Minupala Malahal Rao vs. The assistant commissioner of income tax

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WP/3776/2024HC TelanganaHBHC01007405202414 February 2024Bench: P.SAM KOSHY,N.TUKARAMJI7 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the writ petition, following its previous decision in WP.No.25903 of 2022 & batch, dated 14.09.2023. The Court held that the proceedings initiated were not in accordance with the amended provisions of the Income Tax Act, 1961, but rather under the un-amended provisions, which were not sustainable. The Court specifically noted that the preliminary objection raised by the petitioner regarding the jurisdictional issue was sustained, and all the writ petitions in the batch were allowed on this point. Consequently, the impugned notices and orders were quashed on the point of jurisdiction. The Court explicitly stated that since the impugned notices and orders were being quashed on the point of jurisdiction, it was not inclined to proceed further and decide other issues raised by the petitioner, which were reserved to be raised in appropriate proceedings. The rights of the parties were reserved as envisaged in paragraphs 37 and 38 of the previous order. No order as to costs was made.

What were the facts?

The petitioner, Minupala Malahal Rao, an individual taxpayer, filed a writ petition before the High Court of Telangana at Hyderabad challenging an order passed under Section 147 read with Section 144B of the Income Tax Act, 1961, for Assessment Year 2016-17. The impugned order determined his total income at Rs. 73,14,269. The petitioner also challenged a consequential notice under Section 148 and a notice under Section 148A. The core of the petitioner's grievance was that the reopening proceedings were initiated by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessment Officer (FAO), and that the amended provisions requiring issuance of a notice under Section 148A and providing an opportunity of hearing were not followed. The assessment year in question is 2016-17.

What were the issues?

1. Whether the notice under Section 148A and an opportunity of hearing were required to be provided to the assessee before initiating reassessment proceedings under Section 147 read with Section 148 of the Income Tax Act, 1961, as amended with effect from April 1, 2021? (Question of law) 2. Whether the reassessment proceedings initiated by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessment Officer (FAO) are valid, considering the faceless assessment regime? Assessee's Contentions: - The petitioner argued that under the amended provisions of the Act (effective from 01.04.2021), the respondents were required to issue a notice under Section 148A and provide an opportunity of hearing. The proceedings were also to be conducted in a faceless manner. - The petitioner relied on a previous judgment by the same Bench in WP.No.25903 of 2022 & batch, dated 14.09.2023, which dealt with similar objections. Revenue's Contentions: - The learned Standing Counsel for the respondent-Department did not dispute that the objection regarding the procedural flaw was decided in the aforesaid batch of writ petitions. - However, the revenue contended that apart from the procedural objection, there were other objections raised by the petitioner.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 148,Section 148A,Section 156

AI-generated summary — verify with the full judgment below

[ 337e ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE FOURTEENTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRl JUSTICE N.TUKARAMJI WRIT PETITION NO: 3776 OF 2024 Between: Minupala Malahal Rao, S/o. Vittal Rao, Aged about 63 Years, Occ. Business H No. 4-106 Suddala Village, Sulthanbad Peddapally Karimnagar 505001 , Telangana, lndia PAN. BALPM2514H Assessment Year. 2016-17 ...PETITIONER AND 1 The Assistant Commissioner Of lncome Tax, lncome tax circle 1, Karimnagar Telangana The Principal Chief Commissioner of lncome Tax, Telangana and A.P, Hyderabad, lT Towers, AC Guards, Masab Tank, Hyderabad - 500 028, Telangana. The Central Board of Direct Taxes, Represented by its Chairman, Department of Revenue, Ministry of Finance, Government of lndra, Secretariat Buildings, New Delhi - 1 10 001 . The National Faceless Assessment Center, lncome Tax Department, New Delhi. The Union of lndia, Represented by its Secretary to the Government, Department of Revenue, Ministry of Finance, New Delhi - 1'10 001. ...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 Writ of Mandamus, declaring the impugned order for A.Y. 2016-17 passed u/s 147 r.w.s147 r/w Section 144-8 of the lncome Tax Act, 1961 vide DIN and Notice No.dated 29-12-2023 in ITBA/AST/S 114712023-2411059191056( 1 ) for the assessmenl year 2016-17 determining the total income of Rs. 73.'14.269 I and 2 3 4 5

I the consequential nolice u/s 148 Dt 30-03-2023 in tTBA/ASIlst148-1t2O2Z- 2311051691603(1) for the Assessment Year 2O16-17 issued by the JAO(1=t respondent) instead of FAO(3'd respondent), as void, illegal, and contrary to the provisions of lncome-tax Act and contrary to the Principles of Natural Justice 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 suspend the order Under Section 147 rlw 144-B of the lncome Tax Act, 1961 vlde DIN and Notice No.dated 29-12-2023 in ITBA/AST/S114712O23-24t1059191056(1) for the assessment year 20'16-17 determining the total income of Rs. 73,14,269 I and order and Demand notice u/s 156 of the Income Tax act 1961 , vide DIN and Notice No. ITBA/AST/S/15612023-2411059191118(1) DI. 29-12-2023 for the assessment year 2016-17notice Under Section 148 A(d) Dt. 29-03-2023 in ITBA/AST/F/148A12022-2311O51616806(1 ) and notice under section 148 Dt. 30- 03-2023 in ITBA/AST/S1148 112022- 2311051691603(1) for the Assessment Year 2016-17, pending disposal of the above Writ Petition. Counsel for the Petitioner: SRI THANNERU CHAITANYA KUMAR Counsel for the Respondent No.1 to 4: SUNDARI R PISUPATI (Sr SC for lncome Tax Dept) counsel for the Respondent No.5: sRl GADI PRAVEEN KUMAR, DEPUTY SOLICITOR GENERAL OF INDIA The Court made the following: ORDER lA NO: 1 OF 2024

- 1 ! THE HONOURABLE SRI WSTICE P.SAM KOSHY THE HONOURABLE SRI JUSTICE N.TUKARAMJI WRIT PETITION No.3776 oF 2024 ORDER:(per Ho n'ble Sri Justice P.SAM KOSflY) The instant Writ Petition has been filed by the petitioner under Articl e 226 of the Constitution of India seeking for the following relief: "to issue an appropiate urit order or direction more particularty one in the nature of Writ of Mandamus declanng -the impugned order for A Y 201G17 possed u/ s 147 r u slsZ i/i Section 1448 of the Iname Tox Act 1961 uide DIN and Notice .lVo dated 29122023 Ln ITBA/AST/S/147/202324/1059191056(1) for the- assessmenl gear 201617 determining tlte total income oJ Rs 73 14 269 / and the consequential notice u/s 148 Dt 30032023 in ITBA/ AST/ S/ 1481/ 2022 23/ 10516916031 for the Assessment Year 201617 issued bg the JAO tst respondent tnstead of FAO3rd respondent as uoid illegal and contrary to the proubions of Incom.e tox Act and contrary to the Piiciptes of Nah;:al Justice and pass such other orders" ' 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 carne into effect from O1.O4.2O21, the respondents, while proceeding under Section i48 of the Act, were required to issue notice under AND

2 PSK,J & NTR,J W.P.No.3776 of 2O24 Section 148A and provide arr opportunity of hearing to the assessee. As per the amended provision of law, the proceedings to be drawn are a_lso in a faceless marrner. 3. Whereas, learned counsel 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.25903 of 2022 & batch, dated 14.O9.2023 wherein this Court disposed of the batch of writ petitions to the limited extent. 4. On the other hand, learned Standing Counsel for the respondent-Department does not dispute that the said objection was decided in the erforesaid 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- Departmen t is concerned, this Bench, while disposing of said batch of s-nt petitions, had taken note of

l 3 PSK,J & NTR,J W.P.No.3775 of 2024 the same at paragraph Nos.37 & 38 which are reproduced herein under: I i I i "37. The pretiminary obiection raised bg the petitioner is sustaiied and o.ll these turit petitions stands alloued on this uery jurisdictional issue. Since the impugned iotices ani irders are getting quasLed on tle point of jurisdiction, u)e are not inclined to proceed further and d.ecide the otlrcr issues raised bg the petition'er uhich stand-s reserued to be raised and contended in an ap p ropiate p r oceeding s. " "38. Since the Hon'bte Supreme Court lnd, in the case of Ashish Aganaol, supra, as a one-time measure ixercising the pouers under Article 142 of the Constituiion of India, permitted th.e Reuenue to proceed under the substituted prouisions, and this Court allouing the petitions onlg on the procedural flaw' the ight cinfened on the Reuenue utould remain reserued ti proceid prtLer if they so utant from the stage of the orier o1 tie Supreme Court in the case of Ashish Aganual, suPra." 6. In view of the same, 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 u'ith 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 rights of the parties would stand reserved as is

4 To, TJ GJP PSI(,J & MTR,J W.P.No.3776 of 2O24 envisaged at paragraph Nos.37 & 38 of the said order passed in the batch of writ petitions. No order as to costs' Consequently, miscellaneous petitions pending, if any, shall stand closed. SD/. P. PADMANABHA REPPY ASSISTANT REGISTRAR //TRUE COPY// D SECTION OFFICER 1. The assistant commissioner of income tax' lncome tax circle 1' Karimnagar , +f;5}?flt?ral chief commissioner or lncome Tax .Telanqana and A'P' Hyderabad' lT Towers, ,ii"&"'#t' N'l;lir'i'nr' Hvoeribad - 500 028' a lf;5tt^1lhan, The central Board of DrreclTaxes' Department of Revenue' Ministry of Finance. r,o"!In'i""i oi india Secretarrat Burldinqs New Delhi - o. +lg Rl0a1.""1 Faceless Assessment center' lncome Tax Department' New u. ?f;Ib""r",rry to the-Government' The Union^of hdia' Department of " n"i"rG, H,fiiistry of Ftnance New Delhi 110 001 6. One CC to Sri rnannettib"n-'iianya ruma' Advocale {oPUCl ;. 6;; dc io s,i -Sund3ri ilErilii'iiis'' sc ror rncomsrix o*0,1?I;uStucf ;. 6nE 66 i" 5ii croi Praveen Kumar' Deputv Solicito 9. Two CD CoPies

HIGH COURT DATED:1410212024 ORDER WP.No.3776 of 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS. 4 69w 1 B ilAB 202{ t t TA S E H 1 re o( zoI oo 0 e Des H P T A

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