Sudha Rani Burra vs. INCOME TAX OFFICER

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WP/24266/2024HC TelanganaHBHC01046781202404 September 2024Bench: SUJOY PAUL,NAMAVARAPU RAJESHWAR RAO8 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed both writ petitions. The Court noted that it was common ground between the parties that the reassessment process, modified by the Finance Act, 2021, had not been properly followed by the respondents. The Court referred to its own previous common order dated September 14, 2023, in a batch of writ petitions (WP No. 25903 of 2022 and connected matters). In that order, the Court had held that the procedure adopted by the Department was in contravention of the Finance Act, 2021, and the directives of the Supreme Court in the case of Ashish Agarwal. Consequently, the impugned notices and proceedings were set aside/quashed. The High Court in the present case, following the consensus, set aside the impugned show cause notices and consequential orders. Liberty was reserved to both parties to take their respective stands and proceed in accordance with law as per paragraph 38 of the earlier order, which allowed the Revenue to proceed from the stage of the Supreme Court's order in Ashish Agarwal, if they so wished.

What were the facts?

These two writ petitions, WP Nos. 24266 and 24322 of 2024, were filed before the High Court for the State of Telangana at Hyderabad. The petitioners, Sudha Rani Burra and Iqbal Qureshi Mohammed, challenged assessment orders, penalty orders, and notices issued under various sections of the Income Tax Act, 1961. The assessment orders were passed for AY 2019-20 and AY 2016-17 respectively, following notices under Section 148A and Section 148 of the Act. The petitioners contended that the notices and consequential orders were void, illegal, and contrary to the Income Tax Act and principles of natural justice. They also argued that the notices were issued by the wrong authority (JAO instead of FAO) and that the reassessment process was not conducted in accordance with the modified procedures introduced by the Finance Act, 2021. The respondents are various income tax authorities, including the Income Tax Officer, Principal Commissioner of Income Tax, and the Assessment Unit of the National Faceless Assessment Centre.

What were the issues?

1. Whether the notices issued under Section 148 of the Income Tax Act, 1961, and the subsequent assessment and penalty orders are void, illegal, and contrary to the provisions of the Act and principles of natural justice, particularly in light of the modifications brought about by the Finance Act, 2021. (Question of law and mixed law and fact, concerning Section 148, Section 147, Section 144, Section 144B, Section 270A, Section 272A(1)(d), Section 271(1)(c), Section 271(1)(b), Section 271F, and Section 149). Assessee's Contention: The reassessment process was not conducted in accordance with the modified procedures under the Finance Act, 2021, making the notices and consequential orders unsustainable. The notices were also issued by the wrong authority (JAO instead of FAO). Revenue's Contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 144,Section 144B,Section 270A,Section 272A(1)(d),Section 271(1)(c),Section 271(1)(b),Section 271F,Section 149

AI-generated summary — verify with the full judgment below

a34111 HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (SPecial Original Jurisdiction) WEDNESDAY, THE FOURTH DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRIJUSTICE SUJOY PAUL AND THE HONOURABLE SRIJUSTIC-d NAMAVARAPU RAJESHWAR RAO WRIT PETITION Nos: 24266 AND 243220F 2024 WRIT PETITION NO: 242660F 2024 Between: Telangana-508206. AND Sudha Rani Burra Wo. Pulla Reddy Burra' Age.d about 60 vears' Occupation: Housewife, # H.No. 11, liffi;ffi;" f-nohi,"kooio Post' kodad' Nalgonda' 1 2 ...PETITIONER Krishna Nagar ColonY' loth Floor, C-Block, l.T lncome Tax Officer, Suryapet lncome tax office' Suryapet, Telangana-50821 3. The Princioal Commissioner of lncome -T-q{ ^-. 1 ' iliir"*,' r o:i-s, A.C- cuaras' Hvderabad-500004' 3. The Assessment Unit, lncome Tax Department National Facebss Assessment centre, oeihi,'d"ifilli'y oi?ina1Cd' noom No 4o1'2no Floor' E- Ri""ip, iitiini;tri' liehru Stad i um,'Del h i- 1 1 0003' ...RESPONDENTS PetitionunderArticle226ottheConstitutionoflndiaprayingthatinthe circumstances stated in the affidavit filed therewith' the High Court may be pleasedtoissueawrit,orderordirection'moreparticularlyoneinthenatureot WritofMandamus,declaringtheAssessmentorderdt.ol.ol.2024passedbythe 3'd respondent uts 147 r.w's 144t1448 of the lncome-tax Act for AY 2O19-2O vide DIN No. ITBA/AST tst147t2l23-241105g254g37(1)' consequent to the order passed u/s 148A(d) dt' 30'03 2023 vide DIN No' ITBA/ASTIFI149NZO22-

2311051678877(1) and the notice u/s148dt.30.03.2023vide DtN No.trBA/AST/s/ 148-112022-23/1051693637(1), issued by the JA0(1st respondent) instead of FAo(3rd respondent). and consequentiar penarty orders passed vide order u/s 270A of the Act dt.20-06.2024 bearing DrN rrBArpNLtFt2ToN2o24-2st 1065882257(1) and order urs 272A(1)(d) of the Act dt 03.06.2024 bearing DrN fiBNPNLlFl272A(1)(d)t2o24-25l1065360187(1), as void, iilegat, and contrary ro the provisions of lncome{ax Act and contrary to the principres of Naturar Justice. 1A NO: 1 OF 2024 Petition under section 1s'r cpc praying that in the circumstances stated in the affidavit fired in support of the petition, the High court may be preased to stay all further proceedings pursuant to the Assessment order dt. 01 .01 .2024 passed by the 3'd respondent uts 147 r.w.s 144t1448 of the lncome-tax Act for A.y. 201g- 20 vide DIN No. rrBA/AsT/s/147r2023-24t10s92s4937(1),and consequentiar penalty orders passed vide order uls 27oA of the Act dt.20.06.2024 bearing DIN lrBNPNLlFl2ToN 2024-2st'ro6s\B22s7(1) and order urs 272A(1)(d) of the Act dt.03-06.2024 bearins DrN ITBA/PNLtFr2TzA(1)(d)t2024-2st106s360187(1) and may pass such other order(s) as the Hon'ble court deems fit and proper in the interests of substantiar justice, as otherwise the petitioner wourd be put to irreparable loss and severe injury. WRIT PETITION NO:2 4322o.F 2024 Between: lqbal Qureshi Mohammed S/o. Mohammed Masthan r <ii" arii"li.;'ir ];]d:'i:! Nizampura, r,ranaie;ii, ft,T,.??Hf???"i3:H::frffiAt: AND ...PETITIONER I I

1.

lncome Tax offir:er, Ward 1, W-qr.ql-gq!,#.lncome Tax Office' 1-'6'610' 3d Floor, Mayuri comprex'tipi' ibtED-Ct Bhawan' Nakkalagutta' Warangal' Telangana-506001 . 2. The Principal Chief Commissioner of lncome Tax AP & TS' loth Floor' C- ' eii,-"Ii, i.i. To*"t", r o-z-C, A c' Guards, Hvderabad-500004' 3. The Assessment Unit, lncome Tax Department' National Faceless Assessment centre, oeiiri, ii,ii;;ii oiFin'ncr5' noom'No 4o1 ' 2"" Floor' E- 'riffi;, i;-wih*lal Nenru Stadium, -Delhi-1 1 0003 ...RESPONDENTS PetitionUnderArticle226oftheConstitutionoflndiaprayingthatinthe circumstancesStatedintheaffidavitfiledtherewith,theHighCourtmaybe pleased to issue a writ, order or direction' more particularly one in the nature of Writ of Mandamus, declaring the Assessment Order dt 19 02 '2024 passed by the 3.d respondent uls ,147 r.w ,s144t144Bof the lncome-tax Act for A.Y. 2016-17 vide DIN No. ITBtuAST/S/14712023-24t1061 116739(1)' which is passed as a consequence of the order passed u/s 14BA(d) dt'28032023 vide DIN No' ITBA/AST/F/148N2022-23t1051516066(1)andthenoticeu/s148dL.29.03.2023 videDlNNo.ITBA/ASTtsl1481l2o2223t1o51621go5(1),issuedbytheJAo(1"t respondent) instead of FAO (3'd respondent)' and consequential penalty orders passed vide order u/s 271(1)(c) of the Act dt'12'08'2}24 bearing DIN ITBA/PNUF/27 1(1)(c)12024.25/1067558807(1), order u/s 271(1)(b) of the Act dt.13.08.2024 bearing DIN |TBAJPNLtFl2Tl\1)(b)12024-2511067596599(1) and order u/s 271F of the Act dt.13.08.2024 bearing DIN lrBtuPNLlFl271Fl2024- 25t1067705824(1), as void, iltegal, and contrary to the provisions of lncome-tax Act and contrary to the Principles of Natural Justice' apart from being barred by limitation as per prov'tsions of iection 149 of the Act'

/ //' lA NO: 1 oF 2024 Petition under Section 151 cpc praying that in the circumstances stated in the affidavit fired in support of the petition, the High court may be preased to stay all further proceedings pursuant to the Assessment order dt. 19.02.2024 passed by the 3'd respondent urs 142 r.w.s 144t1448 of the rncome-tax Act for A.y . 2016- 17 vide DrN No rrBA/AST/s/147t2023-24r1061116739(1), and consequential penarty orders passed vide order uts 271(1)(c) of the Act dt.12.0g.2024 bearing DrN rrBA/pNLrFt271(1)(c)t2024-25t1067558807('t), order uts 271(1)(b)of the Act d1.13.08.2024 bearins DrN tTBtupNLtFt2tl(1)(b)t2024_25t1*675s6599(.1) and order u/s 271F of the Act dt 13.08.2024 bearing DrN rrBA/pNL tFt271Fr2o24- 25t1067705824(1) Counsel for the petitioner in both the Writ petitions: SRI DUNDU SHASHANK MANMOHAN Counsel for the Respondents in both the Writ petitions: Ms. BOKARO SAPNA REDDY, JUNIOR STANDING COUNSEL FOR INCOME TAX The Court made the following: COMMON ORDER

THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI WSTICE NAMAVARAPU RA"IESIIWAR RAO UIRIT PETITION NOS.24 266 AND 24922 0F 2024 COMMON ORDER (per Hon'ble SP,J) Sri Dundu Shashank Manmohan, learned counsel appears for the petitioner(s) and Ms.B.Sapna Reddy, learned Junior Standing Counsel for Income Tax Department, appears for the respondents. 2. Regard being had to the similarity of the question involved, on the joint request of the parties, the matters are analogously 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 Act, 2O2l ' te- assessment process stood modifred but the respondents have not taken care of it and therefore notices issued under Section 148 ofthelncomeTaxAct,lg6lcannotsustainjudicialscrrrtiny. Since notices are bad in law, the consequential orders are also bad in law. 4. During the course of hearing, learned 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'25903 of 2022 and other connected matters, decided by common order dated I

2 14.O9.2023. The parties agreed that this matter may be disposed of in terms of the Common Order dated 14.O9.2023. 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 followed 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 Fanance Act, 2021, at the first instance. Secondly, it is also in direct contravention 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 142 and 14g would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is ori the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically. 37. The preliminary objection 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 point of jurisdiction, we are not anclined to proceed further and 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 powe6 under Article 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 confer.ed on the t?

3 7. The Writ Petitions are allowed' No costs' Interlocutory applications, if any pending, shall also stand closed' sD/. Prrh,rS+fffi HgSli+HRA / /ITRUE COPY/' \ ,,, ./ sEcrloN%FFlcER to'',. ,n" lncome Tax officer'^Suryapet lncome Tax office' Krishna Nagar Colony' ' sijwlPti Telangana-508213' , I:i"H1,"6l3l.lit 3ii",H:,fJ.5,",?TSJrlt- 1' 10'[h Froor' c-Brock', rr 3. rhe Assessment unit.. rncome Tg ?33,"4T"TI'*J?3?11" En#:i: " nsle.li"-"n, "",T,i,,"?:Jt,S'ililloSilllir"oooi RamP, Jawaharl' 'H?,I"fi T,",1";*;f*'3'#'+.HF33e"bff#:::i,J'i1"3$'tr;''ft;":'"':l Telangand-50600t ' 5. The Principal Chief Commissioner of lncome Tax AP & TS' l0th Fbor' C- Bbck. l.r. ro*"ll]i oIIl5,'ii]c' c J"a"' Hvderabad-500004' 6. One CC to SRI DUNDU SASHANK MANMOHAN' Advocate [OPUC] ' PrHf"?#tBBrBi**o SAPNA REDDY' Junior standins counsel ror B. Two CD Copies Revenue would remain reserved to proceed further if they so want from the stage otthe order of the Supreme court in the case of Ashish Agarwal' suPra' 39. No order as to costs-" 6. In rriew of the consensus arrived, the impugned 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 stand and to proceed in accordance with law as per paragraph No.38 of the order dated 14'09 '2023 ln W.P.No.25903 of 2022' MP GJP YY

HIGH COURT DATED:0 4l0gt1024 1HE S 14r (( o COMMO o t;) oo 3 0 N[\/ 2021 .Cr ER W.P.Nos: 242GG AND 24322 OF 2OZ4 ALLOWING THE WRIT PETITIONS WITHOUT COSTS N od* #.* \ T)

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