Satyadeva Builders Vs DCIT (Karnataka High Court)
The Karnataka High Court partly allowed a writ petition filed by a partnership firm engaged in the construction business, challenging a notice issued under Section 148A(b) of the Income Tax Act, 1961, the order under Section 148A(d), the assessment order dated 25.02.2026 passed under Section 147 read with Section 144B, and the subsequent penalty show cause notices for the assessment year 2020-21.
The petitioner contended that the proceedings initiated under Section 148A referred only to the sale of a single unit. However, the show cause notice dated 03.02.2026 allegedly expanded the scope of the proceedings by referring, for the first time, to the sale of multiple units, namely 119 apartments. The petitioner further argued that the period between the show cause notice dated 03.02.2026 and the assessment order dated 25.02.2026 was insufficient to collate the necessary payment details and provide an effective response.
The High Court observed that the petitioner was required to respond to allegations relating to the sale of 119 apartments without having the benefit of prior notice under the Section 148A proceedings on that issue. Holding that limited interference was justified, the Court quashed the assessment order dated 25.02.2026 and the consequential penalty notices. The petitioner was granted four weeks to file a detailed response, and the Assessing Officer was directed to conclude the proceedings after duly considering that response.
