Telangana HC Rejects Writ Against Income Tax Intimation Due to Delay, Directs Assessee to Approach ITAT

Paradise Food Court Private Limited Vs DCIT (Telangana High Court)

Telangana High Court Declines Writ Petition Challenging Income Tax Intimation Due to Delay and Availability of Alternate Remedy – Assessee Directed to Approach ITAT Instead of Invoking Writ Jurisdiction After Five Years 

The High Court for the State of Telangana in Paradise Food Court Private Limited v. Deputy Commissioner of Income Tax, Circle-5(1), Hyderabad & Another dismissed a writ petition challenging an intimation issued under Section 143(1) of the Income Tax Act, 1961 on the ground of enormous delay and availability of an alternate statutory remedy before the Income Tax Appellate Tribunal (ITAT).

The Division Bench comprising P. Sam Koshy and Narsing Rao Nandikonda held that the petitioner, having already availed the first appellate remedy before the Commissioner of Income Tax (Appeals), ought to have pursued the second statutory appeal before the ITAT instead of directly invoking writ jurisdiction under Article 226 of the Constitution of India.

Introduction

The Income Tax Act, 1961 provides a structured hierarchy of remedies against assessment orders and intimations issued by tax authorities. Courts exercising writ jurisdiction under Article 226 ordinarily refrain from entertaining petitions where effective statutory appellate remedies are available.

At the same time, disputes frequently arise concerning the interplay between proceedings under Sections 143(1), 143(2), and 143(3) of the Act. Courts have previously examined whether an intimation under Section 143(1) can survive once scrutiny assessment proceedings under Section 143(2) culminate in a regular assessment under Section 143(3).

In the present case, although the petitioner raised important jurisdictional objections regarding continuation of Section 143(1) proceedings after initiation of scrutiny assessment, the Telangana High Court declined to examine the merits due to extraordinary delay and non-exhaustion of alternate remedies.

Case Background

The petitioner, Paradise Food Court Private Limited, challenged:

• intimation dated 11.11.2019 issued under Section 143(1) of the Income Tax Act for Assessment Year 2018-19; and
• continuation of Section 143(1) proceedings despite initiation and completion of scrutiny assessment proceedings under Sections 143(2) and 143(3).

The petitioner contended that:

• the Department had already initiated scrutiny proceedings under Section 143(2);
• the petitioner participated in such proceedings;
• a regular assessment order under Section 143(3) was ultimately passed on 31.03.2021 accepting the returns filed by the petitioner; and
• therefore, continuation of proceedings under Section 143(1) became legally unsustainable.

However, the writ petition challenging the intimation dated 11.11.2019 was filed only on 29.01.2026, after more than five years.

Key Legal Issues

The primary issues before the Court were:

1. Whether a writ petition challenging an intimation under Section 143(1) could be entertained after a delay of more than five years; and

2. Whether the High Court should exercise writ jurisdiction when the petitioner had an effective alternate remedy of appeal before the ITAT under Section 253 of the Income Tax Act.

A related substantive issue raised by the petitioner concerned:

• whether proceedings under Section 143(1) automatically merge into scrutiny assessment proceedings under Sections 143(2) and 143(3).

However, the Court ultimately declined to adjudicate this substantive issue.

Petitioner’s Submissions

The petitioner argued that:

• once scrutiny assessment proceedings under Section 143(2) commenced, proceedings under Section 143(1) could not continue independently;
• the Department had already passed an assessment order under Section 143(3) accepting the petitioner’s returns;
• continuation of Section 143(1) proceedings thereafter was without jurisdiction;
• adjustments made through Section 143(1) proceedings during ongoing scrutiny assessment were arbitrary and illegal; and
• the impugned intimation therefore constituted a nullity in law.

The petitioner relied upon judicial precedents including:

• Vodafone Idea Limited v. Assistant Commissioner of Income Tax; and
• Tamil Nadu Magnesite Ltd. v. Commissioner of Income Tax.

Respondents’ Submissions

The Income Tax Department opposed the writ petition primarily on two grounds.

1. Gross Delay and Laches

The Department argued that:

• the impugned intimation was issued on 11.11.2019;
• the writ petition was filed only in January 2026;
• the challenge was therefore hopelessly delayed; and
• the writ petition deserved dismissal on the ground of delay alone.

2. Availability of Alternate Statutory Remedy

The Department further contended that:

• the petitioner had already availed the first appellate remedy before the Commissioner of Income Tax (Appeals);
• the appeal was dismissed on the ground of delay;
• the Income Tax Act provided a further statutory remedy before the ITAT under Section 253;
• instead of pursuing the statutory appellate mechanism, the petitioner improperly invoked writ jurisdiction.

Court’s Observations

The Division Bench observed that:

• the petitioner actively participated in scrutiny assessment proceedings under Sections 143(2) and 143(3);
• the petitioner was fully aware of the legal proceedings and remedies available under the statute;
• despite such awareness, the petitioner did not challenge the Section 143(1) intimation for more than five years;
• the appeal before the Commissioner of Income Tax (Appeals) itself was filed belatedly and was dismissed due to a delay of 1751 days; and
• the petitioner still had an effective statutory remedy before the ITAT.

The Court emphasized that writ jurisdiction under Article 226 is discretionary and ordinarily should not be exercised where:

• statutory remedies exist;
• the petitioner bypasses the appellate framework; or
• the challenge suffers from unexplained delay and laches.

The Bench further observed that had the petitioner approached the High Court promptly in 2019 itself raising jurisdictional objections, the matter may have stood on a different footing.

Final Judgment

The Telangana High Court dismissed the writ petition while:

• reserving liberty to the petitioner to avail statutory remedy before the ITAT under Section 253 of the Income Tax Act;
• declining to examine the merits of the jurisdictional challenge raised against the Section 143(1) intimation; and
• closing all pending miscellaneous petitions without costs.

Author’s Analysis

1. Delay Remains a Major Barrier in Writ Jurisdiction

The judgment strongly reiterates that even jurisdictional challenges may fail where litigants approach constitutional courts after extraordinary and unexplained delay.

The Court treated the five-year delay as fatal to maintainability.

2. Exhaustion of Alternate Remedies Continues to Be Strictly Enforced

The decision reinforces the consistent judicial principle that where a complete statutory appellate mechanism exists, taxpayers must ordinarily exhaust such remedies before invoking writ jurisdiction.

The Court placed significant emphasis on the availability of appeal before the ITAT under Section 253.

3. Court Did Not Decide the Important Jurisdictional Question

Notably, the Court refrained from examining the substantive legal issue regarding coexistence of proceedings under Sections 143(1) and 143(3).

This issue continues to remain significant in income tax jurisprudence.

4. Timing of Constitutional Challenge Matters

The Bench expressly noted that the outcome may have differed had the petitioner approached the High Court immediately after issuance of the Section 143(1) intimation.

This observation highlights the importance of prompt constitutional challenges where jurisdictional defects are alleged.

5. Participation in Proceedings Weighed Against the Petitioner

The Court considered the petitioner’s continued participation in assessment proceedings and appellate processes as indicative of awareness and acquiescence, weakening the plea for extraordinary writ relief.

Conclusion

The Telangana High Court’s ruling in Paradise Food Court Private Limited v. Deputy Commissioner of Income Tax, Circle-5(1), Hyderabad & Another serves as an important reminder that writ jurisdiction under Article 226 is discretionary and cannot ordinarily be invoked after prolonged delay or bypassing statutory appellate forums.

While the petitioner raised substantial legal questions regarding continuation of Section 143(1) proceedings after scrutiny assessment under Sections 143(2) and 143(3), the Court declined to examine those issues on merits due to delay and availability of alternate remedy before the ITAT. The judgment underscores the necessity for taxpayers to act promptly and exhaust statutory remedies before seeking constitutional intervention.

FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT

Heard Mr. Nageshwar Rao, learned counsel appearing on behalf of Mr. M. Venkatram Reddy, learned counsel for the petitioner; and Mr. K. Sudhakar Reddy, learned Senior Standing Counsel for Income Tax Department appearing on behalf of the respondents.

2. The instant is a writ petition filed by the petitioner under Article 226 of the Constitution of India assailing the impugned intimation dated 11.11.2019 issued by the respondent No.2 under Section 143(1) of the Income Tax Act, 1961 (for short ‘the Act’) for the assessment year 2018-19.

3. The substantial ground on which the writ petition has been filed is that prior to passing of the impugned intimation under Section 143(1) of the Act, the Department itself had already passed an order of assessment under Section 143(2) of the Act on 23.09.2019, which was also taken for scrutiny assessment and the returns submitted by the petitioner were found to be proper. Therefore, once when the order of assessment has been passed under Section 143(2) of the Act, proceedings initiated under Section 143(1) of the Act automatically gets merged, which in the instant case has not been adopted by the Department and have even though passed an order under Section 143(2) of the Act, continued with the proceedings under Section 143(1) of the Act and passed the impugned intimation.

4. Learned counsel for the petitioner contended that the recourse to Section 143(1) of the Act is precluded after the regular assessment proceedings and an intimation under Section 143(1) does not carry the legitimacy of assessment proceedings. Learned counsel for the petitioner further contended that the Courts have consistently held that once when the proceedings under Section 143(2) and Section 143(3) of the Act have been commenced by issuance of notice under Section 143(2) of the Act, it is a limitation on the jurisdiction of the Assessing Officer to proceed under Section 143(1)(a) of the Act.

5. It was contended by the learned counsel for the petitioner that making adjustment to declared loss on pretext of invoking Section 143(1) of the Act in the midst of ongoing scrutiny proceedings under Section 143(2) of the Act is capricious, unlawful and in violation of the principles of natural justice. Further, the CIT (Appeals) holding that there is no merger of intimation into regular assessment but only loss determined in intimation under Section 143(1) of the Act is merely considered in computation of income is also ex-facie arbitrary, illogical, unjust and unlawful.

6. Lastly, the learned counsel for the petitioner contended that the exercise of power under Section 143(2) of the Act by respondent No.1 on 23.09.2019 deprived or precluded respondent No.2 from proceedings under Section 143(1) of the Act. As such, the impugned intimation was passed without jurisdiction and is nullity in the eyes of law.

7. In support of the aforesaid contentions, the learned counsel for the petitioner relied upon the judgments of the Hon’ble Supreme Court in the case of Vodafone Idea Limited (earlier known as Vodafone Mobile Services Limited) vs. Assistant Commissioner of Income Tax, Circle 26(2) and Another¹ and Tamil Nadu Magnesite Ltd. vs. The Commissioner of Income-Tax and Another².

8. Per contra, the learned Senior Standing Counsel for Income Tax Department submitted that the writ petition deserves to be dismissed on two major grounds.

9. Firstly, the writ petition has been filed at a much belated stage and therefore suffers from delay latches. Referring to the relief clause in the writ petition, the learned Senior Standing Counsel for Income Tax Department submits that the order under challenge is one which was passed as early as on 11.11.2019 and the present writ petition has been filed only in the year 2026, to be precise on 29.01.2026. Thus, the writ petition is being filed after more than 5 years and therefore the writ petition deserves to be dismissed on this ground itself.

10. The second ground on which the learned Senior Standing Counsel for Income Tax Department sought for dismissal of the writ petition is that the petitioner has an alternative statutory remedy of appeal available before the Income Tax Appellate Tribunal (for short the ‘ITAT’). According to the learned Senior Standing Counsel for Income Tax Department, the petitioner knowing fully well the statutory remedies available to him has now come to the High Court, in fact after having failed at the level of the Commissioner of Income Tax (Appeals) (for short ‘CIT (Appeals)’) which itself would go to show that the petitioner has already availed the remedy available under the statute and the very same statute also prescribes for yet another remedy of second appeal before the ITAT, which the petitioner did not avail.

11. Having heard the contentions put forth on either side and on perusal of records, particularly taking into consideration the facts and submissions narrated in the writ affidavit, it is evidently clear that proceedings under Section 143(2) of the Act were initiated by the Department vide notice dated 23.09.2019. The petitioner entered appearance and submitted his response to the said notice on 08.10.2019 and finally an order under Section 143(3) of the Act was passed on 31.03.2021 accepting the returns submitted by the petitioner. There seems to be certain errors which have crept in the order passed by the Department and were sought to be rectified under Section 154 of the Act on more than a couple of occasions, which were partially accepted by the Department, against which also remedy of appeal was availed by the petitioner and that proceedings went on independently. However, in between intimation under Section 143(1) was issued on 11.11.2019. Admittedly, the petitioner had not challenged the same before any judicial forum assailing the competence and jurisdiction of the authorities in continuing with Section 143(1) proceedings in spite of the notice having been sent under Section 143(2) and order having been passed under Section 143(3). At a much belated stage, the petitioner did file an appeal before the CIT (Appeals) on 25.09.2024 and the CIT (Appeals) having found the delay in filing of appeal against the intimation dated 11.11.2019 to be more than 1751 days, dismissed the appeal vide order 24.09.2025 on the ground of delay. Yet another aspect which needs to be considered is that even though the appeal stood decided on 24.09.2025, the petitioner very well knows that there is a further remedy of appeal before the ITAT. Therefore, the petitioner ought to have gone to the ITAT challenging the order dated 24.09.2025 instead of preferring a writ petition.

12. This Bench finds much force in the argument of the learned Senior Standing Counsel for Income Tax Department when he raised an objection of the petitioner having not gone to the ITAT for ventilating his grievance and bypassing the said remedy has chosen to seek writ remedy. It is well settled proposition of law that writ jurisdiction under Article 226 of the Constitution of India is not to be exercised as a matter of routine. The said remedy is to be exercised only in exceptional circumstances where there is a breach of fundamental rights or there is a violation of the principles of natural justice or where the very competence and jurisdiction of the authority which has passed the order is under dispute.

13. What needs to be appreciated at this juncture, as has been discussed in the preceding paragraphs is that, the substantive relief which the petitioner has sought for is against the intimation dated 11.11.2019 issued Section 143(1) of the Act. The writ petition is now being filed after more than 5 years. In between, the petitioner cannot be said to be ignorant of the provisions of law as the petitioner has been prosecuting his case before the authority concerned against the proceedings drawn under Section 143(2) of the Act and the consequential order thereafter being passed under Section 143(3) of the Act. This itself goes to show that the petitioner has deliberately not chosen to challenge the said proceedings which indirectly gives an indication of the petitioner not having substantive grievance on the so-called intimation issued under Section 143(1) of the Act.

14. There is also much force in the argument of the learned Senior Standing Counsel for Income Tax Department that against the order passed by the CIT (Appeals) there is a remedy available under Section 253 of the Act before the ITAT, and the petitioner having already availed the remedy of first appeal available under the statute, there is no reason why the petitioner should not be permitted to relegate his remedy available under Section 253 of the Act before the ITAT. It would had been a different case altogether if the petitioner at the first instance would had approached the writ Court in the year 2019 itself or within a reasonable period of time from 11.11.2019 assailing the competence and jurisdiction of the authorities in continuing with the proceedings under Section 143(1) when the proceedings under Section 143(2) and 143(3) have already been passed, which the petitioner did not avail. Having availed the remedy of appeal as is provided under the Act, it would be more appropriate if the petitioner ought to have challenged the order of the CIT (Appeals) by way of an appeal before the ITAT.

15. So far the judgment cited by the learned counsel for the petitioner in his pleadings so far as reliance on the judgment of the Hon’ble Supreme Court in the case of Harbanslal Sahnia vs. Indian Oil Corporation Ltd.³and other similar judgments, we are of the considered opinion that they are distinguishable insofar as the facts are concerned. In the said cases the situation or the facts were not similar to the facts in the present case, where the writ petition is firstly filed at a considerable belated stage and secondly having already availed the remedy of first appeal and bypassing the remedy of second appeal approached the High Court.

16. Since the objections raised by the learned Senior Standing Counsel for Income Tax Department was on the very tenability and maintainability of the writ petition, this Bench does not intend to venture into the merits of the case and reserving the right of the petitioner to avail the right of appeal under Section 253 of the Act, the instant writ petition stands dismissed.

17. As a sequel, miscellaneous petitions pending if any, shall stand closed. However, there shall be no order as to costs.

Notes:

¹ (2020) 19 Supreme Court Cases 12

² 2010 SCC OnLine Mad 4450

³ (2003) 2 SCC 107