Sri Ranpnuja Reddy Mereddy vs. The Assistant Commissioner of Income Tax

PDF · subscribers
WP/36146/2026HC TelanganaHBHC01073931202630 October 2026Author: P.SAM KOSHY,SUDDALA CHALAPATHI RAO8 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the impugned notice dated 27.06.2026 under Section 148 of the Act emanated from the order issued under Section 148-A(3), which indicated consideration of the petitioner's reply and documents. The Court noted that the notice dated 27.04.2026 specifically mentioned the receipt of Overriding Commission (ORC) by the assessee through intermediaries and the conclusion of escapement of tax. The Court was of the considered view that the impugned notice specifically referred to the material and reply filed by the petitioner, and only upon consideration of the same was the notice under Section 148 issued. Furthermore, the Court stated that once a notice under Section 148 is issued, the petitioner has an ample opportunity to file the return of income and relevant documents before the Assessing Officer, who will consider them and pass appropriate orders. If aggrieved, the petitioner can avail further remedies. Therefore, the Court found no good grounds to interfere with the consequential notice and dismissed the writ petition as devoid of merits.

What were the facts?

The petitioner, Sri Ramanuja Reddy Mereddy, an individual assessee, filed a writ petition challenging an order dated 27.06.2026 passed under Section 148-A(3) of the Income-tax Act, 1961, and a consequential notice issued under Section 148 for Assessment Year 2022-23. The Assessing Officer initiated proceedings based on information suggesting the petitioner received commission amounts from insurance companies which were not declared in his return. The petitioner responded by stating that the amount of Rs. 63,35,410/- was received by Smt. Sudha Reddy, not himself, and provided documentary evidence including Form 26-AS. However, the Revenue proceeded to issue the impugned order and notice, citing departmental investigation into Overriding Commission (ORC) payments by insurance companies to Middle Layer Business Entities (MLBEs). The petitioner contended that his reply and supporting documents were not properly considered.

What were the issues?

1. Whether the order passed under Section 148-A(3) and the consequential notice under Section 148 of the Income-tax Act, 1961, are arbitrary, illegal, without jurisdiction, without application of mind, and violative of Article 14 of the Constitution of India and principles of natural justice, due to non-consideration of the petitioner's reply and documentary evidence. Assessee's Contention: The petitioner argued that the respondent-Department failed to consider the specific plea that the amounts in question did not pertain to him, nor the documentary material, including Form 26-AS, filed before the Department. The issuance of the notice under Section 148 without proper consideration of these submissions was contended to be perverse and bad in law. Revenue's Contention: The learned Senior Standing Counsel for the Revenue supported the impugned orders, contending that the reply and documents filed by the petitioner were considered and negated in the notice under Section 148-A(3), and thereafter, the issuance of the notice under Section 148 was mandated. Therefore, the grievance that the reply and documents were not considered was deemed improper and unjustified.

Which sections of the Income-tax Act were involved?

Section 148-A(3),Section 148

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

THE HON’BLE THE ACTING CHIEF JUSTICE P.SAM KOSHY AND THE HON’BLE SRI JUSTICE SUDDALA CHALAPATHI RAO (CNR.No.HBHC010739312026)

Reserved on : 27.10.2026 Pronounced on : 30.10.2026

Uploaded on : 30.10.2026

DATE: 30.10.2026 Between:

Sri Ramanuja Reddy Mereddy. …Petitioner AND The Assistant Commissioner of Income Tax and another. …Respondents

ORDER: (per Hon’ble Sri Justice Suddala Chalapathi Rao)

This Writ Petition has been filed under Article 226 of the Constitution of India, seeking the following relief:-

“ Hon’ble Court may be pleased to :

(a) issue a writ, order or direction, more particularly in the nature of Writ of Mandamus declaring the impugned order, dated 27.06.2026 passed under Section 148-A(3) of the Income-tax Act, 1961 bearing DIN ITBA/AST/F/148A/2026-27/1090519227(1) for AY.2022-23 as arbitrary, illegal, without jurisdiction,

2

without application of mind and violative of Article 14 of the Constitution of India, apart from being passed in violation of principles of natural justice; and (b) consequently quash the notice issued under Section 148, dated 27.06.2026 bearing DIN and Notice No.ITBA/AST/S/1481/2026-27/1090524997(1) for the A.Y.2022-23 and pass such other order or orders…”

2.

Heard Mr.A.V.Raghu Ram, learned counsel for the petitioner and Ms.Bakaro Sapna Reddy, learned Senior Standing Counsel for Income Tax, for respondent No.

1.

Perused the record.

3.

The brief facts of the case are that the petitioner is an individual assesse under the Income-Tax Act, 1961, bearing PAN: COJPM8142N, and the impugned proceedings relates to the Assessment Year 2022-23, corresponding to Financial Year 2021-22. It is stated that the respondents on the information allegedly received under the risk-management framework that the petitioner has received commission amounts from certain insurance companies and had not admitted the same in the return of income, issued a notice under Section 148-A(1), dated 30.03.2026, to the petitioner. In response thereto, the petitioner submitted reply, dated 17.04.2026 disputing the alleged receipt of Rs.63,35,410/- and stating that the said

3

amount had actually been received by Smt.Sudha Reddy, PAN: AXFPN8869A, and not by the petitioner. However, the respondents while dealing with the petitioner’s submissions, proceeded to refer to an alleged departmental investigation concerning Overriding Commission that the insurance companies are allegedly paying to the Middle Layer Business Entities (“MLBEs”). Thus, the respondents only based on the information available that the petitioner was in receipt of ORC payments through middle-layer entities/intermediaries, and the said amounts had not been admitted in the return of income filed by the petitioner, concluded that the income chargeable to tax had escaped assessment and held the case to be fit case for issuing a notice under Section 148, and issued the impugned order. Aggrieved thereby, the instant writ petition is filed.

4.

Learned counsel appearing for the petitioner would contend that, infact, the petitioner in the reply has specifically pleaded that the said amounts do not pertain to the petitioner in the present case and that relevant documentary material including Form 26-AS, has also been filed before the

4

respondent-Department. However, the respondent-Department, without considering the said material placed before it and without mentioning any proper reasons in the impugned notices, has negated the stand of the petitioner and caused the issuance of a notice under Section 148 of the IT Act.

5.

Learned counsel further contended that the respondent- Department though is required to consider the submissions specifically pleaded and the material filed by the petitioner before issuing a notice under Section 148 of the IT Act, the issuance of such a notice under Section 148, without considering the same properly, except stating that the submissions of the assesse were considered, is perverse. Therefore, it is contended that the impugned proceedings are bad in law and are liable to be quashed and set aside.

6.

Per contra, the learned Senior Standing Counsel Ms.B.Sapna Reddy, supported the impugned orders and contended that, in the notice under Section 148-A(3), the reply as well as the documents filed by the petitioner were considered and negated, and thereafter, the issuance of the

5

notice under Section 148 was mandated. Therefore, the grievance of the petitioner that the reply, along with the documents filed by the petitioner, were not at all considered, is not proper or justified.

7.

Having heard Sri Mr.A.V.Raghu Ram, learned counsel for the petitioner, and Ms.Bakaro Sapna Reddy, learned Senior Standing Counsel, appearing for the respondent No.1- Department, and having given earnest consideration to their submissions, perused the record.

8.

Apparently, the impugned notice, dated 27.06.2026 under Section 148 of the Act emanated from the impugned order issued under Section 148-A (3) of the Income Tax Act, 1961, which shows consideration of the reply and documents filed by the petitioner.

9.

Further, vide notice, dated 27.04.2026, respondent- Department has specifically stated that assesse was in receipt of Overriding Commission (ORC), being payments made by insurance companies through the middle-layer business entities/intermediaries, and that the assesse had admitted the

6

receipts under business head and admitted income on estimated basis, and even if the assessee had admitted the receipts to the taxation, the expenditure claimed against the same are to be disallowed, as no services were rendered by the assessee to earn such income, and therefore, came to the conclusion of escapement of tax, and held that it was a fit case for issuing a notice under Section 148 of the IT Act.

10.

In that view of the matter we are of the considered view that the impugned notice, dated 27.06.2026 specifically adverted to the material and the reply filed by the petitioner, and only upon consideration of the same the notice under Section 148 of the IT Act was issued.

11.

Further, once a notice under Section 148 of the IT Act has been issued, the petitioner would have ample opportunity to file the return of income along with the relevant information/documents before the Assessing Officer, who shall consider the same and pass appropriate orders in accordance with law. Even, if the petitioner is aggrieved thereby, it is

7

always open to the petitioner to avail further remedy of approaching the appellate authorities.

12.

Therefore, in the considered view of this Court, the petitioner has not made any good grounds to interfere with the consequential notice issued under Section 148 of the IT Act and that the writ petition is devoid of merits and is liable to be dismissed.

13.

Accordingly, the Writ Petition is dismissed. There shall be no order as to costs.

Miscellaneous petitions, if any are pending, shall stand closed. _________________________________ P.SAM KOSHY, ACJ

_________________________________ SUDDALA CHALAPATHI RAO, J

Date: 30.10.2026 ds

8

THE HON’BLE THE ACTING CHIEF JUSTICE P.SAM KOSHY AND THE HON’BLE SRI JUSTICE SUDDALA CHALAPATHI RAO Date: 30.10.2026

ds

More judgments on Section 148

All 35,022 judgments and leading authorities on Section 148 →

Latest GST High Court judgments

Search GST case law →