of income for the Assessment Year 2019-20 and therefore, based on the material available on record, it was decided by the JAO that it is a fit case for issuance of notice under Section 148 of the Act for Assessment Year 2019-20. Accordingly, 148A(d) order was passed and a notice was issued under Section 148 of the Act. The assessee did not give a return of income in response to the notice issued under Section 148 of the Act. Subsequently, notices under Section 142(1) of the Act were issued, but the Assessee was non-responsive to the notices. Thereafter, a reminder letter was also issued on 27.09.2023. However, the assessee remained non-responsive to the reminder letter also. Hence, the department had no choice except to pass an ex-parte assessment order on 30.01.2024. Under these circumstances, the petitioner has filed the captioned Writ Petition under Articles 226 and 227 of the Constitution of India. - 4 - NC: 2024:KHC-D:14093 WP No. 103658 of 2024 3. Counsel for the petitioner submits that the assessment order is an ex-parte order. Hence, an opportunity may be given for the petitioner to give a reply to all the notices and to take part in the proceedings. Counsel, therefore, submits that the Writ Petition may be allowed. By way of reply, counsel Sri.M.Thirumalesh., urged several contentions. He contends that despite the issuance of several notices, the petitioner did not respond to them. He justified the action of the department. He strongly objected to a remand. Counsel 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 assessment order is furnished along with the Writ Petition and the same is marked as Annexure-C. A perusal of the same reflects that despite the issuance of several notices, the assessee remained non-responsive. Hence, the department had no way except to pass an ex-parte assessment order. However, in the interest of justice, this Court considers it proper to allow the petitioner to give a reply to all the notices and to take part in the proceedings. Hence, the matter requires - 5 - NC: 2024:KHC-D:14093 WP No. 103658 of 2024 a remand. The assessment order is liable to be set aside, so it is set aside. 6. The Writ of Certiorari is ordered. The assessment order dated 30.01.2024 passed by the second respondent under Section 147 R/w Section 144 R/w Section 144B of the Income Tax Act, 1961 in DIN No: ITBA/AST/S/147/2023- 24/1060253606(1) for the Assessment Year 2019-20 vide Annexure-C is quashed. The matter is remanded to the second respondent to the stage of notice issued under Section 142(1) of the Act. This Court has not expressed any opinion on the merits of the case. 7. Resultantly, the Writ Petition is allowed and remanded. Because of disposal of Writ Petition, pending interlocutory applications if any are disposed of. Sd/- (JYOTI MULIMANI) JUDGE TKN List No.: 2 Sl No.: 58.1 "