- 1 - HC-KAR NC: 2025:KHC:33390 WP No. 23488 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28TH DAY OF AUGUST, 2025 BEFORE THE HON'BLE MR. JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 23488 OF 2025 (T-IT) BETWEEN: UNNIKRISHNAN. T AGED 54 YEARS CHATHOOR VADAKKANTHIL PARIJATHAM, THRIPPUMTHURA P.O., CHENNITHALA, MAVELIKARA - 690 105. …PETITIONER (BY SRI. JEEVAN J. NEERALGI, ADVOCATE) AND: ASSESSMENT UNIT NATIONAL FACELESS ASSESSMENT CENTER INCOME TAX DEPARTMENT. …RESPONDENT (BY SRI. SUSHAL TIWARI, ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO-QUASH THE IMPUGNED ORDER PASSED BY THE RESPONDENT UNDER SECTION 147 R/W SECTION 144B OF THE INCOME TAX ACT, 1961, DATED 19.02.2024 BEARING DIN NO. ITBA/AST/S/147/2023-24/1061147903(1) (ANNEXURE-A) AND CONSEQUENTIAL NOTICE UNDER SECTION 156 OF THE Digitally signed by NAGAVENI Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:33390 WP No. 23488 of 2025 INCOME TAX ACT FOR A SUM OF RS. 1,52,97,467/- (ANNEXURE-B) AND ETC., THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA ORAL ORDER The petitioner is before this court calling in question an order dated 19.02.2024 passed by the respondent under Section 147 read with Sections 144 and 144B of the Income Tax Act, 1961 (hereinafter referred to as 'the Act' for short) and a consequential notice under Section 156 of the Act demanding a sum of Rs.1,52,97,467/-. 2. Heard Shri Jeevan J, Neeralgi, learned counsel appearing for the petitioner and Shri Sushal Tiwari, learned counsel appearing for the respondent. 3. Facts in brief germane are as follows: The petitioner is an ex-serviceman served in the Indian Army in the rank of Subedar and retires from services on 30.11.2018. The petitioner's bank account for the financial year - 3 - HC-KAR NC: 2025:KHC:33390 WP No. 23488 of 2025 2018-2019 owing to his retirement was credited with a sum of Rs.56,18,815/-, which was the salary from the Indian Army, terminal benefits in the eve of his retirement and the pension, as was to be paid month wise. The petitioner then deposits a majority of amounts in two accounts; one Rs.26,00,000/- and the other Rs.22,00,000/- in the State Bank of India at Kerala, on which the banker had credited an accrued interest of Rs.99,986/-. The averment in the petition is that the petitioner did not verify as to whether the bank interest was subjected to tax deduction at source and the State Bank of India had deducted it or otherwise. The petitioner for justifiable reason could not file his return of income for the assessment year 2019-2020. The respondent is said to have passed an order on 19.02.2024 and raised a consequential demand for Rs.1,52,97,467/-, without even serving notices, as to be served under the Act, either in electronic form or print. Notwithstanding the same, the Assessing Officer initiates coercive recovery measures by attaching the savings bank account jointly held by the petitioner and his wife maintained at State Bank of India. It is then the petitioner comes to know of - 4 - HC-KAR NC: 2025:KHC:33390 WP No. 23488 of 2025 the proceedings and has approached this court in the subject petition. 4. Shri Jeevan J. Neeralgi, learned counsel appearing for the petitioner would vehemently contend that what is received into the bank is terminal benefits and nothing else. It is no doubt true that the petitioner did not file his return of income for the assessment in the year 2019-2020. The learned counsel submits that the respondent could not have invoked Section 147 of the Act for the reason that Section 147 of the Act comes into play only when an income has escaped the assessment and not in a case where income has remained unexplained. He would therefore submit that the entire action of the respondent is without jurisdiction. The impugned order is under the heading reasons for selection of case and type of case and background facts. Nothing of that sort is available in the case at hand. The learned counsel would further contend that prior to the passage of the order, no notice is even issued to the petitioner and huge demand is now projected. He would seek quashment of the entire proceedings. - 5 - HC-KAR NC: 2025:KHC:33390 WP No. 23488 of 2025 5. Shri Sushal Tiwari, learned counsel appearing for the respondent is not in a position to demonstrate that a notice was issued to the petitioner and he has not replied. Therefore, the order impugned has not been preceded with a notice. 6. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material available on record. 7. The afore-narrated facts are not in dispute. For the year 2018-2019 huge sums of money comes into the account of the petitioner. It is not money that cannot be explained. The petitioner - the ex-serviceman retires in the year 2018. His terminal benefits, pension and other incidental retirement benefits were all credited to the account of the petitioner, which bought him close to a lakh of interest. This was not a money that the petitioner could not have explained. The respondent takes up proceedings under Section 147 of the Act, as if the income of the petitioner has escaped assessment for the assessment year 2019-2020 and takes up proceedings, passes an order under Section 156 of the Act issuing a demand on the ground that the account has escaped assessment. All of which - 6 - HC-KAR NC: 2025:KHC:33390 WP No. 23488 of 2025 are done ex-parte. It is an admitted fact that no notice was issued to the petitioner, but the demand close to one and a half crores is raised against the petitioner. Therefore, the order, which undoubtedly has civil consequences of demand, ought not have passed without at the outset complying the principles of natural justice. 8. In that light, since the admitted fact is that the petitioner was placed ex-parte and the order demands huge sums of money to be paid to the petitioner, the entire proceedings are rendered unsustainable, for it being in violation of principles of natural justice. Only on the said ground, the petition deserves to succeed. 9. For the aforesaid reasons, the following ORDER (i) The writ petition is allowed. (ii) The impugned order dated 19.02.2024 stands quashed. (iii) As a consequence, the matter is remitted back to the hands of the respondent to hear the petitioner and pass necessary orders. - 7 - HC-KAR NC: 2025:KHC:33390 WP No. 23488 of 2025 (iv) In the light of the quashing of the orders impugned as a consequence thereof, the attachment of the Bank account of the petitioner in which pension is deposited shall stand defreeze forthwith. Sd/- (M.NAGAPRASANNA) JUDGE JY List No.: 1 Sl No.: 232 CT: BHK