Lanco Kondapalli Power Limited vs. Union of India

t34741 IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE THIRTEENTH DAY OF OCTOBER TWO THOUSAND AND TWENTY SIX PRESENT THE HONOURABLE THE ACTING CHIEF JUSTICE SRI P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITION NO: 30654 OF 2026 Between: Lanco Kondapalli Power Limited, (PAN AAACK5423A' CIN u35101TG1995P1C021459) A corirpany registered under the provisions of the lndian companies Act, '1956 and having its registered office at 4th Floor, Mahaveer Radiance, Plot Nos. 53, 54, 57 and 58, Survey Nos 43 and 44' Pillar No. 1708, Kavuri Hills, Madhapur, Hyderabad - 500081, Telangana' lndia and Represented by its Authorised Representative, Mr. Sunil Kumar Saraf. ...PETITIONER AND Union of lndia, Ministry of Finance, North Block, New Delhi, Represented by its Secretary. Additional Commissioner of lncome Tax, Telangana Region, Aayakar Bhavan, 8th Floor, Basheerbagh, Hyderabad - 500004 Assistant Commissioner of lncome Tax, DC/ACIT Circle 5(1), Hyderabad Room No.224, B-Block, 2nd Floor, lncome Tax Towers, AC Guards, Masab Tank, Hyderabad - 500004, Telangana. ...RESPONDENTS 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 issue an appropriate writ, order or direction, more particularly one in the nature of a writ of Mandamus (i) declaring the notice dated 29.03.2026 bearing DIN No. ITBA/AST/F/14sA(ScN)_1/2025-2611088083533(1),issuedbyRespondentNo.3 under Section 148A(1) of the Act in respect of AY 2024-25 as illegal, arbitrary' 1 2 J

GEt-rlElGEp' without jurisdiction and contrary to the provisions of the Act, (ii) declaring the order dated 23.06.2O2e bearing DIN No.ITBA/AST/F1148N2O26-27l1090314407(1), passed by Respordent No. 3 under Section 148A(3) of the Act in respect of AY 2024-25, as illegal, arbitrary, without jurisdiction and contrary to the provisions of the Act (iii) declaring the notice dated 23.06.2026 bearing DIN No. ITBtuAST/S/148_1'2026-2711090329931(1), issued by Respondent No.3 under Section 148 of th : Act in respect ot AY 2024-25, as illegal, arbitrary, without jurisdiction and cortrary to the provisions of the Act (iv) consequently, setting aside and quashing the notice dated 29.03.2026, the order dated 23.06.2026, the notice dated 23.06.2026 :rnd all consequential proceedings initiated against the Petitioner tor AY 2024-25. l.A. NO: 1OF 2026 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 Stay the operation of the No:ice dated 23-06-2026 bearing DIN No. ITBA/AST/S/148-112026- 2711090329931(1) ssued under Section 148 of the Act and all the consequential proceedings pendin3 the consideration of the present Writ Petition. Counsel for the Petitioner: SRI VEDULA SRINIVAS, Sr. COUNSEL, REP. SRI V.ANEESH Counsel for the Respondent No.1: SRI MORE SHASHI KIRAN, SC FOR CENTRAL GOVT., Counsel for the Respondent Nos.2 & 3: SRI K.SUDHAKAR REDDY, Sr. SC FOR lT The Court made the following: ORDER

a IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THE HONOURABLE THE ACTING CHIEF ]US P.SAM KOSHY AND THE HONO URABLE SRT JUSTTC E NARSING RAO NA DIKONDA WRIT PETITION 0.30654 of 2026 (CNR No.H8HC010621392026) DArE oF oRDER: 13.10.2026 Reserved on : 16.o9.2026 Pronounced on | 13.10.2026 Uploaded on | 15.1.J.2026 Between: tvl/s. LancoKondapalli Power Llmited. ...Petitioner AND Union of India, Ministry of Finance, North Block, New Delhi, Represented by its Secretary and 2 others. .,. Respondents ORDER: (per ltan'bte sri )usttce P.sam Koshy) Heard Mr. Vedula Srinivas, learned Senlor Counsel appearing on behalf of N4r. V. Aneesh, Counsel for the petitioner; Mr. Shashi Kiran, learned Standing Counsel for Central Government appearing for respondent No.1, and Mr. K. Sudhakar Reddy, learned Senior Standing Counsel appearing on behalf of respondent Nos.2 and 3' 2. The instant Writ Petition under Article 226 of lhe Constitution of India has been flled by the petitioner challenging the notice dated

Page 2 of 13 29.O3.2026, bearing DIN No.ITBA/AST/F/148A (SCN)1/2025- 2611088083533(1), issued under Section 148A(1) of the Income Tax Act, 1961 (for short the 'Act'); the order dated 23.06.2026, bearing DIN No.ITB,\/AST/F/148A/2026-2711090314407(l), passed under Sectron 1481\(3) of the Act, and the consequential notice dated 23.06.2026, issued under Section 148 of the Act, bearlng DIN No. ITBA/AST/Sl -.48 7/2026-27/1090329931(1) in respect of the assessment lear 2024-25, by respondent No.3, as illegal, arbitrary, without jurisdiction and contrary to the provisions of the Act. 3, Vide the impugned order, respondent No.3 alleged that income chargeable t() tax to the tune of Rs.665,22,53,323/- had escaped assessment at the hands of the petitioner under the head of 'carry forward losser;'. 4. The fa:ts of the case are that the petitioner company is engaged in th3 business of generation of power and an assessee under the Act. The relevant assessment year for the present proceedings is 2024-25. The petitioner had undergone liquidation under the Insolvency arrd Bankruptcy Code, 2016 and was sold as a going concern pursLant to the order passed by the National Company Law Tribunal, Hyde,rabad, (for short'NCLT') dated 23.06.2023. By the said order, write-back of liabilities had been directed, and a specific rellef had been grarrted permitting revised financial statements to be filed with the Incorle Tax Authorities without any levies or penalties. The

- Page 3 of 13 benefit of carry forward and set-off of brought-forward business losses and unabsorbed depreciation for the purposes of Minimum Alternate Tax (for short'MAT') had also been granted, subject to permission being obtained from the appropriate authority under the Act. 5. The return of income of the petitioner for the assessment year 2024-25 was filed on L3.II.2024, and a revised return had thereafter been filed on 23.12,2024. Pursuant to the filing of afcresaid returns, an intimation under Section 143(1) of the Act had been received by the petitioner from the Centralized Processlng Centre (for short'CPC') on 19.72.2025. Thereafter, notice dated 29.03.2026 had been issued by respondent No. 3 under Section 148A(1) of the Act, alleging mter a/la that certain information had been received which purportedly indicated that income chargeable to tax had escaped assessment for assessment year 2024-25 in the return filed by the petitioner. The said notice had referred to information purportedly received under the 'Risk Management Strategy'formulated by the Central Board of Direct Taxes and had called upon the petitioner to show cause as to why a notice under Section 148 of the Act ought not to be issued. In response thereto, a reply had been duly furnished by the petitioner on 20.O4.2026, setting out the particulars relating to the unabsorbed losses carried forward and claimed in its returns For the assessment year 2O24-25. The treatment and availability of the said losses across the preceding years had also been explained, and it had been

Page 4 of 13 demonstraterl that the relevant particulars had already been disclosed in the returrrs filed by the petitioner. On that basis, it had been contended tlrat the case of the petitioner was not a fit case for initiation of rr:assessment proceedings. 6. Despitr: the detailed reply furnished submissions contained therein, an order thereafter be:n passed by respondent No.3 by the dated petitioner and the 23.06.2026 had the Act, whereby, mechanically the case of the petitioner held to be a flt case for issuance of notice under Section under Sectlon 148A(3) of had been 148 of the Act. The impugned order had proceeded principally on the alleged claim of rnabsorbed carried-forward losses amounting to Rs.665,22,53,3 23/- and had referred to the variation between the original returrr and the revised return. On the very same day, a notice dated 23.06.,2026 had also been issued by respondent No. 3 under Section 148 cf the Act, proposing to assess or reassess the income of the petitioner or to re-compute the loss, depreciation allowance or any other allowan,:e or deduction for assessment year 2024-25. 7. Aggrieved by the aForesaid proceedings, the petitioner had challenged the show cause notlce dated 29.03.2026 under Section 148A of the A:t, described as the "1't Impugned Section 148A Notice", the notice dated 23.06.2026 under Section 148 of the Act, described as the "2'j Irpugned Section 148 Notice" (hereinafter collectively

Page 5 of 13 referred to as the "Impugned Notices"), and the order dated 23.06.2026, described as the "lmpugned Order". 8. Learned Senior Counsel appearing for the petitioner submitted that the Impugned Notices do not set out, in any manner whatsoever the information which forms the basis for the respondents view that income chargeable to tax had escaped assessment. In its response to the Impugned Section 148A Notice, the petitioner had specifically requested the Department to share all the relevant information to understand the basis on which the reopening proceedings have been initiated. The Department has evidently ignored the request of the petitioner and as such, the proceedings are liable to be struck down on this ground alone, since it violates the principles of natural justice. According to him, it is a trite law that the relied-upon documents have to be furnished to the assessee for any meaningful hearing, which was not done in the present case. 9. Learned Senior Counsel for the petitioner further submitted that both of the Impugned Notices are not enclosed with the primary materials, particulars or reasoning which allegedly connect the petitioner's returns with any escapement of income, and in the absence of such disclosure, the petitioner stands deprived of a reasonable opportunity to respond to such allegations. In this light, it is submrtted that the very jurisdictional foundation for initiating reassessment proceedings stands vitiated.

Page 6 of 13 10. Learne I Senior Counsel for the petltioner also submitted that the Impugnel Notices are also bereft of particulars relating to the information vrhich forms the basis for the same and further fails to meet the r€quirement oF "reason to believe". Pertinently, the Impugned Notlces make vague references to alleged discrepancies in certain amour'rts supposedly related to the petitioner's returns, but do not advert to the petitioner's reply. Therefore, the Impugned Notices are liable to be set-aside. 11. Learnerl Senior counsel for the petitioner relied on the case of Balmer Law'ie and Company Limited vs. Union of India and Othersl wherein the Hon'ble Calcutta High Court held that the Assessing Officer cannot change the basis for reopening between the show-cause notice and the order and that an order cannot travel beyond the ccnfines of the notice. The Hon'ble Court relied upon the case of Reckitt & Colman of India Ltd. vs, Collector of Central Excise2 wherr:in the Hon'ble Supreme Court had held that an order cannot travel treyond the show-cause notice. t2. Learned Senior counsel for petitioner further contended that the Impugned Orcer merely refers to the variation between the original and revised returns and concludes that the matter requires "thorough examination". Such a bald conclusion does not constitute '1zozs; :aa crR 1ca lzra '(1997) 10 SCC 379

- Page 7 of L3 consideration of the petitioner's reply in the manner envisaged through the procedure under Section 148A(3) of the Act, which requires the Assessing Officer to consider the reply furnished by the assessee and to pass an order dealing with the material submissions. A mechanical reference to the reply, without addressing the principal submissions and documents, amounts to n on-consid e ration of the reply and therefore violates the principles of natural justice. 13. On the other hand, the learned Senior Standing Counsel for Income Tax Department contended that the proceedings under Section 1484 of the Act are, by their very nature and design, in the nature of a preliminary or investigative exercise intended to afford the assessee an opportunity to explain the information available with the Department before a formal notice under Section 148 under the Act is issued, and the petitioner having already been afforded such an opportunity and having filed replies and objections, the petitioner was obligated to appear before the Assessing Officer in the reassessment proceedings now set in motion, place its explanation, evidence and objections and permit the assessment to be completed on merits, rather than sho rt-circu itin g the statutory process by invoking the extraordinary jurisdiction of this Court. 74. To support his argument, he relied upon the decision of this Hon'ble Court in the case of Nitin Enterprises vs' Income Tax

Page 8 of 13 Officer3 wherein it was held that assessees cannot jump the gun over statutory renredies available under the Act, and invoke Constitutional remedies unc er Article 226 of the Constitution of India. 15. Having heard the contentions put forth on either side and on perusal of r<cords, the question that falls for our consideration is "whether the petitioner, against whom a notice under Section 14g of the Act has been issued after an order under Section 14gA(3) of the Act, can invol(e the writ jurisdiction of this Court under Article 226 of the Constitution of India to assail the Show Cause Notice, the order and the consequential notice at the threshold of the reassessment proceedings?" 16. The scf-eme of Sections 147 to 151 of the Act contemplates a graded procecure. Section 148A(1) requires the Assessing Officer to put the asses!;ee on notice of the information suggesting escapement of income anC to call for an explanation. Section 14gA(3) then requires the Assessing Officer to decide on the basis of the material available and the reply furnished whether it is a fit case for issuance of notice under :;ection 148. The notice under Section 14g does not conclude any Iiability. It only sets the reassessment in motion. The assessee is thr:reafter entitled to file a return and to place its entire case on facts and in law before the Assessing Officer. An assessment order passed lt the end of that process is appealable before the 'w.p. tro.2qo88 of 2126, decided on 11.08.2026

\ Page 9 of 13 Commissioner of Income Tax (Appeals) and thereafter the Income Tax Appellate Tribunal. A further remedy lies before this Court under Section 260A of the Act on a substantial question of law. The Act therefore provides a complete and self-contained mechanism in which every objection raised before us can be ventilated and decided. t7. The grounds urged on behalf of the petitioner fall into four groups. The first is that the impugned notices do not disclose the information that forms the basis of the proposed reassessment and that the petitioner's request for such information was ignored. The second is that the notices lack particulars and do not satisfy the requirement of reason to believe. The third is that the impugned order travels beyond the confines of the Show Cause Notice. The fourth is that the impugned order does not consider the petitioner,s reply and rests on a bald conclusion that the matter requires thorough examination. 18. We have examined each of these grounds. None of them goes to the inherent lack of jurisdiction of respondent No.3 to issue the notices. Each relates to the adequacy of the material and the quality of the consideration, which are matters for the authorities under the Act in the first lnstance. The record also does not bear out the assertion that the petitioner was left in the dark as to the basis of the proceedings. The notice dated 29.03.2026 refers to information received under the Risk Management Strategy formulated by the

Page 10 of 13 Central Boarl of Direct Taxes. The impugned order proceeds on the claim of unal>sorbed carried forward losses of Rs.665,22,53,323/- and refers to the variation between the original and the revised returns. The petitione r itselF responded to the notice by furnishing particulars of the unabsorbed losses carried forward and claimed in its returns for the assessm:nt year 2024-25 and by explalning the treatment of those losses across the precedlng years. A party that has met the allegation on its speciflcs can hardly maintain that it did not know the case it was ca lled upon to meet, Whether the information should have been suppliec in greater detail is a question that can be raised before the Assessing Offrcer. It does not render the proceedings void. 19. We may add that the broug ht-forw; rd losses and backdrop of the order of the petitioner's ov/n showing made that of the approp -iate authority was sought or obtained and is sustainable in the revised claim of carry forward and set-off of unabsorbed depreciation arises in the NCLT dated 23.06.2023, which on the benefit subject to the permission under the Act. Whether such permission whether the claim for such a la rge amount and law th at petition op rn ron by the return are questions of fact require examination of records. They cannot be answered in a under Article 226 of the Constitution of India. We express no on them and leave them entirely open for determination Assessing Officer and the appellate authorities.

Page 11 of 13 20. The petitioner relied on the decision of the Calcutta High Court in the case of Balmer Lawrie and Company Limited (supra) and on the decision of the Hon'ble Supr:eme Court in the case of Reckitt & Colman of India Ltd. (supra) for the proposition that an order cannot travel beyond the show cause notice. That proposition is unexceptionable. Whether the impugned order has in fact departed from the basis stated in the Show Cause Notice is a matter of comparison of the two documents and an appreciation of the reply. On the present record both the notice and the order are centred on the claim of carried forward losses and the variation between the returns. The petitioner remains free to raise this contention before the Assessing Officer and thereafter before the appellate authorities. The decision relied upon does not hold that a writ Court must entertain such a challenge before the statutory process is allowed to run its course. 2L. The submission that the impugned order does not adequately consider the petitioner's reply is likewise one that can be examined in the ordinary course. The Assessing Officer is bound to consider the objections raised by the petitioner in the reassessment. If the contention of non-consideration is found to be well founded the appellate authorities have ample power to set right any resulting infirmity.

Page 12 of 13 22. We arr: in respectful agreement with the decision of this Court in Nitin Enterprises (supra), relied upon by learned Senior Standing Counsel for Income Tax Department, wherein it was held that assessees cannot jump the gun over the statutory remedies available under the Ar:t and invoke the constitutional remedies under Article 226. The (xistence of an alternative remedy does not oust the jurisdiction o1'this Court. It is a rule of self-restraint, which yields only where the ac:ion impugned is wholly without jurisdiction, where there is a patent b-each of natural justice that cannot be cured before the statutory autlority, or where the vires of a provision is challenged. None of these situations has been made out here. 23. We mu;t also record our disapproval of the manner in which the petitioner has approached this Court. The petitioner is a corporate entity that hits emerged from insolvency proceedings and has the beneflt of pr(,fessional advice at every stage. It was open to the petitioner to'ile its return in response to the notice under Section 14g and to put fo[ward before the Assessing Officer every objection now raised before us. It chose instead to move this Court at the very threshold of tl'e reassessment. The writ jurisdiction of this Court is an, extraordinary and discretionary jurisdiction. It is not meant to be invoked in eve-y dispute that arises under a taxing statute as a means of bypassing r.he forums created by the statute jtself. Assessees would do weli to allow the statutory machinery to function and to

Page 13 of 13 approach this Court only where that machinery has genuinely failed them. A premature resoft to Article 226 only delays the adjudication of the very issues that the assessee wishes to see decided. 24. In vrew of the above discussion, we hold that the writ petition is not maintainable at this stage in view of the efficacious alternative remedy available to the petitioner under the Act. The instant Writ Petition is accordingly dismissed and the question of law framed is answered against the petitioner and in the favour of respondents. It is left open for the petitioner after the conclusion of the reassessment to avail of the remedy of appeal and every other remedy available to it under the Act in accordance with law. 25. As a sequel, miscellaneous petitions pending if any, shall stand closed. However, there shall be no order as to costs. //TRUE COPY// SD/-P.C.SU ASSISTANT LEKHA DEVI \ecrsrnnn (7 SECTION OFFICER To, BSR PB 1. One CC to SRt V.ANEESH, Advocate tOpUCl 2. One CC to SRt K SUDHAKAR REDDY, Sr SC FOR rT [OPUC] 3. One CC to SRt MORE SHASHT K|RAN, SC FOR CENTRAL GOW., [OPUC] 4. Two CD Copies [},/

HIGH GOU]TT DATED: 13i1012026 ORDER WP.No.306li4 of 2026 i \ t oB txE Sfa r4:' (+ N,/,l[ 2W 02 o,) (<, k * o i,,n-r(lH gO DISMISSING THE WRIT PETITION, WITHOUT C;OSTS \ .)\ 1rN 7 s\*t />...0'