- 1 - NC: 2025:KHC-D:5193 WP No. 107426 of 2023 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 21ST DAY OF MARCH, 2025 BEFORE THE HON'BLE MS. JUSTICE JYOTI MULIMANI WRIT PETITION NO. 107426 OF 2023 (T-RES) BETWEEN: SRI. BASAVAPRABHU SIRNADGOUDA, AGED 47 YEARS, PAN: AHHPS7517A, S/O: APPASAHEB, 504, MAIN ROAD, KILLA, BAGALKOT-587 101. … PETITIONER (BY SMT. JINITA CHATERJEE AND SRI. H.R. KAMBIYAVAR, ADVOCATES) AND: 1. THE ASSESSMENT UNIT, INCOME TAX DEPARTMENT, NFAC, DELHI-110 001. 2. CENTRAL PROCESSING CENTRE (CPC) BENGALURU, 1ST FLOOR, PRESTIGE ALPHA NO.48/1, 48/2, BERATENAAGRAHARA BEGUR, HOSUR ROAD, UTTARAHALLI HOBLI, BENGALURU, KARNATAKA-560 100. … RESPONDENTS (BY SRI. M. THIRUMALESH, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, SEEKING CERTAIN RELIEFS. THIS WRIT PETITION IS LISTED FOR ORDERS, THIS DAY, AN ORDER IS MADE AS UNDER: Digitally signed by PREMCHANDRA M R Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC-D:5193 WP No. 107426 of 2023 ORAL ORDER Smt.Jinita Chaterjee., counsel for the petitioner has appeared through video conferencing. Sri.H.R.Kambiyavar., counsel for the petitioner and Sri.M.Thirumalesh., counsel for the respondents have appeared in person. 2. The brief facts are these: The petitioner is a regular income tax assessee, assessed to the tax under the Income Tax Act, 1961. For the Assessment Year 2021-2022, the petitioner filed return of income on 29.03.2022 declaring an income of Rs.67,64,967/- on which the tax was duly paid. The case was selected for complete scrutiny for the following issue “Large Cash Deposits in Bank Account and Assessee has also purchased/ sold one or more property/ ies during the year (both buying and selling transactions are to be considered)”. The petitioner was issued with notices under Section 143(2) and 142(1) from the first respondent on various dates, since there was no response, a show cause notice dated:23.11.2022 under Section 144 was issued and a reply to - 3 - NC: 2025:KHC-D:5193 WP No. 107426 of 2023 the show cause notice was made by the petitioner on 24.11.2022 stating that earlier notices were not received by him on his e-mail ID nor the postal address. It is only when the penalty notice was served, the petitioner was informed of the said notices and necessary modifications were made to the e- mail ID and after obtaining the details, a reply was uploaded on the portal. The petitioner filed a reply along with Annexures on 24.11.2022 and 25.11.2022. Further, a show cause notice dated:14.12.2022 was issued to the petitioner as to the proposed variation should not be made. A reply was made by the petitioner. However, the Assessing Authority concluded the assessment under Section 143(3) r/w. Section 144B on 24.12.2022 determining a total income of Rs.7,42,08,744/- as against the returned income of Rs.67,64,970/-. The petitioner contends that the assessment order and the demand notice under Section 156 were not served to him till date. Consequently, the penalty proceedings were initiated separately. A show cause notice under Section 272A(1)d for not responding to the notices was issued on 22.12.2022 and the petitioner vide reply dated:24.12.2022 submitted his reply and sought fifteen days time. However, the - 4 - NC: 2025:KHC-D:5193 WP No. 107426 of 2023 assessing authority passed the penalty order on 20.03.2023 stating that the petitioner has furnished his reply and the assessment was completed under Section 143(3) of the Act and not ex-parte under Section 144 of the Income Tax Act which implies that the assessee made compliance at later stage of assessment proceedings and furnished documents/ details as called by the A.O. However, taking note of the judgment dated:28.10.2020 in ITA No.6305-6308/Del/2017, the penalty proceedings were dropped. The petitioner raised the grievance with the second respondent on 24.03.2023 stating that the assessment order under Section 143(3) and the demand notice were not served and the assessee was unable to know the reason for making additions to the tune of Rs.6,69,07,806/- and to upload the said order and demand notice on the I.T. Portal. The petitioner got a reply from the second respondent on 30.05.2023. Further on the very same day, the petitioner checked his I.T. Portal and still he could not find the assessment order and the demand notice. Hence, the petitioner filed another grievance with the second respondent mentioning that the assessment order and the demand notice are served to him to take further course of - 5 - NC: 2025:KHC-D:5193 WP No. 107426 of 2023 action and also requested for the service of the assessment order and the demand notice. He also requested that the penalty cannot be enforced. A show cause notice under Section 271AAC(1) was issued and the petitioner filed a response on 26.05.2023. However, a penalty order was passed on 22.06.2023. For a show cause notice issued under 270A, the petitioner filed a reply on 21.06.2023 stating that he was served with the assessment order and the demand notice. However, a penalty order was passed on 27.06.2023. Under these circumstances the petitioner is before this Court. 3. Counsel for the respective parties urged several contentions. Heard the arguments and perused the Writ papers with care. 4. The principal ground on which this court is asked to quash the assessment order and the penalty orders is that the petitioner was not accorded an opportunity. The proceedings are in gross violation of natural justice. It is significant to note that the petitioner was not provided with the assessment order and the demand notice. There is no valid service of the order as - 6 - NC: 2025:KHC-D:5193 WP No. 107426 of 2023 prescribed under Section 282 of the Act. Needless to say, when the service assessment order under Section 143(3) is incomplete in law and without specific direction to levy penalty in the assessment order, no penalty proceedings can be initiated. There is catena of decisions to support the same. A perusal of the writ papers reveal that the authorities have failed to consider the reply that was submitted by the petitioner. Hence, this Court deems it appropriate to quash the assessment order dated 24.12.2022 and consequently the penalty orders dated 22.06.2023 vide Annexure-K and 27.06.2023 vide Annexure-M and hence, the matter requires remand. 5. The Writ of Certiorari is ordered. The assessment order dated 24.12.2022 and consequently the penalty orders dated 22.06.2023 vide Annexure-K and 27.06.2023 vide Annexure-M are quashed. The matter is remanded to the respondents to the stage of reply to the notice dated 11.11.2022. - 7 - NC: 2025:KHC-D:5193 WP No. 107426 of 2023 Needless to say that, before passing the order, the respondents shall issue notice to the petitioner calling for the information. All contentions of the parties are left open. 6. Resultantly, the Writ Petition is allowed and remanded. Sd/- (JYOTI MULIMANI) JUDGE MRP/RH LIST NO.: 1 SL NO.: 29