Sithappana Halli Bychappa Vs ITO (Karnataka High Court)
In the case of Sithappana Halli Bychappa Vs ITO, the Karnataka High Court set aside income tax assessment proceedings initiated under Section 148A(b) of the Income Tax Act, 1961, due to the non-service of the show cause notice (SCN) to the petitioner. The petitioner challenged the assessment order, penalty notices, and related proceedings on the grounds that he was unaware of the proceedings until a penalty notice was issued. The petitioner argued that the assessment under Section 147, as well as orders under Section 148A(d), were invalid as no opportunity was provided to respond to the SCN.
The court found that the assertion of non-service of the SCN was uncontroverted and noted that the income tax department had drawn conclusions against the petitioner without giving him a chance to explain a cash deposit of ₹63,70,000 in his bank account. Acknowledging the petitioner’s argument that he could explain the source of the deposit if given the opportunity, the court quashed the assessment order and related penalty notices. The matter was remanded to the stage of replying to the Section 148A(b) notice, allowing the petitioner another opportunity to present his case before the tax authorities.
