Prathamika Krishi Pathina Sahakara Sangha Niyamitha, v. Commissioner of Income Tax (Appeals)

e -e1e-eeeee e e NC:(2026:KHC:23679 WP(No.(12440(of(2026 IN(THE(HIGH(COURT(OF(KARNATAKA(AT(BENGALURU( THDATED(THIS(THE(28 (DAY(OF(APRIL,(2026( BEFORE( THE(HON'BLE(MR.(JUSTICE(S(SUNIL(DUTT(YADAV( WRIT(PETITION(NO.(12440(OF(2026((T-IT) BETWEEN:( PRATHAMIKA,KRISHI,PATHINA,SAHAKARA,, SANGHA,NIYAMITHA,,, KITHANE,POST,,KATTAYA,HOBLI,,, HASSAN,TALUK,AND,DISTRICT-573,220,, (REGISTERED,UNDER,KCS,ACT,,1959), REP.,BY,ITS,CEO,, RAVI,B.,R., S/O.,RAJACHAR,, AGED,ABOUT,44,YEARS,,, R/O.,DODDABEEKANAHALLI,VILLAGE,,, KATTAYA,HOBLI,,KITTANE,,ALUR,,, HASSAN,-,573,212., …PETITIONER, Digitally signedtiby PRAKASH0N (BY,SRI.,GIRISH,V,BHAT.,,ADVOCATE), Location: HIGH0COURT OF AND: KARNATAKA

1., COMMISSIONER,OF,INCOME,TAX,(APPEALS),, NATIONAL,FACELESS,APPEAL,CENTRE,,, DELHI,-,110,001.,

2., ASSESSING,OFFICER,, NATIONAL,FACELESS,ASSESSMENT,CENTRE,,, DELHI,-,110,001., e -e2e-eeeee e e NC:(2026:KHC:23679 WP(No.(12440(of(2026

3., INCOME,TAX,OFFICER,, WARD,1,AND,TPS,,, NDAAYAKAR,BHAVAN,,2 ,STAGE,,, BELUR,ROAD,,, HASSAN,-,573,201.,

4., THE,BRANCH,MANAGER,, HASSAN,DISTRICT,CENTRAL,CO-OPERATIVE,, BANK,LTD.,, UNNATHI,,B.,M.,ROAD,,, HASSAN-573,201., …RESPONDENTS, (BY,SRI.,M.,THIRUMALESH,,ADVOCATE,FOR,R1,TO,R3;, ,,,,,,SERVICE,OF,NOTICE,TO,R4,IS,DISPENSED,WITH), , THIS, WP, IS, FILED, UNDER, ARTICLES, 226, AND, 227, OF, THE, CONSTITUTION, OF, INDIA, PRAYING, TO, QUASHING, THE, IMPUGNED, BANK, A/C, ATTACHMENT, ORDER/NOTICE, UNDER, SEC.,226(3),OF,THE,ACT,DATED,31.03.2026,,PASSED,BY,THE, RD3 , RESPONDENT, BEARING, NO., ITBA/COM/F/17/2025-, 26/1088180438(1),VIDE,ANNEXURE-E,TO,THE,WRIT,PETITION, AND,ETC.,,, , THIS, PETITION,, COMING, ON, FOR, PRELIMINARY, HEARING,,THIS,DAY,,ORDER,WAS,MADE,THEREIN,AS,UNDER:, CORAM:, HON'BLE,MR.,JUSTICE,S,SUNIL,DUTT,YADAV

ORAL ORDER The petitioner has filed an application seeking for amendment of the petition. The amendment relates to the prayer column whereby the petitioner seeks to assail validity of the impugned assessment order as well as the demand notice. Certain additional amendments are sought including as regards the name of the petitioner.

In light of the averments and submissions made, I.A.No.2/2026 filed under VI Rule 17 of CPC is allowed. Amended petition filed is taken on record.

¶2The petitioner has challenged the validity of the assessment order at Annexure-C and submitted that the petitioner did not participate in the proceedings by replying to the notice issued under Section 148 of the Income Tax Act, 1961 (for short, 'the Act') and subsequent proceedings, in light of the auditor not having informed the petitioner regarding such proceedings.

¶3It is submitted that the authority has disallowed the exemption under Section 80P(2) of the Act and submits that petitioner has material to demonstrate that the exemption could be claimed and necessary material would be produced if matter is remitted for fresh consideration by condoning the delay in not participating in the proceedings.

¶4Learned counsel for the petitioner submits that authority has taken note of the deposits as unexplained while such deposits are in-fact deposits of the members who are the farmers and such deposits are exempted.

¶5Sri. Thirumalesh, learned counsel for the revenue submits that the petitioner has not been diligent in participating in the proceedings and accordingly, the authority was constrained to pass orders on the basis of material available.

¶6Perused the assessment order. It is noticed that the petitioner has not participated in the proceedings. The authority has made additions on the head of unexplained sales. It is also noticed that the authority has disallowed exemption under Section 80P(2). In light of the assertion of the petitioner that it is a Credit Co-operative Society and that they have material to demonstrate under Section 80P(2) as well as material to demonstrate and meet the grounds raised in the show-cause notice, it is prayed that the matter be remitted to the stage of Section 148A(b) notice.

¶7Having perused the assessment order and having noticed the disallowance of exemption under Section 80P(2) and also noticing the assertion of the petitioner that the deposits in the bank are the deposits of the farmers which the petitioner would demonstrate and noticing the financial prejudice that may be caused to the petitioner if order is allowed to remain, the petition requires to be allowed, while affording an opportunity to

the petitioner to participate in the assessment proceedings.

¶8Accordingly, the orders at Annexures-C, D and E are set aside, as also all proceedings pursuant to the Section 148 notice. Matter is remitted to the stage of reply to notice issued under Section 148A(b). Petitioner to appear before respondent No.3 without further notice on

25.05.2026.

¶9In light of setting aside of the impugned orders as noticed above, the instructions made pursuant to recovery proceedings by the revenue to the Bank for attachment to be rescinded, forthwith.

¶10Petitioner to make out reply to the notice issued under Section 148A(b) and matter to be proceeded thereafter. Petitioner to pay cost of Rs.10,000/- to the Karnataka Advocates Clerks Benevolent Trust, High Court Building, Bengaluru.

¶11Accordingly, petition is disposed of. All contentions on merits are kept open. Sd/- (S SUNIL DUTT YADAV) JUDGE MCR