Ramegowdu Mahendra Vs DCIT (Madras High Court)
Summary: The Madras High Court considered a writ petition challenging a notice dated 27.05.2026 issued under Section 148 of the Income Tax Act, 1961 for AY 2023-24. The petitioner submitted that the reassessment notice was founded on an adjudication order dated 03.02.2025 passed under the applicable GST enactments, against which an appeal had already been filed and a deemed stay was in operation. Referring to sub-section (3) of Section 148, the petitioner contended that reassessment could be based on an order of a Tribunal or Court but not on an adjudication order passed by the proper officer under GST law. It was also argued that allowing the Income Tax authorities to proceed could result in conflicting orders.
The Revenue submitted that the contention had already been dealt with in the order under Section 148A(3) and that the Income Tax authorities were required to conduct reassessment independently rather than on the basis of GST adjudication. The High Court observed that under Section 148A(1), initiation of reassessment requires information suggesting that income chargeable to tax has escaped assessment. The expression “information” is exhaustively defined in Section 148(3), including information received in accordance with the CBDT’s risk management strategy. However, nothing was placed on record regarding that risk management strategy or whether it included information in the form of a GST adjudication order.
Since the proceedings were only at the preliminary notice stage, the Court declined to interfere. Importantly, it held that reassessment must be undertaken in accordance with the Income Tax Act and that Income Tax authorities “cannot ride piggyback on the adjudication under GST law.” Even rejection of the petitioner’s GST appeal could not constitute the sole basis for conclusions in reassessment proceedings, and the converse was equally true. The writ petition was therefore disposed of without granting the relief sought, while leaving the petitioner free to challenge the eventual reassessment order in accordance with law. The connected miscellaneous petitions were closed with no order as to costs.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Notice dated 27.05.2026 under Section 148 of the Income Tax Act, 1961 (the I-T Act) is challenged in this writ petition.
2. Learned counsel for the petitioner submits that the impugned notice was issued on the basis of an adjudication order under applicable GST enactments. He also submits that an appeal was filed against adjudication order dated 03.02.2025 and that a deemed stay of the adjudication is in operation. Referring to sub-section (3) of Section 148, learned counsel contends that re-assessment is permissible on the basis of an order of a tribunal or Court, but not on the basis of an order of the proper officer under applicable GST enactments. He also contends that permitting the Income Tax authorities to proceed with re-assessment will result in conflicting orders.
3. Ms.M.Sheela, learned senior standing counsel, accepts notice for the respondent. Referring to the order under Section 148A(3), she submits that contention raised by the petitioner in this writ petition was dealt with in said order. She also submits that the Income Tax authorities are required to undertake re-assessment independently and not on the basis of the adjudication by the GST authorities.
4. Under Section 148A(1), the pre-requisite for initiation of re-assessment proceedings is information suggesting that income chargeable to tax has escaped assessment in the relevant assessment year. The expression “information” is defined exhaustively in sub-section (3) of Section 148. Such exhaustive definition embraces information received in accordance with the risk management strategy formulated by the CDBT from time to time. There is nothing on record with regard to the risk management strategy of the CBDT and whether it includes information in the form of an adjudication order under applicable GST legislation.
5. The matter is at a preliminary stage, where a notice under Section 148 has been issued. Any re-assessment has to be carried out in compliance with applicable provisions of the I-T Act and the Income Tax authorities cannot ride piggyback on the adjudication under GST law. In other words, even if the appeal filed by the petitioner before the appellate authority were to be rejected, such rejection cannot be the sole basis for conclusions in course of re-assessment proceedings. The converse is equally true. Therefore, I am not inclined to interfere with the impugned notice at this juncture.
6. Hence, this writ petition is disposed of by declining to grant the relief claimed. It is, however, open to the petitioner to challenge the re-assessment order in accordance with law. Consequently, connected writ miscellaneous petitions are closed. There shall be no order as to costs.
