Jitendra Kumar Gundapaneni vs. Assessment Unit,

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WP/25547/2024HC TelanganaHBHC01049429202420 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 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 the proceedings drawn by the respondent-Department were neither tenable nor sustainable, being per se illegal. Consequently, the impugned notices and consequential orders were set aside/quashed. The Court noted that the preliminary objection raised by the petitioner was sustained on the jurisdictional issue, and other issues raised by the petitioner were not decided and were reserved to be raised in appropriate proceedings. Liberty was reserved to both parties to proceed in accordance with law as per paragraph 38 of the order dated 14.09.2023 in W.P.No.25903 of 2022, which allows the Revenue to proceed from the stage of the Supreme Court's order in Ashish Agarwal.

What were the facts?

The petitioner, Jitendra Kumar Gundapaneni, challenged an order passed by the Income Tax Officer under Section 148A(d) of the Income Tax Act, 1961, dated 31/07/2022, concerning the financial year 2012-13 (Assessment Year 2013-14). The petitioner contended that the reassessment process was modified by the Finance Act, 2021, and the respondents failed to adhere to these modifications, rendering the notice and consequential orders illegal. The respondents are the Assessment Unit, National Faceless Assessment Centre, and the Income Tax Officer. The matter was brought before the High Court for the State of Telangana at Hyderabad.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 148A of the Income Tax Act, 1961, are valid in light of the modifications introduced by the Finance Act, 2021? (Question of law) Assessee's Contention: The petitioner argued that the respondents failed to follow the modified reassessment procedure as mandated by the Finance Act, 2021. This procedural flaw, they contended, renders the notice issued under Section 148 of the Income Tax Act, 1961, and all subsequent consequential orders bad in law and unsustainable. They relied on the principles of natural justice and specific provisions of the Act. Revenue's Contention: The judgment records that the learned counsel for the parties agreed that the issue had been conclusively decided by this Court in a batch of writ petitions, W.P.No.25903 of 2022 and other connected matters, decided by a common order dated 14.09.2023. Therefore, the revenue implicitly agreed to abide by the decision in that batch of petitions.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148,Section 147,Section 151A,Section 149

AI-generated summary — verify with the full judgment below

[ 3411 ] Between: Jitendra Kumar Gundapaneni, S/o. Venkata Ramaiah Gundapaneni, Oci. Business, Aged abolt 53 years, R/o. Plot No.56, Flat No.Q0! Sai Teja Apartments, Bhagiya Nagar Colbny, Kukatpally, Hyderabad - 72, fehngana State. HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE TWENTIETH 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: 25547 OF 2024 ...PETITIONER AND 1 Assessment Unit,, National Faceless Assessment Centre, Income Tax Department, Miniitry of Finance, Room No.401 , 2nd floor, E-Ramp, Jawaharlal Nehru Stadium, Delhi -110 003. The lncome Tax Officer, Ward -'l l(1), Kothaguda, Opp Botanical Gardens, Seiltingampatty Mandal, Ranga Reildy Districl - 500 084' Telangana State' 2 ...RESPONDENTS Petition under Ad(icle 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 or order or direction, more preferably in the nature of writ of Mandamus, holding the order passed by the 2nd respondent herein under Sec. 148A(d) of the lncome Tax Act, daled.31l1712022 with DIN Notice No.ITBA/COM/Ft17t2022-23t1044329336(1) for the financial yeat 2012-13 relevant to A.Y. 2O13-14 as illegal, arbitrary, bad in Law and violation of Principles of Natural Justice apart from being violative of Provisions of sec.lzEA and 149 of the Act also contrary to the circular issued by CBDT and provisions of sec.151A of the Act consequently set aside the same { lA NO: 1 OF 2024

/ -; Petition under Section 151 CPC praying that in the clrcumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to Suspend the Operation of the Order dated.30lO712022 with DIN Notice No ITBA/COII//F 11712022-2311044329336( 1) for the financial yeat 2012-13 relevant to A.Y. 2013-14 passed by the 2'd respondent, pending disposal of the above writ petrtion. Counsel for the Petitioner: M/S. AYYAGARI JAYASHREE Counsel for the Respondents: MS J. SUNITHA (JUNIOR SC FOR INCOME TAX) The Court made the following: ORDER

THE HONOURABLE SRI JUSTICE SUJOY PAUL AITD THE HONOURABLE SRI JUSTICE ITAMAVARAPU RAJESIIWAR RAO WRIT PETITION No.25547 OF 2o24 ORDER: (per Hon'ble Justice Sujog Poul) Heard Ms. A. Jayashree, 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, 2021, re- assessment process stood modilied 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 frnally drawn by this Court in a batch of writ petitions, W.P.No.259O3 of 2022 ald other connected matters, decided by common order dated 14.09.2023. The parties agreed that this matter may be disposed of in terms of the Common Order dated 14.09.2023' -7

2 4. This Court in the said order dated 14.09.2023 in W.P.No.25903 of 2022, held as under "35. In view of the aforesaid discussions, it is by Eow very clear that the procedure to be follorred by the respondent- Department upon treatiag the notices issued for reassessmeEt being under Section 148A, thc subsequent proccediEgs was maadatorily required to be uEdertaken under the substituted provisions as l,aid down uDder the FiEanc€ Act, 2021. l^ the ebsence of which, we are constrained to hold that the procedure adopted by thc respondent-DepartmeEt is in contraventiotr to the statute i.e. the Fitrance Act, 2O21, at the first instance. Secondly, it is also ia direct coEtravention to the directives issued by the HoE'ble SupreEe Court in the case of Ashish Agarwal, supra. 36. For aU the aforesaid reasons, the impugncd notices issued and the proceedings drawn by the respotrdetrt-Department is neither teaable, r1or sustainable. The Eotices so issued ard the procedure adopted beiEg per se illegal, deserves to be ard ari acgoldingly set aside/quashcd. As a consequeace, all the intpugned orders getting quashed, the consequential orders passed by the respoBdent DepartEeEt pursuart to the notices issucd under Section 147 and 148 would also Bet quashed and it is ordered accordingly, The reason we are quashi[g the consequential order is on the principles that when the initiation of the proccedings itself was procedurally wrong, the subsequent orders also gets lullified automatically. 37. The pretimiEary objection raised by the petitioaer is sustained aad all these writ petitions stands allowed on this very jurisdictioaal issue. Sirce the impugned notices and orders are getting quashed on the point ofjurisdiction, rEe are not incliDed to proceed further and decide the othcr issues raised by the petitiouer which stands reserved to be raised and contended in aa appropriate proceedings. 38. Silce the Hon'ble Suprem€ Court had, ia the case of Ashish Agarwal, supra, as a oEe-tiEe treasure exercising the powers under Article 142 of the Constitution of India, permitted the Revenue to proceed uDder the substituted provisions, and this Court atlowiEg the petitions only on the procedural flaw, the right conferr6d oE the Revenue would _lgmain reserved to proceed further if they so tpant from the

Z, 3 stage of the order of the SuPreme Court irl 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'38 of the order dated 14'09'2023 in W.P.No.25903 of 2022. 6. The Writ Petition is allowed. No costs. Interlocutory applications, if any pending, shall also stand closed' SD/. N.CHANDRA SEKHAR RAO ASSIS A T REGISTRAR //TRUE COPY// CTION OFFICER To, 1 Assessment Unit,, National Faceless Assessment Centre' lncome Tax ij;;;;;;i, rrrtiniltrr,'or Finance, Room- N-o 401 , 2nd floor' E-Ramp' Jrfiininat Nehru Siadium, Delhi -1 10 003 il;j;;;;.;i;i-omcer' warJ - it 1t;, xotnasuaa, opp Botanical Gardens' sJririiid"'ririrv rvlnoar, nanga neidv Drstric:t- 5oo 084' Telangana state' one Cb to M/4. Ayyaqari Jayashree. Advocate luruul - 5'# dd i" rvii"L 5l"itr,i iitltltoR SC for lnconie rax) [oPUC] Two CD CoPies J 4 5 TJ LS s 4,

t l HIGH COURT DATED:2010912024 ORDER WP.No.2S547 of 2024 ALLOWING THE WRIT PETITION ,4 //J .,. 7nG 16. 1 rl r;- S 14, l O 0l il[v zul a c -a \i. a WITHOUT COSTS ,0 dlLrft'4 19, \ 2,? g\'o

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