Krishna Reddy Mereddy V. Offiee Of The Income Tax Officer

WP/10815/2024

AI Insights

The case involves Krishna Reddy Mereddy, who, through his power of attorney holder Kavitha Mereddy, challenged the reassessment order issued by the Income Tax Authorities for the assessment year 2016-17. The reassessment was based on notices issued under Section 148 of the Income Tax Act, 1961, which were contested as being arbitrary, illegal, and violative of natural justice and constitutional provisions. The petitioner argued that the reassessment process was not in accordance with the modified procedures set by the Finance Act, 2021. The court's decision to quash the notices and orders was influenced by a precedent set in a similar case (W.P.No.25903 of 2022), where it was held that the procedures followed by the Income Tax Department were in contravention of the statute and Supreme Court directives.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 765690 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 24-04-2024
• 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: B REDDY; B MUKHERJEE
• Assessee Lawyers: THANNERU KUMAR
• Keywords: Finance Act 2021; Income Tax; Jurisdiction; Natural Justice; Reassessment; Writ of Mandamus
• Section: 147; 148; 14; 148A; 265; 226; 144(8); 19(1)(g)

Judgement Text

"[ 3403 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY ,THE TWENTY FOURTH DAY OF APR{L TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE N.TUKARAMJI WRIT PETITION NO: 10815 OF 2024 Between: Krishna Reddy Mereddy, S/o Amrutha Reddy trilereddy, 4Sed_63 Years, _Orcc Business, pUci 8273 Vermont Pl Manassas VA 20111 USA Rep by its SPA Holder Kavitha Mereddy, W/o Krishnareddy Mereddy Aged about 55 Years, Occupation Business, RJo Hno 3 12 5 2 Sri Sai Nagar Colony Mansoorabad Hayaihnagar KV Ranga Reddy Telangana 500068 Telangana, lndia Assessment Yeat 2016-17 ...pETraoNER AND 'l . Offiee Of The lncorne Tax Officer, Ward-g(1), Hyderabad, Te{angana S{at€. 2. The Prineipal Chief Commissioner Of lneome Tax Telangana And AP, Hyderabad,lT Towers, AC Guards, Masab Tank, Hyderabad 3. The Central Board Of Direct Taxes, Represented By lts Chairman,Department of Revenue, Ministry of Finance, Government of lndia, Secretariat Buildings, New Delhi 4. The National Faceless Assessment Center. lncome Tax Department, New Delhi. 5. The Union Of lndia, Represented By lts Secretary To The Government,Department of Revenue, I /inistry of Finance, New Delhi ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith. the High Court may be pleased to issue an appropriate writ, order or direction more particularly one in the nature of Writ of Mandamus, declaring the order passed by the lncome Tax Authorities (National Faceless E-Assessment Centre completed lhe assessment lJlS 147 r/w Section 144-8 of the lncome Tax Act, 1961 vide DIN and Notice No. dated 04-01-2024 ITBA/AST lsl147l2o23-24l1059389888( 1 ) for the assessment year 2016-lTdetermining the total income of Rs. 72,00,000/- as arbitrary, illegal, bad in law, without jurisdiction, void-ab-initio, violative of the principles of natural justice apart from being violative of Articles 14, 19(1 )(g) and 265 of the Constitution of lndia and Sec. 148A of the lncome Tax Act, 1961 , and consequently set aside the same in lhe interests of justice Counsel for the Petitioner: SRl. THANNERU CHAITANYA KUMAR Counsel for the Respondent Nos. 1&2: M/s. BySAPNA REDDY REp sRt J. v. PRASAD (SC FOR TNCOME TAX) Counsel for the Respondent Nos.3to5: SRI B. MUKHERJEE REp SRI GADI PRAVEEN KUMAR, DY. SOLICITOR GENERAL OF INDIA The Court made the following: ORDER I ! I : THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE N. TUKARAMJI WRIT PETITION No.1O815 OF 2024 ORDEB: (per Hon'bte sP,J) Heard Sri T. Chaitanya Kumar, learned counsel for the petitioner, Ms. B. Sapna Reddy, learned counsel representing Sri J.V. Prasad, learned Standing Counsel for Income Tax Department for respondent Nos. L and 2 and Sri B. Mukheq'ee, learned counsel representing Sri Gadi Praveen Kumar, learned Deputy Solicitor General of India for respondent Nos.3 to 5. 2. The ground taken by the learned counsel for the petitioner is that in furtleerance of Finance Act, 2021, re- assessment process stood modilied but the respondents have not taken care of it and therefore notice issued under Section 148 of the Income Tax Act, 1961 cannot 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 finall-v drawn by this Court in a batch of writ petitions, W.P.No.25903 of 2022 and other connected matters, decided b1 common order dated 2 14 .O9.2023. The parties agreed that this matter may be disposed of in terms of the Common Order dated 14.O9 .2023. 4 This Court in the said order dated 14 .O9 .2023 in W.P.No.25903 of 2022, held as under: \"35. ln view of the aloresaid discussions, it is by now very clear that the procedure to be followed by lhe respondent-Department upon treating the notices issued for reassessment being under Section 148A, the subsequent p.oceedings was mandatorily required to be undertaken under the substituted provisions as laid down under the Finance Act, 2021. ln the absence of which, we are consfained to hold that the procedure adopted by the respondentoepartment is in contravention to the statute i.e. the Finance Act, 2021, at the first instance. Secondly, it is also in direct contravenlion to the directives issued by the Hon,ble Supreme Court in the case of Ashish Agarwal, supra. 36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent-Deparlment is neither tenable, nor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orders gefting quashed, the consequential orders passed by the respondent Dspartment pursuant to the notices issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent ordors also gets nullified automatically. 37. The preliminary objection raised by the petltioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are getting quashed on the point of jurisdiction, we are not inclined to proceed further and decide the other issues raised by the petitioner which stands reserved to be raised and contended in an appropriate proceedings. 38. Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one-time measure ex€rcising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituled provisions, and this Court allowing the petitions only on the procedural flaw, the right conferred on the Revenue would remain 3 reserved to proceed further if they so !,Yant from the stage of the order of the Supreme Court in the case of Ashish Agarwal, supra. 39. No order as to costs,\" 5. In view of the consensus drrived, 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.O9.2023 in W.P.No.25903 of 2022. 6 The writ petition is allowed. No costs. Interlocutory applications, if any pending, shall also stand closed. SDI G. SIREESHA ASSISTANT REGISTRAR //TRUE COPY// SECTIO OFFICER To, 1. The Office Of The lncome Tax Officer, Ward-9(1), Hyderabad, Telangana State. 2. The Principal Chief Commissioner Of lneome Tax Telangana And AP, Hyderabad,lT Towers, AC Guards, Masab Tank, Hyderabad 3. The Chairman, Central Board Of Direct Taxes, Department of Revenue, l ilinistry of Finance, Government of lndia, Secretariat Buildings, New Delhi 4. The Nrtional Faceless Assessment Center, lncome Tax Department, New Delhi. 5- The Secretary to the Government, Union Of lndia, Department of Revenue' Ministry of Finance, New Delhi 6. One CC to SRl. THANNERU CHAITANYA KUMAR, Advocate [OPUCI 7. One CC to SRl. GADI PRAVEEN KUIVIAR, DY. SOLICITOR GENERAL OF rNDrA IOPUC] s One Cc to SRl. J. V. PRASAD (SC FOR INCOI 4E TAX) [OPUCI 9. Two CD Copies y B I ,1 KKS t I HIGH COURT DATED:2410412024 ORDER WP.No.10815 of 2024 ALLOWING THE WRITPETITION WITHOUT COSTS 7oB r.1I S'q 0 5 uu 2itfi c o '9 (f 't 0 f l I i 1 I I I I I I I i I i i l "