Gouse Mohiuddin vs. Union of India, Ministry of Finance

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WP/23834/2024HC TelanganaHBHC01045035202402 September 2024Bench: SUJOY PAUL,NAMAVARAPU RAJESHWAR RAO6 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the writ petition, setting aside the impugned show cause notice and consequential orders. The Court relied on its previous common order dated September 14, 2023, in W.P.No.25903 of 2022 and connected matters. In that order, the Court held that the procedure to be followed upon treating reassessment notices as issued under Section 148A, as per the substituted provisions of the Finance Act, 2021, was mandatory. The failure to follow this procedure, and the directives of the Supreme Court in Ashish Agarwal, rendered the notices and proceedings illegal and unsustainable. Consequently, the impugned notices and orders were quashed. The Court noted that the issue of jurisdiction was sustained, and other issues raised by the petitioner were reserved. Liberty was granted to the revenue to proceed further from the stage of the Supreme Court's order in Ashish Agarwal, if they so desired, as a one-time measure under Article 142 of the Constitution. The operative direction was to set aside the impugned notice and consequential orders, with liberty reserved for parties to proceed in accordance with law.

What were the facts?

The petitioner, Shaik Imam, residing in the USA, represented by his brother, filed a writ petition challenging an assessment order for Assessment Year 2018-19. The assessment order was passed by the Assessing Officer, National Faceless Assessment Centre, Khammam, on December 20, 2024. The petitioner contended that the reassessment process, modified by the Finance Act, 2021, was not followed, rendering the notice under Section 148 of the Income Tax Act, 1961, and consequential orders illegal. The respondents are the Union of India, the Principal Chief Commissioner, Telangana, the Income Tax Officer, Ward 1 Khammam, and the Assessing Officer, National Faceless Assessment Centre, Khammam.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961, are valid when the procedure prescribed by the Finance Act, 2021, was not followed, making the consequential assessment order illegal? Assessee's Contention: The petitioner argued that the respondents failed to adhere to the modified reassessment process introduced by the Finance Act, 2021. Consequently, the notice issued under Section 148 of the Income Tax Act, 1961, is unsustainable, and the subsequent assessment order is bad in law. Revenue's Contention: The judgment does not record specific arguments from the revenue. However, the parties agreed to dispose of the matter based on a previous common order.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 147

AI-generated summary — verify with the full judgment below

[3411] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE SECOND DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO WRIT PETITION NO: 238340F 2024 Between: 9ouse Motri-ud9il,SiS Shaik Imam, Aged 45 years, 105 Bass plantation, Dr. Macon, GA-3'1210, USA, Represented by ^S.t -!yp-!4uA!!1, S/o. Sk tmam, Aged 40 years, Occ. Business, Rlo. Bl1129711 . BK Bazar, Khammam, Khai.rmam Disi - 507 OO1. ...PETITIONER AND 1 Union of lndia, Ministry of Finance, Rep. by The principal Chief Uommrssroner, I elangana. The lncome Tax Officer, Ward 1 Khammam. Assessing Officer, National Faceless Assessment Centre, Khammam. ...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 in the nature of Certiorari declaring impugned assessment order passed by the 3d Respondent against the Petitioner for the A.Y. 2018-19 vide DtN No. ITBA/ASTlsl147tt2123- 241'1061207644(1) Dr. 201212024 as illegal, whotty without jurisdiction, viotative of natural justice and fundamental rights of the Petitioner under Article 14 and consequently quash the same. restrain the Respondents from further action in pursuance to the impugned assessment order. 2 3 i I l

IA NO: 't OF 2024 PetitionunderSectionl5lCPCprayingthatinthecircumstancesstatedin the affidavit filed in support of the petition, the High Court may be pleased restrain the Respondents from taking further action in pursuance to the impugned assessment order passed by the 3'd Respondent against the Petitioner for the A.Y' 20 1 8- 1 9 vide D I N No ITBA/AST/ S t 1 47 t2O23-24 t 1 061 2O7 644 (1)Dt 20 l2l2j24' Counsel for the Petitioner: SRI E. HARI BABU counsel for the Respondent No.1: SRI B' MUKHERJEEE' REPRESENTING-F-OR sRl GADi PRAVEEN KUMAR Dy' SOLlClroR GEN' OF INDIA Counsel for the Respondent Nos'2 and 3: MS' B' SAPNA REDDY' SC FOR INCOME TAX DEPARTMENT The Court made the following: ORDER

THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAIVIAVARAPU RAJESHWAR RAO WRIT PETITION No.238340r. 2024 ORDER: (per Hon'ble Justite SujoA pout) Heard Sri E.Hari Babu, learned counsel for the petitioner(s), Sri B. Mukherjee, learned counsel representing Sri Gadi Praveen Kumar, learned Deputy Solicitor General of India, for the respondent(s)-Central Government and Ms. B.Sapna Reddy, learned Junior Standing Counsel for Income Tax Department, for the respondent(s)- Income Tax Department. 2. The ground taken by the learned counsel for the petitioner(s) is that in furtherance of Finalce Act, 2021, re assessment process stood modihed but the respondents have not taken care of it and therefore notice issued under Section 148 of the Income Tax Act, 196 1 cannot sustain judicial 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.25903 of 2022

7 and other cor,nected matters, decided by common order dated i4.09.2023.The parties agreed that this matter Inay be disposed of in terms of the Common Order dated 14 .O9 .2023 ' 4. This Cotrrt in the said order dated i4.09.2023 in W.P.No.25903'tf 2022, held as under: "35. In viec/ of the aforesaid discussions, it is by now very clear thet the procedurc to be follosed by the respondent- Department upor treating the notices issued fot teassessmeDl: being under Sectio! 148A, the subsequent proceedings was mandatorily requfued to be undertaken uDder the substituted provisions as taid dowtr uEder the FiDance Act,2O2l. In the absence of lrrhich, we are constrained to hotd that the procedure adopted by the respoEdent-Department is in contravention to the statute i.e. the Fiaarce Act' 2O21, at the first instance. SecoDdly, it is also in direct contfave[tion to the directiwes issucd by the Hoo'ble Supterne Court in thc case of Ashish Agarwal, supra. 36. For all the aforesaid reasotrs, the impugned notices issued and the proceediogs drawa by the tesPondent-DePartment is neither t€nabte, aot sustaiEable. The aotices so issued and the procedure adopted beiag per se iuegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugoed orders getting quashed, th€ consequential orders passed by thc respoadent DepartEeut Pursuant to the notices issued under Section 147 and 1zt8 would also get quashed ald it is ordered accordingly. The reasol we are quashing the consequeatial order is on the princiPles that when the initiation of the proceedhgs itself was Ptocedurally wrong, the subsequent orders also gcts nullilied automatically. 37. The preliminary objection taiEed by the Petitioner is sustained and all these writ petitions staads allowed on this very jurisdictiolal issue. Since the imPugEed Eotices and orders are gettitrg quashed o[ the poi[t ofjurisdictio[, we are not inclined to proceed further a[d decide the othel issues raised by the petitioner which stands reserved to be raised aad contended i[ an appropriate proceedings.

3 38. Since the tlo,l'ble Supreae Court had, in the case of Ashish Agarwal, supra, as a one-tilne Eeasure exercisiEg the posers ulder Article 142 of the Constitutiou of India, perEitted the Revenue to proceed uader the substituted provisions, alrd this Court allowing the petitions only on the procedural flaw, the right confeEed oE the ReveEue would re![aiE reserved to proceed further if they so eant from the stage of the order of the SupreEe Court in the case of Ashish Agarwal, 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 stand and to proceed in accordance with law as per paragraph No.3B of the order dated 14.09,2023 in W.P.No.259O3 of 2022. 6. The Writ Petition is allowed. No costs. lnterlocutory applications, if any pending, shall also stald closed. //TRUE COPY// 6D/- N.stuHARt AsasT+Nr RplrRAR SECTION OFFICER To, 1. The Principal Chief Commissioner, Union of lndla, Ministry of Finance, Telangana. ! _--- 2. The lncome Tax Officer, Ward 1 Khammam. 3. Assessing Officer, National Faceless AssessmenfCentre, Khammam. 4. One CC to Sri E.' Hari Babu, Advocate [OPUC] -.- 5. One CC to Ms. Bl Sapna Reddy, SC for lncomeTax Department{OPUCI 6. One CC to Sri Gadi Praveen Kumar Dy. SoJicitor Gen. of lndia [OPUC] 7. Two CD Copi>) r^y TJ

HIGH COURT DATED:0210912024 ORDER WP.No.23834 of 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS 2 Jo 1rr. -)' c * q 'b lile,il-.1 - '.1.. \._') t s Pi.T r.l

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