Kapil Dev Pandey vs. The Income Tax Officer

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WP/24938/2024HC TelanganaHBHC01048208202411 September 2024Bench: SUJOY PAUL,NAMAVARAPU RAJESHWAR RAO6 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the procedure adopted by the respondent-Department for reassessment 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 that the impugned notices and proceedings were neither tenable nor sustainable and were per se illegal. Consequently, the notices and all consequential orders were set aside/quashed. The Court clarified that the quashing was on the ground of procedural flaw and jurisdictional issue, and the right of the Revenue to proceed further, if they so desire, from the stage of the Supreme Court's order in Ashish Agarwal, was reserved. The Court did not decide other issues raised by the petitioner, which were reserved to be raised in appropriate proceedings. The writ petition was allowed.

What were the facts?

The petitioner, Kaoil Dev Pandev, filed a writ petition challenging an order passed by the Income Tax Officer, Ward 2(1), Hyderabad, under Section 148A(d) of the Income Tax Act, 1961, dated August 30, 2024, for Assessment Year 2018-19. A subsequent notice under Section 143 of the Act was also challenged. The petitioner contended that the reassessment proceedings were initiated without adhering to the modified procedure introduced by the Finance Act, 2021, rendering the notice and consequential orders illegal. The respondents were the Income Tax Officer and the Assessment Unit, National e-Assessment Center, New Delhi. The procedural history involved the issuance of a show cause notice and consequential orders, which the petitioner sought to have set aside.

What were the issues?

1. Whether the reassessment notice issued under Section 148A of the Income Tax Act, 1961, is sustainable in law, considering the modifications brought about by the Finance Act, 2021? (Question of law) Assessee's contention: The reassessment notice is bad in law because the respondents failed to follow the modified reassessment procedure as mandated by the Finance Act, 2021. Consequently, the notice and all subsequent orders are illegal. Revenue's contention: The judgment records no specific argument from the revenue on this point. However, the parties agreed that the issue was settled by a previous common order of the High Court.

Which sections of the Income-tax Act were involved?

Section 148A,Section 143,Section 147,Section 148

AI-generated summary — verify with the full judgment below

t 3411 l HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (SPecial Original Jurisdiction) WEDNESDAY, THE ELEVENTH 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 :24938ClF 2024 Between: Kaoil Dev Pandev. s/o V.N. Pandey, aged about 54 years, occ-; Business, Flat No' )o i,'ru Ji."dJFijri. o. r. Road Aheerpet, Hvderabad- 50001 6' .....PETITIONER AND '1 . The lncome Tax Officer, Ward 2(1) lncome Tax Department' Hyderabad' 2. Assessment Unit, lncome T-qx Department, National e- Assessment Center New Dethi noo, NoTijiI iil'rroJidnimp Jawaharlal Nehru stadium, New Delhi - 110 003 ""'RESP.NDENTS Petition Under Article 226 of the constitution of lndia praying that in the circumstancesstatedintheaffidavitfiledtherewith'theHighCourtmaybe pleased to issue a Writ of lVlandamus or any other appropriate Writ Order or DirectiondeclaringtheorderpassedbythelstRespondentu/s148A(d)ofthe lncome Tax Act 1961 dated 30/08/20 24 bearing DIN and Notice No DIN Notice No. ITBA/AST/F/148At2O24-25t10G8170110(1) for the AY 2018-19 and Subsequently,Noticeundersectionl43oflncomeTaxActdated30/08/2024in DIN No. ITBA/AST/148 112024-25 1068170627(1) as arbitrary illegal bad in law void-ab-initioviolativeoftheprinciplesofnaturaljusticeapartfrombeingviolative of Articles 14,1 9g and 265 of the Constitution of lndia and Sec 148A of the lncome Tax Act 1961 and consequently set aside the same in the interests of justice and to pass in the interest of iustice'

|.A.NO:1 OF 2024 Petition Under Section '151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the responderrts to stay all further proceedings, including any recovery, pursuant to the order issued by the '1st Responcient, u/s 14BA(d) of the Income Tax Act 1961 dated 30-08-2024 bearing DIN and Notice No DIN Notice No. ITBA/AST/F/'148A12024- 2511068170110(1) for the A Y 2018-19 and subsequently, Notice under section 148 of lncome Tax Act dated 3010812024 in DIN No. ITBA/AST/148 112024-2511068170627(1), for the Assessment Year 2018-19, pending disposal of the main writ petition. Counsel for the Petitioner : SRI HIMANGINI SANGHI Counsel for the Respondents : Ms. J.SUNITHA (JUNIOR SC FOR TNCOME TAX) The Court made the following ORDER

THE HONOURABLE SRI JUSTICE SUJOY PAUL AND TIIE HONOURABLE SRI JUSTICE NAMAVARAPU RAi'ESIIWAR RAO IIIRIT PETITION No.2493a oF 20.24 ORDER: (per Hon'ble Justice Sujoy Poul) Heard Himangini Salghi, learned counsel for the petitioner(s) and Ms. J.Sunitha, learned Junior Standing Counsel for Income Tax Department, for the respondents' 2. The ground taken by the learned counsel for the petitioner(s) is that in furtherance of Finance Act' 2O2l' re- assessment process stood modihed 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 finally drawn by this Court in a batch of writ petitions' W'P'No'259O3 of 2022 andotherconnectedmatters,decidedbycommonorder dated 14.09.2023. The parties agreed' that this matter may be disposed of in terms of the Common Order dated 14 'O9 2023 ' I

7 4. This Court in the said order dated 14.09.2023 in W.P.No.25903 of 2022, held as under: "35. In vier of the aforesaid discussioas, it is by aotf very cleat that the procedure to be followei by the respoadent- DepartEent upon trcatirrg the aotices issued for reassessment being rnder Section 148A, the subsequent proceedings was mandatorily required to be undertaken under thc substituted provisions as laid down under the Finance Act, 2021. In the absence of which, we are constrained to hold that the procedure adopted by the respondent-Department is in contraveDtio! to the statute i.e. tbe Finance Act, 2021, at the first instance. SecoEdly, it ls also in direct contraveation to the directives issued by the Hoa'ble Supreme Court in the case ofAshish Agarval, sup.a. 36. For all the aforesaid reasoas, the iEpugled rotices issued and the proceedings drawn by the respondent-Departmeflt is neither tenable, Eor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are accordilrgly set aside/quashed. As a coasequence, all the impugned orders gettiug quashed, the consequential orders passed by the respondent Department pursuant to the notices issued under Section 147 and 148 trould also get quashed and it is ordered accordiugly. The reasoa se are quashing the consequential order is otr the principles that when the initiation of the proceeditrgs itself was procedurally wrong, the suhsequent orders also gets nullified autoEatically. 37. The preliminary objectioE raised by the petitioner is sustained and all these writ petitions stands allowcd on this very jurisdictionel issue. Since the iapugned notices and orders are gettitrg quashed on the point ofjurisdiction, we are not inclined to proceed further and declde the other issues raised by the petitioDer which stands reserved to be raised and conteaded in an appropriate proceedings. 38. Since the Hor'ble Supreoe Court had, in the case of Ashish Agarwal, supra, as a one-tlme rDeasure eaercising the powersi under Article 142 of the Conatitutioa of ladia, permitted the Revenue to procced ulder the substituted provisiors, and this Court allotf,ing the petitions only on the procedural flaw, thc right coaferred on the Revenue woulal remain reserved to proceed further if they so rcant from the q- -,.- 1

stage of the order o[ the Suprcme Court in the case of Ashish Agarwal, supra. 39. No ordet 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 rn W.P.No.259O3 of 2022. 6. The Writ Petition is allowed' No costs. Interlocutory applileations, if any pending, shall also stand closed. /TTRUE COPY// SD/-V.KAVITHA ASSISTANT REGISTRAR SECTION OFFICER \I To l.ThelncomeTaxofficer,Ward2(1)lncomeTaxDepartment,Hyderabad. 2 Assessment Unit, tncomJfl;5Hild'Ii Nationdl e-Assessment center New Dethi, Room No aoi, ift"Fi$;,'i irmp Jawaharlal Nehru stadium' New Delhi 1 10 003' I gfu E3[ il:',1uftl+ilf,i,'T,3H'#IB"f i-8sMEr'o*r Advocate toPUCl 5. Two CD CoPies SA GJP o

\ HIGH COURT DATED:1110912024 ORDER WP.No.24938 of 2024 ALLOWING THE W.P WITHOUT COSTS. oR 1HE S'4 r4- zfl EE|" 2tJ21 z DEsp qT (lrlEg a Y o .rl l' o .A ,/*

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