Sri Nemali Hanmath Reddy and Sri Dattu Chandha V. Assessment Unit, National Faceless Assessment Centre, Income Tax Department, Ministry of Finance and The Income Tax Officer, Ward 15(1), Hyderabad and The Income Tax Officer, Ward 1, Nizamabad

WP/14271/2024

AI Insights

The case involves two writ petitions filed by Sri Nemali Hanmath Reddy and Sri Dattu Chandha against the Assessment Unit of the National Faceless Assessment Centre and the Income Tax Officers of Hyderabad and Nizamabad, respectively. The petitions challenged the legality of reassessment notices and orders issued for the assessment years 2016-17 and 2018-19. The petitioners argued that the notices were issued without adhering to the revised procedures established by the Finance Act, 2021, and were therefore void. The court referenced a previous decision in W.P.No.25903 of 2022, which had set a precedent on this issue, leading to the quashing of similar notices and orders.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 798590 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 10-06-2024
• 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 SAPNA REDDY; J SUNITHA
• Assessee Lawyers: A V RAM
• Keywords: Faceless assessment; Income Tax; Legal Proceedings; Reassessment; Writ petition; Unlawful Orders
• Section: 147; 148; 144; 149; 151; 151A; 226

Judgement Text

"| 3411 l HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) IVONDAY, THE TENTH DAY OF JUNE TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO WRIT PETITION NOS. 14253 and 14271 OF 2024 WRIT PETITION NO.14253 of 2024 Between: Sri Nemali Hanmath Reddy, S/o. Sri Nemali Kanaka Reddy, Aged about 49 years, Occupation. Private Service, 2-3-66413, Sai Mithra Residency, Sai Nagar Colony, Road No.1 , Beside Swagath Hotel, Nagole, Alakapuri, Hyderabad - 500068. ...PETITIONER AND 1 Assessment Unit, National Faceless Assessment Cenlre, lncome Tax Department, Ministry of Finance, Room No. 4O1,2\"d Floor, E-Ramp, Jawaharlal Nehru Stadium, Delhi - 110 003. The lncome Tax Officer, Ward 15('1 ), Hyderabadl lncome Tax Towers, AC Gurads, Masab Tank, Hyderabad ...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 pass all order or direction, especially one in the nature of WRIT OF I 4ANDAI ,1US holding that the order passed by 1't Respondenl uts. 147 r.w.s 144 r.w.s 1448 of the Act, d1.12.02.2024 with DIN No.lTBA/AST/5114712023- 241106079318'1(1) for the Ay.20'16- 17, as arbitrary, illegal, bad in law, void ab initio, apart from being violative of provisions of section 148A and section I 49 of the Act and also contrary to the circular issued by CBDT and provisions of section 15'1A of the Act, and consequently set aside the order passed by 1't Respondent uls. 147 r.w.s 144 r.w.s 1448 of the Act, dt.12.02.2o24 with DIN 2 I No.ITBA/AST/5114712A23-24i1060793181(1) for the Ay.201e'-17 and all consequential proceed ings pursuant thereto. lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay all further proceedings, including any recovery, pursuant to the order passed by the 1't Respondent uts. 147 r.w.s 144 r.w.s 1448 of the Act, dt.12.02.2024 with Dl N No. ITBA/AST/SI 1 47 I 2023-2411 060793 1 I 1 ( 1 ) for the Ay.2C1 6-17. Counsel for the Petitioner: SRI A. V. RAGHU RAM Counsel for the Respondents: MS. B. SAPNA REDDY, JUNIOR SC REPRESENTING FOR SRI J. V, PRASAD (SC FOR INCOME TAX) WRIT PETITION NO: 14271 OF 2024 Between: Sri Dattu Chandha, S/o. Sri Veeraiah, Aged about 59 years, Occupation Business, 3-85, Jakora, Varni, Nizamabad 503201 ...PETITIONER AND 1 ntre, lncorne Tax Floor, E-Ramp, Assessment Unit, National Faceless Assessment C Department, l ,4inistry of Finance, Room No. 401, 2n Jawaharlal Nehru Stadium, Delhi 110 003. e d 2. The lncome Tax Officer, Ward 1, 6-2-15613, Subhash Nagar, Nlizamabad - 503002 ..RESPONDENTS Petition under Article 226 of lhe Constitution of lndia pra)'tng that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to pass an order or direction, especially one in the nature of WRIT OF MANDAMUS holding that the order passed by '1't Respondent uls. 147 r.w.s 144 r.w.s 1448 of the Act, d1.08.02.2024 with DIN No.lTBAlA!;flsl147l2O23- 2411060648812(1) for the Ay.2018-19, as arbitrary, illegal, bad in law, void ab initio, apart from being violative of provisions of section 1 4BA and section 149 of the Act and also contrary to the circular issued by CBDT and provisions of section 151A of the Act, and consequently set aside the order passed by 1st Respondent u/s. 147 r.w.s 144 r.w.s 1448 of the Act, dt.08.02.2024 with DIN No.ITBA/AST/S114712023-2411060648812(1) for the Ay.2018-19 and all consequential proceedings pursuant thereto. lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay all further proceedings, including any recovery, pursuant to the order passed by the 1't Respondent u/s. 147 t.w.s 144 t.w.s 1448 of the Act, d1.08.02.2024 with DIN No:ITBA/AST lsl 1 47 12023-241 1060648812(1 )'for the Ay.201 8-1 9. Counsel for the Petitioner: SRI A. V. RAGHU RAM Counsel for the Respondents: M/S J. SUNITHA The Court made the following: COMMON ORDER iii THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO wRrr pETrrroN Nos.14253 & L427t OF 2024 COMMON ORDER (per llotl'ble SP,J) Sri A.V. Raghu Ram, learned counsel appezrrs for the petitioners, Ms.B.Sapna Reddy, learned Junior Standing Counsel representing Sri J.V.Prasad, learned Senior Standing (lounsel for Income Tax Department appears for the respondents ln W.P.No.I4253 of 2024 and Ms. J.Sunitha, learned Junior Standing Counsel for Income Tax Department appears for the respondents in W.P.No. 1427 I of 2024. 2. Regard being had to the similarity of the' question involved, on the joint request of the parties, the rrLatters are analogously heard and decided by this common order 3. It is common ground taken by the learned counsei for the petitioner(s) that in furtherance of Financ e Act, 2O2l , re- assessment process stood modified but the respondents have not taken care of it and therefore notices issued under Sr,-ction 148 of the Income Tax Act, 196 1 cannot sustain judicial scrutiny. Since notices are bad in law, the consequential orders are also bad in law. 2 4. 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.25903 of 2022 and other connected matters, decided by common order dated 14.O9.2023. 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 14.09.2023 in W.P.No.25903 of 2022, 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-Department upon treating the notices issued for reassessment being under Section 1484, 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 Acl, 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 accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent Department pursuant to the notices issued under Section 147 and 14g 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 and 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 3 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 under Article 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 order of the Supreme Court in the case of Ashish Agarwal, supra. 39. No order as to costs.\" 6. In view of the consensus arrived, the impugned Show Cause notices and consequentia-I orders passed in th.is batch of writ 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.25903 of 2022 7. The writ petitions are allowed. No costs. Inr,erlocutory applications, if any pending, shall also stand closed. SD/-V.KAVIT A ASSISTANT REGIS AR //TRUE COPY// SECTION OFFICER To, Assessment Unit, National Faceless Assessment-Centre' lncome Tax ij;;\"r;;;;i, rr,rinlbtrv of Finance, Rooqr-f!o 401 ' 2nd Floor' E-[lamp' Jaiiniart Nehru Sladium, Delhi - 110 003' ffi;]#;ft i;;brflcer; w\",,i i s(r ), nvoe'auad' lncome rax r-owers' AC Gurads. Masab Tank, HYderabad 6iJce iii-6rin. V. nasnu Ram, Advocate toJUCJ ffi d; i6 rrlri. sl\"itiiJ\"ilSb r* !ncoqllgl D-epartment[oPUC] 5;; dc i\" sii L. V. F'i'tad (sc for INCON/E rAX) [oPUC] Two CD CoPies 1 2 4. 5. tt. TJ GJP ?o t , -17 I HIGH COURT DATED:1010612024 ORDER 19 lut wl a) L;, / ,--.. R fHE.ia4 o ,€ t o rn :io/). - r t _ __:='j-.:.--- WRIT PETITION NOS. 14253 and 14271 OF 2024 ALLOWING THE WRIT PETITIONS WITHOUT COSTS. 6 8nq, -1'1\"t, "