M/S. Nandi Design Group Vs Assessment Unit — Income Tax | Karnataka HC (2026)

M/S. Nandi Design Group Vs Assessment Unit — Income Tax | Karnataka HC (2026)

What the court decided

AI extract

Outcome

Petition disposed of: assessment order dated 31.12.2023 (Annexure-A1) and orders at Annexures-A1 to A9 and Annexures-B2 and B3 set aside; matter remitted to the stage of reply to the Section 148A(b) notice; respondent authorities to rescind instructions to the bankers forthwith; all contentions kept open; petitioner to appear before the Assessing Officer on 25.05.2026 and pay Rs. 1,00,000/- towards the tax demand, subject to final adjudication.

Issue for consideration

Whether the ex parte assessment order dated 31.12.2023 passed under Sections 147/144/144B for AY 2019-20 (Annexure-A1), arising from notices sent to the petitioner's auditor's email and the petitioner's consequent non-participation, should be set aside with the matter remitted for reconsideration on terms condoning the lapse.

Court's answer

The order passed is an ex parte order: the petitioner made no reply to the initial Section 148A(b) notice and filed no return in response to the Section 148 notice.

Ratio / Principle

The adjudication of the addition relating to deposits (credits reflected in the 26AS Form) could not meaningfully be made without giving the petitioner an opportunity to explain; the petitioner's non-availment of opportunities should not by itself lead to his suffering the order, and the lapse may be taken note of with the petitioner put on terms.

Key takeaways

Taking note of the proposed addition, it was appropriate that the order of assessment be set aside and the petitioner be given an opportunity to explain the deposits noticed in the 26AS Form.ratio¶42
With the orders at Annexures-A1 to A9 and Annexures-B2 and B3 set aside, the matter is remitted to the stage of reply to the 148A(b) notice.ratio¶45
In light of the setting aside of the impugned orders, the respondent authorities were directed to rescind instructions to the bankers forthwith; all contentions of the petitioner were kept open.

Detailed headnote1 paragraphs

Direct tax – Assessment u/ss. 147/144/144B, Income Tax Act, 1961, AY 2019-20 – Ex parte assessment order dated 31.12.2023 (DIN ITBA/AST/S/147/202324/1059232466(1)) challenged under Arts. 226/227 – S.148 notice and S.148A(d) order sent to auditor's e-mail; petitioner made no reply to S.148A(b) notice and filed no return in response to S.148 notice – Proposed addition based on deposits credited per Form 26AS – Held: additions on such deposits could not meaningfully be adjudicated without an opportunity to explain; assessee's lapse not to result in his suffering the order; assessee put on terms – Orders at Annexures-A1 to A9 and Annexures-B2 and B3 set aside; matter remitted to stage of reply to S.148A(b) notice – Authorities directed to rescind instructions to bankers forthwith – Petitioner to appear before Assessing Officer on 25.05.2026 and pay Rs. 1,00,000/- towards tax demand, subject to final adjudication – All contentions kept open – Petition disposed of (HC-KAR, single Judge: S Sunil Dutt Yadav J.).

NC: 2026:KHC:22209 WP No. 12447 of 2026

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HC-KAR

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 23^RD DAY OF APRIL, 2026

BEFORE

THE HON'BLE MR. JUSTICE S SUNIL DUTT YADAV

WRIT PETITION NO. 12447 OF 2026 (T-IT)

BETWEEN:

M/S. NANDI DESIGN GROUP, A PARTNERSHIP FIRM REPRESENTED BY ITS PARTNER, SHRI. SHIVASHARANAPPA B. PATIL, AGED ABOUT 60 YEARS, S/O SHRI. SRI BHIM RAO SHANKARAPRA PATIL, HAVING OFFICE AT 279, 3^RD FLOOR, IMAGE GREEN APARTMENTS, 7^TH CROSS, 7^TH MAIN, PURNA PRAGNYA LAYOUT, UTTARAHALLI, BENGALURU - 560061. PAN: AAGFN3390L.

Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA

(BY SRI. PRANAY SHARMA Y., ADVOCATE)

AND:

…PETITIONER

ASSESSMENT UNIT, INCOME TAX DEPARTMENT, NATIONAL FACELESS ASSESSMENT CENTRE, MINISTRY OF FINANCE, ROOM NO.401, 2^ND FLOOR, E-RAMP, JAWARLAL NEHRU STADIUM, DELHI-110 003.

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HC-KAR

THE INCOME TAX OFFICER, WARD - 2(2)(7), BMTC BUILDING, 80FT ROAD, 6^TH BLOCK, KHB VILLAGE, KORAMANGALA, BENGALURU - 560095.

THE PRINCIPAL COMMISSIONER OF INCOME TAX-2, CENTRAL REVENUE BUILDING, QUEENS ROAD, BENGALURU - 560001.

…RESPONDENTS

(BY SRI. M. DILIP, ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING THE ASSESSMENT ORDER DATED 31.12.2023 PASSED UNDER SECTION 147 R.W.S 144 R.W.S 144B OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2019-20 BY THE RESPONDENT NO.1 BEARING DIN NO. ITBA/AST/S/147/202324/1059232466(1) HEREIN MARKED AS ANNEXURE - A1 ETC.,

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

CORAM: HON'BLE MR. JUSTICE S SUNIL DUTT YADAV

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ORAL ORDER

Learned counsel, Sri. M. Dilip accepts notice for the respondents.

The petitioner has challenged the validity of the assessment order dated 31.12.2023 passed under Section 147 read with Section 144 of the Income Tax Act, 1961 (for short, 'the Act').

Learned counsel for the petitioner submits that

the assessment order at Annexure-A1 is an exparte order. It is submitted that the proceedings have been initiated pursuant to notice issued under Section 148A(b) followed by the order passed under Section 148A(d) and Section 148 notice. It is submitted that the notice under Section 148 as well as 148A(d) order was sent to the email ID of the petitioner's auditor, who had not communicated regarding such proceedings to the petitioner, which has resulted in the petitioner not participating in the proceedings. Thereby, it is submitted that an exparte

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HC-KAR

order of assessment has been made. It is submitted that the exparte order of assessment be set aside and matter remitted for reconsideration by putting the petitioner on terms by condoning the lapse. It is submitted that the petitioner has sufficient material to demonstrate and meet the grounds made in show-cause notice insofar as the proposed addition is to be made.

Learned counsel for the revenue would submit that petitioner is seeking to set aside the order dated 31.12.2023 after undue delay, and petitioner has suffered an order due to non-participation, which is a lapse on his part.

Perused the assessment order at Annexure-A1.

It is clear that the order passed is an exparte order and the petitioner has made out no reply to the initial notice under Section 148A(b) of the Act. The petitioner has also not filed any return in response to notice issued under Section 148 of the Act. The petitioner has pointed out

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HC-KAR

certain arithmetical errors relating to quantification of proposed addition. The authority has taken note of certain amounts credited to the petitioner's account, reflected in the 26AS Form.

The adjudication by the authority by way of addition relating to deposits could not be meaningfully made without petitioner being given an opportunity to explain the same. No doubt petitioner has not availed of the opportunities, however, that by itself should not lead to petitioner suffering an order. The lapse on part of the petitioner may be taken note of and the petitioner be put on terms.

Taking note of the proposed addition, it would be appropriate that the order of assessment is set aside and petitioner be given an opportunity to explain the deposits as noticed in the 26AS Form. Accordingly, the orders at Annexures-A1 to A9 are set aside as well as

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HC-KAR

Annexures-B2 and B3 are set aside. Matter is remitted to the stage of reply to 148A(b) notice.

In light of setting aside of the impugned orders, the respondent authorities to rescind instructions to the bankers forthwith. All contentions of the petitioner are kept open.

Petitioner to appear before the jurisdictional

Assessing Officer and make out reply to the 148A(b) notice. Such appearance to be made without further notice on 25.05.2026. The petitioner to pay an amount of Rs.1,00,000/- (Rupees One Lakh only) towards the demand of tax, which would be subject to final adjudication.

Accordingly, petition is disposed of .

Sd/(S SUNIL DUTT YADAV) JUDGE

MCR