Varakatnam Manish Reddy vs. Income Tax Officer Ward 4(1)

[ 3403 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) IVONDAY, THE TWENTY NINTH DAY OF APRIL TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE N.TUKARAMJI WRIT PETITION NOS: 11505 11521 11s33 11534 0F 2024 W.P.NO: 11505 OF 2024 Between: Varakatnam lvlanish Reddy, S/o V.surender Reddy, Rep. by GPA Holder - V. Surender Reddy, age 78 years, 3-4-418, Varakatnam Chambers, Kachiguda, Hyderabad, Telangana - 500018. ...pETlTloNER AND '1 . lncome Tax Officer Ward 4(1), Hyderabad, l.T. Towers, 10-2-3, A.C. Guards, Hyderabad-500004. 2. The Principal Commissioner Of Income Tax 1, Hyderabad, l.T. Towers, 10-2- 3, A.C. Guards, Hyderabad-500004. 3. N'ational Faceless-Assessment Centre, Delhi,The Assessment Unit, lncome Tax Department, National Faceless Assessment Centre, Delhi, Ministry of Financ6, Room No. 401 ,2nd Floor, E-Ramp, Jawaharlal Nehru Stadium, Delhi-.l 'l ooo3 ...RESP.NDENTS 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 lvlandamus, declaring the Assessment order dt. 16.03.2024 passed by the 3rd respondent uls 147 r.w.s 14411448 of the lncome-tax Act for A.Y. 2018-19 vide DIN No ITBA/AST/5114712023-2411062761191(1), which is passed as a consequence of the order passed u/s 148A(d) dt.12.04.2022 vide DIN No. ITBA/AST/F/148At2O22- 2311042718756(1) and the nolice u/s 148 d1.12.O4.2022 vide DIN No. ITBA/AST/51148-112022-2311042720367 (',l), issued by the JAO('lst respondent) instead of FAO(3rdrespondent), as void, illegal, and contrary to the provisions of lncome-tax Act and contrary to the Principles of Natural Justice.

lA NO: 1 OF 2024 Petition under Section 'l 51 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 pursuant to the Assessment Order dt. 16.Cr3.2024 passed by the 3rd respondent uls 147 t.w.s 14411448 of the lncome-tax Act for A.Y. 2018- 19 vide DlN No ITBA/AST/SI1 47 12023-2411062761191(1). Counsel for the Petitioner: SRI DUNDU MANMOHAN Counsel for the Respondents: M/s. B.SAPNA REDDY FOR SRI J.V.PRASAD, SC FOR INCOME TAX W.P.NO: 11521 OF 2024 Between: S A Enterprises, Rep by Partner lt/allula Srinivas, Aged about 50 years, S/o lr./. Peddi Raju, D. No. 14- 11412, Stinagar Colony, Patancheru, IVIedak, Telangana - 502319' ,..pETraoNER AND 1. lncome Tax Officer Ward 1, Sangareddy, Veerabhadra Nagar, New Bus Stand, Sangareddy, Telangana - 502001. 2. The Principal Commissioner of lncome Tax- 2, Hyderabad, Signature Towers, Opp Botanical Gardens, Kondapur, Hyderabad - 500004. 3. The Assessment Unit, lncome Tax Department, National Faceless Assessment Centre, Delhi, tvlinistry of Finance, Room No. 4O1 2nd Floor, E- Ramp, Jawaharlal Nehru Stadium, Delhi- 1 10003 ...RESPONDENTS Petition under Article 226 of the Constitution of lndia pray'ing 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 l\landamus, declaring the Assessment Order dl. 05. 12.2023 passed by the 3rd respondent u/s 147 r. w. s 14411448 of the lncome- tax Act for A. Y. 2018- '19 vide DIN No. ITBA/AST/S/14712023- 241'058465754(1), consequent to the order passed u/s 148A(d) dt. '1 1. 04. 2022 vide DIN No. ITBA/AST/F/148412022- 2311042688701(1 ) and the notice u/s 148 dl. 11. 04. 2022 vide DIN No. ITBA/ASTlsl148_112022- 2311042689878(1), issued by the JAO(1st respondent) instead of FA0(3rd respondent), as, illegal, and oontrary to the provisions of lncome- tax Act and contrary to the Principles of Natural Justice.

IA 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 pursuant to the Assessment order dt. 05. 12. 2023 passed by the 3rd respondent uts 147 r. w. s 14411448 of the lncome- tax Act for A. Y 2018- 19 vide DIN No. ITBA/AST/5114712023- 2411058465754(1)' Counsel for the Petitioner: SRI DUNDU MANMOHAN counsel for the Respondents: M/s. J.SUNITHA, JUNIOR SC FOR M/s SUNDARI R PISUPATI, Sr SC for lncome Tax DePt W.P.NO: 11533 0F 2024 Between: SAEnterprises,RepbyPartnertt4allulaSriniv-as,Aged^about.50years,S/o frl. p"OOi' na;u, O.tto.t+-114t2, Srinagar Colony, Patancheru, Medak, Telangana - 502319 ...PETrrroNER AND 1. lncome Tax Officer Ward 1, Sangareddy, Veerabhadra Nagar, New Bus Stand, Sangareddy, Telangana - 502001 Z. ine eiincip"al Commission6r Of lncome Tax 2, Hy_d^erabad,Signature Towers, Ooo Botoriical Gardens, Kondapur, Hyderabad - 500004' S. ihe Rssessment Unit, lncome Tax Department, National Faceless - Asiessment Centre, Delhi, tvlinistry of Finance, Room No' 4O1 ,2nd Floor, E- Ramp, Jawaharlal Nehru Stadium, Delhi-l 10003 ...RES.ONDENTS 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 Assessment order dt. 20.12.2023 passed by the 3rd respondent u/s 147 (.w.s 14411448 of the lncome-tax Act for A.y. 2o1g-2o vide DIN No. ITBA/ASTlsl147l2o23-24l1058915318(1), consequent to the order passed u/s 148A(d) dt.31 .O3 2023 vide DIN No' |TBA/AST/F/148A12022-2311051737681(1) and the notice u/s 148 dt.31 .O3.2O23 vide DtN No.ITBA/AST/S1148 1t2O22-2311051737788(1), issued by the JA0(1st respondent) instead of FA0(3rd respondent), as void, illegal, and contrary to the provisions of lncome-tax Act and contrary to the Principles of Natural Justice.

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 pursuant to the Assessment order dl.20.12.2023 passed by the 3rd respondent uls 147 r.w.s 14411448 of the lncome-tax Act for A.y. 2019- 20 vide DIN No. ITBA/AST/S/147t2oz3-24/105891 53i8(1 ) Counsel for the Petitioner: SRI DUNDU MANMOHAN Counsel for the Respondents: M/s. J.SUNITHA, JUNIOR SC FOR M/s SUNDARI R PlSUpATl, Sr SC for lncome Tax Depl W.P.NO: 11534 OF 2024 Between: .:,/ [\rlB Grammar Schqol, Part of B.K. Educational Society, Rep. by Authorised Representative - K Nagendra Kumar H._No_ 2-12, Surarirn boiony, fOn Jeedimetla, Quthubullapur, Ranga Reddy, Telangana-500055. ,,.PETITIONER AND 1. l-nc91e_]2<.Officer, Ward .1 1(.1) S]gnature Towers, Sy.No.6(p) of Kondapur, !V. No.3 7(P) of Kothaguda, OPP. Botanica l Gardens,'sed ingjampaif y-, Ra[ga - Eeddy, Hyderabad, Telangana - 500084 2. The Princip_al chief commissioner of rncome Tax Ap and rS, 1Oth Froor, c- Block, I.T. Towers, 10-2-3, A.C. Guards, Hyderabad_500004. 3. The Assessment Unit, lncome Tax Departrirent, National Faieless Assessment Centre, Delhi, tvlinistry of Finance. Room No. 40.1 , Znd Floor, E_ Ramp, Jawaharlal Nehru Stadium; Delhi-1 10003 ...RESPONDENTS Petition under Article 226 of the constitution of rndia praying that in the circumstances stated in the affidavit filed therewith, the High oourt may be pleased to issue an appropriate writ order or direction more particularly one in the nature of writ of Mandamus, decraring the Assessment order dr. 21 .o3.2o24 passed by the 3rd respondent uls 147 r.w.s 14411448 of the lncorne{ax Act for A-Y. 2016-17 vide DrN No. |rBA/ASTtst147l2o23-24t106308623\7(1),which is passed as a consequence of the order passed u/s 14gA(d) dt..l g.03.;2023 vide DIN No. |TBA/AST/F/148At2o22- 23t1o509s1243(1) and the notice u/s 14a dt-19-o3-2023 vide DrN No. IrBA/ASTtstl4B_1tzo22-23l10s0958516 (1), issued by the JAO(151 respondent) instead of FAO(3rd respondent), as voi,J, iflegar, and

/ contrary to the provisions of lncome-tax Act and contrary to the Principles of Natural Justice. 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 kie pleased to stay all further proceedings pursuant to the Assessment order dt. 21.03.2024 passed by the 3rd.respondent u/s 147 r.w.s 144t144P of the lncome-tax Act for A.Y. 20't6- 1 7 vide Dl N No. ITBA/AST/S I 1 47 12023-2411 063086237(1 ). Counsel for the Petitioner: SRI DUNDU MANMOHAN Counsel for the Respondents: M/s. J.SUNITHA, JUNIOR SC FOR M/s SUNDARI R PISUPATI, Sr SC for lncome Tax DePt The Court made the following: COMMON ORDER

THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE N. TUKARAMJI IVRIT PETITION NOs. 11505 1152r 11s33 & 1r.534 0F 2024 COMMON ORDER: k)er Hon'bte Justice Sujoa paut) Sri Dundu Manmohan, learned counsel appears for the petitioner(s), Ms. B. Sapna Reddy, learned counsel representing 'Sri J.V. Prasad, learned Standing Counsel for the r,espondents- Income Ta-x Department in W.P.No.11505 of 2024 and Ms. J. Sunitha, learned Junior Standing Counsel representing Ms.Sundari R.Pisupati, learned Senior Standing Counsel for the respondents-lncome Tax Department in W.P.Nos.1152 l, 11533 & 11534 of2024. 2. Regard being had to the similarity of the question involved, on the joint request of the pa{ies, the .matters are anaiogously 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 Financ e Acl , 2021, re assessment process stood modified but the responderrts have not taken care of it and therefore notices issued under ilection 148 of the Income Tax Act, 1961 cannot sustain judicial scrutiny. Since notices are bad in law, the consequentiat ordt:rs are also bad in law. t

2 4 During the course of hearing, iearned 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 arrd 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 14.09.2023. 5 This Court in the said order dated 14.09.2023 in W.P.No.259O3 of 2022, held as under "35. ln view of the aforesaid discussions, it is by now very clear that the procedure to be folloured 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 Act, 2021, at the first instance. Secondly, it is also in direct contraventipn 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 148 would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the ptinciples that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically. 37. The preliminary obiection 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

.3 point of jurisdiction, we are not inclined to proceed further ancl decide 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 Arl'icle 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 ol Ashish Agarwal, supra. 39. No order as to costs." 6. In view of the consensus arrived, the impr-rgned 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 stald and to proceed in accordarrce with law as per paragraph No.3B of the order dated 14 O9.2O23 in W.P.No.25903 of 2022. 7 The writ petitions are allowed. No costs. Interlocutory applications, if any pending, shall also stand closed. /' SD/- K. AMMAJI ASSISTANT REGISTRAR //rRUE coPY// V To SECTION OFFTCER 1 . lncome Tax Officer Ward 4(1 ), Hyderabad, l.T. Towers, 10-2-3, A.C. Guards, Hyderabad-500004. 2. The Principal Commissioner Of lncome Tax 1 , Hyderabad, l_T. Towers, 10-2-3, A.C. Guards, Hyderabad-500004. 3. The Assessment Unit, lncome Tax Department, National Faceless Assessment Centre, Delhi, Ministry of Finance, Room No. 401 , znd Floor, E-Ran o, Jawaharlal Nehru Stadium, Delhi-1 10003. 4. lncome Tax Officer Ward 1, Sangareddy, Veerabhadra Nagar, New Bus Stand, Sangareddy, Telangana - 502001. 5. The Principal Commissioner of lncome Tax- 2, Hyderabad, Signatur,e Towers, Opp Botanical Gardens, Kondapur, Hyderabad - 500004. 6. lncome Tax Officer, Ward 11(1), Signature Towers, Sy.No.6(p) of Kondapur, Sy.No 37(P) of Kothaguda, OpP. gotanicat Gardens, Sertingjarirpa y, Rahga Reddy, Hyderabad, Telangana - 500084 7. ThePrincrpal Chief Commissioner of lncome Tax Ap and TS, l Oth Floor, C-Block, l.T. Towers, 10-2-3, A.C. Guards, Hydera bad-500004. 8. One CC to SRt DUNDU MANMOHAN, Advocate [OpUC] 9. One CC to SRt J.V.PRASAD, SC FOR tNCOrvlE inX 1Oi,UC1 10. one cc to A/t/s SUNDART R.ptSUpATl, sc FoR tNCoME TAX tOpUCl '1 1. Two CD Copies PSK. GJP lAq.

HIGH COURT DATED:2910412024 COMMON ORDER WP.Nos.1 1505,1 1521,11533 & 11534 of 2024 ---:-i'l' i:, ,(: lF J I Jrlt 2il?4 (. I * O6Srra r r.. , ALLOWING THE WRIT PETITIONS WITHOUT COSTS. Pt,l.(,t, aldrq' I :..?-.