Nambiar Builders Private Limited Vs Assessment Unit (Karnataka High Court)
Karnataka HC: Assessment Quashed for Granting Only Two Days to Respond to Section 144B Show Cause Notice
The Karnataka High Court partly allowed the writ petition and quashed the show cause notice, assessment order and consequential penalty notices, holding that the assessee had been denied a reasonable opportunity of hearing under the faceless assessment procedure prescribed in Section 144B. The Court noted that the show cause notice dated 20.02.2026 required the assessee to respond by 24.02.2026, effectively granting only two days, whereas the Standard Operating Procedure (SOP) under Section 144B(6)(xi) contemplates seven days’ time for filing a response unless the period is curtailed for recorded reasons. Since no reasons were recorded for abridging the statutory response period, the procedure adopted was contrary to the prescribed SOP and violated the principles of natural justice.
Rejecting the Revenue’s contention that the defect stood cured because the assessee had participated in the assessment proceedings, the Court held that mere participation does not validate proceedings initiated in breach of the mandatory procedural safeguards. Relying on its earlier decisions in similar matters, the Court restored the assessment proceedings to the stage of the defective show cause notice and directed the Department to enable the assessee to file a detailed additional reply on the portal. The Court further directed that the fresh assessment be completed after duly considering the assessee’s response, while clarifying that the assessee would not subsequently raise the plea of limitation in the remanded proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner, who is in receipt of the Show Cause Notice dated 20.02.2026 and who has not only responded to such notice but also participated in the assessment proceedings, has filed this petition calling in question the Show Cause Notice, Assessment Order and Penalty Show Cause Notices. The impugned Show Cause Notice is dated 20.02.2026 and it is marked as Annexure-A. The Show Cause Notice dated 20.02.2026 is issued calling upon the petitioner to file its response before 2 p.m. of 24.02.2026.
