M/s Steel Exchange India Limited V. The Assistant Commissioner of Income Tax

WP/25293/2024

AI Insights

The case involves multiple writ petitions filed by various petitioners against the Income Tax Department, challenging the legality of notices and orders issued for reassessment and penalties under the Income Tax Act, 1961, for different assessment years. The petitioners argued that the notices were arbitrary, illegal, and violated principles of natural justice and constitutional rights under Articles 14, 19(1)(g), and 265. The court referenced a previous decision in W.P.No.25903 of 2022, which had set a precedent on the procedural flaws in the reassessment process post-Finance Act, 2021. The court's decision was based on the agreement of the parties to dispose of the matter following the principles laid down in the earlier judgment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 752799 (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: B SAPNA REDDY; J SUNITHA
• Assessee Lawyers: A V A SIVA KARTIKEYA
• Keywords: Finance Act 2021; Income Tax; Natural Justice; Reassessment; Writ of Mandamus
• Section: 147; 148; 144; 271(1)(c); 271(1)(b); 151; 1484

Judgement Text

"[ 3411 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO WRIT PETITION NO: 25293 OF 2024 Between: M/s Steel Exchan Hyderabad - 500 Bandi Satish Kum ge 01 at, lndia Limited,303, My Home Lakshmi Nivas, Ameerpet, 6, Telangana. Represented by its Managing Director, lvlr. S/o Mr. Bandi Rama Rao. ...PETITIONER AND 1 The Assistant Commissioner of lncome Tax, Circle 3(1). Hyderabad, Siqnature Towers, Opposite Botanical Gardens, Sy. No. 6(P) of Kondapur, Syi tlo.. 37(P) of Koth'aguda, Serilingampally Mandal, Hyderabad - 500 084, Ranga Reddy District, Telangana. 2. The Principal Chief Commissioner of lncome Tax, Andh Telanqana. Hvderabad Room No..922,gth Floor,'B'Block, I 3, ACbuards, Hyderabad - 500 004. Telangana. 3. The Principal Commissioner of lncome Tax - 1 , Hyderabad, Room No 211 , 7th Floor,' lT Towers, AC Guards, Masab Tank, Hyderabad - 500 004, Telangana. 4. Additional / Joint / Deputy, Assistant Commissioner of lncome Tax lncome Tax Officer, Presently, As6essment Unit, lncome Tax Department Natioial e- Assessment Center; New Delhi, Room No.. 401, 2nd Floor, E-Ramp, Jawaharlal Nehru Stadium, New Delhi - 110 003. ...RESPONDENTS ra Pradesh and T. Towers, l0-2- WEDNESDAY, THE EIGHTEENTH DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FOUR WRIT PETITION NOs: 25293. 25311. 25314 AND 25351 OF 2024 Petition under Article 226 of the Constitution of lndia piaying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ of Mandamus or any other appropriate Writ, Order or Direction, declaring that the notice passed by the 1st Respondent, u/s 148 of the lncome Tax Act, '1961. dated 31/08/2024, bearing DIN and Notice No\" ITBA/AST/S/148_112024- 2511068217765('1), for the Assessment Year 2018 - '19, as arbitrary, illegal, bad in law, void-ab-initio, violative of the principles of natural justice apart from being violative of Articles 14, 19(1Xg) and 265 of the Constitution of lndia, and to consequently set aside the same in the interests of justice. lA l.lO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavlt filed in support of the petition, the High Court may be pleased to stay all further proceedings, including any recovery, pursuant to the notice passed by the lst Respondent, u/s 148 of the lncome Tax Act, 1961, dated 31.08.2024, bearing DIN and Notice No.ITBtuAST/S1148_112024- 2511068217765(1), for the Assessment Year 2018 - 19, pending disposal of the above Writ Petition. Counsel for the Petitioner: SRI A.V.A.SIVA KARTIKEYA Counsel for the Respondents: M/s. B.SAPNA REDDY, Jr. SC FOR INCOME TAX Between: M/s Kethaki Agro lndustries, D. No. Sy 002, Telangana. Represented by its M S/o. Mr. Vudugula Venkaiah . No.231/1, Main Road. Velganur- 503 anaging Partner, Mr. Vudugula Laxman ..PETITIONER AND 1 Assessment Unit, lncome Tax Department, National e-Assessment Center. New Delhi, Room No.- 401.2nd Floor. E-Ramp, Jawaharlal Nehru Stadium. New Delhi - 110 003 The lncome Tax Officer, Ward 1 , Nizamabad, lncome Tax Office. 6-2-156/3. Subhash Nagar, Nizamabad, Kurnool - 518 001. Andhra Pradesh. The Principal Chief Commissioner of lncome Tax, Andhra Pradesh and Telangana. Hyderabad, Room No.- 922.9th Floor. 'B' Block, l.T.Towers, 10-2- 3, AC Guards, Hyderabad - 500 004. Telangana. ...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 2 J pleased to issue a Writ of [t/andamus or any other appropriate Writ, Order or Direction, declaring that a. the order passed by the 1st Respondent, u/s 147 r/w Sec. 144 r/w Sec. 1448 of the lncome Tax Act, 1961, bearing DtN- tTBtuAST/5t147t2023- 2411058920332(1), dated 2011212023. for the Assessment Year 2O1S - 16 b. Consequential penalty orders passed by the 1st Respondent, levying penalties u/s 271('lXb) and 271(1)(c) of the lncome Tax Act. 1961. dated 2410612024 and 261O612024, bearing Dl N- |TBA/PNL tF 127 1 (1)(b)t2024- 25l1065985756(1) tTBNPNLIFt2Tl(1)(c)t2024-25t1066038712(j), respectively, for the Assessment Year 2015 - '16. as arbitrary, illegal, bad in law, void-ab-initio, violative of the principles of justice, apart from being violative of Articles 1a 19(1)(g) and 265 of Constitution of lndia and Sec 1484 of the lncome Tax Act. 1961 and to - Consequently set aside the same in the interests of justice. 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 pteased to stay all further proceedings, including any recovery, pursuant to the order passed by the 1st Respondent, uls 147 rlw Sec. 144 r/w Sec. 1448 of the lncome Tax Act, 1961, bearing DIN- ITBA/AST/S/14712023-24t105892O332(1), dated 2012.2023, for the Assessment Year 2015 - 16;, pending disposal of the above Writ Petition. Counsel for the Petitioner: SRI A.V.A.SIVA KARTIKEYA Counsel for the Respondents: M/s. J.SUNITHA, Jr. SC FOR INCOME TAX Between: lA NO: 1 OF 2024 WRIT PETITION NO: 25314 OF 2024 AND 1 Mr. Srinivas Muddangula, S/o. Mr. t Iuddangula Veeraiah, aged. 47 .years. Occ. Business, Rlo. I-3318121D, Bonthapally Village, Gummadidala Mandal, Sangareddy District - 502 31 3, Telangana ...PETITIONER The lncome Tax Officer, Ward 1, Sangareddy, lncome Tax Office, Veerabhadra Nagar, New Bus Stand, Veerabhadra Nagar, Sangareddy - 502 001, Andhra Pradesh Assessment Unit, lncome Tax Department, National e-Assessment Center, New Delhi, Room No.401, 2nd Floor, E-Ramp, Jawaharlal Nehru Stadtum, New Delhi - 110 003. The Principal Chief Commissioner of lncome Tax, Andhra Pradesh and Telangana, Hyderabad, Room No.922, 9th Floor, B Block, l.T.Towers, 10-2-3, AC Guards, Hyderabad - 500 004, Telangana. ) 3 ...RESPONOENTS Petition under Article 226 of the Constitution of lndia praying that in the cirr;umstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ of Mandamus or any other appropriate Writ, Order or Direction, declaring that the order passed by the 1st Respondent, uls 147 tlw Sec. 144 of the lncome Tax Act. 1961, dated 30.03.2024, bearing DIN and Notice No.. ITBAJAST/S/147 12023-2411063730830(1), for the Assessment Year 2016 - 17 as arbitrary, illegal, bad in law, void-ab-initio, violative of the principles of natural justice, apart from being violative of Articles 14, 19(1)(g) and 265 of the Constitution of lndia and Sec 1484 of the lncome Tax Act, 196'1 , and to consequently set aside the same in the interests of justice. lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit frled 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 'lst Respondent, uls 147 rlw Sec. 144 of the lncome Tax Act, 1961, dated 30.03.2024, bearing DIN and Notice No.ITBA/AST/S114712023- 2411063730830('l), for the Assessment Year 2016 - 17, pending disposal of the above Writ Petition. Counsel for the Petitioner: SRI A.V.A.SIVA KARTIKEYA +-- Counsel forthe Respondents: M/s. J.SUNITHA, Jr. SC FOR INCOME TAX WRIT PETITION NO: 25351 OF 2024 AND 1 Between: Mr. Sultan Shaik, S/o. Late Mr. Shiak Ali, aged 56 years, Occ. Retired, Rio 18-2-451N222, G M Colony, Chandrayangutta - 500 005, Hyderabad ...PETITIONER 2 Assessment Unit, lncome Tax Department, National e-Assessment Center, New Delhi, Room No. 401, 2nd Floor, E-Ramp, Jawaharlal Nehru Stadium, New Delhi - 110 003. The lncome Tax Officer, Ward 9(1), Hyderabad, l.T.Towers, 10-2-3, AC Guards, Hyderabad - 500 004, Telangana The Principal Chief Commissioner of lncome Tax, Andhra Pradesh and Telangana, Hyderabad, Room No.922, 9th Floor, B-Block, l.T.Towers, 10-2-3, AC Gaards, Hyderabad - 500 004, Telangana. ...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 a Writ of Mandamus or any other appropriate Writ, Order or Direction, declaring a) that the order passed under Sec. 147 r/w Sec. 144 riw Sec. 1448 of the lncome Tax Act, 1961, dated 20.03.2024, bearing DIN and Notice No.. ITBA/AST/S/147 12023-2411063021 993(1 ), by the 1 st Respondent, for the Assessment Year 2016 - 17 . b) consequential penalty orders passed by the 1\"t Respondent' levying penalties u/s 27 1 (1)(b), 271F & 271(1 (c) of the income tax act, 1961' dated 03.09.2024, 03.09.2024 and 03.09.2024' bearing DIN: tr B Al P NU F t 27 1 (1 ) (b) t 2024 -25 I I 06827 487 5 (1 ), ITBA/P N L/F/27 1 F I 2024' 2st1068274877 (1) & ITBA/PNLlFl271(1)(c)12024-2511068274738(1) respectively for the assessment year 2016-17; as arbitrary, illegal, bad in law, void-ab-initio, violative of the principles of natural justice, apart from being violative of Articles 14, 19(1Xg) and 265 ? --t , T D of the Constitution of lndia and Sec 1484 of the lncome Tax Act, 1961, and to consequently set aside the same in the interests of justice. fA 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 under Sec. 147 r/w Sec. 144 r/w Sec. 1448 of the lncome Tax Act, 1961, dated 20 03.2024, bearing DIN and Notice No. |TBA/AST/Si 't47t2023- 241 1.063021993(1 ), by the 1st Respondent, for the Assessment year 2016 - j7, pending disposal of the above Writ Petition. Cc,unsel for the Petitioner: SRI A.V.A.SIVA KARTIKEYA Cc,unsel for the Respondents: M/s. B.SAPNA REDDY, Jr. SC FOR INCOME TAX The Court made the following: COMMON ORDER o THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESTIWAR RAO WRIT PETITION NOS.25293 25311 2s314 AND 2535L OF 2024 COMMON ORDER (per Hon'ble SP,J) Sri A.V.A. Siva Kartikeya, learned counsel, appears for the petitioner(s), Ms.B.Sapna Reddy, learned Junior Standing Counsel for Income Tax Department, appears for the respondent(s) in W.P.Nos.25293 and 25351 of 2024 and Ms. J. Sunitha, learned Junior Standing Counsel for Income Tax Department, appears for the respondent(s) in W.P.Nos.253 1 1 and 253i4 of 2024. 2. Regard being had to the similarity of the question involved, on the joint request of the parties, the matters 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, 202 1, re- assessment process stood modilied 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 1aw, 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.259O3 of 2022 and other connected matters, decided by common order dated 14.O9 .2023. The parties agreed that this matter may be disposed 5 This Court in the said order dated 14.09.2023 in ['.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 148A, the subsequent proceedangs 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, su pra. 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 ,espondent Department pursuant to the notices issued under Section 147 and 148 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-a pqilll oUurisdiction, we are not inclined to proceed further and decide of in terms of the Common Order dated 14.09.2023. 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 remaan 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 consequential orders passed in this 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.259O3 of 2022. 7 The Writ Petitions are allowed. No costs. Interlocutory applications, if any pending, shall also stand closed. //TRUE COPY// SD/- MOHD. ISMAIL ASSISTANT REGISTRAR SECTION OFFICER To, 2 3 4 The Assessment Unit, lncome Tax Department, National e-Assessment Center, New Delhi, Room No. 401, 2nd Floor, E-Ramp, Jawaharlal Nehru Stadium, New Delhi - 110 003. The lncome Tax Officer, Ward 9(1), Hyderabad, l.T.Towers, 10-2-3, AC Guards, Hyderabad - 500 004, Tetarigbna The Principal Chief Commissioner of lncome Tax, Andhra pradesh and Je-!a1gana, Hyderabad, Room No.922, 9th Floor, B-BIock, t.T.Towers, 10-2-3, AC Guards, Hyderabad - 500 004, Telangana. The Assistant Commissioner of lncome Tax, Circle 3(.1), Hyderabad, Signature^ To_wers, Opposite Botanical Gardens, Sy. No.. 6(Pj of Kondapur, QV No 37(P) of Kothaguda, Serilingampally Mandal, Hydeiabad - 5OO 084; Kanga Heody Dtstflct, lelanqana. @t; ./ l 5. The Principal Commissioner of lncome Tax _ 1, Hyderabad, Room No.. 71 1. 7th Ftoor, tr Towers. AC Guards, Maarb Ta;[,-;tG;d;;-f 'sbt oo.,i: Telangana. 6. The Adttionat / Joint / Deputy, Assistant Commissioner of lncome Tax lncome Tax officer presentiy,'Asseismeni u-nii,\"iiii,or\" T;*\"D;;;rtm;;i Nationat e-Assessment c_ent'4 ruew olji[i,''ni'\"r'i,it +or, 2nd Ftoor, E_ Ramp, Jawahartat Nehru staoiuh, rrrew Deltii _ i r-o bol 7. The lncome Tax Officer Wgr.q 1, Nizamabad, lncome Tax Office, 6-2_156/3. Subhash Nasar, Nizamabad, Kuih;;t - 5i;00l;'A,;ih;, pradesh 8. The lncome Tax Offrcel, Ward 1, Sangareddy. tncome Tax Office, Veerabhadra Naoar New eus siinu, V\"\"obfi;a;-il\"ga, Sansaieaa),-- 5-o) 001 , Andhra Praiiesh 9. One CC to SRt A.V.A.S|VA KARTIKEYA, Advocate [OPUC] 10. One CC to M/s B.SApNA REDDY, Jr. SC FOR TNCOME IAX IOPUCI 1 1. One CC M/s J.SUN|THA, Jr. SC FOR TNCOME TAX [OPUC] 12.Two CD Copies BSR LS j HlGH COURT DATED: 1810912024 t HE STA Iq 1 I I I o o 0 I 0E[ 2r,l Og g- ) s; r)n.Y COMMON ORDER WP.Nos.25293,25311,25314 AND 25351 OF 2024 ALLOWING ALL THE WRIT PETITIONS, WITHOUT COSTS rt y^ i I "