Sri Muralidhara Krishnappa Vs Income Tax Officer — Income Tax | Karnataka HC (2025)

Sri Muralidhara Krishnappa Vs Income Tax Officer — Income Tax | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Petition allowed in part: the assessment order dated 17.03.2023 under S.148A (Annexure A), the assessment order dated 14.05.2024 under Ss.147 and 144 (Annexure B), the penalty orders dated 19.11.2024 under S.271(1)(b) (Annexure-C), 11.02.2025 under S.271F (Annexure-D) and 13.02.2025 under S.271(1)(c) (Annexure-E), and any other assessment, penalty orders or accrued interest computation for Assessment Year 2016-17 are quashed; the matter is remitted to the Section 148A(b) notice dated 25.02.2023 and the petitioner shall submit a reply thereto, with remedies left open.

Issue for consideration

Whether the assessment and penalty proceedings culminating in the impugned orders were conducted ex parte, the petitioner not having been heard prior to their passage. +1 more

Court's answer

On a perusal of the record the petitioner has not been heard in the matter; therefore the proceedings culminating in the impugned orders are ex parte.

Ratio / Principle

Since the proceedings which culminated into the impugned orders are ex parte from the stage of the notices under Section 148A(b), the proceedings are a nullity.

Key takeaways

The orders impugned are obliterated and the matter is remitted back to the stage at which the proceedings began on 25.02.2023, i.e., issuance of notice under Section 148A(b); the petitioner shall submit a reply to that notice, the reply shall be considered and procedure regulated thereafter by the respondent-authorities.ratio¶57
The assessment orders dated 17.03.2023 and 14.05.2024, the penalty orders dated 19.11.2024, 11.02.2025 and 13.02.2025, and any other assessment, penalty orders or accrued interest computation for Assessment Year 2016-17 stand quashed/obliterated.ratio¶59

Detailed headnote1 paragraphs

Direct taxation - writ (T-IT) under Articles 226/227 - reassessment proceedings for AY 2016-17 commenced by notice u/s 148A(b) dated 25.02.2023, culminating in (i) assessment order u/s 148A dated 17.03.2023 by Respondent No.1 alleging escapement of income of Rs.61,35,595/-, (ii) assessment order u/s 147 r/w 144 dated 14.05.2024 by Respondent No.2 computing assessed income of Rs.61,35,595/-, and (iii) penalty orders u/s 271(1)(b) (Rs.20,000/-), 271F (Rs.5,000/-) and 271(1)(c) (Rs.18,95,899/-) - HELD: the entire chain of proceedings was ex parte, the petitioner never having been heard from the stage of the S.148A(b) notices; such proceedings are a nullity and the impugned orders stand obliterated. Petition allowed in part: all impugned orders and any other assessment/penalty/interest computation for AY 2016-17 quashed; matter remitted to the 25.02.2023 notice stage; petitioner permitted to submit a reply, to be considered, with all remedies left open. - M.Nagaprasanna J. (HC-KAR, 14-08-2025)

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NC: 2025:KHC:31517 WP No. 22643 of 2025

HC-KAR

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 14^TH DAY OF AUGUST, 2025

BEFORE

THE HON'BLE MR. JUSTICE M.NAGAPRASANNA

WRIT PETITION NO. 22643 OF 2025 (T-IT)

BETWEEN:

SRI. MURALIDHARA KRISHNAPPA, REPRESENTED BY SPA HOLDER SRI SATHEESHA CHANDRA D.V., S/O SRI D.S.V BHATTA, AGED ABOUT 69 YEARS, R/AT NO.745/67, JAYALAKSHMI NILAYA, 4^TH LEFT CROSS ROAD, BEHIND GANESHA TEMPLE, URUGADURU, SHIMOGA, KARNATAKA – 577 203. EMAIL: [email protected] MOBILE :7847029179.

…PETITIONER

(BY SMT. ARUNA BHAT, ADVOCATE FOR

Digitally signed by NAGAVENI Location: HIGH COURT OF KARNATAKA

SRI. AJAY T., ADVOCATE)

AND:

INCOME TAX OFFICER, WARD 7(2)(5), BMTC BUILDING, 80 FEET ROAD, 6^TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU, KARNATAKA – 560 095. EMAIL: [email protected] CONTACT NO: 080-46122000.

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INCOME TAX OFFICER, INTERNATIONAL TAXATION WARD 1(2), BMTC BUILDING, 80 FEET ROAD, 6^TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU, KARNATAKA – 560 095. EMAIL: [email protected] CONTACT NO: 080-46122000.

PRINCIPAL COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION WARD 1(2), BMTC BUILDING, 80 FEET ROAD, 6^TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU, KARNATAKA - 560095. EMAIL: [email protected] CONTACT NO: 080-22869239.

MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, CENTRAL BOARD OF DIRECT TAXES (CBDT), NORTH BLOCK, NEW DELHI – 110 001. INDIA.

EMAIL: [email protected] CONTACT NO: 011-23092604.

…RESPONDENTS

(BY SRI. SUSHAL TIWARI, ADVOCATE FOR R1 TO R4)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT IN THE NATURE OF CERTIORARI, ORDER OR DIRECTION QUASHING THE IMPUGNED ASSESSMENT ORDER DATED 17.03.2023 PASSED BY THE RESPONDENT NO.1 UNDER SECTION 148A OF THE INCOME TAX ACT, 1961 VIDE DIN AND NOTICE NO.ITBA/AST/F/148A/2022-23/1050871454(1)

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ALLEGING ESCAPEMENT OF INCOME AMOUNTING TO RS.61,35,595/- AS PER ANNEXURE A AND ETC.

THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA

ORAL ORDER

Petitioner is before this Court seeking the following

prayers:

"i) Issue a Writ in the nature of Certiorari, order or direction quashing the Impugned Assessment Order dated 17.03.2023 passed by the Respondent No.1 under Section 148A of the Income Tax Act, 1961 vide DIN and Notice No.ITBA/AST/F/148A/2022-23/1050871454(1) alleging escapement of income amounting to Rs.61,35,595/- as per Annexure A.

ii) Issue a Writ in the nature of Certiorari or any other appropriate writ, order or direction quashing the Impugned Assessment Order dated 14.05.2024 passed by the Respondent No.2 under Section 147 read with Section 144 of the Income Tax Act, 1961 vide DIN and Order No.ITBA/AST/S/147/2024-25/1064846253(1) computing total assessed income of Rs.61,35,595/- as per Annexure B.

iii) Issue a Writ in the nature of Certiorari, or any other appropriate writ, order or direction quashing the Impugned Penalty Order dated 19.11.2024 passed by the Respondent No.2 under Section 271(1)(b) of the Income Tax Act, 1961 vide DIN No.ITBA/PNL/F/271(1)(b)/2024-25/1070475313(1) demanding a Penalty of Rs.20,000/- as per Annexure-C.

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HC-KAR

iv) Issue a Writ in the nature of Certiorari, or any other appropriate writ, order or direction quashing the Impugned Penalty Order dated 11.02.2025 passed by the Respondent No.2 under Section.271F of the Income Tax Act, 1961 vide DIN No.ITBA/PNL/F/271F/202425/1073151759(1) demanding a Penalty of Rs.5,000/- as per Annexure-D.

v) Issue a Writ in the nature of Certiorari or any other appropriate writ, order or direction quashing the Impugned Penalty Order dated 13.02.2025 passed by the Respondent No.2 under Section.271(1)(C) of the Income Tax Act, 1961 vide DIN No.ITBA/PNL/F/271(1)(C)/2024-25/1073260353(1) demanding a penalty of Rs.18,95,899/-as per Annexure-E.

vi) Issue a Writ in the nature of Certiorari or any other appropriate writ, order or direction quash and set aside any other assessment, Penalty Orders or accrued interest computation for the Assessment Year 2016-17.

vii) Declare that the Petitioner was not liable to file Income Tax Return for Assessment Year 2016-17 as per the Provisions applicable to Non-Resident Indians and that the advance made towards purchase of residential flat under construction was capital in nature and not income.

viii) Issue any other appropriate writ, order or direction as this Hon'ble Court may deem fit and proper in the facts and circumstances in the interest of justice and equity."

Heard Smt.Aruna Bhat, learned counsel for Sri.Ajay

T., learned counsel appearing for the petitioner, Sri.Sushal Tiwari, learned counsel appearing for respondent Nos.1 to 4 and have perused the material on record.

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HC-KAR

The proceedings were taken up against the

petitioner by issuance of notice under Section 148A(b) of the Income Tax Act, 1961 on 25.02.2023. The proceedings have gone on since then and has resulted in the notice of demand now issued on 13.02.2025, all of which are challenged in the subject petition.

Learned counsel appearing for the petitioner would project a solitary contention for the present that the proceedings that have culminated in the impugned order are all ex parte . The petitioner was not heard in the matter prior to the passage of the order.

A perusal at the record would clearly indicate that the petitioner has not been heard in the matter. Therefore, the proceedings are undoubtedly ex parte . Since the proceedings which has culminated into the impugned orders are ex parte from the stage of notices under Section 148A(b), the proceedings are a nullity.

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HC-KAR

6. In that light, I deem it appropriate to obliterate the

orders impugned, remit the matter back to the stage from which the proceedings began on 25.02.2023 i.e., issuance of notice under Section 148A(b) of the Act. The petitioner shall now submit a reply to the said notice so issued on 25.02.2023 and reply be considered and procedure be regulated thereafter by the respondent-authorities.

In the light of the proceedings being ex parte and

the admitted position being that the proceedings are ex parte, the orders impugned would necessarily stand obliterated.

For the aforesaid reasons, the following:

O R D E R

[i] Petition is allowed in part.

[ii] The assessment order dated 17.03.2023 passed by

the respondent No.1 under Section 148A of the Income Tax Act, 1961 vide DIN and Notice No.ITBA/AST/F/148A/202223/1050871454(1) alleging escapement of income amounting to Rs.61,35,595/- as per Annexure A, stands quashed.

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[iii] Assessment Order dated 14.05.2024 passed by the Respondent No.2 under Section 147 read with Section 144 of the Income Tax Act, 1961 vide DIN and Order No.ITBA/AST/S/147/2024-25/1064846253(1) computing total assessed income of Rs.61,35,595/- as per Annexure B, stands quashed.

[iv] Penalty Order dated 19.11.2024 passed by the Respondent No.2 under Section 271(1)(b) of the Income Tax Act,1961 vide DIN No.ITBA/PNL/F/271(1)(b)/202425/1070475313(1) demanding a Penalty of Rs.20,000/- as per Annexure-C, stands quashed.

[v] Penalty Order dated 11.02.2025 passed by the Respondent No.2 under Section 271F of the Income Tax Act, 1961 vide DIN No.ITBA/PNL/F/271F/2024-25/1073151759(1) demanding a Penalty of Rs.5,000/- as per Annexure-D, stands quashed.

[vi] Penalty Order dated 13.02.2025 passed by the Respondent No.2 under Section 271(1)(C) of the Income Tax Act, 1961 vide DIN No.ITBA/PNL/F/271(1)(C)/2024-

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NC: 2025:KHC:31517 WP No. 22643 of 2025

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25/1073260353(1) demanding a penalty of Rs.18,95,899/-as

per Annexure-E, stands quashed.

[vii] Any other assessment, Penalty Orders or accrued interest computation for the Assessment Year 2016-17, stands quashed.

[viii] Petitioner shall now submit a reply to the notice so issued on 25.02.2023 under Section 148A(b) of the Act.

[ix] All further action would remain as a consequence of the consideration of the reply submitted by the petitioner and the petitioner/parties would be left open with all the remedies thereon.

Ordered accordingly.

Sd/(M.NAGAPRASANNA) JUDGE

CBC List No.: 1 Sl No.: 44 CT:SS