PRIMARY AGRICULTURE CO-OPERATIVE SOCIETY v. COMMISSIONER OF INCOME TAX (APPEALS)

(BY SRI.THIRUMALESH M., ADVOCATE FOR R1 TO R3) …RESPONDENTS THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT IN THE NATURE OF CERTIORARI AND TO QUASH THE ASSESSMENT ORDER DATED 13.01.2026 BEARING NO. ITBA/AST/S/147/2025-26/1084728880(1) PASSED BY THE SECOND RESPONDENT WHICH IS AT ANNEXURE-M TO THE WRIT PETITION AND FURTHER PROCEEDING SUBSEQUENT THERETO, THE DEMAND NOTICE DATED

13.01.2026 BEARING NO. ITBA/AST/S/156/2025 26/1084729201(1) ISSUED BY THE SECOND RESPONDENT WHICH IS AT ANNEXURE-N - 3 - NC: 2026:KHC:29258 WP No. 16797 of 2026 HC-KAR TO THE WRIT PETITION AND THE BANK ACCOUNT ATTACHMENT NOTICE/ORDER DATED 17.04.2026 BEARING NO. ITBA/COM/F/17/2026-27/1088493560(1) ISSUED BY THE THIRD RESPONDENT WHICH IS AT ANNEXURE-S TO THE WRIT PETITION; II. ISSUE A WRIT OR DIRECTION OR AN APPROPRIATE ORDER IN THE NATURE OF MANDAMUS, DIRECTING THE THIRD RESPONDENT TO UNFREEZING THE BANK ACCOUNT OF THE PETITIONER CO-OPERATIVE SOCIETY. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD ORAL ORDER The petitioner is a Primary Agricultural Co- operative Society and is aggrieved by Assessment Order dated 13.01.2026 [Annexure-M] and the subsequent Demand Notice and the Bank Attachment Order. The Demand Notice is dated

13.01.2026 and the Attachment Order is dated

17.04.2026. These are produced as Annexure – N and Annexure-S. The Assessment Order relates to the - 4 - NC: 2026:KHC:29258 WP No. 16797 of 2026 HC-KAR assessment year 2018-19, and the petitioner has not filed its returns for this assessment year.

#2. The petitioner is issued with Notice under Section 148A(b) of the Income Tax Act, 1961 [for short, ‘the Act’] on 04.08.2024 suggesting that there is escapement of income which remains unexplained. The petitioner has not responded to this Notice and this has resulted in an Order under Section 148A(d) of the Act followed by the Notice under 148 of the Act is dated 27.08.2024 [Annexure-D]. The assessment under the impugned Assessment Order is under Section 144 of the Act observing that the petitioner has received cash deposits accounts, with withdrawals as well, maintained with the Hassan District Co-operative Central Bank Limited [HDCC Bank].

#3. Sri Girish V Bhat, the learned counsel for the petitioner, submits that the petitioner, as a - 5 - NC: 2026:KHC:29258 WP No. 16797 of 2026 HC-KAR Primary Agricultural Co-operative Bank, acts as an Intermediary Institution facilitating agricultural credit to farmers with the funds sourced from HDCC Bank and that the petitioner does not do any business with non-members. The learned counsel emphasizes that in the circumstances the petitioner’s income would be eligible for deduction under Section 80P of the Act and that the petitioner has not filed its returns for the assessment year because of its nominal income of Rs.4,18,496/-.

#4. Sri Girish V. Bhat submits that the petitioner has filed an appeal with the CIT Appeals on

08.04.2026, but is constrained to invoke this Court’s jurisdiction under Article 226 of the Constitution of India because of the circumstances in which the proceedings under Section 148A of the Act are closed resulting in the impugned Assessment Order and the coercive measures to freeze the bank accounts. The - 6 - NC: 2026:KHC:29258 WP No. 16797 of 2026 HC-KAR learned counsel submits in very similar circumstances this Court in W.P.12474/2026 has disposed of the writ petition quashing the Notice under Section 148 of the Act and all other subsequent proceedings with liberty to the concerned to file reply to the Notice under Section 148A(b) of the Act and appear for personal hearing on a date fixed without further notice. The learned counsel also emphasizes that this Court has observed that communication the Bank stands rescinded forthwith.

#5. Sri M.Thirumalesh, a learned standing counsel for the respondents, is heard for disposal of the petition in the light of these circumstances. This Court must observe that it is not stated before this Court orders this Court W.P.No.12474/2026 has been called in question or that the petitioner’s circumstances are dissimilar to the circumstances in which the petition - 7 - NC: 2026:KHC:29258 WP No. 16797 of 2026 HC-KAR W.P.No.12474/2026 is decided. This Court must further observe that it is not in dispute that if the petitioner can really bring the essential circumstances such as that it functions as an Intermediary Institution lending credit facility only to its members, it would be open to the petitioner to claim deduction under Section 80P of the Act. If these circumstances present the first set of reasons for interference, the next reason is that the Orders under Section 148A(d) of the Act as also the Assessment Order are without the petitioner’s participation. The petitioner pleads bona fides in offering cause for non-participation proceedings. Hence, the following: ORDER [A] The petition is allowed-in-part and impugned Assessment Order dated 13.01.2026 [Annexure-M] is quashed as is the subsequent Demand Notice dated 13.01.2026 and the - 8 - NC: 2026:KHC:29258 WP No. 16797 of 2026 HC-KAR Attachment Order

17.04.2026 [Annexures-N and S]. [B] The proceedings are restored to the stage of Notice under Section 148 A(b) of the Act with liberty to the petitioner to file its response and appear before the respondent on 17.07.2026. [C] The petitioner’s appeal with the first respondent is rendered infructuous with this Order. SD/- (B M SHYAM PRASAD) JUDGE SA List No.: 3 Sl No.: 9