Case Law Details
Ghati Subramanya Kshetra Development Authority Vs ITO (Karnataka High Court)
The case before the Karnataka High Court concerned a petition seeking to set aside an assessment order for Assessment Year 2020–21 and related attachment notices issued by the Income Tax Department. The petitioner challenged the assessment order and the subsequent attachment notices, contending that the order had been passed without proper adjudication.
The petitioner submitted that an appeal had been filed against the assessment order; however, the appeal was disposed of on the ground of non-participation and was not decided on merits. It was also submitted that an application under Section 12A of the Income-tax Act, 1961 was required to be filed and that the petitioner would otherwise have to explain the issues before the assessing officer.
The court observed that the assessment order had been passed ex parte. Prior to the assessment, the authority had issued a notice asking the petitioner to explain why proceedings under Section 148 should not be initiated. Although the petitioner had submitted written submissions in response to the notice issued under Section 148A(b), the petitioner subsequently failed to participate in the assessment proceedings by filing the required return.
The assessment order recorded that the department had examined cash transactions and the non-filing of returns by the petitioner. The assessing authority noted that there was no valid explanation or supporting evidence to justify the source of cash deposits and proceeded to complete the assessment with proposed variations.
Before the High Court, the petitioner requested that the matter be remitted to the stage of assessment so that an opportunity could be provided to present its case. Counsel for the revenue submitted that in the absence of registration under Section 12A, the petitioner would have to properly explain the cash transactions, including deposits, before the assessing officer. The revenue also informed the court that 20% of the tax demand had already been paid and therefore no further conditions were necessary for remitting the matter.
Taking note that the assessment order was passed ex parte and that the appeal had been rejected without adjudication on merits, the court held that it would be appropriate to remit the matter to the stage of notice issued under Section 148. The petitioner was granted liberty to file a return in response to that notice.
Accordingly, the assessment order was set aside and the matter remitted for fresh proceedings. Since the assessment order was set aside, the attachment notices were also quashed. All issues were left open for consideration during the fresh assessment proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner has sought for setting aside of the assessment order passed for the assessment year 2020-21 at Annexure-E and the notice of attachment at Annexures-H and K. It is submitted that an appeal was filed against the assessment order which is disposed of on the ground of non-participation, without any adjudication on merits.
2. Learned counsel for the petitioner submits with all fairness that the application under Section 12A of the Income Tax Act, 1961 (for short ‘the Act’) is to be filed and otherwise the petitioner would have to make out a case before the assessing officer.
3. It is noticed that the assessment order passed is an ex-parte order. The authority had issued a notice to explain as to why notice under Section 148 of the Act should not be issued and despite notices and reminders, it is submitted that the assessee though submitted written submissions insofar as notice under Section 148A(b), subsequently has failed to participate in the assessment proceedings by filing return.
4. Perusal of the order would indicate that the department has taken note of the cash transactions and non-filing of return, and proceeded for adjudication. The authority has also proposed variation and has adjudicated the issue while observing that the assessee has no valid explanation or evidence to substantiate the source of cash deposit.
5. Learned counsel for the assessee submits that the matter may be remitted to the stage of assessment proceedings where the petitioner may be afforded an opportunity.
6. Sri. Dilip M., learned counsel for the revenue submits that in the absence of Section 12A, petitioner would have to make out their stand regarding the cash transactions including deposits before the assessing officer in an appropriate manner.
7. Learned counsel for revenue upon instructions submits that 20% of the tax has already been paid. Accordingly, there is no occasion for imposing further condition and the matter may be remitted.
8. Taking note that the assessment order passed is an ex-parte assessment order and noticing that the appeal stated to have been rejected without adjudication, it would be appropriate to remit the matter to the stage of notice under Section 148 and the petitioner may file return in response to the same.
9. Accordingly, the order at Annexure-E is set aside and matter is remitted in light of the observations made above. In light of the order of assessment being set aside, the notices of attachment at Annexure-H and K are set aside. All contentions are kept open.
Accordingly, petition is disposed of.
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