SRI RAJESWARI FARMS V. INCOME TAX OFFICER

WP/12097/2021

AI Insights

The case involves Sri Rajeswari Farms and its partners, who filed a writ petition against the Income Tax Officer challenging an assessment order and a demand notice dated 14.04.2021. The petitioners contended that they were denied a fair hearing as they could not participate in a scheduled video conference due to technical glitches, leading to an erroneous conclusion by the respondents. The petitioners argued that their income was misclassified and that the assessment order violated principles of natural justice and did not comply with mandatory requirements under the Income Tax Rules, 1962. The court, after considering the submissions and the circumstances of the technical glitches, decided to quash the assessment order and demand notice, remitting the matter back for a fresh assessment.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 754312 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 08-12-2021
• Assessment Year: misc
• Other Referred Cases: Bharat Sanchar Nigam Ltd. & Anr. Vs. Union of India & Ors, Thiru Arooran Sugars Ltd. Vs. Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: M V SHESHACHALA
• Keywords: Agricultural income; Cash credit; Demand notice; Personal hearing; Principles of natural justice; Quash assessment order; Technical glitches; Video conferencing
• Section: 143(3A); 226; 227

Judgement Text

"1 IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 8TH DAY OF DECEMBER, 2021 BEFORE THE HON'BLE MR.JUSTICE S.R.KRISHNA KUMAR WRIT PETITION No.12097 OF 2021 (T-IT) BETWEEN: 1. SRI RAJESWARI FARMS (PARTNERSHIP FIRM) NO.451, 64TH CROSS VTH BLOCK, RAJAJINAGAR BANGALORE-560 010 REP BY ITS PARTNER SRI K.JANARDHANA NAIDU 2. SRI K JANARDHANA NAIDU S/O K RAGHAVALU NAIDU AGED 72 YEARS 3. SMT RAJESWARI W/O SRI K JANARDHANA NAIDU AGED 63 YEARS 4. SMT KAMALAMMA W/O LATE CHENGAMA NAIDU AGED 90 YEARS 5. SRI J.VIVEK S/O SRI K.JANARDHANA NAIDU AGED 40 YEARS 6. SRI J.AJITH RAJ S/O SRI K.JANARDHANA NAIDU AGED 36 YEARS PETITIONERS 2 TO 6 ARE R/AT NO.451, 64TH CROSS VTH BLOCK, RAJAJINAGAR BANGALORE-560 010 …PETITIONERS (BY SRI M.V.SHESHACHALA, SENIOR COUNSEL FOR SRI ARAVIND V.CHAVAN, ADVOCATE) 2 AND: 1. INCOME TAX OFFICER (ASSESSING OFFICER) WARD -2(2)(2) BMTC BUILDING, KORAMANGALA BENGALURU-560 095 2. ASSESSING OFFICER INCOEM TAX OFFICER NATIOANL E ASSESSMENT CENTRE NO.412-413, 1ST FLOOR OPP METRO PILLAR NO.793 DWARKA MOR, NEW DELHI-110 059 …RESPONDENTS (BY SRI E.I.SANMATHI, ADVOCATE) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ASSESSMENT ORDER DATED 14.04.2021 PASSED BY R1 PRODUCED AS ANNEXURE-J AND DEMAND NOTICE U/S OF THE IT ACT DATED 14.04.2021 PRODUCED AS ANNEXURE-K AND ETC. THIS W.P. COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:- ORDER In this petition, the petitioners seek quashing of the impugned assessment order dated 14.04.2021 at Annexure-J and consequential demand notice dated 14.04.2021at Annexure-K passed by respondent No.1 and for other reliefs. 2. Heard Sri. M.V. Seshachala, learned Senior counsel for the petitioners, learned counsel for the respondents and perused the material on record. 3 3. In addition to reiterating the various contentions urged in the petition and referring to the documents produced by the petitioners, learned Senior counsel for the petitioners made the following submissions: (a) Though the petitioners/assessee was called to appear through video conferencing on 12.04.2021 at 12:30 p.m., the same was deferred to 3:00 p.m. on the same day, at which time, the petitioners could not participate in the video conferencing due to technical glitches occurring in the website/portal; it is submitted that despite video conferencing having been deferred from 12:30 p.m. to 3:00 p.m., the petitioners were not given an opportunity to participate in the proceedings, despite which the respondents have come to the erroneous and incorrect conclusion that the petitioners have participated in video conferencing hearing at 3:00 p.m. and has proceeded to pass the impugned order in violation of principles of natural justice. 4 (b) Secondly, it is contended that the reasoning and findings recorded by the respondents that the income derived by the petitioners was not by way of agricultural income but was the income derived by way of cash credit is not only contrary to the material on record, but also contrary to the decisions of the Apex Court in the case of Bharat Sanchar Nigam Ltd. & Anr. Vs. Union of India & Ors reported in (2006) 282 ITR 0273 (SC) and in the case of Thiru Arooran Sugars Ltd. Vs. Commissioner of Income Tax reported in (1997) 227 ITR 0432 (SC). It is therefore submitted that the impugned assessment order deserves to be quashed. (c) It is also contended that the impugned order has been passed without complying with the mandatory requirements of Rule 7 of the Income Tax Rules, 1962, which vitiates the impugned order (d) Learned Senior counsel for the petitioners also submits that the impugned order without 5 conducting/carrying out estimation/estimate of the agricultural income is illegal and arbitrary, being contrary to the circular dated 13.08.2021 issued by the Central Board of Direct Taxes (CBDT) under Section 143-3A of the Income Tax Act, 1961 as well as Clause 5(IX) of the Central Government Notification No.60/2020 dated 13.08.2020 and consequently, the impugned order deserves to be quashed on this ground also. 4. Per contra, learned counsel for the respondents in addition to reiterating the various contentions urged in the Statement of Objections submits that there is no merit in any of the contentions urged in the petition and the same is liable to be dismissed. 5. A perusal of the impugned order will indicate that the personal hearing to the petitioners was scheduled at 12:30 p.m. and the same was deferred to 3:00 p.m. on account of technical glitches in the website/portal of the respondents. It is specifically contended by the petitioners 6 that despite them attempting to participate in the video conferencing hearing scheduled at 3:00 p.m., they could not do so on account of the technical glitches in the website/portal due to which they were unable to participate in the proceedings. It is also contended that if one more opportunity is granted in favour of the petitioners to participate in the proceedings and if the respondents provide an opportunity of personal hearing to the petitioners, the petitioners would place sufficient material before the respondents and establish their claim. 6. Though the aforesaid contentions of the petitioners have been disputed by the respondents, in view of the specific assertion on the part of the petitioners that they were not in a position to attend the video conferencing hearing that is said to have taken place at 3:00 p.m., coupled with the fact that the respondents have not produced any material to indicate that the petitioners had in fact participated in the video conferencing proceedings at 3:00 p.m., without expressing any opinion on the merits/demerits of the rival contentions and in order to give one more opportunity to the petitioners, I deem it just and 7 appropriate to set aside the impugned assessment order and remit the matter back to the respondents for reconsideration afresh, in accordance with law, after permitting the petitioners to establish their claim before the respondents. 7. In the result, I pass the following: ORDER (i) The petition is hereby allowed. (ii) The impugned assessment order bearing No. ITBA/AST/S/143(3)/2021-22/1032408940(1) dated 14.04.2021 vide Annexure-J and the consequential demand notice bearing No.ITBA/AST/S/156/2021- 22/1032408956(1) dated 14.04.2021 vide Annexure- K issued by respondent No.1 are hereby quashed. (iii) The matter is remitted back to respondent No.1 for reconsideration afresh after providing an opportunity of personal hearing to the petitioners and by permitting them to file objections/additional objections and produce material/additional material in support of their claim. (iv) Respondent No.1 is directed to consider the objections and documents submitted by the 8 petitioners and pass appropriate orders in accordance with law bearing in mind Rule 7 of the Income Tax Rules, 1962 and the decisions of the Apex Court in the case of Bharat Sanchar Nigam Ltd. & Anr. Vs. Union of India & Ors reported in (2006) 282 ITR 0273 (SC) and in the case of Thiru Arooran Sugars Ltd. Vs. Commissioner of Income Tax reported in (1997) 227 ITR 0432 (SC), after conducting/obtaining requisite estimate/ estimation as provided in the circular dated 13.08.2021 issued by the Central Board of Direct Taxes (CBDT) under Section 143-3A of the Income Tax Act, 1961 and also the Central Government Notification No.60/2020 as per Clause(5) (IX) of the Notification dated 13.08.2020. (v) All rival contentions on merits/demerits are kept open and no opinion is expressed on the same. SD/- JUDGE Bmc "