Khivraj Motors Vs ACIT (Karnataka High Court)
SAME ₹1.36 CRORE PROPOSED IN HANDS OF FIRM AND PARTNER—KARNATAKA HIGH COURT DIRECTS COMBINED RECONSIDERATION
The Karnataka High Court has set aside an order passed under section 148A(3) and the consequential notice under section 148 where the Income-tax Department proposed to reopen the assessment of a partnership firm in respect of ₹1.36 crore, while proceedings concerning the same amount were also initiated against one of its partners.
Since the proceedings against the partner had already been restored for reconsideration, the Court directed the same jurisdictional Assessing Officer to consider the proceedings against both the firm and the partner comprehensively. The object was to avoid inconsistent conclusions and the possibility of the same income ultimately being assessed twice.
The Court, however, did not decide whether the amount was taxable in the hands of the firm or the partner. It merely restored the proceedings to the pre-reassessment stage.
Facts of the case
Khivraj Motors, a registered partnership firm, received a show-cause notice dated 25 March 2026 under section 148A(1) for AY 2023-24. The notice alleged that income amounting to ₹1,36,18,476 had escaped assessment.
After considering the proceedings, the Assessing Officer passed an order dated 29 June 2026 under section 148A(3), treating the case as fit for reassessment. A consequential notice under section 148 was issued on the same date.
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