Shree Mookambika Developers Vs Additional Commissioner of Income Tax (Karnataka High Court)
Section 148A Requires Examination of the Assessee’s Evidence: Karnataka High Court Quashes Reopening Order and Notice
Background of the Case
The Karnataka High Court held that an Assessing Officer must examine the documents furnished by the assessee and record cogent reasons before concluding that a case is fit for issuance of a reassessment notice under Section 148.
The Court intervened where the officer treated bank credits as unexplained without considering the assessee’s specific explanation that the relevant transactions were disclosed in a schedule to its balance sheet.
It quashed the Section 148A(3) order and Section 148 notice dated 16 June 2026, while restoring the matter for fresh consideration. The petition was therefore allowed in part, rather than the reassessment proceedings being permanently terminated.
Bank Credits Alleged to Be Undisclosed Turnover
The petitioner, a partnership firm based in Byndoor, Udupi district, received a show-cause notice under Section 148A(1) dated 27 March 2026.
The notice alleged that business turnover of ₹3,35,80,385 had not been disclosed in its returns.
In its reply dated 23 April 2026, the firm disputed that characterisation. It explained that the amount comprised transactions relating to loans, capital dealings with Ramanath Services, receipts from debtors, proceeds from sale of a vehicle, cash deposits and interest on refund.
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