Pushpalatha Vistarakula vs. The Income Tax Officer

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WP/12457/2024HC TelanganaHBHC01022625202402 May 2024Bench: N.TUKARAMJI,SUJOY PAUL6 pages
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What did the High Court hold?

The High Court held that the procedure adopted by the respondent department in issuing the impugned notices and drawing proceedings was in contravention of the statute, specifically the Finance Act, 2021, and also in direct contravention of the directives issued by the Supreme Court in the case of Ashish Agarwal. The Court found the notices and the procedure adopted to be per se illegal and therefore set aside/quashed them. As a consequence, all consequential orders passed pursuant to the notices issued under Section 147 and 148 were also quashed. The Court noted that the preliminary objection raised by the petitioner was sustained on the jurisdictional issue, and other issues raised by the petitioner were not decided and stood reserved. Liberty was reserved to the Revenue to proceed further from the stage of the Supreme Court's order in Ashish Agarwal, if they so wished. The writ petition was allowed, setting aside the impugned notice and consequential orders, with liberty to both parties to proceed in accordance with law.

What were the facts?

The petitioner, Pushpalatha Vistarakula, filed a writ petition before the High Court for the State of Telangana at Hyderabad challenging an order passed by the Income Tax Officer under Section 148A(d) of the Income Tax Act, 1961, dated 12.04.2024, and a notice issued under Section 148 of the Act for the assessment year 2020-21. The petitioner contended that these actions were illegal, arbitrary, and violative of natural justice. The petitioner also sought suspension of the operation of the notice and consequential proceedings. The respondents were the Income Tax Officers. The procedural history indicates that the petitioner sought a writ of mandamus to set aside the impugned order and notice.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, for the assessment year 2020-21, is sustainable in law, considering the modifications to the re-assessment process introduced by the Finance Act, 2021? (Question of law) Assessee's contention: The re-assessment process was modified by the Finance Act, 2021, and the respondents failed to adhere to these modifications, rendering the notice issued under Section 148 bad in law. Consequently, any subsequent orders are also bad in law. Revenue's contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148,Section 147

AI-generated summary — verify with the full judgment below

[ 3403 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE SECOND DAY OF IVAY TWO THOUSAND AND TWENTY FOUR tr jI PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE N.TUKARAMJI IT PETITION NO: 12457 oF 2024 i , Between: AND Pushpalatha Vistarakula, D/o. Sri V. Venkata Das, aged about 54 vears. occupation. Governmeni servic;, virir'r.to.zt5, "r"rv 'u"irii n,irril,T"ilI6i,?, R.C. Puram Mandat, Sanga Reddy _ SOZObZ]'"' "'' ' ..PETITIONER 1. The lncome Tax Officer, Ward _ 13(3), Aayakar Bhawan, Basheerbagh, Hyderabad - 500004. :l 2. The lncome Tak Officer, tfalO ;^Qe,. Signature Towers, Opp. Botanical Gardens, Kondapur, Hyderabad - 500bd4. llrrit ..RESPONDENTS i|i Petition under Articre 226 of rhe constitution of rndia praying that in the circumstances stated$in the affidavit fired therewith, the High court may be pleased to pass un oldu. or direction, especia[y one in the nature of wRrr oF ll MANDAMUS rrotoingtthat the order passed by Respondent u/s.14BA(d) of the Act, dt.12.oa.2oza $ with DrN and Notice No.|rBA/AST/ Fr14BN2o24- 251106405091a(i) anril the notice dated 12.04.2024 issued under section 148 of the Act with DrN ,n,i$ruoti"" No.|rBA/AST/ 5r148- 1r2024-25t1064051651(.1) for the assessment year$zozo-21, as being iregar, arbitrary and passed in gross violation of principrelb of naturar justice without apprication of mind, and pnsequently set asidB the same. ri lt1! ,, I II i I I I i I

lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the cir<;umstances stated in the affidavit filed in tsupport of the petition, the High Court tnay be pleased to suspend the operation of the notice issued by the Respondent u/s.'148 of the Act dt. 12-04-2024 for i'the assessment year 2O2O-21 with DIN and Notice No.|TBA/AST/51148_112024-2511064051651(1) and all consequential proceedings there to. Counsel for the Petitioners: SRI A.V.RAGHU RAM j Counsel for the Respondents: M/s. J.SUNITHA, REP. FOR M/s. SUNDARI R.PISUPATI, Sr. SC for lncome Tax Dept The Court made the following: ORDER ltr l,i,!

THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE N. TUKARAMJI WRIT PETITION No. t2457 0F 2024 ORDER: (per Hon'ble Justice Sujog Paul) Heard Sri A.V. Raghu Ram, learned counsel for the petitioner(s) and Ms. J. Sunitha, learned counsel representing Ms.Sundari R.Pisupati, learned Senior Standing Counsel for the respondent(s)-lncome Tax Department' 2. The ground taken by the learned counsel for the petitioner is that in furtherant" -J'f Fi""ttce Act' 2O2l ' re- assessment process stood modified but the respondents have not taken care of it and therefore notice issued under Section l48ofthelncomeTaxAct,lg6lcannotsustainjudicial scrutiny. Since notice is bad in law, the consequential orders are also bad in law. 3. During the course of hearing, learned counsel for the parties agreed that curtains on this issue are hnally drawn by this Court in a batch of writ petitions, W'P'No'259O3 of 2022 and other connected matters, decided by common order

2 dated 14.09.2023. The parties agreed that this matter may be disposed of in terms of the Common Order dated 1.1 .O9.2023. 4. This Court in the said order dated 14.09.2023 in W.P.No.259O3 of 2022, held as under: "35. In view of the aforescid discussions, lt Is by now very clear that the procedure to be followed brr the respondent_ Department upoE treating thc notlces issued for reaasess ment being under Section l4gA, the subsequent proceedings was nandatorily requlred to be undertaken under the substituted provisions as laid dowu uBder the FlnaEce Act,2O2l. In the absence of rhich, we are conatralned to hold thet the procedure adopted by the respoBdelt.Department ilr in contraventioB to the statute i.e. the Flnance Act, 2O21, al: the first iEstance. Secondly, it is also ln dlrect coBtraventioo to the directives issued by the Hon,ble SupreEe Court in the case of Ashish Agarwal, supra. 36. For all the aforesqid reasons, the lmpugned aotices lssued and the proceedings drawn by the responde[t-Departmerrt is neither tenable, nor sustainable. The notices ao lssued and the procedure adoptcd beiag per Ee illegal, deserves to be and are accordingly set aside/quaahed. As a consequencc, ell the impugtred orders getting quashed, the consequeatial orrlers passcd by the respondent Department pursuant to the not ices issued under Section 147 and l4g would also get quashed and it is ordered accordingly. The reaaon we ere quashing the consequential order ia on the pdnciples thrt when the iEitiation of the proceedings itself wEa procedurally wroDg, the subsequent orders also gets !ullified autoEatlcalty. 37. The preliminary objection raised by the peHHoner ls sustained and all theae wrlt pefitions stands allosed on this very jurlsdictional issue. Slnce the iEpugaed notlces and ordera are getting quashed on the point ofjurisdicHon, we rre not lEcliaed to proceed furthcr and decide the other issrres taised by the petitioner which stands reserved to be raised a[d contended in rn appropriate proceedings. 38. Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one-time measure exercislng the powers under Article 142 of the Constitution of Indie

3 permitted the Revcnue 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 waEt from the stage of the order of the supreme court in the case of Ashish AgarPal, supra. 39. No order as to costs.' 5. In view of the consensus arrived, the impugned Show Cause notice and consequential orders passed in this writ petition are set aside. Liberty is reserved to both the parties to take respective stald and,-to proceed in accordalce with law as per paragraph No.38 of the order dated 14.09.2023 in W.P.No.259O3 of 2022. 6. The writ petition is allowed. No costs. Interlocutory applications, if any pending, shall also staad elosed - SD //TRUE COPY// /. MOHD. SANAULLAH ANSARI ASSISTANT REGI AR SECTION OFFICER 1. The lncome Tax officer' Ward . 13(3), Aayakar Bhawan, Basheerbagh To, Hyderabad - 500004. The lncome Tax Officer, Ward - B(1)' CiiO"n-t. XonOapur. Hyderabad - 500084 One CC to SRI A.V.RAGHU RAM, Advocate [OPUCI One CC to M/s.ISUNDARI R PISUPATI' Sr' SC for lncome Tax Dept [OPUC] Signature Towers. OPP. Botanical 2 3 4 5. Two CD CoPies i BSR GJ o 1

HIGH COURT i DATED: 02105/2024 ORDER ,WP.No.12457 6t 2024 ,ALLOWING TI.IE WRIT PETITION, l'ri'l WITHOUT COSTS L E 1 o C.\ry \s 1 o- t A: $ \ \1 + 5 H 1, t t ')l r,ii tli iI iri It i,1 iri !i*'li Ji 0Vq I

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