M/S Kodachadri Associates v. Additional Commissioner of Income Tax, Range-1, Mangalore

Order 148A(3)

16.06.2026

C Order 148A(3)

12.06.2026

C1 Notice

16.06.2026 D

¶2Mr. S. S. Naganand, the learned Senior counsel for the petitioner, submits that the petitioner is issued with Show Cause Notice under Section 148A(1) of the IT Act on 27.03.2026 for the assessment year 2022-23 informing that a business turnover of Rs.28,40,000/- is not disclosed in the Returns and that the petitioner, in response, has filed a detailed reply stating that the sum of Rs.28,40,000/- is not a business turnover but a loan

availed by certain Firms producing not only the petitioner's ledger but also the lender's ledger along with the bank statements, but the second respondent, without considering the same, has passed an Order under Section 148A of the IT Act and has caused the impugned notice opining that the petitioner has not provided the Creditor's Bank statement and that the matter requires a thorough investigation.

¶3Mr. S. S. Naganand also canvasses that the second respondent, as required under Section 148A(3) of the IT Act, is obliged to take into account the petitioner's response and pass an order about the case being fit for reassessment and for notice under Section 148 of the IT Act and unless the second respondent considers the response and opines that it is a fit case, the notice under Section 148 of the IT Act and further proceedings would be a rowing or a fishing expedition which cannot be in law.

¶4Mr. M. Thirumalesh, a learned Senior Standing Counsel who accepts notice for the respondents and who is assisted by Mr. Nirmal Mathew, a learned Standing counsel, are heard for the disposal of the petition in the light of these circumstances. The proceedings are begun with notice under Section 148A(1) of the IT Act based on certain information on business turnover, and the petitioner has responded specifically stating, and enclosing certain documents [as could be seen from the reply dated 22.04.2026 Annexure – B] that the amount is not a business turnover but loans availed from known entities in which he is also a partner. The petitioner also has referred to his own bank statements.

¶5This Court is of the opinion that if the second respondent could conclude that there must be proceedings with issuance of notice under Section 148 of the IT Act, should have first examined these documents to ascertain whether the amounts declared indeed be classified as business turnover as alleged and then record an opinion by

cogent reasons on the circumstances that justify the case being fit for issuance of notice under Section 148 of the IT Act. This failure is a reason for this Court to interfere with the impugned order/approval and notice and restore the proceedings to the second respondent for reconsideration. Further, this Court must also observe that the second respondent, while granting approval under Section 151 of the IT Act, should have looked into all these and then granted approval, and the learned Senior Counsel rightly points out that the prior approval could be dated

27.03.2026 [much before the petitioner's reply which is dated 12.04.2026] showing a predisposition. Hence, the following. ORDER A. The petition is allowed-in-part. B. The following are quashed. Particul ars Section of the Income Tax Act, 1961 Date Annexure Order 148A(3)

16.06.2026

C Order 148A(3)

12.06.2026

C1 Notice

16.06.2026 D

C. The petitioner, without further notice, shall appear before the Income Tax Officer, Ward 1 and TPS, Udupi [the second respondent] on

16.10.2026 and the petitioner will be at liberty to file any further clarification that the second respondent may seek but the second respondent must consider the explanation offered in the light of this Court's observation as afore.

Sd/- (B M SHYAM PRASAD) JUDGE

RB

e -e1e-e e e HC-KAR, NC:(2026:KHC:49555( WP(No.(28272(of(2026( ( , CNR:(KAHC010624172026(e ( e ( Ae e INATHEAHIGHACOURTAOFAKARNATAKAATABENGALURUA e THDATEDATHISATHEA9 DAYAOFASEPTEMBER,A2026A e BEFOREA e THEAHON'BLEAMR.AJUSTICEABAMASHYAMAPRASADAe WRITAPETITIONANO.A28272AOFA2026A(T-IT)Ae Ae BETWEEN:AA e A e M/S-KODACHADRI-ASSOCIATES- e - A-PARTNERSHIP-FIRM-REGISTERED-UNDER-THE- e PROVISIONS-OF-THE-INDIAN-- e PARTNERSHIP-ACT,-1932-- e HAVING-ITS-REGISTERED-OFFICE-AT-SHREE- KAMAKSHI,-BANKESHWAR-ROAD,-- e BYNDOOR,-KARNATAKA-576214-- e REPRESENTED-BY-ITS-PARTNER,- e SRI.-K-VENKATESH-KINI- …PETITIONER-Digitally signed by (BY-SRI.-S.-S.-NAGANAND,-SENIOR-ADVOCATE-FOR-VANAMAeLA N ------SRI.-NAGESH-MORO.,ADVOCATE)-Location: HIGH COURT OF AND:A KARNATAKA A 1.- ADDITIONAL-COMMISSIONER-OF-INCOME-TAX,- RANGE-1,-MANGALORE- C.R.-BUILDING,-N.G.-ROAD,-ATTAWARA,- MANGALURU-575001- - - e e -e2e-e e e HC-KAR, NC:(2026:KHC:49555( WP(No.(28272(of(2026( ( , CNR:(KAHC010624172026( ( ( 2.- INCOME-TAX-OFFICER,-WARD-1-AND--TPS,-UDUPI- AAYAKAR-BHAVAN,-UDUPI,-MALPE-ROAD,-AADI- UDUPI,-AMBALAPADI-(PO),-UDUPI-576103- - …RESPONDENTS- (BY-SRI.-M.-THIRUMALESH,-ADVOCATE-A/W- -------SRI.-NIRMAL-MATHEW,ADVOCATE)- - THIS-WP-IS-FILED-UNDER-ARTICLES-226-AND-227- OF- THE- CONSTITUTION- OF- INDIA- PRAYING- TOQUASH- THE- ORDER- DATED- 16.06.2026- BEARING- NO.- ITBA/AST/F/148A/2026-27/1089766067(1)- PASSED- BY- R2- (ANNX-C);- QUASH- THE- PRIOR- APPROVAL- ORDER- DATED- 12.06.2026- BEARING- NO.- ITBA/AST/S/128/2026-27/1089643238(1)- PASSED- BY- THE- R1- (ANNX-C1).QUASH- THE- NOTICE- DATED- 16.06.2026- BEARING- NO.- ITBA/AST/S/148-1/2026- 27/1089766549(1)- PASSED- BY- R2- (ANNX-D);- DECLARE- THAT- THE- ASSESSMENT- OF- PETITIONER- FOR- THE- AY- 2022-23-IS-NOT-A-FIT-CASE-TO-ISSUE-NOTICE-UNDER- SECTION-148.AWARD-COSTS-OF-THE-PROCEEDINGS.- - THIS- PETITION,- COMING- ON- FOR- PRELIMINARY- HEARING,- THIS- DAY,- ORDER- WAS- MADE- THEREIN- AS- UNDER:- CORAM:-HON'BLE-MR.-JUSTICE-B-M-SHYAM-PRASAD- e ORAL ORDER The petitioner has called in question the Order under Section 148A(3) of the Income Tax Act, 1961 [for short, the IT Act'] and the Notice under Section 148 of the IT Act. The details of these impugned orders and notices are as follows. Particulars Section of the Income Tax Act, 1961 Date Annexure