Mrs. Arunmyee Pasumarthy V. The Income Tax Officer

WP/12702/2024

AI Insights

The case involves Mrs. Arunmyee Pasumarthy, the petitioner, challenging the legality of several notices and orders issued by the Income Tax Department for the assessment year 2017-18. The notices were issued under various sections of the Income Tax Act, 1961, including Section 148, which pertains to the re-assessment of income. The petitioner argued that these actions were arbitrary, illegal, and violated principles of natural justice, among other legal provisions. The court's decision to set aside the notices and orders was based on the failure of the Income Tax Department to adhere to the procedural requirements established by the Finance Act, 2021, and the directives of the Supreme Court in the case of Ashish Agarwal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 690429 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 03-05-2024
• 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: J SUNITHA
• Assessee Lawyers: MANIDEEP MADHAVARAPU
• Keywords: Finance Act 2021; Income Tax; Jurisdiction; Natural Justice; Re-assessment; Writ of Mandamus
• Section: 148; 149; 148A; 151A; 265; 226

Judgement Text

"HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD , (Special Original Jurisdiction) [ 3403 ] I FRIDAY, THE THIRD DAY OF MAY TWO THOUSAND AND TWENTY FOUR Ii PRESENT I THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE N.TUKARAMJI WRIT PETITION NO: 127020F 2024 Between: Mrs., Arunmyee. Pasumarthy, W/o pVSR Murthy, Aged 51 years, Occ. Self_ gnployed. and.... Company Director, R/o.Villa No.26, Luxurb Greens, Opp.Kendriya Vidyalaya, New Bowenpally, Secunderabad _ 500 Oi 1, Telangana. ' o*o ...PETITIONER 1. The lncome Tax Officer, Ward 11(1), Hyderabad, Room No.507,Sth F loor. - Signature Tower Towers, Kondapur, Hyderabad-SOO0g4. 2. The Principal.Commissioner Of lncomd Tax 2, 6th floor, Signature Tower Towers, Kondapur Hyderabad-Telanqana 3. The Principal Chief Commissioner Oilncome Tax, Room No 922 gth Floor B Block lT Towers.10-2-3, AC Guards Hyderabad Telangana ...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, order or directron more particularly one in the nature of Writ of Mandamus declaring the action of Respondent No. 1 in issuing the a. Notice under clause(b) of section 14BA of the lncome-tax Act,1g6.t Dated. 25lo 1 12024 Dl N and Notice No. trBA/AST/F/i 4BA( scN y2023- 24 t 1 060 1 4g3g}(1 ) for the Assessment Year 2017-18 b. order passed u/s 14gA(d) of the lncome Tax Act, 1961 dated 2710312024, vide DtN and Notice No. |rBA/AST/F/148AI2022- 2311042901615(1 ) foflthe Assessment year 2017-18, and c. Sec. 14g Notice dated 30/03/2024 ol the tncome Tax Act, 1961, vide DIN and Notice. ITBA/AST/S/14 8-112023-24110636791 16( 1 ) for the Assessment year 2017-18, as : arbitrary, lllegal, bad rtin law, without jurisdiction, void-ab-initio, violative of the principles of natural justice apart from being viotative of Articles 1a, 19(1 )(g) and I , 265 of the Constitution of lndia and Sec. 148A, 149, 151A of the lncome Tax Act' 1961 , and consequently set aside the same in the interests of justice. lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in i the affidavit filed in sufport of the petition, the High Court may be pleased to direct i the Respondent to stay all further proceedings, including any recovery, pursuant to the notice dated 30/03/2024, issued by the 1st Respondent, u/s .148 of the lncome l Tax Act, 1961, vide DIN and Notice. ITBA/AST/S/148 112023-2411063679116(1) for tie Assessment Yedr 2017-18, pending disposal of the above Writ Petition; and ,l pass such other ordelibr orders may deem fit and proper in the circumstances of the case, as the procbdure laid down under Sec.148A of the Act has not been , followed and the precondition for issuance of notice u/s. 148 of the Act is absent pending disposal of the Writ petition Counsel for the Petiti6ner: SRI MANIDEEP MADHAVARAPU Counsel forthe Resp6ndents: M/s. J. SUNITHA FOR M/s. SUNDARI I R.PISUPATI, SENTOR SC FOR ITD The Court made the following: ORDER -------f 1 THE HONOURABLE SRI WSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE N. TUI(ARAMJI WRIT PETITION No.L27o2 oF 2024 ORDER: fircr Hon'bte Justice SujoA Paul) Heard Sri Manideep Madhavarapu' learned counsel for the petitioner and Ms. J. Sunitha, learned Junior Standing Counsel represents Ms.Sundari R'Pisupati' learned Senior Standing Counsel for Income Tax Department for the respondents ' 2. The ground taken by the learned counsel for the petitioner is that in furtherance of Financ e 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 Ta-x 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 {inally drawn by this Court in a batch of u'rit petitions, W'P'No'25903 of 2022 and other connected matters, decided by common order 2 dated 14.09.2023. 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 14.09.2023 in W.P.No.25903 of 2022, held as under: \"35. In view of thc aforesaid discussiotrs, it is by Eow very clcer that the proccdure to b€ followed by the .e6pondent- DepartEent upon treatlag the notlces issu€d for reessesstnent being under Sectloa 148A, the subsequeat proceedings wes Eandatorily rcqulred to be uDdertaken uEder the substitut€d provisioas as laid dosn undcr thc Finatce Act, 2021. In thc absence of which, we are constr.ined to hold that the procedure adoptcd by the reapondent-DepartErent is in contraventioE to the stitute i.e. the FinaDce Act, 2021, at the first instance. Secondly, lt is also in direct contravention to the directives issucd by the Hoo'ble Suprcme Court in th€ case of Ashish Agarsal, supra. 36. For all the afore8ald reasons, the impugned notices issued and the proceediags drarra by the respoEdeot-Depe.tmcnt is neither teoable, Bor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to bc and are accordingly sct aslde/queshed. As a consequencc, all the impugned orders getthg quashed, the consequcntial orders passed by the respoadent DepartEent pursuant to the noticcs issued under Sectlon 147 aEd 148 would also get quashed and it is ordered accorditrgly. The reason we ere quashing the consequential otdct is oo the principles that when the iDitiation of the proceedlngs itself was procedurally wrong, the subsequent ordcrE also gets rullified automaticatly. 37. The prelirainary objection raised by the petitioner is sustained and all thcse writ petitions stands allowed on this wery jurisdictional issue, Slnce the imputned noticeG and otders qre gettiug quashed on the point ofjurisdiction, we are not inclined to proceed further and decidc thc other issues raised by the petitlotrer which stands reserved to be raised aEd contended in an appropriate proceedings. 38. Since the Hon'ble Suprem€ Court had, in thc case of Ashish Agarwal, supra, as a one-timc mcasure exercising the Powcrs under Article 142 of the Constitution of India, 3 IrerEitted the Revenue to procced under the substltutcd provisiors, and tbis Court qllowing thc pctitions oaly on the proccdur.l flaw, the right conferred on th€ Revcnue would rgtllain rc6elved to Proceed further if they eo want from the stage of the osdcr of the suPreme court ln the cesc of A6hlsh Agarwal,8upra. 39. Ito ordcr es to costs.' 5. In view of the consensus arrived, 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 14.09.2023 in W.P.No.259O3 of 2022. 6. The writ petition is allor.r'ed. No costs. Interlocutory applications, if any pending, shall also stand closed' //TRUE COPY// SD/.T.TIRUMALA DEVI ASSISTANT REGISTRAR I AF- SECTION OFFICER to ,. an\" tncome Taxiofficer, Ward 11(1)' Hyderabad'.Room No'507' 5th Floor' ' ailnaff\" i\"i\"li iow\"ii, Kondaplr' Hvderabad-500084 , Th; Princioar commiiiinei'o-fl;;# tax 2 6th floor' Signature Tower - fowers, Kbndapur Hyderabad-Telangana 3. The Pdncipar Cniet co''irfiis!t;;'\"of l;\";'\" rax' Room No e22 gth Floor B \" BH\"k it'iil\"*'10-'-i, AC Guards Hvderabad.Telanqana rgl:::3ilXrgtfg^'5''JHBlex+':tlli*i1ffi t*oPruoclteucr 6. Two CD CoPies PSK. MR ,) (' I i .1, HIGH COURT , DATED:0310512024 ORDER WP.No.12702 ot 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS. ) , ,.; .: iz.l 4. '/ 6 JUii 2t24 t DESp/.i i ':r ( -/ C) ,./ o o [!t AC-r,.tr! - $ \" "