Umesh Kollira Muddappa (Huf) v. National Faceless Assessment Centre

Karnataka HC23 Mar 2026WP/9152/2026

Case brief

AI extract

What is this about?

HUF assessment; karta's individual income treated as HUF income; individual bank account of Sri K.M. Umesh; s.143(3) r.w. s.144B; assessment year 2024-25; National Faceless Assessment Centre; ITO Ward Madikeri; notice of penalty; remand for fresh consideration; Annexure-D1 communication dated 29.09.2025; Annexure-F bank account extract; Annexure-C2 individual return; Articles 226/227; High Court of Karnataka at Bengaluru; WP No. 9152 of 2026 (T-IT); S Sunil Dutt Yadav, J; disposed of.

What did the court decide?

Assessment order dated 18.02.2026 for AY 2024-25 (Annexure-A) and the notice of penalty (Annexure-A1) set aside; matter remitted to the Authority for fresh consideration in accordance with law; observations expressly prima facie and all contentions kept open; petition disposed of in those terms. ¶¶38

Umesh Kollira Muddappa (Huf) Vs National Faceless… — Writ and Judicial Review | Karnataka HC (2026)

What the court decided

AI extract

Outcome

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Issue for consideration

Whether the assessment order dated 18.02.2026 for AY 2024-25, by which income accounted for in the individual capacity of the karta was treated as income of the HUF despite the petitioner's communication dated 29.09.2025 (Annexure-D1), is valid and calls to be set aside with a direction for reconsideration; and the consequential validity of the penalty notice (Annexure-A1).

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Court's answer

Taking note of the petitioner's contention and the communication at Annexure-D1, it was appropriate that the assessment order be set aside with a direction for reconsideration.

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Ratio / Principle

On the sole ground that the Authority took note of the declaration and details of the individual account (of Sri K.M. Umesh) while passing the assessment order against the HUF, the order was liable to be set aside.

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Key takeaways

The order at Annexure-A is set aside and the notice of penalty at Annexure-A1 is also set aside; the matter is remitted for fresh consideration in accordance with law.ratio¶¶38
Prima facie, the Authority's finding that the bank account in question belongs to the assessee HUF appears incorrect: the extract at Annexure-F indicates it is the individual account of Sri K.M. Umesh, fortified by his individual return at Annexure-C2, whose cash-at-hand balance with State Bank of India correlates with the individual account.obiter¶¶33

Detailed headnote1 paragraphs

Karnataka High Court (S Sunil Dutt Yadav, J), writ petition under Articles 226 and 227 challenging an assessment order dated 18.02.2026 passed u/s 143(3) r.w. s.144B for AY 2024-25 on the petitioner HUF, and a notice of penalty. Held: on the sole ground that the assessing Authority took note of the declaration and details of an individual bank account (of the karta, Sri K.M. Umesh) while passing the assessment order against the HUF, the assessment order (Annexure-A) and the penalty notice (Annexure-A1) are set aside and the matter remitted for fresh consideration in accordance with law. Prima facie, the bank account extract (Annexure-F) shows the account to be the individual account of Sri K.M. Umesh, corroborated by his individual return (Annexure-C2); the petitioner had communicated this by letter dated 29.09.2025 (Annexure-D1). All observations are expressly prima facie, the authority is at liberty to take an independent view after hearing, and all contentions are kept open. Petition disposed of in those terms.

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NC: 2026:KHC:16265 WP No. 9152 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 23^RD DAY OF MARCH, 2026

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BEFORE

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THE HON'BLE MR. JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 9152 OF 2026 (T-IT)

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BETWEEN:

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UMESH KOLLIRA MUDDAPPA (HUF) REPRESENTED BY THE KARTA, SRI. K M UMESH AGED ABOUT 64 YEARS, S/O LATE KK MUDDAPPA, 33 UMAMMAHESHWARI PETROLIUM AGENCIES, MAINROAD GONIKOPPA, GONIKOPPA 571213 PAN: AAAHU4469H

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…PETITIONER

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

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AND:

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Digitally signed by SHWETHA RAGHAVENDRA Location: HIGH COURT OF KARNATAKA

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NATIONAL FACELESS ASSESSMENT CENTRE ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, INCOME TAX DEPARTMENT, MINISTRY OF FINANCE, ROOM NO. 401, 2^ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI 110003

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INCOME TAX OFFICER, ITO WARD MADIKERI, MADIKERI SRIVALLI BUILDING, MADIKERI 571201

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…RESPONDENTS

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(BY SRI. TIRUMALESH., ADVOCATE)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER

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2 - NC: 2026:KHC:16265 WP No. 9152 of 2026

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HC-KAR

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PASSED U/S 143(3) R.W.S 144B OF THE ACT, DATED 18/02/2026 VIDE DIN ITBA/AST/S/143(3)/2025-26/1086194226(1), PASSED BY THE RESPONDENT FOR THE ASSESSMENT YEAR 2024-25 HEREIN MARKED AS ANNEXURE – A AND ETC.

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

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

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ORAL ORDER

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Learned counsel Sri Tirumalesh accepts notice for respondents.

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The petitioner has called in question the validity of the assessment order dated 18.02.2026 for the assessment year 2024-25 at Annexure-A, has also challenged a notice of penalty issued at Annexure-A1.

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It is the case of the petitioner that though the assessment order is as regards the Hindu Undivided Family (HUF), however, the Authority has taken note of the income accounted for in individual capacity and treated the same as income of the HUF.

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It is submitted that such aspect was brought to the notice of the Authority by virtue of the communication

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3 - NC: 2026:KHC:16265 WP No. 9152 of 2026

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HC-KAR

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dated 29.09.2025 at Annexure–D1, despite which the Authority has concluded the assessment, treating the income of the individual as that of the HUF. Accordingly, it is submitted that the matter may be remitted for reconsideration.

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Taking note of the contention made as also the communication at Annexure-D1, it would be appropriate that the order be set aside with a direction for reconsideration.

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The finding of the Authority that the bank account in question belongs to the assessee, HUF, prima facie appears to be incorrect, as the details of the bank account extract produced at Annexure–F would indicate that it is the individual account of Sri K.M. Umesh, which is further fortified by the reference made to Annexure–C2, which is the returns of K.M.Umesh, it is in an individual capacity wherein the balance of cash at hand as regards State Bank of India would indicate that the said balance correlates with the balance of the individual account.

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NC: 2026:KHC:16265 WP No. 9152 of 2026

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HC-KAR

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Accordingly, on such sole ground of the

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Authority having taken note of the declaration and details of the individual account while passing an assessment order, the order at Annexure–A is set aside as also the notice of penalty at Annexure-A1, and the matter is remitted for fresh consideration in accordance with law.

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