RAKSHIT DRUGS PVT LTD V. The Assistant Commissioner of Income tax Circle 3(1)

WP/22224/2024

AI Insights

The case involves Rakshit Drugs Pvt Ltd, represented by its director Palem Srinivas, challenging the validity of notices issued by the Income Tax Department under Section 148A(d) and Section 148 of the Income Tax Act, 1961, for the assessment year 2019-20. The petitioner argued that the notices were issued without adhering to the modified re-assessment procedures mandated by the Finance Act, 2021. The respondents included the Assistant Commissioner of Income Tax, the Principal Chief Commissioner of Income Tax for Telangana and Andhra Pradesh, and the National Faceless Assessment Center. The court referenced a common order from a batch of writ petitions (W.P.No.25903 of 2022) decided on 14.09.2023, which had similar issues regarding the procedural adherence in issuing such notices.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 758072 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 19-08-2024
• Assessment Year: misc
• Other Referred Cases: Ashish Agarwal
• Laws Referred To: Income-tax Act, 1961, Finance Act, 2021, Article 226 of the Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: J V PRASAD; B MUKHERJEE
• Assessee Lawyers: THANNERU KUMAR
• Keywords: Income Tax; Natural Justice; Procedural Flaw; Re-assessment process; Writ of Mandamus
• Section: 148; 148A(d)

Judgement Text

"[ 3411 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Originat Jurisdiction) MONDAY, THE NINETEENTH DAY OF AUGUST TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRIJUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO wRtT PETITION NO| 22224 0F 2024 Between: AND RAKSHIT DRUGS PVT LTD, Rep by its Director PALEM SRINIVAS, S/o. KOTESWARA RAO PALEM, Aged about 48 years, Occupation Business, Rl/o 425l3rt Rakshit House Sanjeeva, Reddy Nagar Colony Ameerpet, Hyderabad 500038, Telangana, lndia. PAN AABCR5S42G Assessment Year 2019-20 ...PETITIONER 1. The Assistant Commissioner of lncome tax Circle 3(1), Signature Towers, Kondapur, Sherlingampally, Ranga Reddy District, Hyderabad. 2. The Principal Chief Commissioner of lncome Tax Telangana and A P, Hyderabad, lT Towers, AC Guards, Masab Tank, Hyderabad 500 028, Telangana. 3. The National Faceless Assessment Center, lncome Tax Department, 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 issue an appropriate writ, order or direction more particularly one in the nature of Writ of Mandamus, declaring the impugned notice. dated. 07.04.2023 for A.Y. 2019-20 passed u/s 148A(d) of the Act vide DIN No. ITBA/ ASTlFl148A12023-2411051934319(1)and the consequential notice u/s 148 dated 1O-O4-2O23 DtN and Notice No.iTBA/AST/S/148 -1t2}23-24t1051956436(1), issued by the JAO (1st respondent) instead of FAO (3rd respondent), as void, illegal, and contrary to the provisions of lncome-tax Act and contrary to the Principles of Natural J ustice. Counsel for the Petitioner: SRI THANNERU CHAITANYA KUMAR Counsel for the Respondent No.'l & 2: SRI J.V.PRASAD' Sr. SC FOR INCOME TAX Counsel for the Respondent No.3: SRI B.MUKHERJEE, REP' FOR SRI GADI PRAVEEN KUMAR, DEPUTY SOLICITOR GENERIAL OF INDIA The Court made the following: ORDER THE HONOURABLE SRI JUSTICE SUJOY PAT'L AND THE IIONOURABLE SRI JUSTICE NAMAVARAPU RAJESIIWAR RAO WRIT PETITION No.22224 0F 2024 ORDER: (per Hon'ble Justice Sujoy paul) Heard Sri Thanneru Chaitanya Kumar, learned counsel for the petitioner, Sri J.V.Prasad, learned Senior Standing Counsel for Income Tax Department appearing for respondent Nos.l ald 2 ald Sri B. Mukherjee, learned counsel representing Sri Gadi Praveen Kumar, learned Deputy Solicitor General of India, for respondent No.3. 2. The ground taken by the learned counsel for the petitioner(s) is that in furtheralce 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 ..--a4d other connected matters, decided by common order 2 dated 14.09.20i13. The parties agreed that this matter may bc disposed of in tt:rms of the Common Order dated 14 09'20-13' 4 . This Cou rt ir-r the said order dated 14 O9 2023 in W.P.No.259O3 c'f 2022, held as under: \"35. In vie*' of tte aforesaid discussloas' it is by lrow very clear that the Procedure to be followed by the resPondent- Departmetrt uPou treatlng the notices issued for leas-sessEent beilg uDder Section 148A, the subscquent proceediags was mandatority lequired to be undertaken uEdel the substituted provisions as laid down under the Fi[ance Act' 2021' h the absence of tshicll, we ale coEstrained to hold that the procedure adopted by tte resPoodent-D€PartEent ls ia cotrtravention to the statute i e' the Filance Act' 2O21' at the flrst iustance. Secondly, it is also ln direct contravention to the diiectiwes issued by the Hon'ble SuPreEe Court itl tbe case of Ashish Agatwal, suPra' 36. For alt the aforesaid reasous, the iEl'u8ned lotices issued and the proceedilgs altawn by the tespoadent'DepartoeDt is neither tenable, nor sustaiaable' ThG aouces so issued add the procedure adoPted being per se illegal, deserves to be aud are accordingly set aside/quasbed' As a cotrsequence' all the impugncd orders gettiog quashcd, the consequential otders passed by the xespoEdeot DePartdeDt putsua'nt to the notices issued under Section 147 aod 148 would also get quashed and it is ordered accordiogty. The teason se are quashing the consequential otder is oE the Pri[clples that when the iuitiation of the Procecdings itself was procedurally wro[g' the subsequent orders also gets Dullitie'l autoEatically' 37. Tltc pretiminary objection ratsed by the Petitioner is sustaiacd and aU thesc writ petitions sta[ds atloEed o! this very jurisdictional issue. siEce the iEPugtred trotices ard orders are getting quashed oo the point of jurtsdictiou' we are not incliaed to proceed furthet and dccide the other issues raiseal ty the Petitiouer which starrds teserved to be raised and coEtetrded ia en aPPropriate proceeditrgs' 38. Since the tlou'ble SuPrellc court ha'l, i[ the case of Ashish Agarwal, suPra' as a one-ti6e Deesure Gxercising the powers under Atticle 142 of t_he Constitutlon of IEdia' 3 perEitted the ReveDue to proceed u[der the substituted provislotrs, and thls Court atlowilg the pctitiols only on the ptocedural flaw, the right conlerred on the Revcnue would temain tesereed to proceed further if they so walrt fto[l the stage of tie order of the Supreme Court in the case of Ashish AgarEal, 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. sJl'a.v.s. PRASAD ASSISTAN[BEGISTRAR //TRUE COPY// .x SECTION OFFICER To, 1 The Assistant commissioner of lncome tax circle 3(1), signature Towers, r'.i\"a\"'pri,'Sr,Lrri\"gJmp;tlv, Ranga Reddv District Hvderabad 2 7. BSR The Princioal Chief Commissioner of HyOerabad, lT Towers, AC Guards, Telangana lncome Tax Telangana Ivlasab Tank, HYderabad ANd A P, 500 028, 3. The National Faceless Assessment Center' lncome Tax Department' New Delhi One CC to SRI THANNERU CHAITANYA KUMAR' Advocate [OPUCI One CC to SRI J.V.PRASAD, Sr' SC FOR INCOME TAX [OPUC] One CC to SRI GADI PRAVEEN KUMAR' DEPUTY. SOLICITOR GENERIAL 5'iiil'DjA, ffisii 6brrt torlhl stai\" oi t\"lahsana at Hvderabad [oPUC] Two CD CoPies 4 5 t) MP 6 HIGH COURT DATED: 1910812024 ORDER WP.No.22224 of 2024 ALLOWING THE WRIT PETITION' WITHOUT COSTS E ,. ,, .| ' f- st: .,. ./ ,^ j ..>t ir ,l' ir j-_l '.'i, {' 1t Dti [rZ4 tt!4 c1 ,rl / .4,^_. @c{. ,* "