SURABHI RESTAURANT and BAR V. The Assistant Commissioner of Income tax circle 13(1)

WP/21247/2024

AI Insights

The case involves Surabhi Restaurant and Bar, represented by its proprietor Baikadi Sathi Reddy, challenging the validity of notices issued by the Income Tax Department under Section 148 of the Income Tax Act, 1961, for the assessment year 2020-21. The petitioner argued that the notices were issued without following the modified re-assessment procedure as required by the Finance Act, 2021. The respondents included various authorities from the Income Tax Department and the Central Government. 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 reassessment notices.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 690327 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 07-08-2024
• Assessment Year: misc
• Other Referred Cases: Ashish Agarwal
• Laws Referred To: Income-tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: BOKARO REDDY; B MUKHERJEE
• Assessee Lawyers: THANNERU KUMAR
• Keywords: Finance Act 2021; Income Tax; Natural Justice; Re-assessment; Writ of Mandamus
• Section: 148; 148A(d)

Judgement Text

"[ 3411 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY,THE SEVENI'H DAY OF AUGUST TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO WRIT PETITION NO: 21247 OF 2024 Between: SURABHI RESTAURANT and BAR, Rep of the its Proprietor BAIKADI SATHI REDDY, S/O.YADI REDDY BAIKADI, Aged about 54 years, Occupation. Business, Rl/O. H.No.4-4-8711 Ecll Main Road Nacharam, Hyderabad 500076,Telangana, lndia- PAN. ACJFS9575R Assessment Year. 2020-21 ...PETITIONER AND 1. The Assistant Commissioner of lncome tax circle '13('l ), Aaykar Bhava n, Basheerbagh, Hyderabad 2- The Principal Chief Commissioner of lncome Tax Telangana and AP, Hyderabad, lT Towers, AC Guards, Masab Tank, Hyderabad 500 028, Telangana 3. The Central Board of Direct Taxes, Represented by its Chairman, Department of Revenue, Ministry of Finance, Government of lndia, Secretariat Buildings, New Delhi 4. The National Faceless Assessment Center, lncome Tax Department, New Delhi 5. The Union of lndia, Represented by its Secretary to lhe Government, Depa(ment of Revenue, Ministry of Finance, 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 drrection more particularly one in the nature of Writ of fvlandamus, declaring the impugned notice dated. 27.03.2O24 for 4.Y.2020-21 passed u/s 148A(d) of the Act vicie DIN No. ITBA/AST/F1148Al2O23- 2411063481256('l )and the consequential notice u/s 148 dated 27 .O3.2O24 vide DIN No. ITBA/AST/S/148 112O23-2411O634U1486(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 Justice Counsel for the Petitioner: SRl. THANNERU CHAITANYA KUMAR Counsel for the Respondent Nos.1&2: MS. BOKARO SAPNA REDDY (Jr. SC FOR TNCOME TAX) Counsel for the Respondent Nos.3 to 5: SRI B.MUKHERJEE FOR SRI GADI PRAVEEN KUMAR DY. SOLICITOR GENERAL OF INDIA The Court made the following: ORDER THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO WRIT PETITION No.21247 OF 2o24 ORDER: (per Hort'ltla,Iustice Sujog Paul) Heard Sri Thanneru Chaitanya Kumar, learned counsel for the petitioner(s), Ms. B.Sapna Reddy, learned Junior Star-rding Coun sel lor lncome Tax Department. for the respondents Income Tax Department and Sri B. Mukherjee, Iearned counsi'l representing Sri Gadi Praveen Kumar, Iearned Depllty Solicitor General of India, for the responden ts - Cen tral Government 2. The grour-rd taken by the learned counsel for the petitionr:r(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 lhe lncome Tax Act, 196 I cannot sustain judicial scmtiny. Since notice is bad in law. the consequential orders are also bad in law 3. During thc course of hearing, learned counsel for the parties agreed th:rt curtains on this issue are finally drawn by this Court in a l>atch of writ petitions, W.P.No.25903 of 2022 and other connccted matters, decided by comm on order 2 dated 14.09.2023. Tlne parties agreed that this matter may be disposed of in terms of the Common Order dated I 4.O9.2023 4. This Court in the said order dated 14.09.2023 rn W.P.No.25903 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- DepartmeEt upoa treating the Eotices issued for reassessroetrt beitrg under Section 148A, the subsequent proceedings was mandatorily requircd to be undeitaken under the substituted provisions as laid down under the Finaace Act,2O2l. ln the absence of which, we are constrained to hotd that the ptocedure adopted by the respondent-DepartEent is in contraveatioa to the statute i.e. the Financc Act,2O21, at the frrst instance. Secondly, it is also in direct conttaweotion to the dlrectives issued by the Hon'ble Supreme Court ln the case of Ashish Aga!'wal, supra. 36. For all the aforesaid rcasons, the impugaed Eotices issued and the proceedings drawu by the respondent-Department is aeither tenable, nor sustainable. The notices so issued and the ptocedure adopted being per se illegal, deserves to be and are accordiDgly set aside/quashed. As a coasequence, all the impugned orders gettilg quashcd, the coDsequential orderc passed by the respondent DepartEeDt pursuant to the notices issued under Sectioa 147 and 148 would also get quashed and it is ordered accordlEgly. The reason we are quashing the consequential order is on the principles that wh€n the initiatioE of the proceedi[gs itself was procedurally wrong, the subscqueat orders also gets trullified automatically. 37. The pretirEinary objection raised by the petitioner is sustaincd and all these writ petitions ataEds allowed on this very jurisdictional issue. Since the impugaed notices and orders are getting quashed oa the point ofjurisdiction, we ere not itrclined to proceed further and decide thc other issues raised by the petitioner which stands tesereed to be raised alld contended in an appropriate proceedings. 38. Since the Hon'ble Supreme Court had, in the casc of Ashish Agarwal, supra, as a ole-time measure exetcising the - --powers under Article 142 of the Constitution of India, I 3 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 aeserved to ploceed further if they so want from the stage of the order of the Supteme Court in the case of Ashish Agarwal, supta. 39. No order as to costs.\" 5. In vieu, of the consensus arrived, the impugned Show Cause notice and consequential orders passed in this writ petition are set asrde. Liberty is reserved to both the parties to take respectir,.e stand and to proceed in accordzrnce with law as p(3r paragraph No.38 of the order dated 14.0').2023 in W.P.No.25903 d''2022. 6. The Writ Petition is allowed. No costs' Interlocutory applications, if any pending, shal1 aiso stand closed //TRUE COPY' SD/-MOHD. ISMAIL ASSISTANT REGISTRAR !,'t '! SECTION OFFICER To, cl& 1. The Assistant Commissioner of lncorne tax circle 13(1), Aaykar B havan, Basheerbag h, Hyderabad 2. The Principal Chref Commissioner of lncome Tax Telangana and AP, Hyderabad. lT Towers, AC Guards, Masab Tank, Hyderabarl 500 028, Telangana 3. The Chairman. Central Board of Direct Taxes, Department of Revenue, Ministry of F-inance, Government of lndia, Secretariat Buildings, New Delhi 4. The National Faceless Assessment Center, lncome Tax Department, New Delhi 5. The Ser;retary to the Government, Union of lndia, Departmerrt of Revenue, [ ,4rnrstry of Finanr:e, New Delhi 6, One CC) to SRI THANNERU CHAITANYA KUN4AR Advocate toPUC] 7. One CC to lr/S BOKARO SAPNA REDDY (Jr. SC FOR TNCOME TAX) Advocate [OPUC] One CC to Sri Gadi Praveen Kumar, DeJ_ruty Soticitor General of lndia [OpUC] Two CD Copies 8 o KKS rlIP HIGH COURT DATED:0710812024 ORDER WP.No.21247 of 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS __-.. 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