Innani Ritesh Kumar Vs ITO (Telangana High Court)
The Telangana High Court heard a batch of writ petitions together as the parties agreed that they involved a similar question of law. The petitioners contended that, following the Finance Act, 2021, the reassessment procedure under the Income-tax Act, 1961 had been modified, but the respondents had not followed the substituted procedure. It was argued that the notices issued under Section 148 were therefore unsustainable in law and that all consequential orders were also liable to be set aside.
Read SC Judgment in this case: SC Remands Section 148 Reassessment Matters to HC for Fresh Consideration
During the hearing, counsel for both parties agreed that the issue had already been decided by the High Court in a batch of writ petitions led by W.P. No.25903 of 2022, disposed of by a common order dated 14.09.2023, and requested that the present matters be disposed of in terms of that decision.
The High Court referred to its earlier common order, wherein it had held that, after treating the reassessment notices as notices under Section 148A pursuant to the Finance Act, 2021, the Income Tax Department was mandatorily required to follow the substituted reassessment procedure. The earlier order recorded that failure to do so was contrary to the Finance Act, 2021 and also contrary to the directions issued by the Supreme Court in Ashish Agarwal. It further held that the impugned notices and the proceedings initiated by the Department were neither tenable nor sustainable and that the notices, along with the procedure adopted, were illegal. Consequently, the earlier order quashed the notices and all consequential orders passed pursuant to the notices issued under Sections 147 and 148, observing that where the initiation of proceedings was procedurally defective, the subsequent orders also stood nullified. The Court had allowed the writ petitions on the jurisdictional issue without examining the other issues raised by the petitioners, leaving those issues open for appropriate proceedings. It had also observed that, since the Supreme Court in Ashish Agarwal had, as a one-time measure under Article 142 of the Constitution, permitted the Revenue to proceed under the substituted provisions, the Revenue’s right to proceed further from the stage indicated in the Supreme Court’s order remained reserved.
