SRI. S S SATHYAMURTHY (HUF) V. ASSISTANT COMMISSIONER OF INCOME TAX

WP/10632/2023

AI Insights

The case involves a writ petition filed by Sri. S S Sathyamurthy (HUF) against the Assistant Commissioner of Income Tax and the Principal Commissioner of Income Tax, challenging the Penalty Order and the Assessment Order for the Assessment Year 2017-18. The petitioner contended that the orders were passed without affording a mandatory hearing as required under Section 274(1) of the Income Tax Act, 1961, and that the authority improperly invoked Section 153C of the Act without the necessary incriminatory material. The court found violations of the principles of natural justice and remanded the matter for fresh consideration, directing a personal hearing and a reevaluation of the legal provisions applied.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 689760 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 13-07-2023
• Assessment Year: misc
• Other Referred Cases: Principal Commissioner of Income Tax v. 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 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:24398 WP No. 10632 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. 10632 OF 2023 (T-IT) BETWEEN: 1. SRI. S S SATHYAMURTHY (HUF) S/O S.N. SHIVASHANKAR, AGED 55 YEARS, R/AT NO.11, 1ST CROSS, 2ND STAGE, NEAR SHANKARMUTT, BASAVESHWARANAGAR, BENGALORE-560 079. REP. BY ITS KARTHA SRI.S.S. SATHYAMURTHY … PETITIONER (BY SRI. ARAVIND V CHAVAN., ADVOCATE) AND: 1. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2(1), C.R.BUILDING, QUEENS ROAD, BANGALORE-560 001. 2. PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, C.R. BUILDING, QUEENS ROAD, BANGALORE-560 001, … RESPONDENTS (BY SRI. M. DILIP, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE PENALTY ORDER DATED 26.09.2022 BEARING NO.ITBA/PNL/F/270A/2022-23/1045977950(1) ANNEXURE-H2 Digitally signed by VIDYA G R Location: High Court of Karnataka - 2 - NC: 2023:KHC:24398 WP No. 10632 of 2023 FOR THE ASSESSMENT YEAR 2017-18 PASSED BY THE R3 AND QUASH THE ASSESSMENT ORDER DATED 18.03.2022 BEARING NO. ITBA/AST/M/153C/2021-22/1041017600(1) ANNEXURE-C FOR THE ASSESSMENT YEAR 2017-18 PASSED BY THE R3 AND ETC. THIS WRIT PETITION COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER Sri M. Dilip, learned counsel accepts notice for the respondents. 2. The petitioner has challenged the Penalty Order at Annexure-H2 dated 26.09.2022 for the Assessment Year 2017-2018 and has also sought for setting aside of the Assessment Order at Annexure-C dated 18.03.2022. 3. It is the contention of learned counsel for the petitioner that the impugned order 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, - 3 - NC: 2023:KHC:24398 WP No. 10632 of 2023 the opportunity of hearing as is provided for under Section 143(3) of the Act was not given. It is also contended that the Authority had no jurisdiction to invoke Section 153C of the Act. 4. 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 v. Abhisar Buildwell Private Limited - 2023 SCC Online SC 481. 5. 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 - 4 - NC: 2023:KHC:24398 WP No. 10632 of 2023 the Act with reference to the law laid down by the Apex Court in the case of Abhisar Buildwell (supra). 6. The Penalty Order at Annexure-'H2' and the Assessment Order at Annexure-'C' in Writ Petition 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. Writ petition is allowed accordingly. Sd/- JUDGE VGR "