M/s PACS Surangal Moinabad V. The Income Tax Officer

WP/10523/2024

AI Insights

The case involves M/s PACS Surangal Moinabad, represented by its CEO P. Manohar Reddy, who filed a writ petition against the Income Tax Officer, Ward 8(1), Hyderabad, and other respondents challenging a reassessment notice issued under Section 147 of the Income Tax Act, 1961 for the Assessment Year 2019-20. The petitioner argued that the notice was arbitrary, illegal, and violated principles of natural justice and various constitutional provisions. The court referenced a previous common order in W.P.No.25903 of 2022, which had set a precedent on the procedural flaws in such reassessment notices post the Finance Act, 2021. The court's decision to allow the writ petition was based on these established precedents and procedural requirements not being met by the respondents.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 752990 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 22-04-2024
• Assessment Year: misc
• Other Referred Cases: Ashish Agarwal
• Laws Referred To: Income Tax Act, 1961, Finance Act, 2021, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SUNITHA PISUPATI
• Assessee Lawyers: A V A SIVA KARTIKEYA
• Keywords: Jurisdictional issue; Natural Justice; Procedural Flaw; Re-assessment; Writ of Mandamus
• Section: 147; 148; 148A; 265; 226

Judgement Text

"[ 3403 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) IMONDAY,THE TWENTY SECOND DAY OF APRIL TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE N.TUKARAMJI WRIT PETITION NO: 10523 OF 2024 Between: AND M/s PACS Surangal Moinabad, Rl/o. Kanakamamidi Moinabad, Rangareddy - 501 504, Telangana Represented by its Chief Executive Officer, P. Manohar Reddy, S/o. tr/r. Chandra Reddy Patlolla. ...pETlTtoNER The lncome Tax Officer, Ward 8(1), Hyderabad, Signature Towers, Opposite Botanical Gardens, Sy. No.. 6(P) of Kondapur, Sy. No.. 37(P) of Kothaguda, Serilingampally Mandal, Hyderabad - 500 084, Ranga Reddy District, Telangana. Assesiment Unit, lncome Tax Department, National e-Assessment Center, New Delhi, Room No.. 401 , 2nd Fioor, E-Ramp, Jawaharlal Nehrlu Stadium, New Delhi - 110 003. The Principal Commissioner of lncome Tax - 2, H-yderabad' Signalure Towers, Ofposite Botanical Gardens, Sy. No.. 6(P) of KondaPlr'.Sy-. No.. 37(P) of Kothaguda, Serilingampally tVandal, Hyderabad - 500 084, Ranga Reddy District, Telangana. ...RESPoNDENTS 2 3 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 a Writ of Mandamus or any other appropriate Writ, Order or Direction, declaring the order passed by the 1st Respondent, u/s 147 of the lncome Tax Act, 1961, dated 01 .O3.2024, bearing DlN.. ITBA/AST lsl147l2O23- 24t1061816976( 1 ), for the Assessment Year 2019 - 20' as arbitrary, illegal, bad in law, void-ab-initio, violative of the principles of natural justice apart from being violative of Articles 1a, 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 the interests of justice 2- lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay all further proceedings, including any recovery, pursuant to the notice issued by the 1st Respondent, uls 147 of the lncome Tax Act, 1961, dated 01 .O3.2024, bearing DIN.. |rBA/AST lsl14712023-241i06181697 6(1 ), for the Assessment year 2019 - 20, pending disposal of the above Writ petition Counsel for the Petitioner: SRI A. V, A. SIVA KARTIKEYA Counsel for the Respondents: M/s. SUNITHA REP M/s SUNDARI R plSUpATl (Sr SC for lncome Tax Dept) The Court made the following: ORDER THE HONOURABLE SRI JUSTTCE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE N. TUKARAMJI WRIT PETITION No.1O523 OF 2024 ORDER: (per Hon'ble SP,J) Heard Sri A.V.A.Siva Kartikeya, learned counsel for the petitioner and Ms.Sunitha, representing Ms.Sundari R Pisupati, learned Standing Counsel for Income Tax for the respondents. a The ground taken by the learned counsel for the petitioner is that in furtherance of Finan ce Act, 2O2l , re- assessment process stood modified 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 finally drawn by this Court in a batch of writ petitions, W.P.No.259O3 of 2O22 and other connected matters, decided by common order dated 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 sa-id order dated 14 .O9 .2023 tn W.P.No.25903 of 2022, held as under: \"35. ln view of the aforesaid discussions, it is by now very clear that the procedure to be followed by the respondent-Department upon treating the notices issued for reassessment being under Section 149A, the subsequent proceedings 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 constrained to hold that the procedure adopted by the respondent-Department is in contravention to the statute i.e. the Finance Act, 2021, at the first instance. Secondly, it is also in direct contravention 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-Department is n€ither 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 getting quashed, the consequential orders passed by the respondent Departmenl 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 oI the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically. 37. The preliminary obieclion raised by the petitioner 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 slands 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 exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right conferred on the Revenue would remain reserved to proceed further if they so want from lhe stage of the order of ths Supreme Court in the case of Ashish Agarwal, supra. 39. No order as to costs.,' 3 5. In view of the consensus arrived, the impugrred 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.259O3 of 2022. 6. The writ petition is a_llowed. No costs. Interlocutory applications, if any pending, shall also stand closed. SD/. V. HARI PRASAD ASSISTANT REGtS AR //TRUE COPY// SECTION OFFICER To, The lncome Tax officer, Ward 8(1), Hyderabad, Signature Towers, opposite B;ir;i;;i cr;&nt, sy r'ro . qi) di x'jnoapur, sv -No 37(P) of Kothasuda' 5;;i;il;*r;lt-M;no'at, l-tvoeiauad - 500 084, Ransa Reddv District' Telanoana. il;'Al\"se;t.\"nt Unit. lncome Tax Department, National e-Assessment c;;i;;,\"N; D\"ini ioo, r'ro.. aor, 2rid Floor, E-Ramp' Jawaharlal Nehru Stadium, New Delhi - 1 10 003 in\" Cii^'\"ipii c\"hmissioner of lncome Tax - 2,-Hyderabad' Signature.. +;;;, o;;\";ite eoianicat Gardens, sv No' 6(P) of Kond-apur' sv' No\" iiiP)';i x6inrsJdi, s.ritinsimpiltv Mahdat, Hvderabad - 500 084' Ranga Rebdv District, Telangana. ii;;tii; 5Hr. A. VlA.-Stvn KARTIKEYA, Advocate roPUCl one cC to M/s. SUNDAnT n'pistjpnir