Mr. Syed Zaheer Hussain V. The Income Tax Officer

WP/24361/2024

AI Insights

The case involves two writ petitions filed by Mr. Syed Zaheer Hussain and M/s Hyma Developers Pvt Ltd against the Income Tax Department, challenging the legality of reassessment notices issued for the assessment years 2016-17 and 2018-19, respectively. The petitioners argued that the notices were issued without jurisdiction and in violation of the procedural requirements set by the Finance Act, 2021. The court examined the procedural changes introduced by the Finance Act, 2021, and found that the Income Tax Department had not adhered to these changes, leading to the conclusion that the notices and subsequent orders were invalid.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 690476 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 05-09-2024
• Assessment Year: misc
• Other Referred Cases: Ashish Agarwal vs. Revenue
• Laws Referred To: Income Tax Act, 1961, Finance Act, 2021, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: BOKARO REDDY; J SUNITHA
• Assessee Lawyers: A V RAM
• Keywords: Jurisdiction; Natural Justice; Procedural Flaw; Reassessment; Writ of Mandamus
• Section: 147; 148; 144; 271(1)(b); 149; 271F; 148A; 151A; 226

Judgement Text

"HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (SPecial Original Jurisdiction) THURSDAY, THE FIFTH DAY OF SEPTEIVIBER TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRIJUSTICE NAMAVARAPU RAJESHWAR RAO WRIT PETITION NOS. 24361 AND 24380 0F 2024 wRlT PETITION NO.24361 0F 2024 Between: [ 3411 ] ed about 54 urga Nagar, Mr. Syed Zaheer Hussain, S/o years, Occupation. Business. Hyderabad - 500008. Mr. Sved Asqhar Hussain, Ag s-3-1istn3tE. MD Lines, D AND 1 ...PETITIONER The lncome Tax Officer, Ward - 14(1). t.T. Towers, A.C. Guards' Masabtank, Hyderabad - 500004. Assessment Unit, National Faceless Assessment Centre, lncome Tax ij;-i[;;i;, Room No..ior, zn d Floot' E Ramp, Jawaharlal Nehru Stadium, Delhi .,.RESPONDENTS Z 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 pass an order or direction, especially one in the nature of wRlT oF MANDAMUS hotding that the notice dated 1 5/03/2023 issued by 1\"t Respondent under section 148 of the Act (with DIN and Notice No.|TBA/AST/S/148 112022- 23t1O50814485(1)) as being without iurisdiction, arbitrary, illegal, bad in law, void ab initio, apart from being violative of provisions of section 1 48A and section 149 of the Act and also contrary to the circular issued by GBDT and provisions of section 151A of the Act, and consequently set aside the notice under section 148 daled 1510312023 and the assessment and penalty orders passed by 1tr Respondent for asst. yeat 2016-17 under section 147 (w's 144' 271F and 271(1)(b) of the Act, respectively. IANO:1 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 to stay the collection of tax and penalty demands raised by 1st Respondent for the Ay.2O16-17 and stay the pending penalty proceedings' ,-)--.- Counsel for the Petitioner: SRI A. V. RAGHU RAM Counsel for the Respondents: BOKARO SAPNA REDDY (Jr. SC FOR lNcoME TAx) WRIT PETITION NO: 24380 0F 2024 Between: AND Hvma Developers PW LTD M/s Hyma Developers Private Limited Bth Frir\"i sii etoir Mv Home Hub, Ivtadhipur. Hyderabad - 500081 Rep by its bii\"\"t\"r., sri iupatty Snyam Rao. S/o. Sii Jupaily Rameshwar Rao ...PETITIONER Deoutv Commissioner of lncome Tax, Circle - 2(1), 5th Floor,-signature i.'l.i'\",bJp Botanical Gardens, Kondapur, Hyderabad - 500084' ...RESPONDENTS Petition under Arlicle 226 of the constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High court may be pleasedtopassanorderordirection,especiallyoneinthenatureofWR|ToF MANDAMUS holding that the order passed by Respondent u/s.148A(d) of the Act, d1.27.082024with DIN and Notice No.ITBA/AST/Ft14'Al2024-25l'1068031668(1) and the notice dated 27.08.2024 issued under section 148 0f the Act with DIN and Notice No.ITBA/AST/S/148_1/2024-2511068039457(1) for the assessment year 2018-19, as being illegal, arbitrary and passed in gross violation of principles of natural justice without application of mind, and consequently set aside the same' ,9 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 SuspendtheoperationofthenoticeissuedbytheRespondentu/s.148oftheAct, dt.27.08.2024 for the assessment yeat 2018-19 with DIN& Notice No.ITBAJAST/S1148 1t2024-25/1068039457(1) and all consequential proceedings thereto. Counsel for the Petitioner: SRI A. V. RAGHU RAM Counsel for the Respondent: MS. J. SUNTTHA (JUNIOR SC FOR INCOME TAX) The Court made the following: COMMON ORDER (- THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESITWAR RAO WRIT PETITION NOS.24361 AND 24380 0F 2o24 COMMON ORDER (per Hon'ble SP,J) Sri A.V.Raghu Ram, learned counsel, appears for the petitioners, Ms.B.Sapna Reddy, learned Junior Standing Counsel for Income Tax Department, apPears for the respondent(s) in W.P.No.2436 l of 2024 and Ms. J.Sunitha, learned Junior Standing Counsel for Income Tax Department, appears for the respondent(s) in W.P.No.243aO of 2024. 2. Regard being had to the similarity of the question involved, on the joint request of the parties, the matters are analoSously 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, 202 1, re- assessment process stood modifled but the respondents have not taken care of it and therefore notices issued under Section 148 of the Income Tax Act, 1961 cannot sustain judicial scrutiny. Since notices are bad in lavr,, the consequential orders are also bad in law. 4. During the course of hearing, learned counsel for the parties agreed that curtains on this issue are finally drawn by 2 this Court in a batch of writ petitions, W.P.No.25903 of 2022 and other connected matters, decided by common order dated 14.09.2023. The parties agreed that this matter may be disposed of in terms of the Common Order dated 14.09.2023. 5 This Court in the said order dated 14.09.2023 in W.P.No.259O3 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 't48A, 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 susteinable. 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 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 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 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 exercising the powers under a 3 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 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. 7 The Writ Petitions are allowed. No costs. Interlocutory applications, if any pendin shal1 also stand ciosed. SD/-A.V.S,P AD ASSISTANT REGIS R //TRUE COPY// To, SECTION OFFICER The lncome Tax Officer, Ward - 14(1), IT Towers, A C Guards, Masabtank' Hvderabad - 500004 iriiiiimt.t [riit. -ultionar Faceless Assessment centre, lncome Tax ffii;;i;;;i R\"\"* r'1. +or, z na rroot E Ramp, Jawaharlal Nehru Stadium' Delhi 3. Deoutv Commissioner of lncome Tax, Circle : ?(1) q'n Floor'-signature \" i#;;'= 6Jp e;\"\"i;rr Gardens, Kondapur, Hvderabad - 500084' 1 2 4. 5. 6. 7. TJ GJP One One One Two CC to Sri A CC to Ms. B CC to Ms. J CD Copies V Raohu Ram. Advocate IOPUCI okaro Sapna Reddy (Jr' SC for lncome Tax)- -sunitna 'SC for ln6ome Tax Department[OP loPUCl ucl I I HIGH COURT DATED:0510912024 ir- 1t E STA ( 4 q Ct t J o 1 ti N'U,l i;zi f) s.- C.$eq PA,1 * COMMON ORDER WRIT PETITION NOS. 24361AND 24380 OF 2024 ALLOWING THE WRIT PETITIONS WITHOUT COSTS lD l t Lcxl r.i*<**r-r.--t..h-rrk "