Case Law Details
Bangalore Thulaseedas Srinath Vs ITO (Karnataka High Court)
In the case of Bangalore Thulaseedas Srinath Vs ITO, the Karnataka High Court addressed the validity of income tax notices issued under Section 148A(b) of the Income Tax Act, 1961. The petitioner contested several notices and orders, including those issued on February 2, 2023, and March 11, 2023, which required a response in less than the stipulated time frame. Specifically, the notice issued on March 11, 2023, demanded a reply by March 15, 2023, failing to provide the minimum seven-day notice period mandated by the Act.
The court found that the lack of adequate time for the petitioner to respond violated principles of natural justice. The High Court noted that the notices and subsequent orders were vitiated due to this procedural lapse, as the petitioner was not afforded a fair opportunity to present objections or explanations regarding the allegations. Consequently, all contested notices and assessment orders were set aside. However, the court granted the Revenue the liberty to initiate appropriate actions in accordance with the law regarding the subject matter of the notices issued under Section 148A(b).
This ruling reinforces the requirement for tax authorities to adhere strictly to procedural timelines, ensuring that taxpayers are given sufficient time to respond to allegations regarding their tax assessments.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner has challenged the notices issued under Section 148A(b) of the Income Tax Act, 1961 (‘the Act’ for brevity) at Annexures-‘A’ and ‘A1’ dated 02.02.2023 and 11.03.2023 respectively. The petitioner has also challenged the order passed under Section 148A(d) at Annexure-‘A2’ dated 27.03.2023, the notice issued under Section 148 at Annexure-‘A3’ dated 27.03.2023 and the Assessment Order passed under Section 147 read with Section 144 read with Section 144B at Annexure-‘A4’ dated 13.03.2024, penalty notice issued under Section 274 read with Section 272A(1)(d) at Annexure-‘A5’ dated 13.03.2024, penalty notice issued under Section 274 read with Section 270A at Annexure-‘A6’ dated 13.03.2024 and the penalty notice issued under Section 274 read with Section 271B at Annexure-‘A7’ dated 13.03.2024.
2. The case of the petitioner is that the notices issued under Section 148A(b) of the Act was issued on 11.03.2024 and was directed to make out a reply on 15.03.2023, which time period is less than the time stipulated under Section 148A(b).
3. Section 148A(b) of the Act reads as follows:-
“148A. The Assessing Officer shall, before issuing any notice under section 148.-
(a) xxx
(b) Provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a);
In light of the same, it is clear that not less than seven days ought to be provided for making out a reply to the notice.
4. The assertion of learned counsel for the petitioner that non-affording of time period of seven days has resulted in prejudice and violation of principles of natural justice requires acceptance, as it is noticed that the proceedings have been initiated in the absence of objections.
5. Accordingly, as the notices at Annexures-‘A’ and ‘A1’ itself are vitiated, the consequential orders and notices also require to be set aside.
6. Accordingly, the petition is allowed. The notices at Annexures-1A1 and 1A11 dated 02.02.2023 and 11.03.2023 respectively, the order at Annexure-1A21 dated 27.03.2023, the notice at Annexure-1A31 dated 27.03.2023, the Assessment Order at Annexure-1A41 dated 13.03.2024, penalty notices at Annexures-1A51, 1A61 and 1A71, all dated 13.03.2024, are set aside.
7. However, liberty is reserved to the Revenue to take appropriate action as regards the subject matter of notice issued under Section 148A(b) of the Act, in accordance with law.
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