M/S. UNITED TRADING COMPANY V. THE INCOME TAX OFFICER

WP/6091/2020

AI Insights

The case involves M/s. United Trading Company, represented by Smt. Anuradha Kagod, challenging the validity of certain provisions of the Income Tax Act, 1961, specifically Section 115BBE and Section 271AAC, as amended by the Taxation Laws (Second Amendment) Act, 2016. The petitioner argued that these sections were violative of Articles 14, 19, and 300A of the Constitution of India. Additionally, the petitioner contested an assessment order and a demand notice issued by the Income Tax Officer, claiming that they were passed without proper consideration of the petitioner's submissions and thus violated the principles of natural justice.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 768259 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 04-11-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, Taxation Laws (Second Amendment) Act, 2016, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: V RAGHURAMAN; C R RAGHAVENRA; BHANUMURTHY
• Keywords: Assessment Order; Income Tax; Natural Justice; Writ petition; Violation of Article 14/19/300A
• Section: 115BBE; 271AAC

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 4TH DAY OF NOVEMBER, 2022 BEFORE THE HON'BLE MR.JUSTICE S.R.KRISHNA KUMAR WRIT PETITION No.6091 OF 2020(T-IT) BETWEEN: M/S. UNITED TRADING COMPANY SORBA ROAD, SAGAR SHIMOGA DISTRICT – 577 401 (REPRESENTED BY SMT. ANURADHA KAGOD PARTNER, AGED ABOUT 49 YEARS D/O KAGOD THIMMAPPA) …PETITIONER (BY SRI. V. RAGHURAMAN, SENIOR COUNSEL FOR SRI. C.R. RAGHAVENRA AND SRI. BHANUMURTHY J.S., ADVOCATES) AND: 1. THE INCOME TAX OFFICER WARD -3, SHIVAMOGA KARNATAKA – 577 501. 2. UNION OF INDIA MINISTRY OF FINANCE REPRESENTED BY SECREATARY NORTH BLOCK, NEW DELHI – 110 001. …RESPONDENTS (BY SRI. E.I.SANMATHI., ADVOCATE) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT SECTION 115BBE OF THE INCOME TAX ACT, 1961, AS AMENDED BY SECTION 2 OF TAXATION LAWS (SECOND AMENDMENT) ACT, 2016 ( ANNEXURE-A) BE STRUCK DOWN AS VIOLATIVE OF ARTICLE 14/19/300A OR IN THE ALTERNATIVE BE READ DOWN TO APPLY ONLY FOR INCOMES ARISING FROM THE YEAR 1.4.2017(OPERATIVE FROM A6 2018-19) AND ETC. THIS W.P. COMING ON FOR ‘FURTHER HEARING’ THIS DAY, THE COURT MADE THE FOLLOWING:- 2 ORDER In this petition, the petitioner has sought for the following reliefs: a. Writ or direction in the nature of a writ of declaration or any other writ to declare that section 115BBE of the Income Tax Act, 1961 as amended by Section 2 of the Taxation Laws (Second Amendment) Act, 2016, (Annexure-A) be struck down as violative of Article 14/19/300A or in the alternative be read down to apply only for incomes arising from the year 1.4.2017 (operative from AY 2018-19). b. Writ or direction in the nature of a writ of declaration or any other writ to declare that section 271AAC of the Income Tax Act, 1961 as amended vide Section 4 of the Taxation Laws (Second Amendment) Act, 2016, (Annexure-B) be struck down as violative of Article 14/19/300A or in the alternative be read as operative for incomes arising from the year 1.4.2017 (operative from AY 2018-19). c. Writ or direction in the nature of a writ of certiorari or any other writ or direction to quash the impugned order no.ITBA/AST/S/143(3)/2019- 20/1023474105(1) dated 30.12.2019, (Annexure- C) passed by Respondent No.1 as being violative of Article 14, Article 19(1)(g), of the Constitution. 3 d. Direct the Respondent by an appropriate writ or Order in the nature of Mandamus or otherwise, not to proceed with the recovery of the amounts proposed in the Demand Notice No. vide notice ITBA/AST/S/156/2019-20/1023474205(1) dated 30.12.2019 in any manner (Annexure-D). e. Direct the Respondent by an appropriate writ or order in the nature of certiorari or otherwise, not to proceed with the recovery of the amounts proposed in the letter dated 06.02.2020 in any manner.(Annexure-E). And f. Grant such other consequential reliefs as this Honourable High Court may think fit including refund of amounts paid, if any and the cost of this writ petition. 2. Heard learned Senior counsel for the petitioner and learned AGA for the respondents and perused the material on record. 3. In addition to reiterating the various contentions urged in the Memorandum of Petition and referring to the documents produced by the petitioner, learned Senior counsel for the petitioner invites my attention to the notice dated 05.12.2019 issued by the respondent calling upon the petitioner to produce the 4 documents mentioned in the said notice by 10.12.2019. Subsequently, on 06.12.2019, the respondents issued one more notice once again calling upon the petitioner to produce the documents mentioned in the said notice. In this context, it is submitted that while the notice dated 05.12.2019 was replied to by the petitioner vide reply dated 19.12.2019, due to voluminous records and inability on the part of the petitioner to procure all the documents relating to the assessment year 2017-18, which related to the period immediately after demonetization took into effect, the petitioner addressed a communication dated 30.12.2019 along with all relevant documents to the respondents. It is the grievance of the petitioner that despite the aforesaid communication, the respondents have proceeded to pass the impugned assessment order on the very same day i.e., 30.12.2019 itself without taking into account the replies submitted by the petitioner, who is before this Court by way of the present petition. 5 4. Per contra, learned counsel for the respondents submits that there is no merit in the petition and the same is liable to be dismissed. 5. As rightly contended by the learned Senior counsel for the petitioner that though the petitioner had submitted his replies dated 19.12.2019 and 30.12.2019, the same have neither been considered nor adverted to in the impugned assessment order, which has been passed clearly without providing sufficient or reasonable opportunity to the petitioner and without considering the aforesaid replies and as such, the impugned assessment order being violative of principles of natural justice, the same deserves to be set aside and the matter be remitted back to the concerned respondents for reconsideration afresh in accordance with law. 6. In so far as the other prayers sought for by the petitioner are concerned, having regard to setting aside of the impugned assessment order and remitting the matter back to the concerned respondent for reconsideration afresh, the grievance of the petitioner in respect of prayers 6 (A) and (B) are not addressed in the present petition and the same are kept open. 7. The undertaking given on behalf of the petitioner that the appeals filed by the petitioner on 20.01.2020, 31.01.2020 and 01.02.2020 shall be withdrawn is placed on record. 6. In the result, I pass the following: ORDER (i) The petition is hereby allowed. (ii) The impugned order at Annexure-C dated 30.12.2019 passed by respondent No.1 is set aside; consequently, the impugned demand notice at Annexure-D dated 30.12.2019 is also set aside. (iii) The concerned respondents are directed to reconsider the claim of the petitioner by considering the replies dated 19.12.2019, 30.12.2019 and 20.01.2020 and documents submitted by the petitioner. 7 (iv) Liberty is reserved in favour of the petitioner to file additional pleadings and documents before the concerned respondents, who shall consider the same in accordance with law. Sd/- JUDGE Bmc "