Narayan Reddy Thumallapally and Papi Reddy Chintha Reddy V. Union of India and Income Tax Officer, Ward 14(1), Hyderabad and The Principal Commissioner of Income Tax - I, Hyderabad and The National Faceless Assessment Centre, Income Tax Department, Ministry of Finance, Govt. of India

WP/25242/2024

AI Insights

The case involves multiple writ petitions filed by different petitioners challenging the notices and orders issued by the Income Tax Department under Section 148 of the Income Tax Act, 1961, for various assessment years. The petitioners argued that the notices were illegal, arbitrary, and violative of the principles of natural justice and constitutional rights under Articles 14, 19, and 265. The respondents, including the Union of India and the Income Tax Department, defended the notices. The court, referencing a previous decision in W.P.No.25903 of 2022, found that the reassessment process followed by the respondents did not comply with the modified provisions under the Finance Act, 2021, and thus, the notices and orders were set aside.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 803933 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 18-09-2024
• 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: P KIRAN; B REDDY
• Assessee Lawyers: P RAO
• Keywords: Income Tax; Jurisdiction; Natural Justice; Notice under section 148; Writ of Mandamus
• Section: 148; 148A(d)

Judgement Text

"[ 3411 I HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE EIGHTEENTH DAY OF SEPTEMBER TWO THOUSAND AND TWENry rcUR PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE.HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO WRIT PETITION NOS: 25240 2s242 AND 25250 0F 2024 W.P.NO: 25240 OF 2024 Between: ...PETITIONER AND Narayan. Reddy_Thumallapally, S/o. T. Pulla Reddy, Aged about 65 years, Occ,Business, R/o. H.No. 8-2-293t 2lcl3o1 MLAi C6lony, Road No.12, Banjara Hills, Hyderabad, Telangana, lndia, 500034. 1. Union of lndiar l/ilistry of Finance, Rep. by its Secretary, 166-8 North Block, New Delhi - 1'10 001. 2- lncome Tax Officer, Ward 14(1), Hyderabad IT Towers, Masab Tank, Hyderabad, Telangana - 500004. 3. The Principal Commissioner of lncome Tax - l, Hyderabad, lT Towers, Masab Tank, Hyderabad, Telangana - 500004. 4. The National Faceless Assessment Centre, lncome Tax Department Ministry of Finance Govt. of lndia, New Delhi. ...RESPONDENTS Petition under Artrcle 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to i. lssue a Writ, Order or Directron more particularly, one, in the nature of Writ of Mandamus, declarrng the Notice issued by the Respondent No.2 under Section 148 of the lncome Tax Act. '196'ldated 3110812024 as illegal, arbitrary, bad in law, void ab initio. violative of the principles of natural justice and being violative of Articles 14,19 and 265 of the Constitution of lfldia and consequently, i. Set aside the Notice issued by the Respondent No.2 under Section 148 of the lncome Tax Act, 1961 dated 31lOBl2O24 calling for the return of incorne of the Petitioner fot AY 2017-18 and any consequenl proceedings as lacking in jurisdiction. Counsel for the Petitioner: SRI P.SRIKANTH RAO counsel for the Respona\"nt Ho.it Cnr P'SHASHI KIRAN' sc FoR CENTRAL GOVT. Counsel for the Respondent Nos'2 TO 4: M/s' B'SAPNA REDDY' Jr' SC FOR ITD W.P.NO: 25242 oF 2024 Between: Paoi Reddv Chintha Reddy, S/o. Saidi Reddy Chinthared u\"5is. Occ Business, 'R/o. 845. Dharmapuram' bGii',apuiim, tlalgonda, 508374, Telangana, lndia' dv. Aoed about 48 (ann6ral B. o, .,.PETITIONER AND 1. Union of lndia, Ministry of Finance Rep by its Secretary' 166- B North Block' New Delhi - 110 001 z i\"i6.i'Jt'r, Oincer, Waro 1, Nalgonda ITO Office' Near Rail Under Bridge J 4 Nalqonda, Telangana 508001 i[.]Fii\"\"ioI coii.isiioner of lncome Tax - l, Hyderabad lr rowers' Masab Tank. Hvd'erabad, Telangana - 500004' +;;'ii;iil;t F;itrLi. Ali\"ir.i\"nic\"nt|.\" tncome rax Department Ministry of Finance Govt. of lndia, New Delhi ..RES'ONDENTS 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 i. lssue a Writ, Order or Direction more particularly one in the nature of writ of Mandamus, declaring the order passed by the Respondent No 2 in passing the Order dated 30. 03 2023 u/s 148A(d) and Notrce ssued by the Respondent No. 2 under Section l4S of the lncome Tax Act\"l96ldated 0l 04' 2023as illegal, arbitrary' bad in law, void ab initro' violatrve of the principles of natural justice and being violative of Articles 14 19 and 265 of the (lonstitution of lndia and consequently, ii. set aside the Order dated 30 03 2023 u/s' 148A(d) and Notice issued by the Respondent No 2 under Sectlon 148 of the lncome Tax Act, 1961 dated 01 . 04 2023calling for the return of tncome of the Petitioner for AY 2016- 17 and any consequent proceedings as lacking rn Jurisdlction' Counsel for the Petitioner: SRI P.SRIKANTH RAO Cornsef for the Respondent No.1: SRI P'SHASHI KIRAN' SC FOR CENTRAL GOVT. Counsel for the Respondent Nos.2 TO 4: M/s' B'SAPNA REODY' Jr' SC FOR ITD i I j ! t 1 i i t i I i I ' { t ) . I .P.NO:25 oF 2024 Between: Papi RedlV C_hintha Reddy, S/o. Saidi Reddy Chinthareddy Aged about 48 years, Occ.Business,. B4or-_B _ 45, Dh'armapuram, 'Kairckal g.O, Dharmapuram, Nalgonda, 508374, Telangana, lndid. AND ...PETIT|ONER 1. Union of lndia, Ministry of Finance Rep. by its Secretary, 166_8 North Block, New Delhi - 110 001. ' 2. lncorne Tax Officer, Ward^1,^Nalgonda ITO Offrce, Near Rail Under Bridg€ Nalgonda, Telangana, 508001 - 3. The. PnncipalCommissioner of lncome Tax - I. Hyderabad lT Towers, Masab Tank, Hyderabad. Telangana - 500004. 4. The National Faceless Aisessment Centre, lncome Tax Departrneflt Ministry of Finance ...RESPONDENTS Petition under Nlicte 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to i. lssue a Writ, Order or Direction more particularly, one, ifl the nature of Writ of Mandamus, declaring the order passed by the Respondent No.2 in passing the Order dated 23.04.2022 u/s. 148A(d) and Notice issued by the Respondent No.2 under Section 148 of the lncome Tax Act, 1961dated 23.04.2022 as illegal, a(bi(ary. bad in law, void ab initio, violative of the principles of natural justace and being violative of Articles 14,19 and 265 of the constitution of lndia and consequently, ii Set aside the Order dated 23.04.2022 u/s. 148A(d) and Notice issued by the Respondent No.2 under Section 148 of the lncome Tax Act, 1961 dated 23.04.2022 ca ing for the return of income o; the petitioner for Ay 2015-16 and any consequent proceedings as lacking in jurisdiction. Counsel for the Petitioner: SRI P.SRTKANTH RAO Counsel for the Respondent No.1: SRI P.SHASHI KIRAN, SC FOR CENTRAL GOVT. Counsel for the Respondent Nos.2 TO 4: M/s. B.SAPNA REDDY, Jr. SC FOR ITD The Court made the following: COMMON ORDER ,i I THE HONOURABLE SRI JUSTICE SUJOY PAUL AI{D THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJISHWAR RAO WRIT PETITION NOS.25240 25242 AltD 25.250 oF 2024 COMMON ORDER (per Hon'ble SP,J) Sri P. Srikanth Rao, learned counsel, appears for the petitioner(s), Sri P. Shashi Kiran, learned Standing Counsel for Central Government, appears for the respondent(s)-Central Government and Ms.B.Sapna Reddy, 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 questron involved, on the joint request of the parties, the mzrtters 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, 2O2 1 , re- assessment process stood modified 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 law, 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 finallr' drart'n by i i I z 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.O9 .2023 . 5 This Court in the said order dated I4.O9.2O23 in W.P.No.259O3 of 2O22, 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-Oepartment upon treating the notices issued for reassessment being under Section lrEA, 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 neither tenable, nor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are according{y set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent Depaltment pursuant to the notices issued under Section 147 and 1.l8 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 aod 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 uflder i 3 Afticle 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 o.der of the Supreme Court in the case of Ashish Agarwal, suPra. 39. No order as to costs.\" 6. In view of the consensus arrived, tJle impugned Show Cause notices and consequential orders passed in this batch of ',r,rit 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 To applications, if any pending, shall also stand closed. ^33'U^'^iT'#ti3'R'^'J 'ffRUE coPY'/ sEcfl'dPoFFlcER The Secretary, Union of lndia, Ministry of Finance 166-8 North Block' New R:',Il\"t+:f3lr\"er. ward 14(1), Hvderabad lr rowers' Masab rank' HvJ\"jqu'o lfl'\"9-911,^!991?,0;*.\" rax - r, Hyderabad, rr rowers. Masab The PrinciPal Commisstoner o il\"i riud'\"irora, Telangana - soooM' Tne National Faceless n \"t\"tr.iJiiCi'ntre' lncome Tax Department Ministry *i;mi:-ts*\"31'il$l?i,'li1ffllida rro orrice, Near Rair Under Bridge 'rijaroonoa. Telanqana 508001 gliEE I: til is$ffi 'ffi *j*#EtJlst \"ror o eu c Two CD CoPies 1. 2 3 4 6 7 8 I PSK. LS ft HIGH COURT DATED:1810912024 COMMON ORDER WP.Nos.2S240,25242 &25250 of 2024 ALLOWING THE WRIT PETITIONS WITHOUT COSTS. /: ...... '-(( BE STA Ie' 1 0 cil 2024 o :l a ,.'' (. .uql\"b &- rr I I 1 I i I I "