The Income Tax Officer Vs Venkatala Iyyappa Rajanna

NATIONAL FACELESS ASSESSMENT CENTRE, ADDITIONAL/JOINT/DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX/ INCOME TAX DEPARTMENT, MINISTRY OF FINANCE, ROOM NO.401, 2^ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI-110 003.

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Digitally signed by NANDINI R Location: HIGH COURT OF KARNATAKA

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THE PR. CHIEF COMMISSIONER OF INCOME TAX, THE OFFICE OF THE PR. CHIEF COMMISSIONER OF INCOME TAX, C.R. BUILDING, QUEENS ROAD, BENGALURU-560 001.

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…APPELLANTS

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(BY SRI M DILIP, ADVOCATE FOR SRI Y V RAVIRAJ, ADVOCATE)

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AND:

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VENKATALA IYYAPPA RAJANNA, 1298 CHOWDAPPA BUILDING, GR CYBER CENTRE, 1^ST MAIN, 1^ST CROSS, GANDHI NAGAR, OPP KINTO SCHOOL,

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HC-KAR

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YALAHANKA OLD TOWN, BANGALORE NORTH-560 064. PAN NO: BMNPR 7459E.

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PRESENTLY AT: VENKATALA IYYAPPA SRI. RAJANNA, AGED ABOUT 53 YEARS, S/O. IAYYAPPA, NO.5, 29^TH A CROSS, IYAPPA BADAVANE, 1^ST MAIN ROAD, MARUTHINAGARA, YELAHANKA-560 064.

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…RESPONDENT

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THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO a)SET ASIDE THE ORDER PASSED BY THE LEARNED SINGLE JUDGE IN WP NO.12618/2024 DATED 04/06/2024 b)PASS SUCH OTHER SUITABLE ORDERS.

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THIS APPEAL, COMING ON FOR PRELIMINARY HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE and HON'BLE MR. JUSTICE C M JOSHI

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ORAL JUDGMENT

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(PER: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE)

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The Revenue has filed the present appeal impugning

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an order dated 04.06.2024 passed by the learned Single Judge of this Court in Writ Petition No. 12618 of 2024 [T-

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IT] captioned Venkatala Iyyappa Rajanna Vs. The Income Tax Officer and others [NC:2024 KHC:19107].

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The respondent [Assessee] had filed the said

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petition, inter alia, impugning a notice dated 20.03.2022 issued under Section 148A (b) of the Income Tax Act, 1961 [Act] for the assessment year [AY] 2015-16 on the ground that the said notice did not provide sufficient time for the Assessee to file a response to show cause calling upon him to show cause why it was not a fit case for issuance of a notice under Section 148 of the Act.

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The learned Single Judge has found merit in the aforesaid contention and accordingly, set aside the impugned notice as well as the notice dated 31.03.2022 issued under Section 148A (d) of the Act and further reassessment proceedings that were initiated pursuant to the said notice.

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Before proceeding further, it would be relevant to refer to Section 148A of the Act, as was in force at the material time. The same is set out as below:

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"148A. Conducting inquiry, providing opportunity before issue of notice under section 148.

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The Assessing Officer shall, before issuing any notice under section 148,—

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(a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment;

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(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);

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(c)consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b);

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(d)decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which

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the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires:

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Provided that the provisions of this section shall not apply in a case where,—

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(a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or

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(b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or

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(c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, 2[relate to, the assessee; or

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(d) the Assessing Officer has received any information under the scheme notified under section 135A pertaining

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to income chargeable to tax escaping assessment for any assessment year in the case of the assessee.]

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It is clear from the plain reading of Clause (b) of Section 148A of the Act, that a notice under Section 148A(b) of the Act is required to provide an opportunity to the assessee to respond to the information which may suggests that the assessee’s income has escaped assessment. The minimum period of such notice is stipulated as " not less than seven days" . In the present case, the impugned notice was issued on 20.03.2022 and the Assessee was called upon to furnish a reply on or before 25.03.2022. Indisputably, the impugned notice did not comply with the requirement of providing a minimum period of seven days to respond to the said notice.

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The impugned notice is contrary to law as rightly pointed out by the learned Single Judge.

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In addition to the above, it is also relevant to note that the impugned notice was issued in respect of AY 2015-2016. Pursuant to the impugned notice, an order

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dated 31.03.2022 was passed under Section 148(d) of the Act, holding that it was a fit case for issuance of notice under Section 148 of the Act. The question, whether such notices issued in respect of the Assessment Year, 20152016 were sustainable was a subject matter of observation by the Supreme Court of India, in Union of India V. Rajiv Bansal¹ . During the said proceedings, it was readily conceded by the Revenue that all such notices issued on or after 01.04.2021 in respect of Assessment Year 20152016 were liable to be dropped. Paragraph 19 (e) and 19 (f) of the said decision are reproduced below:

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"e. The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income-tax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 201314, 2014-15, 2015-16, 2016-17, and 2017-18 will be

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1 2024 INSC 754

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within the period of limitation as explained in the tabulation below:

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Assessment year	Within 3 years	Expiry of Limitation read with TOLA for (2)	Within Six Years	Expiry Limitat read TOLA (4)	of ion with for
(1)	(2)	(3)	(4)	(5)
2013-2014	31-3-2017	TOLA not applicable	31-3-2020	30-6-2	021
2014-2015	31-3-2018	TOLA not applicable	31-3-2021	30-6-2	021
2015-2016	31-3-2019	TOLA not applicable	31-3-2022	TOLA applica	not ble
2016-17	31-3-2020	30-6-2021	31-3-2023	TOLA applica	not ble
2017-2018	31-3-2021	30-6-2021	31-3-2024	TOLA applica	not ble

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f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA."

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In view of the concession made by the Revenue in Rajeev Bansal (supra) , the reassessment proceedings in the present case would also require to be dropped.

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It is also relevant to note that in the subsequent decision in Deepak Steel and Power Limited V. CBDT² ,

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the attention of the Supreme Court was also drawn to the

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2 Civil Appeal No. 5177/2025 decided on 02.04.2025

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concession made by the Revenue in Rajeev Bansal ( Supra ). The said appeal emanated from the orders passed by the Hon'ble High Court of Orissa at Cuttack, declining to entertain a batch of petitions. The Supreme Court noted the concession made on behalf of the Revenue and accordingly, allowed the writ petitions, which were filed before the High Court of Orissa. The relevant extract of the said decision of the Supreme Court is set out below:

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"4. The learned counsel appearing for the revenue with his usual fairness invited the attention of this Court to a three judge bench decision of this Court in Union of India and Ors. v. Rajeev Bansal, reported in 2024 SCC Online SC 2693, more particularly, paragraph 19(f) which reads thus:-

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"19. (f) The Revenue concedes that for the assessment year 2015-2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020."

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As the revenue made a concession in the aforesaid decision that is for the assessment year 2015-2016, all notices issued on or after 1^st April, 2021 will have to be

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dropped as they would not fall for completion during the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of certain Provisions) Act, 2020. Nothing further is required to be adjudicated in this matter as the notices so far as the present litigation is concerned is dated 25.6.2021.

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In view of the aforesaid, in such circumstances referred to above the original writ petition Nos. 2446 of 2023, 2543 of 2023 and 2544 of 2023 respectively filed before the High Court of Orissa at cuttack stands allowed."

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Similarly, in ITO V. R.K. Build Creations (P) Ltd .³ , the Supreme Court dismissed the Special Leave Petition arising out of a decision rendered by the Hon'ble Rajasthan High Court in DBC WP No.14414/2022. It would be equally relevant to refer to the said order passed by the Supreme Court, which is reproduced below:

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"Delay condoned.

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Having regard to the concession made by the petitionerDepartment in the case of Union of India v. Rajeev Bansal, Civil Appeal No. 8629 of 2024 on 03.10.2024 (2024 SCC ONLINE 754), this Special Leave Petition would not survive for further consideration.

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