M/S SHREE MOOKAMBIKA DEVELOPERS vs ADDITIONAL COMMISSIONER OF INCOME TAX
- Court
- Karnataka High Court
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HC-KAR
NC: 2026:KHC:56187
WP No. 29609 of 2026
CNR: KAHC010647872026
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
TH
DATED THIS THE 7 DAY OF OCTOBER, 2026
BEFORE
THE HON'BLE MR. JUSTICE B M SHYAM PRASAD
WRIT PETITION NO. 29609 OF 2026 (T-IT)
BETWEEN:
M/S SHREE MOOKAMBIKA DEVELOPERS
A PARTNERSHIP FIRM REGISTERED
UNDER THE INDIAN PARTNERSHIP ACT, 1932,
HAVING ITS OFFICE AT
SHREE KAMAKSHI, BANKESHWAR ROAD,
BYNDOOR, KUNDAPURA TALUK,
UDUPI-576214 REPRESENTED BY ITS PARTNER,
SRI. K VENKATESH KINI.
…PETITIONER
(BY SRI. S.S. NAGANAND., SENIOR ADVOCATE FOR
Digitally
signed by
VANAMALA
N
Location:
HIGH
COURT OF
KARNATAKA
SRI. NAGESH MORO., ADVOCATE)
AND:
1. ADDITIONAL COMMISSIONER OF
INCOME TAX RANGE-1, MANGALORE
C.R. BUILDING, N.G. ROAD, ATTAWARA,
MANGALURU-575001.
2. INCOME TAX OFFICER,
WARD 1 AND TPS, UDUPI
AAYAKAR BHAVAN, UDUPI,
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WP No. 29609 of 2026
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MALPE ROAD, AADI UDUPI,
AMBALAPADI (PO), UDUPI-576103.
…RESPONDENTS
(BY SRI.M. THIRUMALESH., ADVOCATE FOR
SRI. NIRMAL MATHEW., ADVOCATE)
THIS WP IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO-QUASH
THE ORDER DATED 16.06.2026 BEARING NO.
ITBA/AST/F/148A/2026-27/1089768841(1) PASSED BY
R2 (ANNX-C); QUASH THE PRIOR APPROVAL ORDER
DATED 12.06.2026 BEARING NO.
ITBA/AST/S/128/2026-27/1089642949(1) PASSED BY
THE R1 (ANNX-C1); QUASH THE NOTICE DATED
16.06.2026 BEARING NO. ITBA/AST/S/148-1/2026-
27/1089769380(1) PASSED BY R2 (ANNX-D).
THIS PETITION, COMING ON FOR PRELIMINARY
HEARING, THIS DAY, ORDER WAS MADE THEREIN AS
UNDER:
CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD
ORAL ORDER
The petitioner has called in question the
Order/prior approval under Section 148A(3) and
Section 151 of the Income Tax Act, 1961 [for short,
the IT Act’ ] and the Notice under Section 148 of the IT
Act for the assessment year 2022-23. The details of
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NC: 2026:KHC:56187
WP No. 29609 of 2026
CNR: KAHC010647872026
these impugned Order/prior approval and notice are
as follows.
Particulars Section of the
Date Annexure
Income Tax Act,
1961
Order 148A(3) 16.06.2026
C
Prior Approval 148A(3) and 151 12.06.2026
C1
Notice 148 16.06.2026 D
2. Mr. 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 and this Court
must intervene because of the following:
2.1 The petitioner is informed that a business
turnover of Rs.3,35,80,385/- is not disclosed in the
Returns and that the petitioner, in response, has filed
a detailed reply stating that the sum of
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NC: 2026:KHC:56187
WP No. 29609 of 2026
CNR: KAHC010647872026
Rs.3,35,80,385/- is not a business turnover but a
loan availed by certain Firms, capital transactions
with M/s Ramanath Services, receipts from the
debtors, capital receipt arising out of sale of vehicle,
cash deposit and interest on refund and producing
the bank account statements. The petitioner has also
offered to issue clarification if required.
2.2 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 .
2.3 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 under
Section 147 of the IT Act and for notice under Section
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WP No. 29609 of 2026
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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 roving exercise which cannot
be in law.
2.4 The first respondent’s approval must be
after the second respondent records an opinion on
the case being fit for reassessment under Section 147
of the IT Act with notice under Section 148 thereof.
The notice to the petitioner under Section 148A(1) is
dated 27.03.2026 but the first respondent’s approval
is dated 27.03.2026 [ on the same day and prior to the
petitioner’s response ]. This demonstrates that there is
pre-determination and an enquiry under Section
148A of the IT Act is treated a formality.
3. Mr. M. Thirumalesh, a learned Senior
Standing Counsel who accepts notice for the
respondents, and who is assisted by Mr. Nirmal
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Mathew, a learned Standing counsel, is heard for the
disposal of the petition in the light of these
circumstances. On the petitioner’s case that the first
respondent’s approval is pre-dated, the learned
Senior standing counsel/Standing counsel inviting
this Court’s attention to Annexure-C1 submit that it
is digitally signed on 12.06.2026 and they also
contend that the second respondent has not
permitted a roving exercise in recording fitness.
4. 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 23.04.2026 Annexure – B ] that the amount is
not a business turnover but a loan availed by certain
Firms, capital transaction s with M/s Ramanath
Services, receipts from the debtors, capital receipt
arising out of sale of vehicle, cash deposit and
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interest on refund and producing the bank account
statements.
5. The second respondent has recorded
reasons as follows:
“The assessee firm in its reply stated that it has
received a sum of Rs. 3.20 crores from
Ramantath [sic] Services. The owner of
Ramanath Services is Mr. Venkatesh Kini and
the managing partner of this firm is also Mr.
Venkatesh Kini. The assessee firm has not
mentioned the purpose for which this amount
has been received from it’s Managing partner, Mr
Venkatesh Kini proprietor of Ramanath Services.
It is seen from the profit and loss account that
assessee firm has not made any sales or
purchases for the year under consideration.
Assessee firm is not showing any income from
business for which it is registered as real estate.
A sum of Rs.3.20 crores received from Mr
Venkatesh Kini Prop of Ramanath Services is not
reflected in profit and loss account as turnover
nor in the Balance sheet of the assessee firm as
capital or unsecured loan. It is observed from the
Balance sheet, that there is no increase in
capital during the year, nor there is an increase
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in unsecured loan, therefore, this amount has not
been accounted in the books of account of the
assessee firm. Therefore, in the absence of valid
explanation from the asseesee for the difference
in bank credits and turnover of Rs.Rs.[sic]
3,35,80,385/-, this remains unexplained.
As the assessee has no valid explanation for the
nature and source of the above mentioned
transactions, remains unexplained. Thus, income
arising out of the above transactions has not
been offered for tax for the relevant A.Y. 2022-23
as per the provisions of the Income Tax Act 1961.
It is therefore clear that the assessee does not
have any explanation as to why a notice u/s
148 of the IT Act should not be issued. As there
is information available with the department as
per para 1 above which suggests that the Income
of the assessee has escaped assessment, it is
necessary to make an assessment of the
income.”
6. The petitioner’s specific case is that the
capital transactions with M/s Ramanath Services are
specifically mentioned in Entry-2 Schedule-K of its
Balance Sheet disclosing the loan outstanding as of
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WP No. 29609 of 2026
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31.03.2021 and 31.03.2022. This specific reply has
not been considered, and this is too glaring. Further,
the second respondent should have called for
clarification on the absence of increase in the capital
or the unsecured loan as offered by the petitioner for
an effective consideration under Section 148A(3).
This Court in the Writ Petitions filed by the
proprietor/associated concerns has intervened in
similar circumstances to restore the proceedings.
7. These circumstances persuade this Court
to opine that the second respondent, to conclude that
there must be proceedings with issuance of notice
under Section 148 of the IT Act, should have first
examined the documents produced by the petitioner
and then record an opinion, offering cogent reasons,
on the circumstances that justify the case being fit
for issuance of notice under Section 148 of the IT Act.
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WP No. 29609 of 2026
CNR: KAHC010647872026
8. Further, this Court must also observe that
the second respondent, while granting approval
under Section 148A(3) and Section 151 of the IT Act,
should have looked into all these and then granted
approval, and, significantly, should have ensured
that there is no reason for the assertions that there is
pre-determination because of a technical glitch or
otherwise. This Court, where similar circumstances
are canvassed on behalf of the petitioner’s associate
companies, has refused to set at naught the entire
proceedings on this ground. This Court also observes
that with the Order under Section 148A of the IT Act
being quashed, the first respondent’s approval [ as per
Annexure-C1 ] will stand dissolved. Hence, the
following.
ORDER
A. The petition is allowed in-part.
B. The following order/notice are quashed.
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HC-KAR
NC: 2026:KHC:56187
WP No. 29609 of 2026
CNR: KAHC010647872026
Date Annexure
Particulars Section of the
Income Tax
Act, 1961
Order 148A(3) 16.06.2026
C
Notice 148 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 30.10.2026 and
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
NV