INDUSTRIALISTS & PROFESSIONALS v. THE INCOME TAX OFFICER

(BY SRI. M THIRUMALESH, ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF CERTIORARI OR DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING THE ORDER PASSED U/S 144 R.W.S 144B DATED 16/09/2022 BEARING DIN ITBA/AST/S/144/2022- 23/1045577258 (1) PASSED BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2020-21 HEREIN MARKED AS ANNEXURE A. II) QUASHING THE PENALTY ORDER - 3 - NC: 2026:KHC:35639 WP No. 20337 of 2026 HC-KAR DATED 21/03/2023 PASSED U/S 272A(1)(D) OF THE ACT BEARING DIN ITBA/PNL/F/272A(1)(D)/2022- 23/1051067820(1) BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2020-21 HEREIN MARKED AS ANNEXURE - A1. III) QUASHING THE PENALTY ORDER DATED 25/05/2026 PASSED U/S 270A OF THE ACT BEARING ITBA/PNL/F/270A/2026-27/1089171327(1) BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2020-21 HEREIN MARKED AS ANNEXURE - A2. IV) QUASHING THE PENALTY ORDER DATED 26/05/2026 ISSUED U/S 271AAC(1) OF THE ACT BEARING DIN ITBA/PNL/F/271AAC(1)/2026-27/ 1089216526 (1) BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2020-21 HEREIN MARKED AS ANNEXURE A3 THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD - 4 - NC: 2026:KHC:35639 WP No. 20337 of 2026 HC-KAR ORAL ORDER The petitioner has called in question the Assessment Order dated 16.09.2022 under Section 144 read with Section 144B of the Income Tax Act, 1961 [for short, ‘the Act’] and the consequential Penalty Orders under Section 272A[1][d], 270A and 271AAC[1] of the Act. The impugned Assessment Order and the Penalty Orders are produced as Annexures – A, A1 to A3.

#2. The petitioner has filed an appeal against the afore Assessment Order with the concerned Commissioner of Income Tax [Appeals] under Section 250 of the Act, and the appeal is dismissed on the ground of limitation. The petitioner has filed an application for condonation of delay of 123 days in filing the appeal stating that its President was hospitalized during the relevant time because of a heart condition and therefore the President of the Society, was not in a position to grant the required - 5 - NC: 2026:KHC:35639 WP No. 20337 of 2026 HC-KAR approval. The Commissioner of Income Tax [Appeals], after referring to different decisions, has opined that the reason offered by the petitioner's representative will not constitute sufficient cause for condonation of delay and has rejected the appeal.

#3. Sri Ravishankar S V, the learned counsel for the petitioner, arguing for interference with the Assessment Order, submits the following stating that the petitioner's grievance would be redressed if the proceedings are restored with opportunity to file a response to the Show Cause Notice preceding the impugned Assessment Order. [A] The Assessment Order is an ex parte order, and the entire receipt is treated as undisclosed income resulting in a demand at the rate of 78% of the entire receipt. [B] After the impugned Penalty Orders, the petitioner's bank accounts are frozen and if the petitioner has to avail further appeal - 6 - NC: 2026:KHC:35639 WP No. 20337 of 2026 HC-KAR Income Taxable Appellate Tribunal, the petitioner, who has to pay 20% of the Demand, will not be in a position to offer such deposit. [C] The petitioner is bona fide in stating that its President was hospitalized during the relevant period, and as such, there was a delay in filing the appeal.

#4. Sri Ravishankar S V invites this Court's attention to the proviso to Section 251[1][a]1 of the 1 251 (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers— (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment : Provided that where such appeal is against an order of assessment made under section 144, he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment (3) The Joint Commissioner (Appeals) or Commissioner (Appeals) may admit an appeal after the expiration of the said period if he is satisfied that the appellant had sufficient cause for not presenting it within that period. - 7 - NC: 2026:KHC:35639 WP No. 20337 of 2026 HC-KAR Act to canvass that the Commissioner of Appeals, if in a given circumstance, is satisfied with the reasons offered may set aside the ex parte Order under Section 144 of the Act and refer the case back to the Assessing Officer for making a fresh assessment. Sri M Thirumalesh, a learned standing counsel for the respondents who accepts notice for the respondents, is heard on whether this Court must interfere in the afore circumstances.

#5. The petitioner's appeal undisputedly is belated by 123 days, and it is also not in serious contest that the petitioner's representative was hospitalized during the relevant time. The question of lack of due diligence and sufficient cause essential for condoning the delay in filing the appeal must be considered in these circumstances, and this Court is of the view that mere reference to certain decisions would not amount to a due consideration of all - 8 - NC: 2026:KHC:35639 WP No. 20337 of 2026 HC-KAR circumstances to decide on whether there must be condonation of delay.

#6. The petitioner’s case is that it’s President was hospitalized during the relevant time because of a heart condition, and this is not in serious dispute. Therefore, this Court finds reason to interfere with impugned Order-in-Appeal. The assessment proceedings are concluded ex-parte, and because the Commissioner Income Tax [Appeals] could also, as contemplated under the proviso to Section 251[1][a] of the Act, interfere with the Assessment Order and restore the proceedings for fresh assessment, this Court is of the view that there must be an interference with the impugned ex parte Assessment Order and the Penalty Orders restoring proceedings for fresh consideration. In the light of the afore, the following. ORDER [A] The petition is allowed in-part. - 9 - NC: 2026:KHC:35639 WP No. 20337 of 2026 HC-KAR [B] The impugned Assessment Order dated 16.09.2022 [Annexure-A] and the Penalty Orders under Section 272A[1][d], 270A and 271AAC[1] of the Act [Annexures-A1 to A3] are set aside restoring the proceedings second respondent consideration with liberty petitioner to respond to the Show Cause Notice dated 29.08.2022 and the petitioner shall file such Response upon intimation of the enablement thereof on the portal. Sd/- (B M SHYAM PRASAD) JUDGE AN/-