DSN FILMS PRIVATE LIMITED V. INCOME TAX OFFICER

WP/25668/2024

AI Insights

The case involves DSN Films Private Limited, represented by its director Mr. Dulam, challenging the legality of a notice and subsequent orders issued by the Income Tax Officer, Ward-17(1), Hyderabad, under Section 148 of the Income Tax Act, 1961, for the assessment year 2020-21. The petitioner argued that the reassessment process was not properly followed as per the modifications introduced by the Finance Act, 2021, and that the notice was therefore bad in law. The court referenced a common order from a batch of writ petitions (W.P.No.25903 of 2022) decided on 14.09.2023, which had similar issues and found the procedures adopted by the Income Tax Department to be illegal and unsustainable.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 752772 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 23-09-2024
• Assessment Year: misc
• Other Referred Cases: Ashish Agarwal
• Laws Referred To: Income Tax Act, 1961, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: J SUNITHA
• Assessee Lawyers: U RAGHAVENDER
• Keywords: Finance Act 2021; Income Tax; Natural Justice; Reassessment; Writ of Mandamus
• Section: 148; 148A

Judgement Text

"HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE TWENTY THIRD DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRIJUSTICE NAMAVARAPU RAJESHWAR RAO [ 34111 ...PETITIONER Between: DSN Films Private Limited, Represented Satyanarayana, Row H.No.5, Urna Heights, Banjara Hills, Hyderabad- 500034 by its Director Mr. Dulam Plot NoTB. M L A Colony, AND 1 2 lncome Tax Officer, Ward-17(1), Hyderabad, lncome Tax Office, Signature Towers, Sy No 6(P) of Kondafur, Sy.No.37(P) of Kothtg,u-d-1 Opp. Botanical Garden, Sbrlingampally(M), R. R. District, Hyderabad -500084. Principal Commissioner Of lncome Tax-2, Signature Towers, Opp. Botanical Gard6n, Serlingampally(M), R. R. District, Hyderabad -500084 ...RESPONDENTS Petition under Article 226 of lhe Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ of Mandamus or any other appropriate writ, order or direction, declaring the order passed by the lncome Tax Officer, Ward-17(1), Hyderabad, Under Order 148-A of the lncome Tax Act, 1961 Date of Order 22-03- 2024 DIN No. ITBA/AST/F/14i1N2023 2411063204425(1) For the Year Assessment Year 2020-21 , as arbitrary illegal bad in law without jurisdiction void abinitio violative of principles of Natural Justice part from being violative of Artble 4, 19 and 265 of Constitution of India and consequently set aside the same in the interests of justice. WRIT PETITION NO: 25668 OF 2024 lA NO: 'l oF 2024 Petition under section 151 cpc praying that in the circumstances stated in the affidavit fired in support of the petition, the High court may be preased to stay all further proceedings incruding any recovery, pursuant to the order passed by the 1st respondent Under orde-r4g-A of the rncome Tax Act, 1961 Date of order of 22-03-2024 DrN No. ,'BA/AST/F/148A1202324t106320442 5(1) For the year Assessrnent Year 2O2O-21 pending disposal of writ petition. Counsel for the petitioner: SRI UpADHyAy RAGHAVENDER counsel for the Respondents: Ms. J. suNlrHA (JUNloR sc FoR lNcoME TAx) The Court made the foflowing: ORDER i 7 THE HONOURABLE SRI JUSTTCE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE IYAMAVARAPU RA\"'ESIIWAR RAO trIRIT PETITION No.25668 OF 2024 ORDER: (per Hon'ble Sri Justice Sujog paul) . Heard Sri U. Raghavender, learned counsel for the petitioner(s) and Ms. J. Sunitha, learned Junior Stalding Counsel for Income Tax Department, for the respondents. 2. The ground taken by the learned counsel for the petitioner(s) is that in furtherance of Financ e Act, 2021, re_ assessment process stood modified but the respondents have not taken care of it arld therefore, notice issued under Section 148 of the Income Tax Act, 196 1 carnot sustain judicial scrutiny. Since notice is bad in law, the consequential orders are also bad in law. 3. During the course of hearing, learned counsel for the parties agreed that curtains on this issue are finally drawn by this Court in a batch of writ petitions, W.p.No.259O3 of 2022 and other connected matteJs, decided by common order dated 14.09.2023. TI;.e parties agreed that this matter may be dispo_sed of in terms of the Common Order d,ated 14.O9.2023. 2 W.t'.No.25903 of 2022, held as under: '35. In vies of the aforesaid dlscussions, it is by now very clear that the procedure to be followed by the respoEdent- Departmert upon treating the notices issued for reassessment being under Section 148A, the subsequett proceedings was mardatorily required to be utrdertakeE under the substituted provlsions as laid doya uDder the FiraBce Act, 2021. ln the absence of whlch, we are constrained to hold that the procedure adopted by the respordeDt-DepartEetrt is in contraveution to the statute i.e. the Fi[allce Act, 2021, at the first instance. Secondly, it is also ilr dilect contraveation to the directives issued by the Hon'ble Supreme Court in the case of Ashish Agarsal, supra. 36. For all the aforesaid reasons, the impugred notices issued atrd the proceedings drawo by the respondent-Department is leither tenable, nor sustqinable. The notices so issued and the ptocedure adopted belEg per se illegal, deserves to be and are accordingly set aside/quashed. As a co!6equeace, all the iEpugned orders gettiag quashed, the cons€queutial orders passed by the respondent Departmetrt pursuant to the notices issued under Sectio! 147 aad 148 would also get quashed aad it is ordered accordiEgly. The reasoD we are quashing the consequeEtial order is on the principles that when the itritiation of the proceedings itself was procedurally wrong, the subsequent orders also gets lullified autotaatically. 37. The preliminary objectior raised by the petitiorer is austained and all these writ petitiotrs strnds sllowed on this very jurisdictional issue. Siacc the impugrcd Eotices and ordera are getti[g quashed oE the poilt ofjuriadiction, we are not incliled to proceed further atrd decide the other issues raised by the petitioaer shich stands rescrved to be raised and coaterded in aE appropriate proceediugs. 38. Since the ltron'ble Supretae Court had, ia the case of Ashish Agarwal, supra, as a otte-tiBe measure exercising the powera ulrder Artlcle 142 of the Corstitutloa of llldia, pcrEitted the ReveEue to proceed under the substituted provisioas, aod this Court allowiDg the petitio8s otrly on the procedurat flaw, the right confered on the Revenue would reEain reserved to proceed further if they so want from the 4. This Court in the said order dated 74.09.2023 in , ,,. stage of the order of the Supreme Court iB the case of Ashish AgarPal, 6upra. 39. No order as to costs.\" 5. In view of the consensus arrived, the impugned Show Cause notice and consequential orders passed in this writ petition are set aside. Liberty is reserved to both the parties to take respective stand and to proceed in accordance with law as per paragraph No.38 of the order dated 14.09.2023 in W.P.No.25903 of 2022. 6. The Writ Petition is allowed. No costs. Interlocutory applications, if any pending, shall also stand closed. //TRUE COPY// SD/- T. TIRUMALA DEVI ASSISTANT REGISTRAR SEC OFFICER To, 5. Two CD CoPies TJ LS 1. lncome Tax Officer, Ward-17(1), Hyderab-qd, lnc-ome Tax Office' Signature . ' t;;;;;, sv ruo otpi or xJndairui, $v.t'ro szte) of Kothas^ujj^9. pPP' Botanical G;;;;;: slaingi;nbattv(M), R. R. District, Hvderabad -500084 z p'i\"lipir-c.rntii..ion.i,\"of 'rniomJrii-2, signature Torygr-s, opp Botanical - d;#\", S.;insampally(M), R R. District, Hyderabad -500084 3. dilct to SiiUpionfdv iiagnavender, A