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

e -e1e-eeeee e e NC:(2026:KHC:23680 WP(No.(12441(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.(12441(OF(2026((T-IT) BETWEEN:( PRATHAMIKA,KRISHI,PATHINA,SAHAKARA,, SANGHA,NIYAMITHA,,, M,SHIVARA,,BAGUR,S.O,(HASSAN),,, M.SHIVARA,,HASSAN,573,111,,, (A,SOCIETY,REGISTERED,UNDER,KCS,ACT,,1959), REP.,BY,ITS,CEO,, DINESH,M.,N.,, S/O,NANJEGOWDA,,, AGE,48,YEARS,,, R/O.,K.,MALLENAHALLI,,KUNDUR,, CHANNARAYAPATNA,,, HASSAN-573,111., …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:23680 WP(No.(12441(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,17.02.2026,,PASSED/ISSUED, RDBY,THE,3 ,,RESPONDENT,BEARING,NO.,ITBA/COM/F/17/2025-, 26/1086149074(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 which is an Agricultural Credit Co-operative Society has called in question the validity of the assessment order at Annexure-C and submitted that the assessment order is in-effect an exparte order insofar as after filing of the return in response to the notice under Section 148, the petitioner was not in a position to appear and such lapse on part of the petitioner is due to non-communication from the auditor.

¶3It is further submitted that the authority in the assessment order has treated the deposits with the bank as unexplained income, though such deposits were deposits of the farmers and could not have been construed be an income. It is submitted that the petitioners are also entitled for exemption under Section 80P of the Income Tax Act, 1961 (for short, 'the Act') and such aspect would be demonstrated before the authority, if an opportunity is granted.

¶4Learned counsel for the petitioner submits that non-participation in the proceedings may be condoned and matter be remitted to the stage of reply to the notice issued under Section 148A(b).

¶5Sri. Thirumalesh, learned counsel for the revenue submits that the petitioner having filed return of income and response to Section 148 notice, has been negligent in not participating in the assessment proceedings.

¶6Perused the assessment order. The fact that the petitioner is a Credit Co-operative Society, is borne out from the name of the petitioner. The petitioner though filed a return and response to the notice under Section 148, subsequently has not participated in the proceedings. In the absence of such participation, the authority has proceeded with an addition insofar as cash deposits are concerned.

¶7The petitioner has specifically asserted that the deposits cannot be treated as unexplained income as the deposits are deposits of the farmers who are members and accordingly, taking note of such submission as well as exemption claimed by the petitioner under Section 80P, it would be appropriate to remit the matter to the stage of reply to notice under Section 148A(b).

¶8Accordingly, the orders at Annexures-C, D and E are set aside. Matter is remitted to the stage of reply to notice issued under Section 148A(b). The proceedings

consequent to the notice under Section 148 are also set aside. Petitioner to appear before respondent No.2 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