Primary Agricultural Cooperative Society Ltd., Thimmapur V. Union of India, Ministry of Finance and Income Tax Officer, Ward 2, Karimnagar and Income Tax Officer, Ward 1, Nirmal and The Principal Commissioner of Income Tax - II, Hyderabad and The National Faceless Assessment Centre, Income Tax Department

WP/17972/2024

AI Insights

The case involves the Primary Agricultural Cooperative Society Ltd., Thimmapur, which challenged the legality of a notice and subsequent orders issued by the Income Tax Department under Section 148 of the Income Tax Act, 1961, for the assessment year 2017-18. The petitioner argued that the reassessment process was modified by the Finance Act, 2021, and the respondents failed to adhere to these modifications, rendering the notice and orders illegal and void. The court referenced a common order in a batch of writ petitions (W.P.No.25903 of 2022) decided on 14.09.2023, which had similar issues and found in favor of the petitioners, leading to the quashing of the notices and orders in those cases.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 803986 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 11-07-2024
• 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: KAVITHA YADAV; J SUNITHA
• Assessee Lawyers: P SOMASHEKAR REDDY
• Keywords: Income Tax; Jurisdictional issue; Procedural Flaw; Reassessment; Writ of Mandamus
• Section: 148; 148A(d); 226

Judgement Text

"IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE ELEVENTH DAY OF JULY TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO WRIT PETITION NO: 17972 OF 2024 [ 3411 ] 141 Pan. Between: Primary Agricultural Cooperative Society Ltd., Thimmapur Office at Thimmapoor, Dharampuri, Karimnagar Telangana, 505425 AACTP7265J Rep. byJ. Prabhakar ...PETITIONER AND 1 Union of lndia, Ministry of Finance Rep. by its Secretary, 166-8 North Block, New Delhi - 'l 10 001 . lncome Tax Officer, Ward 2, Karimnagar,lT Office, Aayakar Bhavan, Near Natraj Theake, Karimnagar, 50500'1 . lncome Tax Officer, Ward '1 , Nirmal lT Office Nirmal, Nirmal 504'101. The Principal Commissioner of lncome Tax - ll, Hyderabad Signature Towers, Kondapur, Opp.:Botanical gardens, Serilingampally, R.R. District, Hyderabad, 500084. The National Faceless Assessment Centre, lncome Tax Department tVlinistry of Finance Govt. of lndia, New Delhi. ...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 l. lssue a Writ, Order or Direction more particularly, one, in the nature of Writ of fMandamus, declaring the order passed by the Respondent No.2 in passing the Order daled 1810312024 uls. 148A(d) and Notice issued by the Respondent No.2 under Section 148 of the lncome Tax Act, 1961 dated 19103t2024 as illegal, arbitrary, bad in law, void ab initio, violative of the principles of natural lustice and being violative of Articles 14, 19 and 265 of the Constitution of India and consequently, ll. Set aside the Order dated 1810312024 u/s. 148A(d) and Notice issued by the Respondent No.2 under Section 148 of the lncome Tax Act, '1 961 dated 1910312024 calling for the return of income of the Petitioner for AY 2017-18 and any consequent proceedings as lacking in 2 J 4 5 jurisdiction lll. Direct the AO to cancel PAN. AACTP7265.J- which is the allotted Pan Pan and allow tfre Petitioner to use PAN AAGAP3320U on. lV. Counsel for the Petitioner: SRI P. SOMA SHEKAR REDDY Counsel for the Respondent No.1 : Ms. KAVITHA YADAV, SC FOR CENTRAL GOVT Counsel for the Respondent No.2 to 5: Ms. J. SUNITHA, SC FOR INCOME TAX The Court made the following: ORDER 'l THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHIVAR RAO UIRIT PETITION No.17972 OF 20.24 ORDER: (per Hon'ble Justice Sujog Paul) Heard Sri P.Soma Shekar Reddy, learned counsel for the petitioner; Ms.Kavitha Yadav, learned Standing Counsel for Central Government, for respondent No. 1; and Ms.J.Sunitha, learned Junior Standing Counsel for Income Tax Department, for respondent Nos.2 to 5 2. The ground taken by the learned counsel for the petitioner(s) is that in furtherance of Finance Act, 2021, re- assessment process stood modified 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 hnally drawn by this Court in a batch of writ petitions, W.P.No.259O3 of 2022 matters, decided by common order and other connected 2 dated 14.09.'2023. The parties agreed that this; matter may be disposed of in terms of the Common Order dated 14.Ct9.2023. 4. This Court in the said order dated 14.09.'2023 in W.P.No.259O?' of 2022, held as under: \"35, In view of the aforesaid discussions, it is by now very clear that the procedure to be followed by the respondent- Department upon treating thc notices issued for reassessment being under Sectioa 148A, the subsequent proceedlngs was mandatorily required to be undertaken under the substituted provisions as laid down under the Finance Act,2O2l. In the absencc of which, we are constrained to hold that the procedure adopted by the respondeat-Department is in cortravention to the statute i.e, the Finance Act, 2O21, at the first instance. Secondly, it ls also in direct contravention to the directivcs issued by the Hotr'ble Supreme Court in the case of Ashish Agarsal, supra. 36. For all the aforesaid reasons, the impugned Eotices issued and the proceedings drawn by the respondent-Depaltment is neither tenable, nor sustainable. The notices so lssued and the procedure adopted being per se illegal, deserves to be and are accordingly set aslde/quashed. As a consequence, all the impugned orders getting quashed, the consequential o.ders passed by the rcslrondent Department pursuant to the notices issued under Section 147 and 148 woutd 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 wronB, the subsequent orders also gets nullified automatically. 37, The preliminary objection raised by the petitioner is sustained and all these writ petitiorls stands allowed on this very jurisdictional issue. Silrce the impugned noticcs and orders are getting quashed o[ the point ofjurisdietion, we ate 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 undet Atticle 142 of the Constitution of India., l I I / 3 pernitted the Rewenue to procced under the substituted provisions, and this Couft allowiut the petiuons only on the proccdural flawr the right conferred on the Revenu€ 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.. 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.25903 of 2022. 6. The Writ Petition is allowed. No costs. Interlocutory applications, if any pending, shall also stand closed. SD/-MOHD, ISMAIL ASSISTANT REGIS AR //TRUE COPYii SEGTION OFFICER To, l.Thesecretary,Unionoflndia,MinistryofFinancel66-8NorthBlock,New Delhi -110001. Z. lniome fjx Officer, Ward 2, Karimnagar, lT Office' Aayakar Bhavan, Near Natrai Theatre. Karimnaqar, 505001 . e. iniorfie iax Officer, War-O 1, Nirmal lT Office Nirmal, Nirmal 504101 - i. tnl prin\"ipaidomririssionei of lncome Tax - ll, Hyd'I\"bad Sign9ty,re,T9-Y9r:' 'Kondapur,'Opp.'Botanicalgardens,serilingampally,RRDistrict'Hyderabad' 500084. S. ii6 f'lriionrl Faceless Assessment Centre, lncome Tax Department Ministry of Finance Govt. of lndia, New Delhi. o. One Cblo SRI P. SOMA SHEKAR REDDY, Advocate tqfugl-^r..^. i. on; cc io r,tt. xnVtrnn YADAV, sc FoR cE rRAL goYJ. toPUCl B. O;; CC io Ms. J. SUNITHA, SC FOR INCOIVE TAX [OPUC] 9. Two CD CoPies BN GJP f., C.. HIGH COURT DATED:1110712024 ORDER WP.No.17972 of 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS l/,- ..;!,'(,, i,i ii ,, , -/. - -.-i j:::-:=:_-:r, :-.1r' ,1t :\" i4 -- -'- il )t Li liT ?024 '.ls .!. j. ., ;l ,l.' 1i :.' qLgt4-t^ t "