Mahesh Manchikanti vs. The Assistant Commissioner of Income Tax

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WP/21784/2024HC TelanganaHBHC01041786202412 August 2024Bench: SUJOY PAUL,NAMAVARAPU RAJESHWAR RAO6 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the writ petition. The Court noted that the parties agreed to dispose of the matter in terms of a common order dated 14.09.2023 passed in W.P.No.25903 of 2022 and connected matters. In that order, the High Court had held that reassessment notices and proceedings initiated by the Department were unsustainable due to procedural flaws, particularly in contravention of the Finance Act, 2021, and the Supreme Court's directives in Ashish Agarwal. The Court found that the initiation of proceedings itself was procedurally wrong, rendering consequential orders null and void. Consequently, the impugned notices and consequential orders in the present writ petition were set aside. Liberty was reserved for both parties to proceed in accordance with law as per paragraph 38 of the aforementioned common order, which allowed the Revenue to proceed from the stage of the Supreme Court's order in Ashish Agarwal.

What were the facts?

The petitioner, Mahesh Manchikanti, filed a writ petition before the High Court of Telangana at Hyderabad challenging an order dated 04.03.2024 passed by the 4th respondent (Income Tax Officer) under Section 147 read with Section 148 of the Income Tax Act, 1961, for Assessment Year 2015-16. This order was consequential to an order passed under Section 148A(d) dated 09.09.2022 and a notice under Section 148 dated 11.04.2022. The petitioner contended that the initiation of reassessment proceedings was time-barred as per Section 149 of the Act and that the notice was issued by the incorrect authority. The petitioner also sought a stay on further proceedings.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, for AY 2015-16, initiating reassessment proceedings, is void and illegal for being issued after the time period stipulated under Section 149 of the Act and by an incorrect authority? Assessee's Contention: The petitioner argued that the reassessment proceedings were initiated beyond the time limit prescribed by Section 149 of the Act. Furthermore, the petitioner contended that the notice was issued by the 1st respondent (Assistant Commissioner) instead of the 3rd respondent (National Faceless Assessment Centre), making it void and contrary to the provisions of the Income-tax Act and principles of natural justice. Revenue's Contention: The judgment does not record any specific arguments made by the revenue.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 149

AI-generated summary — verify with the full judgment below

[ 3411 ] IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE TWELFTH 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: 21784 OF 2024 Between: lvlahesh [r,4anchikanti, S/o Raghu Manchikanti, Aged about 45 years, Occ: Pvt Employee, H.No.3-3-4, Opp. Police Station, Srinivasa Kirana and General Stoi'es, LB NaEar- Ring Road, Hyderabad-500044. ...PETITIONER AND 1 T.: Assrsi?xi Co,'rmissioner of lncome Tax. Circl: 9i1). HrCeracai =lr':':n:: Tax To,,vers, 1O-2-3, AC Guards, Masab Tank, Telangana - 50000'1 The PrincrDal Chief Commissioner of lncome Tax, AP & Telangana #lncome Tax Toweis, 10-2-3, A.C. Guards, Masab Tank, H ydera bad-500004 ' National Faceless Assessment Centre, Delhi' The Assessment Unit, lncome iai Oepattment, National Faceless Assessment Centre' Delhi, Mrnistry of Frnancd, Room No. 4O1,znd Floor, E-Ramp, Jawaharlal Nehru Stadium, Delhi-1'10003. The lncome Tax Officer, Ward 9(1), Hyderabad #lncome Tax Towers' 10-2-3, AC Guards, tvlasab Tank, Telangana - 500004. ...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 order or direction, more particularly one in the nature of Writ of Mandamus, declaring the impugned Order dt 04'03 2024passed by the 4th respondent u/s 147 r.wls. of the Act vide DIN No. ITBA/AST1S114712O23- z+lrOoigolsag(1), for A.Y.2015-l6,consequent to the order passed u/s 148A(d) it Ot .Oq.ZOZZ ulO" OtN No. |TBA/AST tF t 1 4BA:2O22-231 1042619086(1 ) and the notice u/s 148 dt.11.O4.2O22 vide DIN No ITBA /AST lsl148-112-022- zl)loqzlistsl (1) issued by the 1st respondent instead of FAO(3rd ,"rponJ"ntl, that ioo initiatior, of proceedings after the time period stipulated u/s t +d of tne Act, as void, illegal and contrary to the provisions of lncome-tax Act and contrary to the Principles of Natural Justice' 2 3 4

lA NO: 1 oF 2024 7 Petition under Ser rn the affidavit t;tno in.rli^ol-'?l ,,cPc praying that in the c,rcumstances stated stay alr further proceeo,,PPon of the petition the High_coun ,l1, o"'plrJJo,, 4th responden, IiJl"#''nt pursuant to the order d,t..04 03 zo24r"rJ.o"ii',n" il;f r'.'"',TliinitiiJi::fi .1,!ii:y',".'.1-,):,1'#;y"'l,ll,:,la: otn "*i.u i,"" pffi ;'"/ ff;: fffi ',"",,.11i, i:l:,-J il: "-r .,,,.,"m"i il {,,1J,,. oss and severe injury. Counsel for the petitioner: SRI DUNDU MANMOHAN Counsel for the Respondents: Ms. B. SAPNA REDDY (Jr. SC FoR TNCOME TAX) The Court made the following: ORDER .t

THE HONOURI rHE HoryouRAB". "o rr.*-:t s;lJusrrcE suroy pAuL STICE NAIIAVARAPU RA.IESHWAR RAO T TION No.21 7a4 OF 2024 (per Hon'ble Justice SujoA paul) 148 ol the Income Ta_x Act, 1961 calnot sustain judicial scrutrny. Since notice is bad in law, the consequential orders are also bad in law 3' During the course of hearing, rearned counsel for the pa,rties agreed that curtains on this issue are iinally drawn by this Court in a batch of writ petitions, W.p.No.259O 3 ol 2022 and other connected matters, decided by common order dated 14.09.2023. The parties ,gr.eed that this matter may be disposed of in terms of the Common Order dated 14.09.2023. Heard Sri Dundu Manmohan, Iearned counsel for the Petitioner(s) and Ms.t counsel for Income "* tto" Reddy' iearned Junior Standing 2. The ground ,.rotoutt-"'t for respondents. :en bY the learned counsel for the petitioner(s) is that in lurtherance of Finance Act, 2O21, re_ assessment process stood modified but the respondents have not taken care of it and therefore notice issued under Section ORDER: i I I I :

)- 4. This Court lr-r the said crder d'aled l4'O9 2023 W.P.No'2590 3 al 2022' heid as under: :::;":J::":',X'"J:::::"'"'":"""'J;TJ::"fjjI Departcrent upon treatrl6 '_ .. , -..r.-..oart proceealings l"ras b" iog 'l nd" r " " o. ". 1 1:' .:::" :::'"- J:.nl'* ""o".,."."u ;::'"^'":l'J:":;;;;";;"":"1,*-:'1"1:',l;llll" absence of which, we arc constrained. ,1l-".a-.rra ," ,rt procedute adopted by the respondent-Depl contraveotion t" ;" ;t";t t't' tttt Fi"a"ct Act' 2021' at the flrst instance. ;;;;;, it is also in dircct coEtravention to the directives ;"";.; ;' the lton,ble suPtefire court in the 111 case ol Ashish A5arwa-l' supra -r -^+i-a< issued 35. For all the aforesaid reasons' the impugned notices issued and the pioceedings dtawn by the respondent-DePartment is neithet tenable' nor sustainable' The notices so issued and the proredure adoPtcd beitrg Pcr sc iltegal' deserves to be and ate accord.inEly set asidelqlreshed' As a consequence' aU the irrrpugned orders getting qua$hed' the co[sequential orders passed by the resPondent Department pursualt to the notices issued undet Section 14? and 148 would atso get quashed and it is ordered accordingly' The reason r^,e are quashing the consequential order is on the Principles that when the initiation of the proceedings itself {ras proce'lurally wfong' the subsequent orders also gets nultified automaticauy- 37. The Preliminary objection raised by the petitiooer is sustained and all these q'rit Petitions stands allowed on this very jurisdictioflal issue' Since the imPugned notices and orders are getting quashed on the point ofjurisdictiol- we ate not inclined to proceed further aod decide the other issues raised hy the petitiooer which stands reserved to bc raised and contended in an appropriate proceediags' 38. Since the Hon'ble Suprelrre Court had' in the case of Ashish Agarwal, supra, as a one-time measure exercisiag the powers under Articte 742 of the Constitution of lndia, pcrmitted the Revenue to I provisions, and this court .,r"::::":. under the substituted procedurar flaw, the ,,-.. _ 'l't* the petitions only on the ."--"i' .".u,,.d ," ",":".; ;;:::'::- "l .o. Revenue pourd rther if they so Erant from the

,'' 3 stage of the order of the Supreme court in the case of Ashish Agarsal, supra. 39. I{o order as to costs." 5. In view of the consensus arrived, the impugned Show Cause notice and conseque ntial orders passed in this writ petition are set aside. Liberty is reserved to both the parties to take respective stand and to proceed in accordartce with law as per paragraph No.38 of the order dated 14'09'2023 in W.P.No.259O3 ol 2022. 6. The rvrit Petltloll is allowed. No costs. Interlocutory applications, if any pending, shall also stand closed' //TRUE COPY// SD/.N. SRIHARI ASSISTANT REGISTRAR , SECTION OFFICER To, 1 2 3 The Assistant Commissioner of lncome Tax, Circle 9('t ), Hyderabad lncome Tax Towers, 10-2-3, AC Guards, Masab Tank, Telanldna - SOOOO+. The Principal Chief Commissioner of Income Tax, APand Telangana, lncome Tax Towers, 10-2-3, A.C. Guards, Masab Tank, Hyderabad-SOOdO4. National Faceless Assessment Cenke, Delhi, The Assessment Unit, lncome Tax Department, National Faceless Assessment Centre, Delhi, Ministry of Finance, Room No. 4O1 .2nd Floor, E-Ramp, Jawaharlal Nehru Stadiu-m, Delhi-1 '10003. The lncome Tax Officer, Ward 9(1), lncome Tax Towers, 10-2.3, AC Guards, lvlasab Tank, Telangana - 500004. One CC to SRI DUNDU [/ANMOHAN, Advocate [OPUC] One CC ro MS B SAPNA REDDY (Jr. SC FOR TNCOME TAX) tOpUCl Two CD Copies BN GJP 8"\r,, 4 5 6 7 \ \ V

HIGH COURT DATED:1210812024 ORDER WP.No.21784 of 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS ?r.(. r-r{qlrl. 11 ST41 .1 6 _,-_.?- )/ [t'r zul (9 !,) d \,

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