M/s. Venkata Sai Commissions V. Union of India, Ministry of Finance, Income Tax Department, New Delhi and The Office of Commissioner, Income Tax Department, Ministry of Finance, Government of India, New Delhi and The Income Tax Officer, Ward 2, Karimnagar, Aayakar Bhavan, Near Nataraj Theatre, Karimnagar and The National Faceless Assessment Center, Income Tax Department, Ministry of Finance, Government of India, New Delhi

WP/23831/2024

AI Insights

The case involves M/s. Venkata Sai Commissions, a partnership firm, challenging the notices and orders issued by the Income Tax Department under Sections 147 and 148 of the Income Tax Act, 1961, for the Assessment Years 2018-2019 and 2019-2020. The petitioner argued that the reassessment process followed by the respondents did not comply with the procedural requirements set out in the Finance Act, 2021. The High Court, referencing a similar batch of writ petitions (W.P.No.25903 of 2022), agreed with the petitioner's stance and quashed the notices and orders, emphasizing the need for adherence to statutory procedures in reassessment matters.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 703274 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 02-09-2024
• 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: B MUKHERJEE; J SUNITHA
• Assessee Lawyers: MYTRI INDUKURU
• Keywords: Assessment Year; Income Tax; Judicial scrutiny; Procedural Flaw; Reassessment; Writ of Certiorari
• Section: 147; 148; 144; 151; 148A(d)

Judgement Text

"[ 3411 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) I ,IONDAY ,THE SECOND DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO WRIT PETITION Nos : 23831 AN D 23865 0F 2024 Between: AND 1. 2. 3. 4. Ir4/S. Venkata Sai Commissions, A partnership firm having its Principal place oi Ousiness at. Gadhe No. 16, Agricultural l .4arket Complex, Peddapally iosliz, Telangana. Represented 6y its managing partner, ltrlr' Deekonda l rahendar' ...PETlrloNER Union of lndia, tVlinistry of Finance, lncome Tax Department, New Delhi '100 011 The Office of Commissioner, lncome Tax Department, Ministry of Finance, Government of lndia, New Delhi 100 01 '1 . Office of the lncome Tax Officer, Ward 2, Karimnagar, Aayakar Bhavan, Near Nataraj Theatre, Karimnagar 505001 . The Nitional Faceless As-sessment Center, lncome Tax Qepartment, tvinistry of Finance, Government of lndia, New Delhi 100 0'1 1. ' ...*ara.*Oa*ra 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 or direction or order more particularly in the nature of a writ of certiorari calling for the records and quashing the (i) lmpugned Order dated 31 .03.2023 bearing DIN and Notice No. ITBA/AST/F/148A12022' 23110517 52251(1 ) for the Assessment Year 2019 - 2020, issued by the Respondent under Section 148A(d) of the lncome Tax Act, 1961(ii) lmpugned Notice dated 31 .O3.2O23 bearing DIN and Notice No. ITBA/AST/S/148 112022- 23t1O51782544(1 ) for the Assessment Year 2019 - 2020, issued by the Respondent under Section 148 of the lncome Tax Act, 1961.and consequently quashing the (iii) lmpugned Order dated 20.03.2024bearing DIN and Notice No. i W.P.NO: 23831 OF 2024 ITBA/AST/S/1 47 12023-241 1 0630401 28(1 ) for the Assessment Year 2019 - 2020, issued by the Respondents under Section 147 read with Section 1 44 of the lncome Tax Act, 1961 as being illegal and in violation of applicable law. and consequently set-aside all con seq ue nt/subseq uent notices/ord ers/pena lties and further restrain the Respondents from making any assessment, reassessment or re-computation or otherwise proceeding against the Petitioner on the basis of the aforementioned lmpugned Order and Notice dated 31.03.2023 and 20.O3.2024, Petition under Section '1 51 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay the operation of lmpugned order dated 20.o3.2o24bearing DIN and Notice No. ITBA/ASTlsl147l2a23-24t1o63o4o128(1) for the Assessment year 20'r9 - 2020, issued by the Respondents under Section 147 read with Section 144 of the lncome Tax Act, '1961 in the interest of justice Counsel for the Petitioner: Ms. MyTRI INDUKURU Counsel for the Respondent No.1: SRI B. MUKHERJEE REp SRI GADI PRAVEEN KUMAR Dy. SOLICITOR GEN. OF tNDtA Counsel for the Respondent Nos. 2to4: M/s. J. SUNITHA, Jr SC FOR TNCOME TAX lA NO: 2 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 suspend all further proceedings including any penalty or other proceedings pursuant to the lmpugned Order dated 20.03.2024bearing DIN and Notice No. ITBA/AST/S/14712023-2411063040128(1) for the Assessment year 2019 - 2020, issued by the Respondents under Section 147 read with Section 144 of the lncome Tax Act, 1961 in the interest of justice lA NO: 3 OF 2024 -r-- W.P.No. 23865 OF 2024 Between: AND 1. 2. .7 4. Vl/S. Venkata Sai Commissions, A partnership firm having its Principal place of business at Gadhe No. 16, Agricultural Market Complex, Peddapally - 505172, Telangana. Represented by ils managing partner, Mr. Deekonda lt/ahendar. ...PETITIONER Union of lndia, Ministry of Finance, lncome Tax Department, New Delhi - 100 01'l The Office of Commissioner, lncome Tax Department, tvinistry of Finance, Government of India, New Delhi - 100 01 1 . Office of the Income Tax Officer, Ward 2, Karimnagar, Aayakar Bhavan, Near Nataraj Theatre, Karimnagar - 505001. The National Faceless Assessment Center, lncome Tax Department, Ministry of Finance, Government of lndia, New Delhi - 100 0 1 1 . ...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 a writ or direction or order more particularly in the nature of a writ of certiorar; calling for the records and quashing the (i) lmpugned Order dated 06. 04. 2022 bearing DIN and Notice No. ITBA/AST/F/148412022- 23t1O42552813(1) for the Assessment Year 2018 - 2019, issued by the 3'd Respondent under Section 14BA(d) of the lncome Tax Act, 1961(ii) lmpugned Notice dated 06. 04.2022 bearing DIN and Notice No. ITBA/AST/S/148 112022- 2311042573056(1) for the Assessment Year 2018 - 2019, issued by the 3rdRespondent under Section 148 of the lncome Tax Act, '196'1and consequently quashing the (iii) lmpugned Order dated '19. 03. 2024bearing DIN and Notice No. ITBA/AST/S/14712023- 2411062951832(1)'for the Assessment Year 2018 - 2019, issued by the Respondents under Section 147 read with Section 144 of the lncome Tax Act, '1961 as being illegal and in violation of applicable law and consequently set- aside all co nseq uent/subseq uent notices/ord ers/pena lties and further restrain the Respondents from making any assessment, reassessment or re- computation or otherwise proceeding against the Petitioner on the basis of the aforementioned lmpugned Order and Notice dated 06. 04. 2022 and 19. 03. 2O24, and pass such further or other orders as this Honble Court may deem fit and necessary in the interest of justice. lA NO: 2 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 the operation of lmpugned Order dated 19. 03. 2o24bearing DIN and Notice No. ITBA/ASTlsl14712023- 2411062951832(1) tor the Assessment Year 201B - 2019, issued by the Respondents under Section 147 read with Section '144 of the lncome Tax Act, '1961 in the interest of justice Counsel for the Petitioner: Ms. MYTRI INDUKURU Counsel for the Respondent No.1 : SRI B. MUKHERJEE REP SRI GADI PRAVEEN KUMAR Dy. SOLICITOR GEN. OF INDIA Counse[ for the Respondent Nos. 2to4: M/s. J. SUNITHA, Jr SC FOR INCOME TAX The Court made the following: COMMON ORDER 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 suspend all further proceedings pursuant to the impugned Order dated 19. 03. 2024bearing DIN and Notice No. ITBA/AST/S/14712023- 2411062551832(1) for the Assessment Year 2O18 - 2019, issued by the Respondents under Section 147 read with Section 144 of the lncome Tax Act, 1961 in the interest of justice lA NO: 3 OF 2024 THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO U/RIT PETITION NOS.23A31 AND 23865 OF 2024 COMMON ORDER (per Hon'ble SP,J) Ms. Mytri lndukuru, learned counsel, appears for the petitioner(s), Sri B. Mukherjee, learned counsel representing Sri Gadi Praveen Kumar, learned Deputl, Solicitor General of India, appears for the respondent(s)-Central Government and Ms.J. Sunitha, learned Junior Standing Counsel for Income Tax Department, appears for the respondent(s) Income Tax Department. 2 Regard being had to the similarity of the question involved, on the joint request of the parties, the matters are analogously heard and decided by this common order. 3. It is common ground taken by the learned counsel for the petitioner(s) that in furtherance of Financ e Act, 2O2l , re assessment process stood modified but the respondents have not taken care of it and therefore notices issued under Section 148 of the lncome Tax Act, 196 1 cannot sustain judicial scrutiny. Since notices are bad in lau,, the consequential orders are also bad in law I 2 parties agreed that curtains on this issue are finallv drawn bv this Court in a batch of writ petitions, W.P.No.25903 of 2022 14.O9.2023. The parties agreed that this matter may be disposed of in terms of the Common Order dated 14.09.2023. 4 5 During the course of hearing, learned counsel for the This Court in the said order dated 14.09.2023 in W.P.No.259O3 of 2022, held as under: and other connected matters, decided by common order dated \"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 148A, 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 Acl, 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 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 getting quashed, the consequential orders passed by the respondent Department pursuant to the notices issued under Section 147 and 149 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 orders also gets nullified automatically. 37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very judsdictional issue. Since the impugned notices and orders are getting quashed on the point of lurisdiction, we are not inclined to proceed further and decide a I I I i l 3 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 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 the stage of the order of the Supreme Court in the case of Ashish Agarwal, supra. 39. No order as to costs.\" 6. In view of the consensus arrived, the impugned Show Cause notices and consequential orders passed in this batch of writ petitions are set aside. Liberty is reserved to both the parties to take respective stand ald to proceed in accordance with law .AS per paragraph No.38 of the order dated 14'09'2023 in W.P.No.259O3 of 2022. 7. The Writ Petitions are allowed. No costs lnterlocutory applications, if any pending, shatl also stald closed SD/.K.VENKAIAH ASSISTANT REGISTRAR ,TRUE COPY// s$b SECTION OFFICER 1. The Union of lndia, Ministry of Finance, lncome Tax Department, New Delhi 100 01 1 Z. i5e bffi\"\" of Commissioner, lncome Tax Department, tvlinistry of Finance, Government of lndia, New Delhi 100 01 1 . s. ind o*iC\" oi the lnc6me Tax officer, Ward 2, Karimnagar, Aayakar Bhavan' Near Nataraj Theatre, Karimnagar 505001' +. f6e f.fitii:\"ii f\"iet\"si Assessrient Center, lncome Tax Department, Ministry '- of Finance, Government of lndia, New Delhi 100 0'1 1 S. One CC to' Snt. MYTRI INDUKURU, Advocate tOPqCl 6. o;; CC io Sat. GADI PRAVEEN KUtvlAR Dv. SOLICITOR GEN oF INDIA toPUCl z. bne-ct to Ms. J. suNlrHA , Jr SC FOR lNCot ,lE TAX DEPARTMENT loPUCl B. Twc CD CoPies BM,fY BSK To, I HIGH COURT DATED:0210912024 t..''-'-- COMMON ORDER 7aR lHE S 14 |4. rJ tJ WP.No's.23831 AND 23865 af 2024 1 4 oci zut .9f\",^, e H t EO ALLOWING BOTH THE WRITPETITIONS WITHOUT COSTS (n ( 2 o a ,ocd4 XP ?-]S ' l ' : t "