Smt. Lakshmi Arla Prabhu V. The Income Tax Officer

WP/17393/2024

AI Insights

The case involves Smt. Lakshmi Arla Prabhu, the petitioner, who sought to quash various orders related to her income tax assessment for the year 2024. The petitioner argued that she was unable to participate in the tax proceedings due to her husband's ill-health, who managed their accounts and business. The assessment was concluded based on best judgment due to her non-participation, leading to a significant unexplained cash deposit being treated as taxable income. The court, considering the petitioner's circumstances, decided to set aside the contested orders and allow her an opportunity to explain the source of the deposit.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 815882 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 24-07-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: DILIP
• Assessee Lawyers: SUYOG E
• Keywords: Assessment Order; Best Judgment Assessment; Demand notice; Ill health; Income Tax; Non-participation; Penalty order; Show cause notice; Writ petition
• Section: 147; 144; 144B; 271AAC(1); 272A(1)(d); 156

Judgement Text

" - 1 - NC: 2024:KHC:28950 WP No. 17393 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF JULY, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 17393 OF 2024 (T-IT) BETWEEN: 1. SMT. LAKSHMI ARLA PRABHU W/O A. V PRABHU AGED ABOUT 40 YEARS R/A, NO.7-92, MAIN ROAD, BANTWAL KASABA VILLAGE, BANTWAL POST, BANTWAL TALUK, DAKSHINA KANNADA - 574 219. …PETITIONER (BY SRI. SUYOG HERELE E., ADVOCATE) AND: 1. THE INCOME TAX OFFICER, BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KORAMANGALA, BENGALURU - 560 095. …RESPONDENT (BY SRI. DILIP M., ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED PENALTY ORDER UNDER SECTION 271AAC(1) DATED 21/06/2024 OF THE IT ACT, DEMAND NOTICE DATED 21/06/2024 UNDER SECTION 156 OF THE IT ACT AND THE ASSESSMENT ORDER DATED 16/01/2024 UNDER SECTION 147 R.W.S. 144 R/W 144B OF THE IT ACT PASSED BY THE RESPONDENT (PRODUCED AT ANNEXURE-A, B AND C).AND ETC., Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:28950 WP No. 17393 of 2024 THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S SUNIL DUTT YADAV ORAL ORDER (PER: HON'BLE MR JUSTICE S SUNIL DUTT YADAV) Petitioner has filed the present petition seeking for issuance of writ in the nature of certiorari to set aside the assessment order, demand notice and penalty order. Petitioner has also sought for setting aside of the show cause notices under Section 271-AAC(1) and 272-A(1)(d) of the Income Tax Act, 1961 (for short 'the Act'). 2. It is the case of the petitioner that the petitioner was unable to participate in the proceedings due to the ill-health of petitioner's husband during the concerned assessment year. It is further submitted that the accounts and business was looked after by the petitioner's husband and in light of his ill-health, petitioner was not in a position to respond to the show cause notice. - 3 - NC: 2024:KHC:28950 WP No. 17393 of 2024 3. Perusal of the assessment order at Annexure-C would reveal that petitioner has not participated in the proceedings. It is noticed that by virtue of non-participation of the petitioner, assessment is concluded on the basis of best judgment assessment. In such proceedings, the assessing authority has observed that in the absence of return of income as well as any inspection / clarification of cash deposit to the extent of Rs.1,33,97,700/- the said amount has been treated as income chargeable to tax that has escaped assessment or remained unexplained. 4. In light of the same, as learned counsel for petitioner submits that if an opportunity is afforded petitioner would explain the source of such deposit, it would be appropriate to afford an opportunity to the petitioner to participate in the proceedings. This would also result in actual income that has escaped the tax to be determined on the basis of reply to be made out by the petitioner. - 4 - NC: 2024:KHC:28950 WP No. 17393 of 2024 5. Accordingly, the Penalty order at Annexure-A, Demand Notice at Annexure-B, Assessment order at Annexure-C and the Demand Notice at Annexure-E are set aside. The matter is remitted to the stage of reply to the show cause notice. All contentions are kept open. 6. Petition is accordingly disposed off. Sd/- (S. SUNIL DUTT YADAV) JUDGE VP "