SRI.S.D NAGESHWAR (HUF) V. DEPUTY COMMISSIONER OF INCOME TAX

WP/10367/2023

AI Insights

The case involves Sri S.D. Nageshwar (HUF), the petitioner, challenging a penalty and assessment order related to the assessment year 2017-18. The petitioner argued that the orders were passed without a mandatory hearing, violating the legal requirements under Sections 270A and 274(1) of the Income Tax Act, 1961. Additionally, the petitioner contested the jurisdiction to invoke Section 153C of the Act, which pertains to the assessment of income in certain cases of search or requisition. The court found that there was a violation of the principles of natural justice and that the authorities had not properly considered the legal provisions regarding the reassessment of income.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 769151 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 27-07-2023
• Assessment Year: misc
• Other Referred Cases: Principal Commissioner of Income Tax vs. Abhisar Buildwell Private Limited - 2023 SCC Online SC 481
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M DILIP
• Assessee Lawyers: ARAVIND V CHAVAN
• Keywords: Assessment Order; Jurisdiction; Natural Justice; Penalty order; Reassessment
• Section: 147; 148; 143(3); 153C; 270A; 274(1); 226; 227

Judgement Text

" - 1 - NC: 2023:KHC:26420 WP No. 10367 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF JULY, 2023 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 10367 OF 2023 (T-IT) BETWEEN: 1. SRI.S.D NAGESHWAR (HUF) S/O. LATE S.D. DHAKTAPPA, AGED 72 YEARS, R/AT. NO.9/1, 13TH CROSS, 2ND MAIN ROAD, RMV 2ND STAGE, HANUMAIAH LAYOUT, SANJAYANAGAR, BANGALORE-560 094. REP. BY ITS KARTHA SRI. S.D. NAGESHWAR … PETITIONER (BY SRI. ARAVIND V CHAVAN., ADVOCATE) AND: 1. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-5(2)(1), BMTC BUILDING, 80 FEET ROAD, KORAMANGALA. BANGALORE-560 095. 2. PRL. COMMISSIONER OF INCOME TAX-5, BMTC BUILDING, 80 FEET ROAD, Digitally signed by VIJAYA P Location: High Court of Karnataka - 2 - NC: 2023:KHC:26420 WP No. 10367 of 2023 KORAMANGALA. BANGALORE-560 095 3. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), C.R. BUILDING QUEENS ROAD, BANGALORE-560 001 4. PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE C.R. BUILDING QUEENS ROAD, BANGALORE-560 001 … RESPONDENTS (BY SRI. M. DILIP, ADVOCATE) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE PENALTY ORDER DTD 26.09.2022 BEARING NO. ITBA/PNL/F/270A/2022-23/1045978034(1) ANNEXURE-H2 FOR THE ASSESSMENT YEAR 2017-18 PASSED BY THE R-3 AND ETC. THIS W.P. COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petition was dismissed for non-prosecution due to non-compliance of office objections. 2. During the pendency of I.A.-1/2023 for recalling the order of dismissal, the petitioner has complied the - 3 - NC: 2023:KHC:26420 WP No. 10367 of 2023 office objections. Accordingly, I.A.-1/2023 is allowed and the order of dismissal dated 19.06.2023 is recalled and the petition is restored to file. 3. Sri Dilip, learned counsel accepts notice for the respondents. 4. The Petitioner has challenged the penalty order dated 26.09.2022 at Annexure-H2 for the assessment year 2017-18 and has also sought for setting aside of the assessment order dated 10.03.2022 at Annexure-C. 5. It is the contention of Sri.Aravind V. Chavan, learned counsel for petitioner that the impugned orders passed including the penalty order under Section 270A of the Income Tax Act, 1961 ('the Act') is without affording mandatory hearing in terms of the legal requirements under Section 274(1) of the Act and also insofar as the assessment order passed under Section 143(3) read with Section 153C of the Act, the opportunity of hearing as is provided for under Section 143(3) of the Act was not - 4 - NC: 2023:KHC:26420 WP No. 10367 of 2023 given. It is also contended that the Authority had no jurisdiction to invoke Section 153C of the Act. 6. It is pointed out that for the purpose of initiating proceedings, there must be recovery of incriminatory material without which recourse cannot be had to Section 153C of the Act and that the only option available under such circumstance would be to proceed for reassessment under Sections 147 to 148 of the Act. Reliance is placed on the judgment in the case of Principal Commissioner of Income Tax vs. Abhisar Buildwell Private Limited - 2023 SCC Online SC 481. 7. Admittedly, there has been violation of principles of natural justice. Accordingly, case is made out for remanding the matter for fresh consideration while directing the Authority to embark upon reconsideration including the contentions raised regarding Section 153C of the Act with reference to the law laid down by the Apex Court in the case of Abhisar Buildwell (supra). - 5 - NC: 2023:KHC:26420 WP No. 10367 of 2023 8. The penalty order at Annexure-H2 and the assessment order at Annexure-C are set aside. The Authority to reconsider the matter in light of the discussion made above. The respondent is directed to fix a date for hearing and afford an opportunity of personal hearing as mandated under law as noticed above and pass orders afresh. 9. Writ petition is allowed accordingly. Sd/- JUDGE NP "