SMT NAYANA VENKATESH KINI vs ADDITIONAL COMMISSIONER OF INCOME TAX
- Court
- Karnataka High Court
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WP No. 29534 of 2026
CNR: KAHC010645342026
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. 29534 OF 2026 (T-IT)
BETWEEN:
SMT NAYANA VENKATESH KINI
W/O K VENKATESH KINI,
AGED ABOUT 49 YEARS,
RESIDING AT NO. 4-15/3,
BANKESHWAR ROAD, BYNDOOR,
YEDTHARE B.O., YEDTHARE,
UDUPI, KARNATAKA 576214.
…PETITIONER
(BY SRI. S.S. NAGANAND., SENIOR ADVOCATE FOR
SRI. NAGESH MORO., ADVOCATE)
Digitally
signed by
VANAMALA
N
Location:
HIGH
COURT OF
KARNATAKA
AND:
1. ADDITIONAL COMMISSIONER OF
INCOME TAX RANGE-1, MANGALORE
C.R. BUILDING, NG ROAD, ATTAWARA,
MANGALURU-575001.
2. INCOME TAX OFFICER,
WARD 1 AND TPS, UDUPI
AAYAKAR BHAVAN, UDUPI,
MALPE ROAD, AADIUDUPI,
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AMBALAPADI (PO), UDUPI
KARNATAKA -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 17.06.2026 BEARING NO.
ITBA/AST/F/148A/2026-27/1089783707(1) PASSED BY
R2 (ANNX-C); QUASH THE PRIOR APPROVAL ORDER
DATED 12.06.2026 BEARING NO.
ITBA/AST/S/128/2026-27/1089638852(1) PASSED BY
THE R1 (ANNX-C1); QUASH THE NOTICE DATED
17.06.2026 BEARING NO. ITBA/AST/S/148-1/2026-
27/1089783962(1) PASSED BY R2 (ANNX-D).
THIS PETITION, COMING ON FOR PRELIMINARY
HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE
THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD
ORAL ORDER
The petitioner is a partner in multiple firms
engaged in various business activities along with her
spouse. The petitioner's grievance is with the Order
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under Section 148A(3) of the Income Tax Act, 1961
[for short, ‘the IT Act’ ]. The proceedings are for the
assessment year 2022-23. The details of the
impugned order/approval and notice are as follows.
Sl. Nos. Order/Notice Section of the Annexure
Income Tax Act
1. Order 148A(3) C
2. Prior Approval 148A(3) and C1
151
3. Notice 148 D
2. The proceedings under Section 148A of
the IT Act are commenced with the issuance of the
notice under Section 148A(1) of the IT Act dated
27.03.2026 [ Annexure – A ]. Admittedly, this notice is
issued four days prior to the expiry of the limitation
that is contemplated under Section 149(1)(b) of the IT
Act. The petitioner is put on notice to show cause
against business turnover of Rs. 2,06,513/- not being
disclosed in the Return of income. The petitioner is
called upon to furnish, amongst others, the
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computation of income along with the financial
statements and a description of the business
activities with supporting evidence.
3. The petitioner has responded to this
notice on 23.04.2026 stating [a] that the notice
mentions a sum of Rs. 2,06,513/- as business
turnover which is not disclosed in the Return of
income, [b] that this amount is based on the
difference in bank credits and the turnover and [c]
that all bank account credits cannot be considered
turnover as it includes different entries which are not
to be treated as turnover. The petitioner, enclosing
documents, has also stated that if any further
clarification is required, she would furnish the same.
The first respondent has granted approval as is
envisaged under Section 148A(3) and Section 151 of
the IT Act on 12.06.2026, and the second respondent
has passed the impugned Order on 17.06.2026. This
Court must at this stage mention that though the
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first respondent's approval, in terms of the Order
dated 17.06.2026 reads ‘Specified Authority approval
date- 12.06.2026’ , the approval itself [ Annexure - C1 ]
mentions ‘27.03.2026’ [ which is on the same date as
the notice dated 27.03.2026 under Section 148A(1) of
the IT Act and prior to the petitioner’s response. ]
4. Mr. S. S. Naganand, the learned Senior
counsel for the petitioner, submits that this Court
must interfere because :
the order under Section 148A(3) of the
IT Act dated 17.06.2026 is on the
propositions which are not put to the
petitioner as part of notice under
Section 148A(1) dated 27.03.2026,
the petitioner has specifically
responded saying that every bank
account credit cannot be treated as
turnover categorically stating, while
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producing voluminous documents as
part of the reply, that if further
information is required the same
would be furnished but this has not
even been alluded to.
5. In elaboration, Mr. S. S. Naganand
submits that the second respondent has observed in
the order under Section 148A of the IT Act that the
petitioner is a partner of eight to nine Firms with her
husband but this may not be relevant in itself for the
purposes of commencing the proceedings for
reassessment under Section 147 of the IT Act and
that the petitioner, given the circumstances, is
engaged in different businesses, including Real
Estate and is receiving salary and interest on capital
from her own Firms with rate of interest being
minimum but there are unsecured loans across
Firms. The learned Senior counsel next submits that
the second respondent has observed that these Firms
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are used to park funds in the form of unsecured loans
and advances given to others for diversion of profits
and rotation of funds, but without an opportunity to
the petitioner to show cause against the same as part
of enquiry under Section 148A of the IT Act.
6. Mr. S. S. Naganand canvasses that the
petitioner has not been put on notice of any material
which justifies these and the other allegations
mentioned in the order under Section 148A of the IT
Act. The learned senior counsel also canvasses that
the second respondent has observed that the
petitioner has claimed huge expenses in profit
and loss account apart from certain business
expenses without any documentary evidence,
but the petitioner has not been put on notice
of the information that constitutes the basis
for this assertion, and
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the second respondent has made certain
adverse observations about the accounting
practice and again the petitioner is not
informed about the same and that if the
petitioner was put on notice of these, she
could have explained that she is not a
contractor who has to adopt such practice.
7. Mr. M. Thirumalesh, the learned Senior
Standing counsel for the respondents and who is
assisted by the Mr. Nirmal Mathew, a learned
Standing counsel for the respondents, are heard with
Mr. S. S. Naganand emphasising the afore for
interference with the entire proceedings. The learned
Senior Standing counsel submits that because the
proceedings are begun in time as contemplated under
Section 149 of the IT Act and if the petitioner
complains about not being furnished with all
information or lack of due opportunity, this Court
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could pass just orders without jettisoning the entire
proceedings.
8. This Court finds reason to accept the
submissions on behalf of the Revenue, and
notwithstanding a certain amiss in granting prior
approval under Section 148A(3) and Section 151 of
the IT Act as this Court is persuaded to opine that
the fitness of a case for reassessment must be
examined in the peculiarities of this case with all due
opportunity to the petitioner. The proceedings are
begun with the petitioner being put on notice that a
business turnover of Rs. 2,06,513/- is not disclosed
in the Return of Income. The petitioner has filed a
detailed response stating that the amount is
computed based on a difference in the turnover and
the bank credits and that every credit cannot be
treated a turnover.
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9. Significantly, the petitioner has also stated
that if further details are required on this aspect, she
would produce the details if made known how the
amount of Rs. 2,06,513/- is computed in the Notice
under Section 148A(1) of the IT Act. There is no
response in this regard, and it cannot be gainsaid
that if further details were required to ascertain
fitness of the case for reassessment, it was open to
the second respondent to call for such details to
justify the further proceedings.
10. This Court also finds that the propositions
in the order, such as [a] that the petitioner is a
partner of multiple Firms which are used to park
funds and rotate profits, [b] that there are huge
expenses claimed and [c] that the petitioner receives
unsecured loans but minimal rate of interest are all
outside the show cause notice. If there is to be any
adjudication under Section 148A(3) of the IT Act
leading to reassessment proceedings under Section
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147 of the IT Act, it must be with notice thereof to the
petitioner.
11. Hence, this Court is of the considered
opinion that the second respondent ought to have put
the petitioner on notice of these propositions with all
the requisite details to substantiate such
propositions. In the absence of the computation being
made available for the sum of Rs. 2,06,513/- and the
details based on which the observations/propositions
are put out in the impugned Order under Section
148A(3) of the IT Act, this Court opines that there
would be more a roving enquiry in the reassessment
than an enquiry on definite aspects. As such, this
Court passes the following.
ORDER
[A] The petition is allowed in-part and the
following are quashed restoring the
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proceedings to the second respondent
for due consideration.
Order/Notice Section of the
Income Tax
Act
Annexure
Order 148A(3) C
Prior Approval 148A(3) and
C1
151
Notice 148 D
[B] The petitioner shall be at liberty to file
a certified copy of this order with both
the first and second respondents by
30.10.2026 .
[C] The second respondent, when served
with a copy of this order, shall furnish
the computation of Rs. 2,06,513/- and
the information which forms the basis
for such computation.
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[D] The second respondent shall allow the
petitioner a reasonable opportunity to
respond in the light of such
information and the observation in the
order under Section 148A of the IT Act.
[E] Further, this Court observes that the
first respondent, when a report is filed
for prior approval under Section
148A(3) and Section 151 of the IT Act,
shall examine all materials and then
grant approval.
[F] It is needless to observe that all
contentions are left open.
Sd/-
(B M SHYAM PRASAD)
JUDGE
NV