Redan Infrastructure Private Limited vs. Union of India

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WP/25182/2024HC TelanganaHBHC01048574202412 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 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 the procedure to be followed by the Revenue for reassessment notices issued under Section 148A, as substituted by the Finance Act, 2021, was mandatory. The failure to undertake these subsequent proceedings rendered the procedure adopted by the Revenue in contravention of the statute and the directives of the Supreme Court in Ashish Agarwal. Consequently, the impugned notices and proceedings were held to be neither tenable nor sustainable and were set aside/quashed. The court also quashed consequential orders passed pursuant to the notices under Sections 147 and 148, based on the principle that if the initiation of proceedings is procedurally wrong, subsequent orders are automatically nullified. The court reserved liberty for the Revenue to proceed further from the stage of the Supreme Court's order in Ashish Agarwal, if they so desired. The present writ petition was allowed in terms of this common order, setting aside the impugned show-cause notice and consequential orders.

What were the facts?

This case involves a writ petition filed by Redan Infrastructure Private Limited and Convalt Energy India Private Limited. The petitioners challenged an order dated 07.04.2022 passed under Section 148A(d) of the Income Tax Act, 1961, and a consequential notice issued under Section 148 of the Act. They contended that these actions violated the E-assessment of Income Escaping Assessment Scheme, 2022, and were illegal, arbitrary, and in violation of natural justice and fundamental rights. The assessment year(s) are not explicitly stated, but the challenge pertains to the reassessment proceedings initiated by the Income Tax Department. The procedural history involves the issuance of a show-cause notice and consequential orders, which are now under challenge before the High Court.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, and consequential orders are sustainable in law, given the modifications to the reassessment process by the Finance Act, 2021? (Question of law) Assessee's Contention: 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 bad in law, and all consequential orders are also illegal. Revenue's Contention: The judgment records no specific argument from the revenue on this point. 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 148A,Section 148,Section 147

AI-generated summary — verify with the full judgment below

Between: 1. Redan lnfrastructure Private Limited, A company incorporated under the Companies Act and Having lts Registered Office At 2hd Floor' Plot No. 20. Rao 'and Raju Colony, H. -No S-2-i 20/86/9/450 Road No 2,. Banjara Hills, Hyderabad 500034, Represented by its Authorized Representative 2. Convalt Energy India Private Limited, A company incorporated under the Companies A"ci and, Having lts Regrstered Office,at 39/19 Aspen Court, lll Flooi 6th Main Road. R A Puraml Chennai 600028, Represented by its Authorized Representative ...PETITIONERS IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (SPecial Original Jurisdiction) THURSDAY, THE TWELFTH 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: 25182 OF 2024 Union of lndia, Ministry of Finance, lncome Tax Department. New Delhi. The Office of Commissioner, income Tax Department Ministry of Finance Government of lndia New Delhi Principal Commissioner of lncome Tax, CIT 31.T. Towers A.C. Guards Hyderabad lncome Tax Officer, Ward 3 1 Hyderabad l.T. Towers A C. Guards Shri Vijaya Kumar Nlmmagada, lncome Tai Officer, lncome Tax Department, Ward 3 i Hyderabad l.T. Towers A.C. Guards Assessment Unit, lncome Tax Department ...RESPONDENTS AND 1 2 3 6 4 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 grant an order, direction or writ, more so in the nature of writ of Mandamus declaring the actions of Respondent Nos. 5 and 6 in passing lmpugned order dated 07.04.2022 under section 148A(d) of the lncome Tax Act, 1961 and consequ€ntial notrce issued by R?spondent No. 5 and 6 under Section [ 3411 ]

148 of the lncome Tax Act as being violative of E-assessment of lncome Escaping Assessment Scheme. 2022' notitied vide Notifacation dated 29 03.2022 bearing S.O. No. 1466 (E) and also being illegal, arbitrary, unreasonable in gross violation of the principles of natural justice and being violative of Petitioners fundamental rights enshrined under Article 14 and Article 21 of the Constitution of lndia and to consequently set aside lmpugned order and Notice and all other Orders and proceedings passed/rn itiated pursuant to lmpugned Order and lmpugned Notice including assessment order dated 22.03.2024. Counsel for the Petitioner : Ms.MYTRI INDUKURU counser ror the Respondent No'1 ' 3[l3X5,Xt#ri.tili[uro*, Dy.so.GEN Counsel for Respondent No.2to6 : SRI B.SAPNA REDDY, Jr.SC FOR lT DEPT The Court made the following: ORDER (

-- TI{E TIONOURABLE SRI JUSTICE SUJOY PAUL AND THE HoNouRABLE sRI JusrrcEii*^u^*o"u RAJDS'T*AR RAo TPETITION No.25 18 oF2024 petitioner(s), Sri B' Mukherjee' learned counsel representrng Sri Gadi Praveen Kumar' learned Deputy Soiicitor General of India, for the respondent(s)-Central Government and Ms' B' ORDER: (per Hon'ble Justice SuioA Paul) Heard Ms' MYtri Indukuru' learned counsel for the Reddy, leamed Junior Standing Counsel for Income Tax Department, for thc resPondent(s)-Income Tax DePartment' ground taken by the learned counsel for the SaPna 2. The petitioner(s) is that in furtherance of Finance Act' 2021' 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' judicial scrutiny' Since nolice is consequential orders are also bad in la'iv 1961 cannot sustarn bad in law' the 3. During the course of hearing' learned counsel for the parties agreed that curtains on this issue are {inally drawn by this Court in a batch of writ petitions' W'P'No'259O3 of 2022

i and other connected matters, decided by common order dated 14.O9.2023. The parties agreed that this matter may be disposed of in terms of the Common Order dated 14.O9.2023. 4. This Court in the said order dated 14.O9 .2023 rn W.P.No.259O3 of 2022, held as under: 2 "35. In vies of th€ aforesaid discussions, it is by Dow wery clear that the procedure to be followed by the respondelt- Department upon treatiag the notices issued for reassessEeut bei[g under Section 148A, the subsequent proceedings qras mandatorily required to be utrdertake[ under the subsututed ptovisiorF as l,aid down ulder the Filrance Act, 2021. Io the absence of which, we are constrained to hold that the procedure adopted by the respondeat-I)eparthent is in contravention to the statute i.e. the FiuaEce Act,2021, at the filst i[starxce. Secondly, it is also i[ direct contravention to tte directives issued by the Hoa'ble Supreme Court iD the case of Ashish Agarsal, supra. 36. For all the aforesaid reasons, the itnpugaed Eotices issued aad the proceedings drawa by the respondetrt-Department is neithet tenable, aor sustainable. The notices so issued aad the proced[ie adopted beiog per se illegal, deserves to be a[d are accordiEgly set aside/quashed. As a corrsequence, all the irnpugEed orders getting quashed, the conr,equentlal orders passed by the respondent DepartEent pursuaat to t_he notices .. issued uader Sectiod 147 and 148 would also get quashed aad it is ordeled accordiagly. The reasou we are quashing the cotrseque[tial order is ort the principles that wheE the initlation of the proceedings itself was procedurally wrong, t.he subsequeat orders al.so gets nullifred autoEatically. 37- Tbe preliBinary objection raised by the petitioler is sustairned and all these Erit petitiorls stands allowed otl this very judsdictional issue. Since the i.Bpug[ed lotices a,rd orders are gettirlg quashed o[ the poiat ofjutisdictioa, we are not incliaed to proceed further and decide the other issues raised by the petitiorer which stauds reserved to be raised and conterded in au appropriate proceedingE- ,l

38- Sinc€ the Hotr'ble SupreBe court had' in the case of Ashish Agarqral, supta, as a oE!''ti.re Eeasure excrcisi'lg the powers undet Article 142 of the Coastitutiod of India' perBitted the Revetrue to Proceed udder the substituted p.ori"ioos, ald this Court allo!'iqg the petitioDs only or tie i."""ut..i llaw, the tight colferted on the Reveuue would .em"io ,e.ert,ed to proceed furthet if they so want froa the stage of the order of the Supfe@e Court iq the case of Ashish 5.. In view of the consensus arrived' the impugned Show CausenoticeandConsequentialorderspassedinthiswrit 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'38 of the order dated 14-O9'2O23 in W.P.No.25903 ot2022' 6. The Writ Petition is allowed' No costs' Interlocutory applications, if any pending' shall also stand closed //TRUE COPY// SD'. MOHD. ISMAIL ASSISTA REGISTRAR SECTION OFFICER t To, Hi{frii$,1ffi=di"p;'H**"?.':TT{*:i:**; ffiti6t*rump5,ffit,g;,g:".,,,',*H::l 1. 2. 3. 4.q b. 7 8I iwo CD CoPies BSK LSw { Agarwal, suPra' 39. No order as to costs'" I

HIGH COURT DATED:12l0gl2024 ORDER WP.No.2S182 of 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS *n9eL \-c ; itL $ j4 2 2 Ctr 20i{ Dara-,rf.a, c,. ',/ 'l1 ft"un { l I

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