IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 23^RD DAY OF NOVEMBER, 2021

PRESENT

THE HON9BLE MRS.JUSTICE S.SUJATHA

AND

THE HON9BLE MR. JUSTICE HANCHATE SANJEEVKUMAR

I.T.A.No.65/2017

BETWEEN :

THE SRI KANNIKAPARAMESWARI

CO-OP. BANK LIMITED,

REP BY ITS PRESIDENT

SRI R.G.SRINIVASA MURTHY

# 165/1-2, 3^RD MAIN, P.J.EXTENSION,

DAVANAGERE - 577 002

PAN: AADTS3885J

...APPELLANT

(BY SRI V.CHANDRASHEKAR, ADV. A/W

SRI BHAIRAV KUTTAIAH, ADV.)

AND :

THE INCOME TAX OFFICER

WARD-3, SHREE TOWER,

OPP: DRR POLYTECHNIC,

HADADI ROAD,

DAVANAGERE - 577 002.

&RESPONDENT

(BY SRI K.V.ARAVIND, ADV.)

THIS INCOME TAX APPEAL IS FILED UNDER SECTION

260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER

DATED 23.09.2016 PASSED IN ITA NO.1364/BANG/2016, FOR

THE ASSESSMENT YEAR 2004-2005 PRAYING TO A) TO

FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS

STATED ABOVE AND THE ANSWER THE SAME IN FAVOUR OF

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THE APPELLANT. B) TO ALLOW THE APPEAL AND SET ASIDE

THE FINDINGS TO THE EXTENT AGAINST THE APPELLANT IN

THE ORDER PASSED BY THE ITAT, BENGALURU BENCH, SMC,

BENGALURU IN ITA NO.1364/BANG/2016 DATED 23.09.2016

FOR THE ASSESSMENT YEAR 2004-2005 (ANNEXURE-A).

THIS APPEAL COMING ON FOR HEARING, THIS DAY,

S. SUJATHA, J., DELIVERED THE FOLLOWING:

J U D G M E N T

This appeal is filed by the assessee under Section

260A of the Income Tax Act, 1961 (8Act9 for short)

challenging the order dated 23.09.2016 passed by the

Income Tax Appellate Tribunal, Bangalore Bench

<SMC=,

Bengaluru

(8Tribunal9

for

short)

in

ITA

No.1364/Bang/2016 relating to the Assessment Year

2004-05.

2.

The appellant/assessee is a Co-operative

Society governed by the Karnataka Cooperative Societies

Act, 1959 and is engaged in the business of banking.

The appellant provides loans and advances to its needy

members and similarly collects deposits only from its

members and pays interest only to its members. As the

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appellant is carrying out the activity of banking through

among the members, it is governed by the Reserve Bank

Act.

3.

The appellant originally filed its return of

income declaring 8nil9 income on 27.10.2004 after

claiming an exemption under Section 80P(2) of the Act.

The same was processed under Section 143(1) of the

Act. Subsequently, the case was selected for scrutiny

and order under Section 143(3) of the Act was passed

accepting the return of income at 8nil9. Thereafter, the

assessing officer issued a notice under Section 148 of

the Act dated 06.03.2009 and the assessment under

Section 143(3) r/w Section 147 of the Act was

concluded on 31.12.2009 by determining the total

income of the appellant at Rs.44,53,500/- as against

the 8nil9 income filed by the appellant. Being aggrieved,

the assessee/appellant preferred an appeal before the

Commissioner of Income Tax (Appeals)-III, Bengaluru,

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who partly allowed the appeal. However, being

aggrieved by the order of the Commissioner of Income

Tax (Appeals) to the extent it was against the appellant,

the appellant preferred an appeal before the Tribunal

and the same came to be dismissed. Hence, this

appeal by the appellant/assessee.

4.

This appeal was admitted by this Court to

consider the following substantial questions of law;

<1)

Whether the Tribunal was justified in law in

holding that the reopening of the assessment is valid

in law on the facts and circumstances of the case.

2)

Whether the Tribunal erred in law in not

holding that as per mandatory conditions for issue of

notice under Section 148 for reopening have not been

complied the entire assessment order is liable to be

cancelled on the facts and circumstances of the case.

3)

Whether the Tribunal erred in law in not

holding that the notice under section 148 is bad in

law and consequently all further proceedings are

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bad in law on the facts and circumstances of the

case.

4)

Without prejudice, whether the Tribunal