- 1 - HC-KAR NC: 2025:KHC:50563 WP No. 13407 of 2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF DECEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 13407 OF 2021 (T-IT) BETWEEN: URBAN CO-OPERATIVE CREDIT SOCIETY LTD., no.1 CHURCH STREET, KANAKAPURA, RAMANGARA DISTRICT – 562 117 REP. BY ITS GENERAL MANAGER SRI RAMACHANDRA PADUVARY …PETITIONER (BY SRI. M.V. SESHACHALA, SENIOR COUNSEL FOR SRI. G.S. NAGHARISH, ADVOCATE) AND: 1. ASSESSING OFFICER NATIONAL E ASSESSMENT CENTRE NO.412-413 1ST FLOOR, OPP. METRO PILLAR NO.793 DWARAKA MOR, NEW DELHI – 110 059 2. JURISDICTIONAL ASSESSING OFFICER INCOME TAX OFFICER, WARD -1, RAMANAGAR MAHATMA GANDHI ROAD, MANDIPET AGRAHAR, RAMANAGARA – 562 159 3. PRINCIPAL COMMISSIONER OF INCOME-TAX-1 BMTC BUILDING, 80 FEET ROAD KORAMANGALA, BENGALURU – 560 034 …RESPONDENTS (BY SRI. E.I. SANMATHI, ADVOCATE) Digitally signed by CHANDANA B M Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:50563 WP No. 13407 of 2021 THIS W.P. IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE INTEREST INCOME EARNED BY THE ASSESSEE SOCIETY FROM LENDING TO ALL ITS MEMBERS IS PERMITTED UNDER THE KARNATAKA CO-OPERATIVE SOCIETIES ACT, 1959 AND SOCIETY’S BYELAWS AND THEREFORE EXEMPTED U/S 80P(2)(a)(i) OF IT ACT AND THE PRINCIPLE OF MUTUALITY AS HELD BY APEX COURT IN THIS COURT IN MAVILAYI SERVICE CO-OPERATIVE BANK LTD. (SUPRA) AND ETC., THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR ORAL ORDER In this petition, petitioner seeks for the following reliefs:- “a. Issue a Writ of mandamus or such other writ declaring that the interest income earned by the assessee society from lending to all its members is permitted under the Karnataka Co-operative Societies Act, 1959 and Society’s Byelaws and therefore exempted u/s 80P(2)(a)(i) of the IT Act and the principle of mutuality as held by Apex court in this Court in Mavilayi Service Co-operative Bank Ltc. (Supra). b. Issue a writ a mandamus or such other writ declaring that the interest income earned from deposits made with other statutory bodies permitted under the - 3 - HC-KAR NC: 2025:KHC:50563 WP No. 13407 of 2021 Karnataka Co-operative Societies Act, 1959 and Petitioner’s Byelaws is exempted u/s 80P(2)(a)(i) of the IT Act as per judgment of this Court in Guttigedarara Credit Co-operative Society Ltd., (supra) and Tumkur Merchants Souharda Credit Co- operative Ltc., (Supra). c. Issue a writ of certiorari to quash the order of assessment order dated:02.03.2021 bearing No.ITBA/AST/S/143(3)2020-21/1031128066(1) (Annexure-G) passed by first respondent and the subsequent recovery notice dated: 13.07.2021 bearing No.ITBA/COM/F/17/2021-22/1034174329(1) (Annexure-L) passed by second respondent. d. Issue such other Writ or direction as this Hon’ble Court deem fit to grant in the facts and circumstances of the present case.” 2. Heard learned Senior counsel on behalf of the learned counsel for the petitioner and learned counsel for the respondents and perused the material on record. 3. A perusal of the material on record will indicate that pursuant to the Income Tax Returns filed by the petitioner on 20.09.2018, respondent No.1 proceeded to pass the impugned Assessment Order dated 02.03.2021, without providing any - 4 - HC-KAR NC: 2025:KHC:50563 WP No. 13407 of 2021 opportunity of personal hearing to the petitioner, who is before this Court by way of the present petition. 4. Per contra, learned counsel for the respondents submits that there is no merit in the petition and that the same is liable to be dismissed. 5. A perusal of the material on record including the impugned Assessment Order will indicate that an opportunity of personal hearing as mandatorily required under Section 143(3) of the I.T. Act having not been provided by the respondents to the petitioner, I deem it just and appropriate to allow the petition by setting aside the impugned order and by remitting the matter back to the concerned respondent, who shall afford the petitioner an opportunity of personal hearing and proceed further, in accordance with law. 6. In the result, I pass the following: ORDER (i) The petition is allowed. (ii) The impugned Assessment Order dated 02.03.2021 at Annexure-G passed by respondent No.1 and the subsequent recovery notice dated - 5 - HC-KAR NC: 2025:KHC:50563 WP No. 13407 of 2021 13.07.2021 at Annexure-L passed by respondent No.2 are hereby set aside. (iii) The matter is remitted back to respondent No.1 for reconsideration of the matter afresh, in accordance with law. (iv) Liberty is reserved in favour of the petitioner to submit reply/response, documents, etc., before respondent No.1, who shall consider the same, provide sufficient opportunity, hear the petitioner and proceed further, in accordance with law. Sd/- (S.R.KRISHNA KUMAR) JUDGE BMC List No.: 2 Sl No.: 0