Vensai Infra vs. The National Faceless Assessment Center

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WP/33095/2023HC TelanganaHBHC01060981202306 December 2023Bench: P.SAM KOSHY,N.TUKARAMJI7 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the writ petition, holding that the proceedings were not drawn in accordance with the amended provisions of the Income Tax Act, 1961, but under the unamended provisions, which rendered them unsustainable. The Court relied on its previous decision in WP.No.25903 of 2022 & batch, dated September 14, 2023. The Court noted that while the impugned notices and orders were quashed on the point of jurisdiction and procedural flaw, the right conferred on the Revenue to proceed further, if they so wished, would remain reserved, as envisaged in paragraphs 37 and 38 of the earlier judgment. This principle allows the Revenue to potentially proceed from the stage of the Supreme Court's order in the case of Ashish Agarwal, supra, as a one-time measure. The Court explicitly stated it was not inclined to decide other issues raised by the petitioner, which stood reserved to be raised in appropriate proceedings. No order as to costs was made.

What were the facts?

The petitioner, Vensai Infra, filed a writ petition challenging a manual notice under Section 148 of the Income Tax Act, 1961, dated July 28, 2022, an order under Section 148A(d) dated July 28, 2022, and an assessment order dated May 12, 2023. The petitioner also challenged consequent penalty proceedings. The core of the challenge was that the reopening of assessment was initiated by the jurisdictional Assessing Officer, and the proceedings were not conducted in a faceless manner as required by the amended provisions of the Act effective from April 1, 2021. The respondents are the National Faceless Assessment Center, the Income Tax Officer, Ward 11(1), Hyderabad, and the Assessment Unit, Income Tax Department.

What were the issues?

1. Whether the proceedings initiated under Section 148 of the Income Tax Act, 1961, were vitiated by procedural illegality due to not being conducted in a faceless manner and by not providing an opportunity of hearing as mandated by the amended provisions effective from April 1, 2021. (Question of law and fact, turning on Section 148A and Section 148 of the Income Tax Act, 1961). Assessee's Contentions: - The reopening of assessment was initiated manually by the Jurisdictional Assessing Officer. - The proceedings were not conducted in a faceless manner as required by the amended provisions of the Act. - Relied on the judgment of this very Bench in WP.No.25903 of 2022 & batch, dated September 14, 2023. Revenue's Contentions: - The revenue did not dispute that the objection regarding the procedural flaw was decided in the aforementioned batch of writ petitions. - However, the revenue contended that apart from the procedural objection, the petitioner had raised other various objections.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 271(1)(b),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

[ 337e 1 HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAO (Special Original Jurisdiction) WEDNESDAY, THE SIXTH DAY OF DECEMBER TWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE N.TUKARAMJI WRIT PETITION NO: 33095 OF 2023 Between: Vensai lnfra, A partnership firm Having its office at 105, Kranthi Prasanna Apartments, Arul Colony, A.S.Rao Nagar Kapra, ECIL, Hyderabad Represented by its partner Mr. Venkatesh V, S/o. Late V. Lingiah, Aged about 44 Years' Rl/o' Hyderabad ...'ETIT..NER AND 1. The National Faceless Assessment Center, lncome-tax Department, New Delhi, lndia 2. lncome Tax Officer, Ward 1 1 ('1 ), Hyderabad. 3. The Assessment Unit, Income Tax Department Ministry of Finance Government of lndia' New Delhi ...RES'.NDENTS Petition under Article 226 ol 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, order or direction, more particularly in the nature of writ of mandamus declaring the manual notice under Section 148 of the lncome Tax Act, 1961 dated 2B-O7-2022, the order under Section 148A(d) dated 28-07-2022 under DIN and Order No. ITBA/COM/F/1 712022- 2311044232529(1) and the assessment orderdated 12-05-2023 bearing DIN No. ITBA/AST/S/14712023-2411052786108(1) and the consequent penalty proceedings as being void, illegal, arbitrary, without jurisdiction, violate of Article 14 of the Constitution of lndia and consequently set aside the same. lA NO: 1 OF 2023 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 penalty proceedings initiated pursuant to the assessment order dated 12-05- 2023 vide notices dated 20-09-2023 uls. 271(1)(b) and u/s. 271(1)(c) bearing Din tTBAtPNLtFl2Tl(1)(b)12023-24l1056306002(1) and lrBA/PNL/F/271(1)(c)t2023- 24l1 056305968(1 ) respectively. lA NO: 2 OF 2023 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in suppbrt of the petition, the High Court may be pleased to stay all further actions including collection of tax pursuant to the assessment order d ated 1 2-O 5 -2023 bea rin! D I N N o. I TBA/AST/S/'I 4 7 I 2023 -24 I 1 O52T 86 1 OB(1 ). Counsel for the Petitioner: SRI M.NAGA DEEPAK Counsel for the Respondent Nos.1 & 2: SRI SUNDARI R PISUPATI, Sr SC for lncome Tax Dept Counsel for the Respondent No.3: SRI GADI PRAVEEN KUMAR, Dy. SOLICITOR GENERAL OF INDIA The Court made the following: ORDER

THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE N.TUI(ARAMJI IIRIT PETITION No.33O95 OF 2o23 ORDER:(per Ho n'ble Sn Justice P.SA I K0SHY) The instant Writ Petition has been filed by the petitioner under Articl e 226 of the Constitution of India challenging the manual notice under Section 148 of Income Tax act, 1961, dated 28.07.2022, the order under Section 14BA(d), dated 28.O7.2022 under DIN & Order No.ITBA/CoM/F/ 17 12022 231 to44232529(tl and the assessment order, dated L2.O5.2023 bearing DIN No.ITBA/ AST/ S/ 147 / 2O23-24l 1Os2786 1 0B( 1 ). 2. One of the contentions that the petitioner has raised in the present Writ Petition is that under the amended provisions of the Act which came into effect from Ol.O4.2O2l, the respondents, while proceeding under Section 148 of the Act, were required to issue notice under Section 1484, ald provide an opportunity of hearing to the assessee. As per the amended provision of law, the proceedings to be drawn are also in a faceless manner.

z PS-[(,J & MrX,J W.P.No.33095 oJ 2O23 3. Whereas, learned counsei for the petitioner contended that, in the instant case, reopening has been initiated by the Jurisdictional Assessing Officer. In support of his contention, he relied upon the recent judgment rendered by this very Bench in WP.No.259O3 of 2022 & batch, dated 14.09.2023 wherein this Court disposed of the batch of writ petitions to the limited extent. 4. On the other hand, learned Stalding Counsel for the respondent-Department does not dispute that the said objection was decided in the aforesaid batch of Writ Petitions. However, he further contended that apart from the aforesaid objection, there have been other various objections also which the petitioner has raised in the writ petition. 5. So far as this contention of the learned counsel for the respondent-Department is concerned, this Bench, while disposing of said batch of writ petitions, had taken note of the same at paragraph Nos.37 & 38 which are reproduced herein under:

3 t I PSK,J & NTR,J W.P.No.33O95 oJ 2O23 "37. The prelimiftary objection raised bA the petitioner is sustained and all these writ petitions stands allowed on this uery juisdictional issue. Since the impugned notices and orders are getting quashed on the point of jurisdiction, ute are not inclined to proceed further and decide the other issues rdised by the petitioner uhich sktnds reserued to be raised and contended in an a.ppropiate pro ce eding s. " "38. Since the Hon'ble Supreme Court had, in ttte case of Ashish Aganaal, suprq as a one-time measTtre exercising the pou-rcrs under Article 142 of the Constitution of India, permitted the Reuenue to proceed under the substituted prouisions, and this Court allouing the petitions only on the procedural flau, the ight conferred on the Reuenue utould remain reserued to proceed further if they so u.tant from the stage of the order of the Supreme Court in the case of Ashish Agaru.tal, supra." 6. In view of the sarne, we are inclined to allow the present writ petition also on similar terms. Accordingly, the present Writ Petition stands allowed on the objection of the petitioner that the proceedings have not been drawn in accordance with the amended provision but under the un- amended provision which is otherwise not sustainable. 7. As has been held by this Bench in the aforesaid batch matters, the right of the respondents would stald reserved

4 PSI(,J & ] TR,J w.P.No.33O95 of 2023 as is envisaged at paragraph Nos.37 & 38 of the said order passed in the batch of writ petitions. No order as to costs' 8. Consequently, miscellaleous petitions pending, if any shall stand closed. //TRUE COPY// SD/. MOHD. SANAULLAH ANSARI ASSISTANT REGISTRAR SECTION OFFICER To PSK GJP 1. The National Faceless Assessment Center, lncome{ax Department, New Delhi, lndia 2. lncome Tax Officer, Ward 11 (1), Hyderabad. 3. The Assessment Unit, lncome Tax Department Ministry of Finance Government of lndia, New Delhi. 4. One CC to SRI M.NAGA DEEPAK, Advocate [OPUC] 5. One CC to SRI SUNDARI R PISUPATI, Sr SC for lncome Tax Dept [OPUC] 6. One CC to SRI GADI PRAVEEN KUMAR, Dy. SILICITOR GENERAL OF rNDrA [OPUC] 7. Two CD Copies r

HIGH COURT DATED:0611212023 ORDER WP.No.33095 of 2023 ALLOWING THE WRIT PETITION WITHOUT COSTS. tr o I D SIATE o g\ 6Gq'u' u.X$r-x'- 'ltl\ C l.J n P

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