Narayan Reddy Thumallapally V. Union of India, Ministry of Finance 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/25213/2024

AI Insights

The case involves Narayan Reddy Thumallapally, the petitioner, challenging a notice issued by the Income Tax Officer under Section 148 of the Income Tax Act, 1961, for the assessment year 2018-19. The petitioner argued that the notice was illegal, arbitrary, and violated principles of natural justice and constitutional rights under Articles 14, 19, and 265. The respondents included the Union of India, Ministry of Finance, and various Income Tax authorities. The court referenced a previous common order in W.P.No.25903 of 2022, which had set a precedent on the procedural requirements for re-assessment notices under the Finance Act, 2021. The court's decision to set aside the notice was based on these established procedural flaws and the lack of jurisdiction.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 803935 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 12-09-2024
• 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; B REDDY
• Assessee Lawyers: P RAO
• Keywords: Jurisdiction; Natural Justice; Notice; Re-assessment; Writ of Mandamus
• Section: 148; 148A

Judgement Text

"[ 3411 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE TWELFTH DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FOUR PRESENT WRIT PETITION NO: 25213 OF 2024 Between: Narayan Reddy Thumallapally, S/o. T. Pulla Reddy Aged about 65 years, Occ.Business, R/o. H.No. 8-2-2931821c1301 MLA's Colony, Road No.12, Banjara Hills Hyderabad, Telangana, lndia, 5C0034. ANO ...PET|T|ONER 1 . Union of lndia, Ministry of Finance Rep. by its Secretary, 166-8 North Block, New Delhi - 1 10 001 . 2. lncome Tax Offrcer, Ward 14(1), Hyderabad lr Towers, Masab Tank, Hyderabad, Telangana - 500004. 3. The Principal Commissioner of lncome Tax - I Hyderabad, lT Towers, Masab Tank Hyderabad, Telangana - 500004. 4. The National Faceless Assessment Centre lncome Tax Department, Ministry of Finance Gcvt. of lndia. New Delhi. ...RESPONDENTS Petition under Article 226 ol the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to lssue a Writ, Order or Direction more particularly, one, in the nature of Writ of Mandamus, declaring the Notice issued by the Respondent No.2 under Section '148 of the lncome Tax Act, 1961dated 31 .08.2024as 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 lndia and consequently, ii. Set aside the Notice issued by the Respondent No.2 under Section 148 of the lncome Tax Act. 1961 dated 31.08.2024calling for the return of income of the Petitioner for AY 20 18-19 and any consequent proceedings as lacking in jurisdiction. Counsel for the Petitioner: SRI P.SRIKANTH RAO Counsel for the Respondent No.1: SRI B.MUKHERJEE FOR SRI GADI PRAVEEN KUMAR, Dy. SOLICITOR GENERAL OF INDIA Counsel for the Respondent Nos.2 TO 4: M/s. B. SAPNA REDDY, JUNIoR Sc FOR ITD The Court made the following: ORDER THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO TI{E HONOUFTABLE SRI JUSTICE SUJOY PAI'IL AI{D THE HOI{OURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO WRIT PETITION No.252l3 0F 2024 ORDER: G,er Hon'ble Justtce Sujog PauI) Heard Sri P. Srikanth Rao, learned counsel for the petitioner(s), Sri B. Mukherjee, learned counsel representing Sri Gadi Praveen Kumar, learned Deputy Solicitor General of India, for the respondent(s)-Central Government and Ms. B. Sapna Reddy, learned Junior Standing Counsel for Income Tax Depa,rtment, for the respondent(s)-lncome Tax Department. 2. The ground taken by the learned counsel for the petitioner(s) is that in furtherance of Finance Act, 2021, re- assessment process stood modilied but the respondents have not taken care of it and therefore, notice issued under Section 148 of the Income Tax 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 finally drawn by this Court in a batch of writ petitions, W.P.No.259O3 of 2022 2 and other connected matters, decided by common orde r dated 14.O9.2023. The parties agreed that this matter may be disposed of interms of the Common Order dated 74'O9'2023' 4. This Court in the said order dated l4'O9 '2023 in W.P.No.25903 of 2022, held as under: \"35. I'1 view of the aforesaid discusslons' lt is by T ow ver, clear tbat tbe plocedure to be follon'ed by the tesPo[dert- Department upotr tteaung the ,rotices lssued for reaasessmeEt belng unater Sectiotr 148A, the subsequeT t proceeditrgs was mandatorily tequired to be u,xdertakeu uuder the substltuted provisious as laiat dowrr unaler the Fina[ce Act, 2O2l' ln the absence of which, we ate colsttailed to hold that the procedure adopted by the tespondeDt-Departtr€lt is i[ coatraventioD to tte statute i.e. the FiEatrce Act' 2o2lt at tbe fi.st itrstance. secoadly, it is also in direct contravention to the alfuectives issued by the Eoa'ble Supler[e Court iD the case ofAshish Agarwal, suPra' 39. For all the aforesaiil reasons, the lapugned notices issued aad the proceediags draw[ by the req'ondent-DePait8ent ls Eeither tenable, Eor sustai[able' The Dotices so issued and the procedure adoPted belng per se lllegal, deserves to be aad are accordingly set aside/quashed' As a coBsequence' aU the iBpugEed orde$ tetting quashe'l, tbe coosequeatial otdera passed by the respoudent Departaeat Putsuaat to the lotlces issued uldet Sectioo 147 and 148 would also get quashed aud it is ordered accolaliugly. The reason we are quashlag the consequetrtial order is otr the princiPles that Yrhen the initiauoo of t.be Ptoceedings itself was Procedurally sronS' the subsequeot orders also Sets nullifled autoEatrcally' 37- The preliminary obiection raised by the Petitioner is sustai.ned and all these sT it Petitious staods allowed on this very jurisdictioaal issue. Siace the imPugBed notices aT d orders are gettiag quashed on the polnt ofjurisdiction' we are uot inclined to Proceed furthet aEd decide the othet issues raired by the petitionet which stands reserved to be raised -lonteaded irr an approprlate proceedings' + 3 38. Sitrce the tlotr'ble Supreme Court had, i! the case of Ashish AgarEal, sup.a, as a one tine deasure cxercisirg the powers urrder Arttcle 142 of the Cotrstitutioq of India, perEitted the Reveoue to ptoceed under the substituted provisioas, atld this Court allowing the petitio[s olly on the proeedural flaw, the right couferred o[ the Revenue would reraaitl reserved to p.oceed further if they so sallt froE the stage of the order of the SupreEe Court ia the case of Ashish Agarral, supra. 39. No order as to costs.\" 5. In view of the consensus arrived, the impugned Show Cause notice and consequentia.l 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.O9.2023 in W.P.No.25903 of 2022. 6.' The Writ .Petitioh iS all6wed. No costs. Interlocutory applications, if any pending, shall also stand ciosed. I //TRUE COPY' SD/.V.KAVITHA ASSISTANT REGISTRAR SEC ION OFFICER To '1 2 J 4 The Secretary, Union of lndia, Ministry of Finance 166-8 North Block' New Delhi - 1 10 001 . \"fniorne fit Officer, Ward 14(1), Hyderabad lT Towers, Masab Tank' Hvderabad, Telangana - 500004. it; P;;;il.i cornini\"\"ion.iof ln\"ome Tax - I Hyderabad, lT Towers' Masab Tank. Hvd'erabad, Telangana ' 500004 +ru\"iil;iiJn\"\"iFri\"r\"rJAli.i\"ment centre tncome Tax Department, Ministry of Finance Govt. of lndia' New Delhi. 'On\" CCio SRI P SRIKANTH RAO, Advocate [qip.Cl 6;; cc io 5ni oAor pnnVEer'r kijtrmR, Dl,'sollclroR GENERAL oF INDIA tOPUCl b,i\"'cb-t. w'r. B SAPNA REDDY, JUNIoR sc FoR lrD [oPUC] -l-'rvo CD CoPies ( 6 7 I PSK. (;iP I I.IIGH COURT DATED:1 210912024 ORDER WP.No.25213 of 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS. 5 1l Dll 0 Cot-iiA 2I il[l/ 2u{ (c ( oR THE St' sqTr;r.r o !) "