Polraj Pallapu vs. Assessment Unit

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WP/24820/2024HC TelanganaHBHC01047930202410 September 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 during the hearing, both parties agreed that the issue had been conclusively decided by a previous common order of the High Court in a batch of writ petitions, specifically W.P. No. 25903 of 2022 and connected matters, decided on 14.09.2023. In that order, the High Court had held that the procedure adopted by the respondent-Department for reassessment, particularly concerning notices issued under Section 148A, was in contravention of the substituted provisions laid down by the Finance Act, 2021, and also in direct contravention of the directives of the Supreme Court in the case of Ashish Agarwal. Consequently, the impugned notices and proceedings were set aside/quashed as being per se illegal and lacking jurisdiction. The High Court in the present case, following the consensus, set aside the impugned show cause notice and consequential orders. Liberty was reserved for both parties to proceed in accordance with law as per paragraph 38 of the cited order. The other issues raised by the petitioner were left undecided.

What were the facts?

The assessee, Polraj, filed a writ petition before the High Court of Telangana at Hyderabad challenging notices and orders issued by the Income Tax Department for Assessment Year 2018-19. The challenge was directed against a notice under Section 148A(b) dated 30.03.2023, an order under Section 148A(d) dated 26.04.2022, a notice under Section 148 dated 26.04.2022, an order under Section 147 read with Section 144 read with Section 144B dated 27.02.2024, and penalty orders under Section 272A(1)(d) dated 14.08.2024 and Section 270A dated 26.08.2024. The assessee contended that these actions were without jurisdiction and contrary to the faceless assessment procedure. The parties agreed to dispose of the matter based on a previous common order of the High Court.

What were the issues?

1. Whether the notice issued under Section 148A(b) and subsequent proceedings for reassessment for Assessment Year 2018-19 are without jurisdiction and contrary to the faceless assessment procedure laid down under Section 148A of the Income Tax Act, 1961, as amended by the Finance Act, 2021? (Question of law and fact) 2. Whether the order passed under Section 147 read with Section 144 read with Section 144B and the penalty orders under Section 272A(1)(d) and Section 270A are without jurisdiction, arbitrary, illegal, void-ab-initio, and violative of Articles 14, 19(1)(g), and 300A of the Constitution of India, and contrary to Section 148A of the Income Tax Act, 1961? (Question of law and fact) Assessee's Contention: The learned counsel for the petitioner argued that the reassessment process, as modified by the Finance Act, 2021, was not followed by the respondents, rendering the notice under Section 148 of the Income Tax Act, 1961, unsustainable. Consequently, all consequential orders are also bad in law. Revenue's Contention: The judgment records that the parties agreed to dispose of the matter in terms of a previous common order of the High Court. No specific arguments were recorded for the revenue in this instance.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148,Section 147,Section 144,Section 144B,Section 272A(1)(d),Section 270A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE TENTH DAY OF SEPTEMBER - rWO THOUSAND AND TWEN-r-Y FOUR [ 3411 I ...PETITIONER THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTIC.E NAMAVARAPU RAJESHWAR RAO PRESENT WRIT PETI TION NO:2 4820 oF 2024 Between: Polraj 500 0 AND 1 Pallaou.PlotNo.T25,NandhiHills,Meerpet,SaroorNagar'Hyderabad- 38 (PAN CAUPP06T lc) 2 J Assessment Unit, lncome Tax Department, National e-Assessment Center' Room No.401, 2nd Floor, Eri;;l;;;niiriiNer"u Stadium' New Delhi-1 1 0 003. lncome Tax Officer, Ward 9(1), 2nd Floor, D-Block' lT Towers' 10-2-3' AC Guards, HYderabad-500 028. Princioal Chief Commissioner of lncome Tax' 4'1Qlttg Pradesh and i;i;;E;;;.'ii;j.,il6,J*io:) 5: R;' N" e'2' e'h Froor' 'B' Brock' rr rowers' AC Gfards, Hyderabad-500 004' ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated an tfre aitiOavit filed therewith' the High Court may be ;1";;; 1; ".ue a Writ oi-H4indamrs or any other appropriate writ, order or ;;;.; (a) declaring tne noiice Lsued bv the 2nd Respondent'19:l-!^"9tlon 148A(b) dated 30.03.20d' U"'i'g DIN' ITBA/AST/F/148A(SCN\t2021-221 1042023702(1) and order passeO UV" 2!q 59:q9^,9tnt under Section 14BA(d) dated 26.4.2022, bearing brr.r.-rranlnsrEtliSAt2o22-2311042863458('1) and notice under Section t+g J tne lncome Tax Act' 1961' daled 26'04 2022 ' ;;;g-DiN. riaAAsrlsi iqa-11ozz-zt/ 1042863583(1)' for the assessment vear 2018_1g as witnoui jrrisoiction and contrary to faceless assessment il#J.],"";; io*n'r's""iion '148A of the lncome Tax Act 1961 (b) dectarins the order passed by tne Ginespondent' und.e^r-section 147 r/w Section 144 read with Section 1448 oIin" into*" Tax Act' 1961' dated 2T'022024' bearing DtN.ITBAJAST tst147t2o2i-;4lioorooszzsir), for the assessment vear 2018-19 as without Jurisdiction anJ contrary to faceless assessment procedure laid down , sL"ti* 148A of tne rncome rai n"t tgot and (c) set-aside the penalty order \'

I ,,under section 272A(1)(d) bearing DtN. trRA/pNL/F/ 272A(1)(d)12024- 2511067658657(1)dated,.1,4.8.2024andunderSection270AbearingDlN ITBA/PNL/F/27'iAnOi3-ZStto679S1966(1) dated 26 8 2024 . a.s wilhout Jurisdiction, arbitrary, illegal, bad in law, void-ab-initio, apart from being violative of Articles ia, rgtrl(gl aios or the constitution of lndia and contrary to section 14gA of the lncome'lax Act, 1g61 and consequently set-aside the same in the interests of justice lA NO: 1 OF 2024 PetitionunderSectionl5lCPCprayingthatintheCircumstancesstated in the affidavit filed in support of the petition, the High Court may be pleased to "t"V ,ff further proceedings, including any re^covery, pursuant to the impugned oiOlr issueO by the 1st Respondent,-under Secticn 147 read with Section 144 read with sectibn 1448 oI the lncome Tax Act, 1961, dated 27 02.2024, bearing DIN.ITBA/ASTtst147t2o23-24t1061605723(1)fortheassessmentyear20lB.l9 and the penalty order under Section 272A(1Nd) bearing DIN -ITBA/PNL/F/ iizxll6i4tZOZi_ZUrcArcSAA57(1) dated 14.82024 and under Section 270A nearing" DIN ITBA/PNL/F/27ON|O24' 2511067981966(1) dated 2682024' p"rairg disposal of the Writ Petition as otherwise the Petitioner will be put to severe loss and hardshiP. Counsel for the Petitioner: SRI S. VIJAY ADITHYA counsel forthe Respondents: Ms. B. SAPNA REDDY (Jr. SC FOR INCOME TAX) The Court made the following: ORDER

THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO WRIT PETITION No.2482ooF 2024 ORDER: (per Hon'ble Justice Sujog Poul) Heard Sri S. Vrjay Adithya, learned counsel for the petitioner(s) and Ms. B' Sapna Reddy' learned Junior Standing Counsel for Income Tax Department' for the respondents. 2. The ground taken by tl're learned counsel for the petitioner(s) is that in furtherance of Finance Act' 2O2I' re- assessment process stood modified but the respondents have not taken care of it and therefore notice issued under Section 148 of the Income Tax Act, 1961 ca-nnot 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 finally drawn by this Court in a batch of writ petitions' W'P'No'25903 of 2022 andotherconnectedmatters,decidedbycommonorder dated 14.09. 2023. Tne parties agreed that this matter may be disposed of in terms of the Common Order dated 14 'O9 '2023 '

2 -rr- 4. This Court in the said order dated 14.09.2023 rn W.P.No.259O3 ol 2022, held as under: '35. In view of the aforesaid discussionb, it is by now very clear that the procedure to be followed by the respondent- Depart6ent upon treating the ltoticcs issued for reassessment being under Section 148A, the subsequent proceedings was mandatorily requfued to be undertaken under the substituted provisions as laid dolrn under the Finarce Act, 2021. In the abseace of rrhich, we are constraitred to hold that the procedure adopted by the respoadettt-DepartrEeut is in coatraventior to the statute i.e. the FiDance Act,2O21, at the first lnstance. Secoadly, lt ls also ia direct contravention to the directives issued by the Hou'ble Supreme Court in the case of Ashish Agarwal, supra. 36. For all the aforesaid reasons, the impugaed lotices issued and the proceedirgs drawn by the respotrdent-Department is neither tenable, nor sustainable. The notices so issued and the procedure adopted beitrg per se illegal, deserves to be aud are accordingly set aslde/quashed. As a coasequeEce, all the iEpugned orders gettiBg quashed, the coosequential orders passed by the respondelt DepartEe[t pursuant to the notices issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The reason rre are quashing the coasequetrtial o.de. is oa the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullilied autotlatically. 37. The prelimlnary objection raised by the petitioner is sustaiDed a[d all these writ petitions statrds alloqred on this very jurisdictioral iasue. Siace the iepuglred notices ald orders ar€ getting quashed on the point ofJurisdiction, we are not inclined to proceed further atrd decide the other issues raised by the petitioncr which staads teaerved to be raised arld cotrtended in an appropriate pioceedings. 38. Sirce the Hoa'ble Supreme Court had, iu the case of Ashish Agarwal, supra, as a o[e-time ueasure exercising the powers under Article 142 of the Constltution of tndia, permltted the Revenue to proceed under the substituted provisiors, and this Court aUosirg the petltions only on the procedutal [latl,, the rlght confer.ed o! the Revenue would

remain reserved to ptoceed further if they so want from the stage of the order of the Supreme 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 pa-ragraph 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, shal1 also stand closed' SD/. K,SREERAMA MURTHY ASSISTANT REGISTRAR //TRUE COPY// SE ION OFFICER To, 1. Assessment Unit, lncome Tax Department National e-Assessment Center' Room No 401, zno rtooi Efr;till;;;h;;;l irlehiu stadium New Delhi-110 , ,o"Xlr. Tax Officer, Ward 9(1), 2nd Floor' D-Block' lT Towers' 10-2-3' AC - Guards, HYderabad-500 028 3. Principal Chief Commrssii-n""' ot lncome T-ax' A^ndhra Pradesh and retanoana. Hvderabad i'dlib. ir"Jii'tl" s)2' stl'' Floor' lV Block' lT Towers' nC Giards, HYderabad-S0O 004 4 a;"ac'i. snlb. Vrinv AblrHYA, Advocatg-Lqigc' 5 one cc to Ms B. sAPNf,iliDiji'ti; s"CFoi-ttlcott'tE rAX) toPUCl 6. Two CD CoPies BN GJP 3 l I i I

HIGH COURT DATED: 1 0 10912024 ORDER WP.No.24820 of 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS oR THE Si{ oo 0 B JAit zozs z\6( :(, * l I gq4 W

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