SMT SEENI PADMANABHAN V. THE INCOME TAX OFFICER

WP/10050/2023

AI Insights

The case involves Smt. Seeni Padmanabhan, the petitioner, who challenged the assessment order issued by the Income Tax Officer, International Taxation Ward 2(1), Bengaluru, under Section 147 read with Section 144 of the Income Tax Act, 1961, for the assessment year 2015-16. The petitioner, a non-resident, argued that the procedure under Section 144C, which requires the forwarding of a draft of the proposed order of assessment to the eligible assessee, was not followed. The respondents contended that the petitioner did not respond to any notices, thus the procedure under Section 144C was not applicable. The court found that the mandatory procedure under Section 144C was not followed, leading to the setting aside of the assessment order and related notices.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 752542 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 13-07-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: NARENDRA JAIN; GEETHA
• Keywords: Assessment Order; Income from other sources; Non-Resident; Unexplained investment; Procedure under Section 144C; Draft of proposed order of assessment
• Section: 147; 144; 144C; 226; 144C(15)(b); 227

Judgement Text

" - 1 - NC: 2023:KHC:24299 WP No. 10050 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF JULY, 2023 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 10050 OF 2023 (T-IT) BETWEEN: SMT. SEENI PADMANABHAN, W/O MR. BRIJESH THIYYANCHERI, AGED ABOUT 44 YEARS, C/O MKUK AND ASSOCIATES, #3155/A, 2ND FLOOR, 11TH MAIN, HAL 2ND STAGE, INDIRA NAGAR, BENGALURU – 560 038. …PETITIONER (BY SRI. NARENDRA KUMAR J JAIN AND Ms. GEETHA RANI K., ADVOCATES) AND: 1. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION WARD 2(1), BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BANGALORE – 560 095. 2. THE INCOME TAX OFFICER WARD 6(2)(1), BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BANGALORE – 560 095. …RESPONDENTS (BY SRI. E.I.SANMATHI, ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH AS FAR AS THE PETITIONER IS CONCERNED BY AN APPROPRIATE WRIT OR ORDER IN THE NATURE OF CERTIORARI OR OTHERWISE THE IMPUGNED ASSESSMENT ORDER DATED 26.03.2023 ISSUED BY THE LEARNED FIRST RESPONDENT UNDER SECTION 147 RWS 144 VIDE DIN ITBA/AST/S/147/2022-23/1051334319(1) FOR AY 2015-16 ENCLOSED IN ANNEXURE –A AND ETC. Digitally signed by SUCHITRA M J Location: High Court of Karnataka - 2 - NC: 2023:KHC:24299 WP No. 10050 of 2023 THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has sought for setting aside of the assessment order dated 26.03.2023 passed under Section 147 read with Section 144 of the Income Tax Act, 1961 (for short 'the Act') for the assessment year 2015-16 at Annexure-A; sought for setting aside of the demand notice at Annexure-B and penalty notice at Annexures-C, C1 and C2. 2. Learned counsel Sri. Narendra Kumar.J.Jain appearing for the petitioner draws attention to the assessment order and submits that the assessee being a Non-resident, not being a company, the procedure under Section 144C of the Act, which includes forwarding of draft of the proposed order of assessment to the eligible assessee if the Assessing Officer proposes to make any variation which is prejudicial to the interest of such assessee, ought to have been followed. It is further submitted that while passing of the assessment order, no such procedure has been followed and accordingly on such ground itself, the assessment order requires to be set aside with a direction that the proceedings be concluded after - 3 - NC: 2023:KHC:24299 WP No. 10050 of 2023 following the procedure under Section 144C of the Act, which includes forwarding of draft of the proposed order of assessment. 3. Learned counsel Sri. E.I.Sanmathi appearing for the respondent-revenue submits that perusal of Para-5 of the assessment order shows that the petitioner has not responded to any of the notices mentioned at said Para-5 and accordingly, the question of sending draft of the proposed order of assessment does not arise. 4. Heard learned counsel for the petitioner and learned counsel for the respondents. 5. At the outset, it must be noticed that the assessment order has been passed by Officer, INTL. Taxation Ward 2(1), Bengaluru. It is not in dispute that the petitioner falls within the category of eligible assessee being Non-resident in terms of Section 144C(15)(b) of the Act. It must be noticed that the procedure under Section 144C of the Act is clear and provides that the Assessing Officer is required to forward a draft of the proposed order of assessment to the eligible - 4 - NC: 2023:KHC:24299 WP No. 10050 of 2023 assessee, if he proposes to make any variation prejudicial to the interest of such assessee. 6. In the present case, the proposed addition details are found in Para-11 of the assessment order, wherein the Assessing Officer has taken an amount of Rs.01,07,13,416/- as unexplained investment and has also made a further addition as income from other sources of Rs.77,387/-. Both such amounts could amount a variation prejudicial to the interest of such assessee. Accordingly, interference is called for. 7. The contention of the learned counsel for the revenue that non-participation of the petitioner disentitles him be afforded with the procedure as contemplated under Section 144C cannot be accepted. The Assessing Officer is mandated as per law to follow the procedure of forwarding draft of proposed order of assessment. Wherever the draft of proposed order of assessment is forwarded, the interest of such assessee is forthcoming from the procedure to be followed under Section 144C of the Act. Accordingly, on this sole ground itself, the assessment order is set aside, the Assessing Officer to re-do the assessment proceedings by following procedure under - 5 - NC: 2023:KHC:24299 WP No. 10050 of 2023 Section 144C of the Act including forwarding of draft of proposed order of assessment, where he seeks to make any variation prejudicial to the interest of such assessee. 8. Accordingly, assessment order at Annexure-A is set aside. Consequently, demand notice at Annexure-B and penalty notice at Annexures-C, C1 and C2 are set aside. The matter is remanded to the Assessing Officer to dispose of the proceedings afresh in accordance with law after affording an opportunity to the petitioner to file objections. In view of the above, petition is disposed off. All contentions are kept open. Sd/- JUDGE SMJ List No.: 1 Sl No.: 13 "