M/S. the Karnataka Chemists and Druggists Association (R) Vs the Income Tax Officer

ALSO AT AMBEKAL JEEVAN KUSHALAPPA, SECRETARY OF THE KARNATAKA CHEMISTS AND DRUGGISTS ASSOCIATION (R), AGED ABOUT 54 YEARS, S/O KUSHALAPPA A., RESIDING AT BRAMINS VALLEY, MADIKERI, KODAGU 571201.

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…APPELLANT

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(BY SRI RAVI SHANKAR S. V., ADVOCATE)

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NC: 2026:KHC:2922-DB ITA No. 13 of 2025 C/W ITA No. 14 of 2025

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HC-KAR

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AND:

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THE INCOME TAX OFFICER, WARD 5(2)(1), BMTC BUILDING, KORAMANGALA, BANGALORE 5600095.

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…RESPONDENT (BY SRI ARAVIND V. CHAVAN, SENIOR STANDING COUNSEL)

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THIS ITA / INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, PRAYING TO SET ASIDE THE TRIBUNAL ORDER TO THAT EXTENT HELD AGAINST THE APPELLANT AS BAD IN LAW, IN THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE 'C' BENCH, IN ITA Nos. 700, 701, 703 AND 704/BANG/2024 DATED 4.06.2024 FOR THE ASSESSMENT YEARS 2013-14 AND 2014-15, ANNEXURE - A.

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IN ITA No. 14/2025

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BETWEEN:

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M/S. THE KARNATAKA CHEMISTS AND DRUGGISTS ASSOCIATION (R), LAKSHMI COMPLEX, K. R. ROAD, OPP. VANI VILAS HOSPITAL, BANGALORE 560002, PAN: AACAT8119Q,

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ALSO AT AMBEKAL JEEVAN KUSHALAPPA, SECRETARY OF THE KARNATAKA CHEMISTS AND DRUGGISTS ASSOCIATION (R), AGED ABOUT 54 YEARS, S/O KUSHALAPPA A.,

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HC-KAR

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RESIDING AT BRAMINS VALLEY, MADIKERI, KODAGU 571201.

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…APPELLANT

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(BY SRI RAVI SHANKAR S. V., ADVOCATE)

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AND:

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THE INCOME TAX OFFICER, WARD 5(3)(2), BMTC BUILDING, KORAMANGALA, BANGALORE 5600095.

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…RESPONDENT

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(BY SRI ARAVIND V. CHAVAN, SENIOR STANDING COUNSEL)

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THIS ITA / INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 4.06.2024 PASSED IN ITA Nos.699 AND 702/BANG/2024, FOR THE ASSESSMENT YEAR 2013-14 AND 2014-15 PRAYING TO SET ASIDE THE TRIBUNAL ORDER TO THAT EXTENT HELD AGAINST THE APPELLANT AS BAD IN LAW, IN THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE 'C' BENCH IN ITA NOs. 699 AND 702/BANG/2024 DATED 4.06.2024 FOR THE ASESSMENT YEARS 2013-14 AND 2014-15, ANNEXURE-A.

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THESE APPEALS COMING ON FOR ADMISSION THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE S.G.PANDIT and HON'BLE MR. JUSTICE K. V. ARAVIND

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HC-KAR

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ORAL JUDGMENT

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(PER: HON'BLE MR. JUSTICE K. V. ARAVIND)

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Heard Sri Ravi Shankar S.V., learned counsel for the appellant and Sri Aravind V. Chavan, learned Senior Standing Counsel for the respondent.

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These appeals are filed by the assessee challenging the order dated 04.06.2024 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, 'the Tribunal') in ITA Nos.699 to 704/Bang/2024.

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The assessee failed to furnish returns of income for

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the Assessment Years 2013-14 and 2014-15. Consequently, the Assessing Officer reopened the assessments by issuance of notice under Section 148 of the Income Tax Act, 1961 (for short, 'the Act'). The assessee failed to file returns of income even in response to the notice issued under Section 148 of the Act. Thereafter, the Assessing Officer completed the assessments under Sections 147/144 read with Section 144B of the Act on 23.03.2022 and 17.03.2022 for the Assessment Years 2013-14 and 2014-15, respectively. The Assessing Officer raised a demand of Rs.1,07,65,348/and

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HC-KAR

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Rs.71,42,345/- for the Assessment Years 2013-14 and 201415, respectively. The Assessing Officer for the above assessment year, levied penalty under Section 271(1)(c) of the Act.

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Aggrieved by the orders of assessment, the assessee preferred appeals before the Commissioner of Income-tax (Appeals) (for short, 'the CIT(A)'). The appeals against the assessment were presented with delays of 259 days and 265 days, respectively. The Appellate Commissioner, by order dated 15.03.2024, dismissed both the appeals on the ground of delay.

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The said orders were carried in further appeal before the Tribunal. The Tribunal, under the impugned order dated 04.06.2024, rejected the appeals filed by the assessee, upholding the order of the CIT(A) dismissing the appeals on the ground of delay.

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Sri Ravi Shankar S.V., learned counsel appearing for the appellant, submits that the notice issued under Section 148 of the Act and the subsequent notices were sent to an email ID maintained by an employee of the Chartered

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Accountant. At the relevant point of time, the said employee

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had left the office of the Chartered Accountant, and consequently, the notices were not brought to the notice of the assessee for compliance. Learned counsel further submits that, in the return of income, the email ID of the assessee was furnished as a secondary email ID for service of notices; however, the notices were not issued to the said secondary email ID.

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6.1 Learned counsel also submits that, in the absence of participation by the assessee in the assessment proceedings, the Assessing Officer proceeded to consider the entire gross receipts and levied tax. It is further submitted that the CIT(A) as well as the Tribunal, without considering the reasonable explanation offered for the delay, committed an error in rejecting the appeals solely on the ground of delay.

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Sri Aravind V. Chavan, learned Senior Standing Counsel appearing for the Revenue, submits that the assessee is required to furnish a valid email ID in the return of income filed. The Assessing Officer issued notices to the email ID furnished by the assessee and, therefore, there is no illegality

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either in the issuance or service of the notices. It is further submitted that non-compliance with the notice issued under Section 148 of the Act resulted in the assessment orders.

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7.1 It is also submitted that the delay in filing the appeals before the CIT(A) has not been satisfactorily explained and, therefore, the CIT(A) as well as the Tribunal were justified in dismissing the appeals on the ground of delay.

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We have considered the submissions of learned counsel for the parties and perused the appeal papers.

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We notice that the Assessing Officer issued notices under Section 148 of the Act for the Assessment Years 2013-14 and 2014-15, on account of the failure of the assessee to file returns of income under Section 139 of the Act. From the assessment orders, it is evident that the income of the assessee mandated the filing of returns of income for both the assessment years. The assessee had furnished an email ID for communication of notices, and the Assessing Officer issued notices to the email ID available in the income-tax database.

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HC-KAR

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In such circumstances, non-service of notice cannot be attributed to any fault on the part of the Assessing Officer. It is incumbent upon the assessee to furnish a valid and accessible email ID for communication, and if the email ID furnished is not accessed by the assessee, the consequences necessarily follow. However, the assessee cannot be denied opportunity on that ground.

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We are inclined to interfere with the appeals to the limited extent of granting an opportunity to the assessee to participate in the appellate proceedings and redress its grievance before the CIT(A). Though the learned counsel for the appellant sought a remand of the matter for fresh adjudication by the Assessing Officer, we are not inclined to grant such relief. The assessee was required to file returns of income and, having failed to do so, the statutory window for filing returns cannot be reopened at this length of time.

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The appellate proceedings before the CIT(A) are in continuation of the assessment proceedings, and the assessee would have sufficient opportunity to place its case before the CIT(A).

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HC-KAR

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Insofar as the reasons assigned for condonation of

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delay are concerned, we notice that the notices were issued during the COVID-19 period, and the possibility of noncommunication of notices and consequent non-compliance for reasons attributable to the pandemic cannot be ruled out. The assessee ought to be afforded a sufficient opportunity before the demand is enforced. In view of the remand in the appeals arising out of assessment order, for the very reasons, the appeal arising out of the order of penalty also requires remand.

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In that view of the matter, and having regard to the reasons assigned for seeking condonation of delay, we are inclined to condone the delay in filing the appeals before the CIT(A) and direct the CIT(A) to adjudicate the appeals on merits. However, the condonation of delay shall be subject to the assessee depositing 20% of the demand before the Assessing Officer. The CIT(A) shall consider the appeals on merits only upon such deposit being made. The requirement of deposit of 20% of the demand is, in any event, in consonance with the statutory mandate.

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HC-KAR

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In view of the above, the following;

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ORDER

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(i) The appeals are allowed .

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(ii) The order passed by the Income Tax Appellate Tribunal 'C' Bench, Bengaluru in ITA Nos.699 to 704/Bang/2024 dated 04.06.2024 and the order of the Commissioner of Income Tax (Appeals) Nos. NFAC/2012-13/10205856 and NFAC/2013-14/10205861 dated 15.03.2024 insofar as Assessment Years 2013-14 and 2014-15 are hereby set aside.

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