Sri. Vinayak Ramachandraguoda Neelgund V. The Income Tax Officer, Ward No.1 and The Joint Commissioner of Income Tax, Range I

WP/105471/2025

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The case involves Sri. Vinayak Ramachandraguoda Neelgund, the petitioner, who challenged the notices issued by the Income Tax Department under Sections 148 and 148A(3) of the Income Tax Act, alleging that income chargeable to tax had escaped assessment. The notices were based on the grounds that the petitioner had sold immovable properties below their market value, which was considered as income escapement under capital gains. The petitioner argued that their replies to the show-cause notices were not considered, leading to a violation of natural justice. The respondents contended that the petitioner failed to submit the replies through the proper channels initially, which justified the issuance of the notices.

• Counselvise Citation: [] 140 COUNSELVISE.COM (IT) 822309 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 11-12-2025
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M THIRUMALESH; ROOPA
• Assessee Lawyers: ROOPA
• Keywords: Assessment year 2021-22; Certiorari; Certiorari; Income Escapement; Income Tax; Notice Quashing
• Section: 148; 50C(1); 148A(3); 148A(1)

Judgement Text

" - 1 - HC-KAR NC: 2025:KHC-D:18042 WP No. 105471 of 2025 IN THE HIGH COURT OF KARNATAKA,AT DHARWAD DATED THIS THE 11TH DAY OF DECEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 105471 OF 2025 (T-IT) BETWEEN: SRI. VINAYAK RAMACHANDRAGOUDA NEELGUND, AGE. 67 YEARS, SON OF LATE SRI. RAMACHANDRAGOUDA NEELGUND, RESIDING AT V R NEELGUND BUILDING, BEHIND IOC PETROL PUMP, SAI NAGAR, NH-63, SERVICE ROAD, HULKOTI-582 205, DIST. GADAG. REPRESENTED BY HIS SON-AUTHORISED REPRESENTATIVE, SRI. VARUN NEELGUND, AGE.29 YEARS, OCC.EMPLOYED, R/O: V.R.NEELGUND BUILDING, BESIDE IOC PETROL PUMP, SAI NAGAR, NH 63 SERVICE ROAD, HULKOTI, GADAG – 582 205. …PETITIONER (BY SMT. ROOPA FOR SRI. K.L.PATIL, ADVOCATES) AND: 1. THE INCOME TAX OFFICER, WARD NO.1, OFFICE OF THE INCOME TAX OFFICER, AYAKAR KARYALAYA, NEAR HATALGERI NAKA, GADAG – 582 101. 2. THE JOINT COMMISSIONER OF INCOME TAX, INCOME TAX DEPARTMENT, RANGE I, C.R. BUILDING, NAVANAGAR, HUBBALLI – 580 025. …RESPONDENTS (BY SRI. M. THIRUMALESH & SMT. ROOPA, ADVOCATE FOR R1 & R2) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT IN THE NATURE OF CERTIORARI OR ANY OTHER ORDER OR WRIT, QUASHING THE IMPUGNED NOTICE BEARING DIN AND NOTICE NO. Printed from counselvise.com Digitally signed by VISHAL NINGAPPA PATTIHAL Location: High Court of Karnataka, Dharwad Bench, Dharwad - 2 - HC-KAR NC: 2025:KHC-D:18042 WP No. 105471 of 2025 ITBA/AST/S/148_1/2025-26/1076148047(1) DATED 09.05.2025 ISSUED BY RESPONDENT NO.1 UNDER SECTION 148 OF THE INCOME TAX ACT BY THE RESPONDENT NO.1 AT ANNEXURE-A AND ETC., THIS WRIT PETITION, COMING ON FOR ORDERS THIS DAY, ORDER WAS MADE THEREIN AS UNDER: ORAL ORDER (PER: THE HON'BLE MR. JUSTICE M.NAGAPRASANNA) The petitioner is before this Court seeking the following prayers: A. Issue a Writ in the nature of Certiorari or any other order or writ, quashing the impugned notice bearing DIN and Notice No. ITBA/AST/S/148_1/ 2025-26/1076148047(1) dated 09.05.2025 issued by Respondent No.1 under Section 148 of the Income Tax Act by the Respondent No.1 at Annexure-A and B. Issue a Writ in the nature of Certiorari or any other order or writ, quashing the order dated 07.05.2025 passed under Section 148A (3) of the Income Tax Act bearing DIN and notice No. ITBA/AST/F/148A/2025-26/1076069145(1) by the Respondent No.1 at Annexure-G along with the corrigendum bearing No.ITBA/COM/F/17/2025- 26/1076143922(1) dated 09.05.2025 issued by Respondent No.1 at Annexure-H and C. Grant such other and further reliefs as this Hon’ble Court may deem fit in the facts and circumstances of the case, in the interest of justice and equity. 2. Heard Smt.Roopa, learned counsel for Sri.K.L.Patil, learned counsel appearing for the petitioner, Sri.M.Thirumalesh and Roopa, learned counsels appearing for respondent Nos.1 and 2. Printed from counselvise.com - 3 - HC-KAR NC: 2025:KHC-D:18042 WP No. 105471 of 2025 3. Facts in brief, germane are as follows: (a) The petitioner is assessed to tax. For the Assessment Year 2021-22, the petitioner receives notice under Section 148A(1) of the Income Tax Act [hereinafter referred to as the ‘Act’ for short], requiring the petitioner to show cause as to why a notice under Section 148 should not be issued on the ground that the income chargeable to tax has escaped assessment. The said notice was issued on the score that the petitioner during the Financial Year relevant to Assessment Year 2021-22, sold the immovable properties below the market value of the said properties. (b) It was alleged that the consideration received towards the sale is less than the value adopted by the assessing authorities for the purpose of payment of stamp duty. Invoking the provisions of Section 50C(1) of the Act, the first respondent alleges that there has been an income escapement of Rs.2,07,10,000/- under the capital gains. 4. The petitioner comes to know of it in the month of April 2025 and tried to submit a reply on the portal of Printed from counselvise.com - 4 - HC-KAR NC: 2025:KHC-D:18042 WP No. 105471 of 2025 the Income Tax Department. It was found that the portal was closed to the case of the petitioner, then electronic mails were communicated from the petitioner to the respondents seeking submission of reply. Several aspects in defense of the petitioner were not undertaken as the replies submitted on 06.05.2025 and 07.05.2025 were not considered and an order-in-original comes to be passed under Section 148(3) of the Act and holds that it was a fit case for issuing notice under Section 148 of the Act. Again on 09.05.2025, the 2nd respondent purporting to issue a corrigendum for passing an order under Section 148(3), determines the aforesaid amount. Learned counsel Smt.Roopa appearing for the petitioner would vehemently contend that the reply submitted to the show cause notices are not even considered while passing the impugned order holding that it was a fit case for issuing notice under Section 148 of the Act. Learned counsel Smt.Roopa would contend that the allegation that the petitioner has undersold the properties, are all not the capital assets on the score that the lands were agricultural lands, situated outside the municipal limits of Hubli. Nonetheless, she Printed from counselvise.com - 5 - HC-KAR NC: 2025:KHC-D:18042 WP No. 105471 of 2025 would contend that all these factors were brought out in the reply which does not bear any consideration. 5. Per contra, Sri.M.Thirumalesh and Roopa, learned counsels appearing for the respondents would vehemently refute the submissions to contend that despite opportunity, the petitioner did not submit the reply. The reply was not submitted on the portal but later communicated by electronic mail. The issue is of income chargeable to tax escaping assessment. Therefore, this Court should not interfere. 6. I have given my anxious consideration to the submissions made by the learned counsel for the parties and have perused the material on record. 7. The aforesaid facts link in the chain of events, are all a matter of record. 8. A notice comes to be issued under Section 148A(1) by the 1st respondent seeking to show cause as to why the proceedings under Section 148A of the Act must not be initiated for the reason aforestated. The petitioner Printed from counselvise.com - 6 - HC-KAR NC: 2025:KHC-D:18042 WP No. 105471 of 2025 does not receive the notice in time but seeks to submit a reply through the portal. The portal stands closed as there was delay in submission of reply. Nonetheless, the petitioner has submitted the reply through electronic mode which does not bear any consideration in the order impugned which holds that it was a fit case to issue a notice under Section 148 of the Act. The order reads as follows: “Notice under section 148 of the Income-tax Act, 1961 Sir/Madam/M/s. 1. I have the following information in your case/ the case of the person in respect of which you are assessable under the Income tax Act, 1961 (hereinafter, referred to as \"the Act\") for Assessment Year under consideration: • information in accordance with the risk management strategy formulated in this regard The information suggests that income chargeable to tax has escaped assessment within the meaning of section 147 of the Act. Order under sub-section (3) of section 148A of the Act has been passed in the case vide DIN ITBA/AST/F/148A/2025- 26/1076069145(1) dated 07/05/2025 determining it as a fit case to issue notice under section 148 of the Act. [copy of the same is annexed herewith for reference.] Printed from counselvise.com - 7 - HC-KAR NC: 2025:KHC-D:18042 WP No. 105471 of 2025 2. I, therefore, propose to assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for the Assessment Year 2021-22 and I, hereby, require you to furnish, within a period of 90 days in which this notice is issued, a return in the prescribed form for the Assessment Year 2021-22. MAHESH NARAYANAPPA MANTRASHETTI ITO WARD 1, GADAG” The order nowhere refers to the reply submitted by the petitioner. Therefore, there is violation of principles of natural justice. In that light, without going into the merit of the claim of the 1st respondent or the defense of the petitioner which has to be assessed only by the 1st respondent, I deem it appropriate to remit the matter back to the hands of the 1st respondent to consider the reply already submitted to the show cause notice so issued. 9. For the aforesaid reasons, the following: O R D E R [i] The petition stands allowed. [ii] The impugned notices stand quashed. Printed from counselvise.com - 8 - HC-KAR NC: 2025:KHC-D:18042 WP No. 105471 of 2025 [iii] The matter is remitted back to the respondents to consider the reply already submitted by the petitioner to the show-cause notice issued. It is for the respondent-authority to regulate its procedure in accordance with law. Ordered accordingly. Sd/- (M.NAGAPRASANNA) JUDGE CBC/CT-ASC List No.: 1 Sl No.: 108 Printed from counselvise.com "