Medak Primary Agricultural Cooperative Credit Society Limited 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 Office of the Income Tax Officer, Ward1, Siddipet and The National Faceless Assessment Center, Income Tax Department, Ministry of Finance, Government of India, New Delhi

WP/25622/2024

AI Insights

The case involves the Medak Primary Agricultural Cooperative Credit Society Limited, which challenged the legality of notices and orders issued by the Income Tax Department under the Income Tax Act, 1961. The petitioner argued that the reassessment notices for the Assessment Years 2017-2018 and 2020-2021 were issued without adhering to the procedural modifications introduced by the Finance Act, 2021. The High Court, referencing a similar batch of writ petitions decided on 14.09.2023, found that the procedures followed by the Income Tax Department were in contravention of the statute and the directives of the Supreme Court in the case of Ashish Agarwal. Consequently, the court quashed the notices and all consequential orders.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 819279 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 19-09-2024
• Assessment Year: misc
• Other Referred Cases: Ashish Agarwal
• Laws Referred To: Income Tax Act, 1961, Telangana Cooperative Societies Act - 1964, Finance Act, 2021, Article 226 of the Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: B MUKHERJEE; B REDDY
• Assessee Lawyers: MYTRI INDUKURI
• Keywords: Income Tax; Jurisdictional issue; Procedural Flaw; Reassessment; Writ of Certiorari
• Section: 148; 148A(d)

Judgement Text

"t3411 l HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) THURSDAY HE NINETEENTH DAY OF SEPIEMBER TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO WRIT PETITION NO's :25622 AND 25660 0F 2024 Between: Medak Primary Agricultural Cooperative CreditSociety Limited. A. registered society establilhe6 under the T6langana Cooperativd Societies Act - 1964. havinj its principal place of business at. D No 2-413, Ausulapqlty- e 9 , Meda( - Sozlli, Tdlangana, Represented by its Chairman, Mr. Chilumula Hanmanth ReddY ...PETrroNER AND 1 2 J Union of lndia, Ministry of Finance, lncome Tax Department, New Delhi - 100 01'1 The Office of Commissioner, lncome Tax Department Ministry of Finance Government of lndia New Delhi Office of thi: lncome Tax Officer, Wardl, Siddipet, lncome Tax Office, B-1-44, 4th Floor, Krishna Reddy Chambers, Hyderabad Road, Siddipet, Telangana, 502103 ine frtationat Faceless Assessment Center, lncome Tax Department, Ministry of Finance, Government of lndia, New Delhi - 100 011 The Office' of Commissioner, Income Tax Department, Ministry of Finance, Government of lndia, New Delhi - 100 011. ...RES'ONDENT' 4 ( 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 lS.o3.2024bearingDlNandNoticeNo.lTBfuAST/F/148A12023- 2411062693948(1) for the Assessment Year 2017 - 2018, issued by the 3rdRespondent under section 14BA(d) of the lncome Tax Act, 'l961and (ii) tmpugned Notice dated 15.03.2024 bearing DIN and Notice No. ITBA/AST/S/148 1 w.P.No.25622 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 dispense with the filing of certified copy of (i) lmpugned Order dated 15.03.2024 bearing DIN and Notice No ITBAiAST/F/148A12023-2411062693948(1) for the Assessment Year 2017 - 2018, issued by the 3rdRespondent under Section 148A(d) of the lncome Tax Act, '1961 and (ii) lmpugned Notice dated 15.03.2024 bearing DIN and Notice No. ITBA/AST/S/148112023-2411062705217(1) for the Assessment Year 2017 - 2018, issued by the 3rdRespondent under Section '148 of the lncome Tax Act, 196 1, Pending disposal of the main Writ Petition 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 dispense with the filing of certified copy of (i) lmpugned Order dated 15.03.2024 bearing DIN and Notice No. ITBA/AST/F/148A12023-2411062693948(1) for the Assessment Year 2017 - 2018, issued by the 3rdRespondent under Section 148A(d) of the lncome Tax Act, 1961 and (ii) lmpugned Notice dated 15.03.2024 bearing DIN and Notice No. ITBA/AST/S/148112023-2411062705217(1) for the Assessment Year 2017 - 2018, issued by the 3rdRespondent under Section 148 of the lncome Tax Act, 1961 , Pending disposal of the main Writ Petition in the interest of justice 112023-2411062705217(1) for the Assessment Year 2017 - 2018, issued by the 3rdRespondent under Section 148 of the lncome Tax Act, 196'1 , as being illegal and in violation of applicable law, and consequently set-aside all consequentisubsequent notices/orders/penalties 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 lmpug.ned Order and Notice dated 15.03.2024 lA NO: 1 OF 2024 ., lA NO: 3 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 (i) lmpugned order dated 15.03.2024 bearing DIN and Notice No. ITBA/AST/F/1 4 BAI2O23-241 1062693948(1 ) for the Assessment Year 2017' 201 I, issued by the 3rdRespondent under section 148A(d) of the lncome Tax Act, 1961 and (ii) lmpugned Notice dated 15.03.2024 bearing DIN and Notice No. |TBA/AST/S/148-112023-24t1062705217(1) for the Assessment Year 2017 - 2018, issued by the Respondent under Section 148 of the lncome Tax Act, 1961, in the interest of justice Counsel for the Petitioner: SRI' MYTRI INDUKURU Counsel for the Respondents: SRI B. MUKHERJEE REP SRI GADI PRAVEEN KUMAR Dy. SOLICITOR GEN. OF INDIA Counsel for the Respondent Nos. 2to5 : Ms. B. SAPNA REDDY, Jr SC for lncome Tax DePartment .+ W.P. NO: 25660 OF 2024 Between: Medak Primary Agricultural Cooperative Credit Society Limited, A registered society established under the Telangana Cooperative Societies Act - l964,having its principal place of business at. D. No. 2-413. Ausulapally 8.O., Medak - 502113. Telangana, Represented by its Chairman, Mr. ChilumulaHanmanth Reddy. ...PET|T!ONER AND 1. Unionof India, Ministry of Finance, lncome Tax Department, New Delhi - 100 011 2. The Office of Commissioner, lncome Tax Department Ministry of Finance Government of lndia New Delhi-10001 1 3. Office of the lncome Tax Officer, Wardl, Siddipet, lncome Tax Office, 8-1-44,4th Floor, Krishna Reddy Chambers, Hyderabad Road, Siddipet, Telangana, 502103. 4. The National Faceless Assessment Cenler, lncome Tax Department, Ministry of Finance, Government of lndia, New Delhi - 100 011. ...RESPONOENTS 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 certiorarr calling for the records and quashing the (i) lmpugned Order dated 12.03.2024 bearing DIN and Notice No. ITBA/AST/F/148 Al2O23- 2411062455625(1 ) for the Assessment Year 2020 - 2021 , issued by the 3rdRespondent under Section 148A(d) of the lncome Tax Act, 1961and (ii) lmpugned Notice dated 12 03.2024 bearing DIN and Notice No. ITBAiAST/S/148 112023- 2411062456429(1) for the Assessment Year 2020 - 2021, issued by the 3rdRespondent under Section 148 of the lncome Tax Act, 1961 as being illegal and in violation of applicable law and consequently selaside all consequenUsubsequent notices/orders/penalties and further restrain the Respondents from making any assessment, reassessment or re- computation ol otherwise proceeding against the Petitioner on the basis of the aforementioned lmpugned Order and Notice dated 12.03.2024 lA NO: 1 OF 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 dispense with the filing of certified copy (i) lmpugned Order daled 12.03.2024 bearing DIN and Notice No. ITBA/AST/F/148 412023- 2411062455625(l) for the Assessment Year 2O2O - 2021 , issued by the 3rdRespondent under Section 148A(d) of the lncome Tax Act, 1961 and (ii) lmpugned Notice dated 12.03.2024 bearing DIN and Notice No. ITBA/AST/S/1481/2023- 2411062456429(1) for the Assessment Year 2020 - 202'1, issued by the 3rdRespondent under Section 148 of the lncome Tax Act, 1961, Pending disposal of the main Writ Petition in the interest of justrce // 5 lA NO: 2 OF 2024 Petition under Section 15 1 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased lo suspend all further proceedings pursuanl to the (i) lmpugned Order dated 12.03.2024 bearing DIN and Notice No. ITBA/AST/F 1148A12023- 2411062455625(1 ) for the Assessmenl Yeat 2020 - 2021, issued by the 3rdRespondent under Section 148A(d) of the lncome Tax Act, 1961 and (ii) lmpugned Notice dated 12.03.2024 bearing DIN and Notice No. ITBA/AST/S 1148-112023- 2411062456429(1) for the Assessment Year 2020 - 2021, issued by the 3rdRespondent under Section 148 of the lncome Tax Act, 1961, in the interest ofjustice lA NO: 3 OF 2024 Petrtion 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 operataon of (i) lmpugned Order dated 12.03.2024 bearing DIN and Notice No. ITBA/AST/F ll 48A12023- 24t1062455625(1) for the Assessment Year 2020 - 2021, issued by the 3rdRespondent under Section 148A(d) of lhe lncome Tax Act, 1961 and (ii) Impugned Notice dated 12.03 2024 bearing DIN and Notice No. ITBAiAST/S 1148-112023-2411062456429(1) for lhe Assessment Year 2020 - 2021, issued by the 3rdRespondent under Section 148 of the lncome Tax Act, 1961 . in the interest of justice Counsel for the Petitioner: SRl. MYTRI INDUKURU Counsel for the Respondents: SRI B. MUKHERJEE REP SRIGADIPRAVEEN KUMAR Dy. SOLICITOR GEN. OF INDIA Counsel for the Respondent Nos. 2to4 : Ms. B. SAPNA REDDY, Jr SC for lncome Tax Department The Court made the following: COMMON ORDER i THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO WRIT PETITION NOS.25622 AND 25660 0F 2024 COMMON ORDER @er Hon'bte Sp,J) Ms. Mytri Indukuru, learned counsel, appea_red for the petitioner(s), Sri B. Mukherjee, learned counsel representing Sri Gadi Praveen Kumar, learned Deputy Solicitor General of India, appeared for the respondent(s)-Centr.rl Government ald Ms.B.Sapna Reddy, learned Junior Standing Counsel for Income Tax Department, appeared for the respondent(s)_ Income Tax Department. 2. Regard being had to the similarity of the question involved, on the join t 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 Finance Act, 2021, re_ assessment process stood modilied but the respondents have not taken care of it and therefore notices issued under section l4g of the Income Tax Act, 196 I cannot sustain judicial scrutiny. Since notices are bad in law, the consequential orders are arso bad in law. 2 4. During the course of hearing, learned counsel lor the parties agreed that curtains on this issue are finally drarvn by this Court in a batch of writ petitions, W.p.No.259O3 of 2022 and other connected matters, decided by common order dated L4.O9.2023. The parties agreed that this matter may be disposed of in terms of the Common Order dated 14.O9.2023. 5 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 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 '1484, 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, su pra. 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 14g 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 jurisdictional issue. * -- Since the impugned notices and orders are getting quashed on the pgint of jurisdiction, we are not inclined to proceed further and decide 6. In view of the consensus arrived, the impugned Show Cause notices and consequential orders passed in this batch of writ petitions a-re 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.259O3 of 2022. applications, if any pending, shali also stand closecl' //TRUE COPYII SD/. K. AMT{IAJI ASSISTANT REGISTRAR sEcfloN #,\"r* To, o BM 1 J The Union of lndia, Ministry of Finance, lncome Tax Department, New Delhi - 100 01 1 Zl ifre Office of Commissioner, lncome Tax Department Ministry of Finance Government of lndia New Delhi in'd-OkiJ\" oiinJ f nJome Tax Officer, Wardl, Siddipet, lncome Tax Office, 8-1- iq, qtn ib\"r, Krishna Reddy Chambers, Hyderabad Road, Siddipet' Telanoana. 502103. fi;N'rtffirl F;cLless Assessment Center, lncome Tax Department' Ministry of Finance, Government of lndia, New Delhi - 100 011 ihe Offi;;'oaaommissioner, lncome Tax Department, Ministry of Finance, Government of lndia, New Delhi - 100 011. One CC to SRl. MYTRI INDUKURU Advocate [OPUCj - o;; aa io sht. onot PRAVEEN KUMAR Dv. sollclroR GEN oF rNDrA [OPUC] one Cb to MS. B. SAPNA REDDY, JT, SC FOR INCOME TAX DEPARTMENT [OPUC] Two CD Copies q A 7 8 -t - 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-\" 7. The Writ Petitions are allo'*'ed' No costs' Interlocutory I 1 I I HIGH COURT DATED:19 t gt2 24 /,. -. (, a- rl ;-.'/ COMMON ORDER WP.No's.25622 AND 25660 ot 2024 AL-L.O. WING BOTH THE WRITPETITIONS WTHOUT COSTS ffi,-, + )ry, "