Case Law Details
Dover India Private Limited Vs Assessment Unit (Karnataka High Court)
Karnataka High Court Treats Assessment Order as Fresh Show Cause Notice; Quashes Demand and Penalty Notices
The Karnataka High Court granted relief to the assessee after finding that the principles of natural justice had not been adequately followed during the faceless assessment proceedings. The assessee contended that despite requesting a video hearing, no such opportunity was provided, and that while the original show cause notices dealt with certain proposed additions, the final assessment order contained an additional disallowance that had never formed part of the show cause notice.
Accepting these contentions, the Court held that the assessee should be afforded a proper opportunity to respond to the proposed additions. Accordingly, it directed that the assessment order itself be treated as a fresh show cause notice, permitting the assessee to file a detailed reply within four weeks. The Court also quashed the consequential demand notice and penalty notice, leaving all issues on merits open for fresh consideration. It further directed that if the assessee seeks a video hearing in its reply, such opportunity should be granted before passing a fresh assessment order.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner has called in question the Assessment Order dated 24.03.2026 under Section 143[3] and 144B of the Income Tax Act, 1961 [for short, ‘the Ace] [Annexure-G] while also calling in question the Demand [Annexure-H] and the Penalty Notices [Annexure-JJ of the even date. Ms. Manasa Ananthan, the learned counsel for the petitioner, submits that notwithstanding certain grounds urged, the petitioner would request for disposal of the petition with liberty to treat the impugned Assessment Order dated 24.03.2026 as a Show Cause Notice and opportunity to file the response to the additions made therein.
In elaboration, the learned counsel submits that this request is made on behalf of the petitioner in the light of the following two grounds: fa] the petitioner has requested for an opportunity of hearing on video which is not extended /14 the Show Cause Notices were issued for different additions and the assessment proceedings are concluded accepting the cause shown against additions except for one addition and another addition which is not a part of the Show Cause Notice.
Sri M Dilip and Sri Vinayaka S Pandit, the learned standing counsels for the respondents who accept notice for the respondents, are heard for final disposal of the petition in the light of these circumstances and the request. This Court must opine that these reasons suffice for this Court to conclude that there must be an opportunity to the petitioner to show cause against the additions made treating the impugned Assessment Order as the Show Cause Notice. In the light of the afore, the following:
ORDER
[a] The petition is allowed in part reading the Assessment Order dated 24.03.2026 [Annexure-G] as another Show Cause Notice with liberty to the petitioner to file response within four [4] weeks from today. Consequently, the impugned Demand and the Penalty notices [Annexures H and J] are quashed.
[b] It is needless to observe that all questions on the subject are left open to be considered with the petitioner being extended an opportunity of video hearing if that request is part of the Reply.
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