- 1 - HC-KAR NC: 2025:KHC:30359-DB WA No. 734 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 5TH DAY OF AUGUST, 2025 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE MR. JUSTICE K. V. ARAVIND WRIT APPEAL No.734 OF 2024 (T-IT) BETWEEN: 1. SRI KULUMEPALYA LENKEGOWDA SHIVAKUMAR, AGED ABOUT 53 YEARS, S/O. LATE SRI. LENKE GOWDA, KULUMEPALYA POST, KUNIGAL, TUMKUR-572 126, PAN No.GNXPS3092E. &APPELLANT (BY SRI BALRAM R. RAO, ADVOCATE) AND: 1. THE INCOME TAX OFFICER, WARD 2, AAYAKAR BHAVAN, RAMAKRISHNA NAGAR, KUNIGAL ROAD, TUMKUR-572 103. 2. NATIONAL FACELESS APPEAL CENTRE, REPRESENTED BY ITS COMMISSIONER OF INCOME TAX (APPEALS), ROOM No.356, C.R. BUILDING, IP ESTATE, DELHI-110 002. &RESPONDENTS (BY SRI E.I. SANMATHI, SENIOR STANDING COUNSEL) Digitally signed by VALLI MARIMUTHU Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:30359-DB WA No. 734 of 2024 THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE AFORESAID CLAUSE IN THE ORDER DATED 02.02.2024 IN WP No-9458/2023(TAX-IT) PASSED BY THE LEARNED SINGLE JUDGE AND TO ALLOW THIS WRIT APPEAL. THIS APPEAL, COMING ON FOR PRELIMINARY HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S.G.PANDIT and HON'BLE MR. JUSTICE K. V. ARAVIND ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE K.V. ARAVIND) Sri E. I. Sanmathi, learned Senior Standing Counsel, accepts notice for respondent Nos.1 and 2. Though the appeal is listed for Preliminary Hearing, with the consent of the learned counsel for the parties, the matter is taken up for final disposal. 2. Heard Sri Balram R Rao, learned counsel for the appellant and Sri E. I. Sanmathi, learned Senior Standing Counsel for respondent Nos.1 and 2. 3. The instant writ appeal under Section 4 of the Karnataka High Court Act, 1961 is directed against the order dated - 3 - HC-KAR NC: 2025:KHC:30359-DB WA No. 734 of 2024 02.02.2024 passed by the learned Single Judge in WP No.9458/2023. 4. The appellant3assessee preferred the writ petition challenging the order of assessment and the demand notice for the Assessment Year 2017318, dated 24.08.2019, on the ground that the assessment was made without affording an opportunity to the assessee. Learned Single Judge, having considered the contentions advanced, set aside the assessment order dated 24.08.2019 and remanded the matter to the Assessing Officer for fresh consideration. Liberty was reserved to the assessee to submit his response/reply along with supporting documents before the Assessing Officer. Learned Single Judge further observed that in the event the reassessment proceedings culminate in a demand, by not accepting the case of the assessee, the Assessing Officer shall be entitled to levy interest on the amount in terms of the demand notice dated 24.08.2019. 5. Sri Balram R. Rao, learned counsel appearing for the appellant3assessee, submits that the grievance of the appellant is confined to the observations made by learned Single Judge to - 4 - HC-KAR NC: 2025:KHC:30359-DB WA No. 734 of 2024 the effect that, in the event the respondent3Assessing Authority does not accept the response/reply of the assessee and passes an order against the assessee, the respondent3 Assessing Authority would be entitled to claim interest on the amount in terms of the demand notice dated 24.08.2019. Learned counsel further submits that upon fresh assessment being made, the Assessing Officer would be entitled to levy interest strictly in accordance with the provisions of the Act. It is his submission that when such statutory provision exists, the direction to levy interest on the demand raised under the order dated 24.08.2019, which has been set aside, is erroneous. 6. Sri E. I. Sanmathi, learned Senior Standing Counsel appearing for the respondent3Revenue, is unable to dispute the submission made by learned counsel for the appellant. However, learned Senior Standing Counsel submits that liberty may be reserved to the Assessing Officer to levy interest, if any, strictly in accordance with law upon completion of the assessment in compliance of directions in the impugned order. 7. Having considered the submissions of learned counsel for the parties and upon perusal of the appeal papers, this Court is - 5 - HC-KAR NC: 2025:KHC:30359-DB WA No. 734 of 2024 of the view that limited interference is warranted, only to the extent of the observation made by learned Single Judge that the respondent3Assessing Officer would be entitled to claim interest in terms of the demand notice dated 24.08.2019. 8. Learned Single Judge, while accepting the contention of the assessee, set aside the assessment order with a direction to re-do the same, granting liberty to the assessee to submit his response/reply along with supporting documents. The provisions of the Act contemplate levy of interest for delayed/deferred payment of tax. When the statute itself enables the Assessing Officer to levy interest consequent to assessment of income, the observation made by learned Single Judge that the respondent3Assessing Officer would be entitled to claim interest in terms of the demand notice dated 24.08.2019, in the facts of the present case is not warranted. 9. In that view, the observation made in the operative portion of the order at paragraph 5(d) to the extent as observed above is set aside. However, liberty is reserved to the Assessing Officer to levy interest, if any, in accordance with law upon completion of the fresh assessment. - 6 - HC-KAR NC: 2025:KHC:30359-DB WA No. 734 of 2024 10. Accordingly, the appeal stands disposed of. Sd/- (S.G.PANDIT) JUDGE Sd/- (K. V. ARAVIND) JUDGE MV, List No.: 1 Sl No.: 47