By Sri. M.v.sheshachala, Senior Advocate Forsri Aravind v. Chavan, Advocate

NC: 2023:KHC:19562WP No. 10559 of 2023C/W WP No.10594/2023,10674/2023, 10699/2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 8 DAY OF JUNE, 2023BEFORE. THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV|+WRIT PETITION NO. 10559 OF 2023 (TIT) C/W WRIT PETITION NO.10594/2023WRIT PETITION NO.10674/2023WRIT PETITION NO.10699/ 202 IN W.P. NO.10559/2023 BETWEEN: 1.SRI. S S VINAYAK (HUF) S/O S.N.SHIVASHANKAR,AGED 45 YEARS.R/AT NO.11, 1 CROSS,2 STAGE, NEAR SHANKARMUTT,BASAVESHWARANAGAR, BANGALORE- 560 0/9REP. BY ITS KARTHA|SRI. S.S.VINAY AKAGED 45 YEARS.R/AT NO.11, 1 CROSS,2 STAGE, NEAR SHANKARMUTT,BASAVESHWARANAGAR, BANGALORE- 560 0/9REP. BY ITS KARTHA|SRI. S.S.VINAY AK Digitally signed by BKMAHENDRAKUMARLocation: HighCourt of Karnataka —_ PETITIONER (BY SRI. M.V. SHESHACHALA, SENIOR ADVOCATE FOR|SRI ARAVIND V CHAVAN, ADVOCATE)SRI ARAVIND V CHAVAN, ADVOCATE) AND: 1.DEPUTY COMMISSIONER OF INCOME TAX.INCOME TAX,|CENTRAL CIRCLE-2(1),C.R.BUILDING,INCOME TAX,|CENTRAL CIRCLE-2(1),C.R.BUILDING, Page Nos.1 to 9 are re-typed and replaced vide Court|order dated 06.07.7073. -).- NC: 2023:KHC:19562WP No. 10559 of 2023C/W WP No.10594/2023,10674/2023, 10699/2023 QUEENS ROAD,|BANGALORE - 560 OO1 2.PRINCIPAL COMMISSIONER OF INCOME TAXCENTRAL CIRCLE, C.R.BUILDING,QUEENS ROAD,|BANGALORE - 560 OO1CENTRAL CIRCLE, C.R.BUILDING,QUEENS ROAD,|BANGALORE - 560 OO1 .. RESPONDENTS (BY SRI. M. DILIP, ADVOCATE)| THIS WRIT PETITION IS FILED UNDER ARTICLES 2276AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TQ)QUASH THE PENALTY ORDER DTD 26.09.2022 BEARING|NO.ITBA/PNL/F/2 70A/2022-23/1045984832(1) ANNEXURE-H2FOR THE ASSESSMENT YEAR 2017-18 PASSED BY THE R3 ANDETC. IN W.P. NO.10594/2023 BETWEEN: 1.SRI. SHIVAKUMAR SULEGAL |SRINIVASAMURTHY (HUF)S/0O.S.N.SRINIVASAMURTHYAGED 51 YEARS.SRINIVASAMURTHY (HUF)S/0O.S.N.SRINIVASAMURTHYAGED 51 YEARS. R/AT NO.273, SUBEDAR CHATRAM ROAD,BANGALORE-560 OOSREP. BY ITS KARTHA|SRI.SHIVAKUMAR SULEGAISRINIVASAMURTHY. —_ PETITIONER (BY SRI. M.V. SHESHACHALA, SENIOR ADVOCATE FOR|SRI ARAVIND V CHAVAN, ADVOCATE)SRI ARAVIND V CHAVAN, ADVOCATE) Page Nos.1 to 9 are re-typed and replaced vide Courtorder dated 06.07.707°3. NC: 2023:KHC:19562WP No. 10559 of 2023C/W WP No.10594/2023,10674/2023, 10699/2023 AND: 1.INCOME TAX OFFICER|WARD-5(2)(3),BMTC BUILDING,8O FEET ROAD,KORAMANGALABANGALURU-560 O95. 2.PRL. COMMISSIONER OF INCOME TAX-5BMTC BUILDING,BMTC BUILDING, 80 FEET ROAD,KORAMANGALABANGALURU-560 O95. 3.DEPUTY COMMISSIONER OF INCOME TAX.CENTRAL CIRCLE-2(1),C.R.BUILDING,|QUEENS ROAD,|BANGALURU-560 OO1..CENTRAL CIRCLE-2(1),C.R.BUILDING,|QUEENS ROAD,|BANGALURU-560 OO1.. VAPRINCIPAL COMMISSIONER OF INCOME TAXCENTRAL CIRCLE, C.R.BUILDING,QUEENS ROAD,|BANGALURU-560 OO1..CENTRAL CIRCLE, C.R.BUILDING,QUEENS ROAD,|BANGALURU-560 OO1.. .. RESPONDENTS (BY SRI. M. DILIP, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 2276AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TOQUASH THE PENALTY ORDER DTD 26.09.2022 BEARING|NO.ITBA/PNL/F/2 70A/2022-23/1045978038(1) ANNEXURE-H2FOR THE ASSESSMENT YEAR 2017-18 PASSED BY THE R3 AND ETC. Page Nos.1 to 9 are re-typed and replaced vide Court|order dated 06.07.7073. NC: 2023:KHC:19562WP No. 10559 of 2023C/W WP No.10594/2023,10674/2023, 10699/2023 IN W.P. NO.10674/ 202 BETWEEN: 1.SRI. S S DHONDUSA (HUF). S/O S.N. SRINIVASAMURTRHY, AGED 56 YEARS,R/AT NO.235, 7 D MAIN, |3 CROSS, 4 STAGE,BASAVESHWARANAGAR, BANGALORE-560 O79.REP. BY ITS KARTHA, SRI.S.S. DHONDUSA .. PETITIONER (BY SRI. M.V. SHESHACHALA, SENIOR ADVOCATE FOR |SRI ARAVIND V CHAVAN, ADVOCATE)SRI ARAVIND V CHAVAN, ADVOCATE) AND: 1.INCOME TAX OFFICER|WARD-5(2)(3),BMTC BUILDING,8O FEET ROAD,KORAMANGALA,BANGALORE-560 095.WARD-5(2)(3),BMTC BUILDING,8O FEET ROAD,KORAMANGALA,BANGALORE-560 095. 2.PRL. COMMISSIONER OF INCOME TAX-5,| BMTC BUILDING, 8O FEET ROAD, ETC. Page Nos.1 to 9 are re-typed and replaced vide Court|order dated 06.07.7073. NC: 2023:KHC:19562WP No. 10559 of 2023C/W WP No.10594/2023,10674/2023, 10699/2023 IN W.P. NO.10674/ 202 BETWEEN: 1.SRI. S S DHONDUSA (HUF). S/O S.N. SRINIVASAMURTRHY, AGED 56 YEARS,R/AT NO.235, 7 D MAIN, |3 CROSS, 4 STAGE,BASAVESHWARANAGAR, BANGALORE-560 O79.REP. BY ITS KARTHA, SRI.S.S. DHONDUSA .. PETITIONER (BY SRI. M.V. SHESHACHALA, SENIOR ADVOCATE FOR |SRI ARAVIND V CHAVAN, ADVOCATE)SRI ARAVIND V CHAVAN, ADVOCATE) AND: 1.INCOME TAX OFFICER|WARD-5(2)(3),BMTC BUILDING,8O FEET ROAD,KORAMANGALA,BANGALORE-560 095.WARD-5(2)(3),BMTC BUILDING,8O FEET ROAD,KORAMANGALA,BANGALORE-560 095. 2.PRL. COMMISSIONER OF INCOME TAX-5,| BMTC BUILDING, 8O FEET ROAD, KORAMANGALA,BANGALORE-560 O95.BANGALORE-560 O95. 3.DEPUTY COMMISSIONER OF INCOME TAX. CENTRAL CIRCLE-2(1), C.R. BUILDING, QUEENS ROAD,|BANGALORE-560 OOL.BANGALORE-560 OOL. Page Nos.1 to 9 are re-typed and replaced vide Court|order dated 06.07.7073. -5- NC: 2023:KHC:19562WP No. 10559 of 2023C/W WP No.10594/2023,10674/2023, 10699/2023 4PRINCIPAL COMMISSIONER OF INCOME TAXCENTRAL CIRCLE,C.R. BUILDING,QUEENS ROAD,BANGALORE-560 OO1. .. RESPONDENTS (BY SRI. M. DILIP, ADVOCATE)| THIS WRIT PETITION IS FILED UNDER ARTICLES 220)AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TQ}QUASH THE PENALTY ORDER DATED 26.09.22 BEARING NO.ITBA/PNL/F/2 70A/2022-23/1045978033(1) ANNEXURE-H2 FORTHE ASSESSMENT YEAR 2017-18 PASSED BY THE THIRD|RESPONDENT AND ETC. IN W.P. NO.10699/2023 BETWEEN: 1.SRI. SULEGAI NARAYANASA SHIVASHANKAR (HUF).S/O LATE S.D.NARAYANASAAGED 78 YEARS,R/AT NO.11, 1 FLOOR,1 CROSS, 2 STAGE, |KIRLOSKAR COLONY,|BASAVESHWARANAGAR, BANGALORE - 560 0/9REP. BY ITS KARTHA.SRI, SULEGAI NARAYANASA SHIVASHANKAR| .. PETITIONER (BY SRI. M.V.SHESHACHALA, SENIOR ADVOCATE FOR|SRI ARAVIND V. CHAVAN, ADVOCATE) Page Nos.1 to 9 are re-typed and replaced vide Court|order dated 06.07.7073. NC: 2023:KHC:19562WP No. 10559 of 2023C/W WP No.10594/2023,10674/2023, 10699/2023 AND: 1.INCOME TAX OFFICER |WARD -7(2)(1)BMTC BUILDING,SO FEET ROAD,KORMANGALA,BANGALORE - 560 095 2.PRL. COMMISSIONER OF INCOME TAX-/BMTC BUILDING, 80 FEET ROAD,KORAMANGALA,BANGALORE - 560 095BMTC BUILDING, 80 FEET ROAD,KORAMANGALA,BANGALORE - 560 095 3.DEPUTY COMMISSIONER OF INCOME TAX.CENTRAL CIRCLE- 2(1), C.R.BUILDING,QUEENS ROAD,|BANGALORE - 560 OO1..CENTRAL CIRCLE- 2(1), C.R.BUILDING,QUEENS ROAD,|BANGALORE - 560 OO1.. VAPRINCIPAL COMMISSIONER OF INCOME TAXCENTRAL CIRCLE, C.R.BUILDING,QUEENS ROAD,|BANGALORE - 560 OO1.CENTRAL CIRCLE, C.R.BUILDING,QUEENS ROAD,|BANGALORE - 560 OO1. _ RESPONDENTS| (BY SRI. M. DILIP, ADVOCATE)| THIS WRIT PETITION IS FILED UNDER ARTICLES 2276AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TQ)QUASH THE PENALTY ORDER DTD 26.09.2022 BEARING|NO.ITBA/PNL/F/2 70A/2022-23/1045977497(1) ANNEXURE-H2FOR THE ASSESSMENT YEAR 2017-18 PASSED BY THE R3 ANDETC. THESE WRIT PETITIONS COMING ON FOR PRELIMINARYHEARING, THIS DAY, THE COURT MADE THE FOLLOWING: Page Nos.1 to 9 are re-typed and replaced vide Courtorder dated 06.07.7073. NC: 2023:KHC:19562WP No. 10559 of 2023C/W WP No.10594/2023,10674/2023, 10699/2023 ORDER W.P.Nos. 10559/2023, 10594/2023, 106/74/2023 and 10699/2023 are taken up together and are disposed off by a common order in light of the similar factual matrix. 2.Petitioners have challenged the penalty order at Annexure-H2 for the assessment year 2017-18 and havealso sought for setting aside of the assessment order atAnnexure-C.. THESE WRIT PETITIONS COMING ON FOR PRELIMINARYHEARING, THIS DAY, THE COURT MADE THE FOLLOWING: Page Nos.1 to 9 are re-typed and replaced vide Courtorder dated 06.07.7073. NC: 2023:KHC:19562WP No. 10559 of 2023C/W WP No.10594/2023,10674/2023, 10699/2023 ORDER W.P.Nos. 10559/2023, 10594/2023, 106/74/2023 and 10699/2023 are taken up together and are disposed off by a common order in light of the similar factual matrix. 2.Petitioners have challenged the penalty order at Annexure-H2 for the assessment year 2017-18 and havealso sought for setting aside of the assessment order atAnnexure-C.. ‘3It is the contention of Sri. M. V. Sheshachala,|learned Senior counsel appearing for the petitioners that.tne impugned orders passed including the penalty order|under Section 2/0A of the Income Tax Act, 1961 (‘theAct’) is without affording mandatory hearing in terms ofthe legal requirements under Section 2/74(1) of the Actand also insofar as the assessment order passed underSection 143(3) read with Section 153C of the Act, theopportunity of hearing as is provided for under Section.143(3) of the Act was not given. It is also contended that| Page Nos.1 to 9 are re-typed and replaced vide Court|order dated 06.07.7073. NC: 2023:KHC:19562WP No. 10559 of 2023C/W WP No.10594/2023,10674/2023, 10699/2023 the Authority had no jurisdiction to invoke Section 153C ofthe Act. 4It is pointed out that for the purpose of|Initiatingproceedings,there.MUST.de|recoveryOT incriminatory material without which recourse cannot behad to Section 153C of the Act and that the only option.available under such circumstance would be to proceed forreassessment under Sections 14/7 to 148 of the Act.Reliance is placed on the judgment in the case of.Principal Commissioner of Income Tax vs. Abhisar.Buildwel/] Private Limited - 202.3 SCC Online SC 4 5.Admittedly,there hasbeen|violationofprinciples of natural justice. Accordingly, case is made out.for remanding the matter for fresh consideration whiledirecting the Authority to embark upon reconsideration|including the contentions raised regarding Section 153C ofthe Act with reference to the law laid down by the Apex. Court in the case of Abhisar Bultldwell (supra Page Nos.1 to 9 are re-typed and replaced vide Court|order dated 06.07.7073. NC: 2023:KHC:19562WP No. 10559 of 2023C/W WP No.10594/2023,10674/2023, 10699/2023 6.The penalty order at Annexure-H2 and theassessment order at Annexure-C in all writ petitions areset aside. The Authority to reconsider the matter in light of|the discussion made above. The respondent is directed tofix a date for hearing and afford an opportunity of personalhearing aS mandated under law as noticed above and pass|orders afresh. /.Writ petitions areallowedaccordingly. | Sd/-—JUDGE| VP. Page Nos.1 to 9 are re-typed and replaced vide Court|order dated 06.07.7073.