Devaraj Ramasamy Naidu Vs ACIT (Madras High Court)
The Madras High Court has delivered a judgment affirming that income tax assessment and penalty proceedings cannot legally stand if the initial notice empowering such actions has been quashed. The ruling came in the case of Devaraj Ramasamy Naidu Vs. ACIT, where the court set aside an assessment order and a consequential penalty notice for the assessment year 2013-14.
The petitioner, Devaraj Ramasamy Naidu, had challenged an assessment order dated June 20, 2024, passed under Section 147 read with Section 144B of the Income Tax Act, 1961, and a subsequent penalty notice issued under Section 271(1)(c) of the Act on the same date. The core of the petitioner’s argument was that these proceedings were a direct consequence of an initial notice issued under Section 148 of the Income Tax Act dated March 13, 2020, which had already been quashed by the High Court’s First Bench.
Procedural History
The sequence of events began with the Income Tax Department issuing a Section 148 notice on March 13, 2020, seeking to reopen the assessment for A.Y. 2013-14. The petitioner challenged this notice by filing a writ petition (W.P.No.9618 of 2021), which was initially dismissed by a Single Judge of the High Court on January 23, 2024.
