Allowed

Primary Agricultural Credit Co. Operative Society Ltd. v. Commissioner of Income Tax (Appeals)

Karnataka HC10 Mar 2026WP/7492/2026

Case brief

AI extract

What is this about?

This writ petition challenged an income tax assessment order, demand notice, and appeal order passed ex parte by the Income Tax authorities on the principle of best judgment. The High Court set aside the impugned orders and remitted the matter to the authority for the stage of reply to the show cause notice, allowing the petitioner to clarify deductions and loan repayments before the matter is adj

What did the court decide?

The impugned Assessment Order (Annexure-C), Demand Notice (Annexure-D), and Appeal Order (Annexure-E) were set aside, and the matter was remitted to the stage of reply to the show-cause notice.

Primary Agricultural Credit Co. Operative Society Ltd. Vs… — Income Tax | Karnataka HC (2026)

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NC: 2026:KHC:14341 WP No. 7492 of 2026

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HC-KAR

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 10^TH DAY OF MARCH, 2026

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BEFORE

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THE HON'BLE MR. JUSTICE S SUNIL DUTT YADAV

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WRIT PETITION NO. 7492 OF 2026 (T-IT)

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BETWEEN:

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PRIMARY AGRICULTURAL CREDIT

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CO-OPERATIVE SOCIETY LTD (A SOCIETY REGISTERED UNDER KCS ACT, 1959),

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MADENUR, HASSAN TALUK, HASSAN DISTRICT - 573 225. REPRESENTED BY ITS C.E.O MR. KRISHNA KUMAR C. J. AGE: 59 YRS.

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… PETITIONER

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(BY SRI. MAHESH R UPPIN., ADVOCATE)

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AND:

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Digitally signed by PRAKASH N Location: HIGH COURT OF KARNATAKA

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COMMISSIONER OF INCOME TAX (APPEALS) NATIONAL FACELESS APPEAL CENTRE, DELHI-110 001.

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ASSESSING OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI-110 001

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INCOME TAX OFFICER, WARD - 1 AND TPS, AAYAKAR BHAVAN, 2^ND STAGE,

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BELUR ROAD, HASSAN - 573 201.

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NC: 2026:KHC:14341 WP No. 7492 of 2026

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HC-KAR

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THE BRANCH MANAGER, HASAN DISTRICT CENTRAL CO-OP. BANK LTD "UNNATHI", B. M. ROAD, HASSAN - 573 201.

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… RESPONDENTS

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(BY SRI. M. THIRUMALESH., ADVOCATE FOR R1 TO R3)

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THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ASSESSMENT ORDER DT 17-03-2023 BEARING DIN NO. ITBA/AST/S/147/2022-23/1050887036(1) PASSED BY THE SECOND RESPONDENT MARKED AS ANNEXURE-C AND THE DEMAND NOTICE DT 17-03-2023 BEARING DIN AND NOTICE NO. ITBA/AST/S/156/2022-23/1050887092(1) ISSUED BY THE SECOND RESPONDENT MARKED AS ANNEXURE-D AND THE ORDER DT 08-12-2024 BEARING DIN AND ORDER NO. ITBA/NFAC/S/250/2024-25/1070999792(1) MARKED AS ANNEXURE-E ISSUED BY THE FIRST RESPONDENT BY ISSUING A WRIT IN THE NATURE OF CERTIORARI AND ETC.

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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

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The petitioner has called in question the validity of

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Assessment Order at Annexure-C dated 17.03.2023 and

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Demand notice dated 17.03.2023 at Annexure-D.

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Petitioner submits that the assessment order

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passed is an exparte order and passed on the principle of

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3 - NC: 2026:KHC:14341 WP No. 7492 of 2026

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HC-KAR

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'Best Judgment Assessment'. It is submitted that due to

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bonafide reasons, petitioner could not make out any reply or participate in the assessment proceedings.

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It is submitted that the authority had initiated proceedings with specific reference to credits in the bank account which the assessee allegedly has failed to explain through documentary evidence.

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It is specifically asserted that deposits taken note of by the authority were in fact payments made to discharge the loans and accordingly, such aspect requires to be demonstrated before the authority.

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It is submitted that the income of the petitioner

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being below the taxable limits, the question of filing returns did not arise.

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It is noticed that the assessment order is passed

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on the principle of 'Best Judgment Assessment' in light of petitioner not having participated in the proceedings. As

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NC: 2026:KHC:14341 WP No. 7492 of 2026

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HC-KAR

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against the assessment order, petitioner had filed an

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appeal, which appeal also came to be rejected on merits.

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It is the case of the petitioner that the Appellate Authority was not in a position to set aside the assessment order in light of petitioner not having placed any material before the Assessing Officer.

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Learned counsel for petitioner has brought to the notice of this court that second appeal has been withdrawn. The said submission is taken note of.

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Taking note of the assertion of the petitioner that much of the income is eligible for deduction under Section 80P of the Act, and also the petitioner's assertion that deposits were in fact repayment of loans by the farmers under the Kissan Cash Credit loans, it would meet the ends of justice by setting aside the impugned order and remitting the matter back to the stage of reply to the show-cause notice.

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NC: 2026:KHC:14341 WP No. 7492 of 2026

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HC-KAR

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Accordingly, the order at Annexure-C, D and E

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are set aside. The matter is remitted to the stage of reply to the show-cause notice. All other contentions are kept

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open.

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SD/(S SUNIL DUTT YADAV) JUDGE

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Primary Agricultural Credit Co. Operative Society Ltd. v. Commissioner of Income Tax (Appeals)

Case brief

What is this about?

What did the court decide?

Primary Agricultural Credit Co. Operative Society Ltd. v. Commissioner of Income Tax (Appeals)

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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