SRIJAN CAPITAL ADVISORS LLP V. THE ASSISTANT DIRCTOR OF INCOME TAX

WP/4681/2023

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The case involves Srijan Capital Advisors LLP, which filed a writ petition against the Assistant Director of Income Tax and the Income Tax Officer, challenging an order that deemed their tax returns for the assessment year 2021-22 as invalid under Section 139(9) of the Income Tax Act, 1961. The petitioner argued that they were engaged in business, not profession, and thus the tax audit limit applicable to them was Rs.10,00,00,000, not Rs.50,00,000. The respondents contended that the petitioner was engaged in a profession. The court found the impugned order to be non-speaking and unreasoned, violating the principles of natural justice, and thus set it aside.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 674542 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 06-02-2024
• 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 J JAIN
• Keywords: Assessment Year; Audit limit; Income Tax; Natural Justice; Non-speaking order; Writ petition; Business vs Profession
• Section: 139(9)

Judgement Text

" - 1 - NC: 2024:KHC:5294 WP No. 4681 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6TH DAY OF FEBRUARY, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 4681 OF 2023 (T-IT) BETWEEN: SRIJAN CAPITAL ADVISORS LLP J-305,PURVA PAVILION,PAMPA EXTENSION, HEBBAL KEMPAPURA, BENGALURU-560024 (REPRESENTED BY ITS MANAGING PARTNER MR RAVI TRIVEDI,S/O MR. DEVESH KUMAR AGED ABOUT 48 YEARS) REGISTERED LIMITED LIABILITY PARTNERSHIP …PETITIONER (BY SRI. NARENDRA KUMAR J. JAIN, ADVOCATE) AND: 1. THE ASSISTANT DIRCTOR OF INCOME TAX CENTRAL PROCESSING UNIT(CPC) INCOME TAX DEPARTMENT BENGALURU-560500 2. THE INCOME TAX OFFICER WARD 6(3)(1) BMTC BUILDING,KORMANGALA BENGALURU-95 …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 Digitally signed by ANAND N Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:5294 WP No. 4681 of 2023 AS THE PETITIONER IS CONCERNED BY AN APPROPRIATE WRIT OR ORDER IN THE NATURE OF CERTIORARI OR OTHERWISE THE IMPUGNED ORDER VIDE CPC/2122/G5D/937440330170122 DT 29.12.2022 ISSUED BY THE LEARNED FIRST RESPONDENT UNDER SECTION 139(9) FOR AY 2021-22, ENCLOSED IN ANNEXURE-D AND ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN B GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER In this petition, the petitioner seeks quashing of the impugned order at Annexure-D dated 29.12.2022 passed by the respondent No.1 - the Assistant Director of Income Tax under Section 139(9) of the Income Tax Act, 1961 [for short, 'the IT Act'] for the assessment year 2021-22 and for other reliefs. 2. Heard the learned counsels for the parties and perused the material on record. 3. In addition to reiterating the various contentions urged in the petition and referring to the material on record, the learned counsel for the petitioner invited my attention to the grievance petition filed by the petitioner on 30.08.2022 [Annexure-C] in order to point out - 3 - NC: 2024:KHC:5294 WP No. 4681 of 2023 that it was specifically contended by the petitioner that it was engaged in a Business and was not carrying on any Profession, and tax audit limit was Rs.10,00,00,000/- and not Rs.50,00,000/-, which was applicable to the Profession. It was submitted that the grievance of the petitioner was resolved on 10.12.2022 on which day, the respondents addressed an E-mail to the petitioner informing it that the returns would be taken up for further processing. 4. It is the grievance of the petitioner that despite not carrying on any Profession but engaged in a Business, the respondent No.1 has issued the impugned non- speaking and un-reasoned order under Section 139(9) of the IT Act treating the returns filed by the petitioner for the assessment year 2021-22 as INVALID without assigning any reason whatsoever as to why the returns were treated as INVALID. Subsequently, the petitioner filed a grievance, which was also not resolved satisfactorily by the respondents and as such, the petitioner is before this Court by way of the present petition. - 4 - NC: 2024:KHC:5294 WP No. 4681 of 2023 5. Per contra, the learned counsel for the respondents, in addition to reiterating the various contentions urged in the statement of objections, submits that the petitioner was engaged in a Profession and was not carrying on a Business and consequently, the contention of the petitioner was that the upper audit limit of Rs.50,00,000/- was not applicable insofar as the petitioner is concerned. It was also contended that sufficient opportunity was granted to prove the defects and since the same was not done, the petitioner is not entitled for the claim in the present petition. 6. A perusal of the material on record will indicate that while it is the specific contention of the petitioner that it is involved/engaged in a Profession and was not carrying on any Business, the respondent in the statement of objections, for the first time before this Court, contends that the petitioner was involved/engaged in a Profession. However, the said question/issue as to whether the petitioner was carrying on a Business or engaged in a Profession has neither been adverted to nor addressed in - 5 - NC: 2024:KHC:5294 WP No. 4681 of 2023 the impugned order at Annexure-D dated 29.12.2022, which is a non-speaking and unreasoned order being violative of principles of natural justice, and the same deserves to be set aside and the matter remitted back to the respondent No.1 for reconsideration afresh in accordance with law by providing one more opportunity to the petitioner to put forth its claim and for a direction to the respondent No.1 to examine the material on record and proceed further in accordance with law. 7. In the result, the following: ORDER a The petition is hereby allowed. b The impugned order dated 29.12.2022 at Annexure-D by the Assistant Director of Income Tax, CPC, Bengaluru is set aside. c The matter is remitted back to the respondent No.1 for reconsideration afresh in accordance with law. d Liberty is reserved in favour of the petitioner to file additional - 6 - NC: 2024:KHC:5294 WP No. 4681 of 2023 pleadings/documents before the respondent No.1, who shall provide sufficient opportunity of hearing to the petitioner and proceed further in accordance with law as expeditiously as possible. Sd/- JUDGE RB "