Wp/19073/2023 Of Reddy Vanga Ventures Llp v. Pr. Commissioner Of Income Tax - 2

[ [337e ]] HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD(Special Original Jurisdiction) THURSDAY, THE TWENTY EIGHTH DAY OF DECEMBERTWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHYANDTHE HONOURABLE SRI JUSTICE N.TUKARAMJI WRIT PETITION NO: 19073 OF 2023 Between: Reddy Vanga Ventures LLP, Having its Registered Office at Flat No.202, OakWood Apartments Plot No, 29,3O,34, Nandagiri Hills, Jubilee Hills,Hyderabad, Telangana-500033 Represented by its Designated Partner ...PETITIONER AND 1. Pr. Commissioner of lncome Tax [- ]2, Hyderabad lncome Tax towers, A.C.Guards, Masab Tank, Hyderabad [[- ]]500004Guards, Masab Tank, Hyderabad [[- ]]500004 [[- ]]2. Asst. Director of lncome Tax Centralized Processing Centre, lncome TaxDepartment, Bengaluru - 560500Department, Bengaluru - 560500 3. lncome Tax Officer Ward-11(1), Hyderabad Signature Towers, Sy. [No.6(P) ][of]Kondapur Sy. No.37(P) of Kothaguda Opp. Botanical Gardens,Serilingampally (M) Hyderabad - 500084Kondapur Sy. No.37(P) of Kothaguda Opp. Botanical Gardens,Serilingampally (M) Hyderabad - 5000844. Union of lndia, Rep. by its Secretary, Department of Revenue, Ministry [of]Finance, North Block New Delhi [- ]110001 ...RES'ONDENTSFinance, North Block New Delhi [- ]110001 ...RES'ONDENTS Petition under Article 226 of the Constitution of lndia [praying ]that in thecircumstances stated in the affidavit filed therewith, the [High ][Court ][may ][be]pleased to issue Writ Order or Direction more particularly in the nature of Writ ofMandamus declaring the 2nd respondents [. ][communications ] no.EFLl2122lG5al1TR000177067055 dated 91812022 treating [the ][petitioners ][return]for AY 2021-22 as defective and consequent communication no.CPCl2122lG5dl63516996030122'1 dated [2511212022 ][invalidating ][the]petitioners return of income for A.Y.2021-22 and also communication DINno.EFLl2223lG22llTRO0O472429203 dated [1411212022 ][as ]all [being ][illegal,]arbitrary, violative of [principles ]of natural [justice and ][contrary ][to ][sections ][4448,]139 (9) and 264 and other provisions of the [lncome Tax ][Act, ][1961 ][and violative ][of]Articles 14, 19(1 )g and 265 of the Constitution [of ][lndia ][consequently ][direct ][the ][2] as/, [and ][3rd ][respondents ][to ][treat the ][petitioners return ][of ][income for ][A.y.2021-22 ]valid and not to disallow the carried forward loss of AY 2021-22 to set off forsubsequent A-Y.2022-23 and pass such further orders in the interest of justice oralternatively Set aside the order no.ITBA/REV/F|REV7l2o23-24l10561569j4(1)dated 15-09-2023 passed by the ['lst ]respondent uls 264 of the act and directrespondent to consider and dispose off on merits the petitioner's application uis264 of the Act after duly considering the report of Assessing officer dated 30-08-2023 and pass such further orders in the interest of justice" and carry out theamendments in the writ affidavit and writ petition and permit petitioner to make allconsequential amendments. (Prayer is amended as per Court Order dated 15.11.2023 Vide lA.No.2 of 2023 inWP.No.'19073 ot 2023) lA NO: [1 ]OF 2023 Petition under Section ['151 ]CPC praying that in the circumstances stated inthe affidavit filed in support of the petition, the High Court may be pleased to staythe communication Dl N no.CPCl 21 22 I G5dl635 1 69960 30i 221 dated 25- 1 2-2022issued by 2nd respondent invalidating the petitioner's return of income for4.Y.2021 -22 and communication Dt N no.EF Ll 2223t G22 I lT ROOO47 2429203 dated1411212022 issued by 2nd respondent tor A.y.2022-23 proposing to disailow thecarried fonr,vard loss of A.Y.2021-22 and set off for Ay 2022-23. Counsel for the Petitioner: SRI C.V.NARASIMHAMCounsel forthe Respondent Nos.1 TO 3: M/s. SUNDARI R plSUpATl, SR.SCFOR INCOME TAX DEPARTMENTCounsel for the Respondent No.4: SRI GADI PRAVEEN KUMAR, Dy.SOLICITOR GENERAL OF INDIA The Court made the following: ORDER Petition under Section ['151 ]CPC praying that in the circumstances stated inthe affidavit filed in support of the petition, the High Court may be pleased to staythe communication Dl N no.CPCl 21 22 I G5dl635 1 69960 30i 221 dated 25- 1 2-2022issued by 2nd respondent invalidating the petitioner's return of income for4.Y.2021 -22 and communication Dt N no.EF Ll 2223t G22 I lT ROOO47 2429203 dated1411212022 issued by 2nd respondent tor A.y.2022-23 proposing to disailow thecarried fonr,vard loss of A.Y.2021-22 and set off for Ay 2022-23. Counsel for the Petitioner: SRI C.V.NARASIMHAMCounsel forthe Respondent Nos.1 TO 3: M/s. SUNDARI R plSUpATl, SR.SCFOR INCOME TAX DEPARTMENTCounsel for the Respondent No.4: SRI GADI PRAVEEN KUMAR, Dy.SOLICITOR GENERAL OF INDIA The Court made the following: ORDER THE HON'BLE SRI JUSTICE P. SAM KOSHYANDTHE HON'BLE SRI JUSTICE N. TUKARAMJIWRIT PETITION No.19O73 OF 2OZ3 ORDER: [(Per ]the Hon'ble Sri lustice P. Sam Koshy) Present is the Writ Petition, which has been filed seeking the following relief : "In these circumstances, it is prayed that the Hon'ble HighCourt may be pleased to issue Writ Order or Direction moreparticularly in the nature of Writ of Mandamus declaring the2n{ respondent's communications DIN No.EFL/2122/GSa/ITRbOO177067055 dated [g-8-2O22 ]treating the petitioner',sreturn for A.Y. 2O2l-22 as defective and consequentcommunication DIN No.CPC/2t22/G5d/635169960301221dated 25-12-2022 invalidating the petitioner's return ofincome for A.Y. 2021-22 and also communication DINN o.EF Ll 2223 / G22 / IT ROO O 47 2429 20 3 date d 14 - 72 - 20 2 2 a s a I Ibeing illegal, arbitrary, violative of principles of natural [justice]and contrary to sections 4448, 139(9) and 264 and otherprovisions of the Income Tax Act, 1961 and violative ofArticles 14, 19(1)(g) and 265 of the Constitution of India andconsequently. direct the 2nd and 3'd respondents to treat thepetitioner's return of income for A.Y. 2027-22 as valid andnot to disallow the carried forward loss of A.Y. 2O2l-22 to setoff for subsequent A.Y. 2022-23 and pass such further ordersin the interest of justice; or alternatively set aside the Order No.ITBA/REV/F/REV7/2023-24/t}56t569t4(1) dated L5-09-2O23 passed by the 1'trespondent u/s. 264 of the Act and direct 1* respondent toconsider and dispose off on merits the petitioner's applicationuls 264 of the Act after duly considering the report ofAssessing Officer dated 30-08-2023 and pass such furtherorders in the interest of [justice."] 2. At the outset, learned counsel for the petitioner referred the order, dated 09.08.2022, passed by respondent No.2 considering theincome tax return filed by the [petitioner-esta ]blish ment as defective PSK.J & NTR,Jw.P.No.l907l of2023w.P.No.l907l of2023 within the meaning oF Section 139(9) of the Income Tax Act, 1961(for short, 'the Act'), to be erroneous and contrary to the facts.Respondent No.2 has held the income tax return of the petitioner tobe defective as the balance sheet and profit and loss account of thepetitioner's establishment have not got audited, as is required underthe statute, as is the reason that is reflected in the order, dated09.08.2022, passed by respondent No.2. 2. At the outset, learned counsel for the petitioner referred the order, dated 09.08.2022, passed by respondent No.2 considering theincome tax return filed by the [petitioner-esta ]blish ment as defective PSK.J & NTR,Jw.P.No.l907l of2023w.P.No.l907l of2023 within the meaning oF Section 139(9) of the Income Tax Act, 1961(for short, 'the Act'), to be erroneous and contrary to the facts.Respondent No.2 has held the income tax return of the petitioner tobe defective as the balance sheet and profit and loss account of thepetitioner's establishment have not got audited, as is required underthe statute, as is the reason that is reflected in the order, dated09.08.2022, passed by respondent No.2. 3. Learned counsel for the petitioner categorically makes astatement that it was the stand of the petitioner all along that theirincome under the'profits and gains from business or profession'wasless than Rs.10 Crores and therefore, it was not required to beaudited. Hence, the finding given by respondent No.2 to theaforesaid extent is bad in law. In support of his contention, learnedcounsel for the petitioner referred to I.A.No.2 of 2023, wherein thereis an order passed by respondent No.1, under Section 264 of theAct, where an extract of the order of the Assessing Officer wasreproduced and in paragraph No.6.B, there is a specific finding thatthe assessee's claim of its turnover being less than Rs.10 Crores isfound to be in order. This in other words mean that the turnover ofthe petitioner-establishment has been found to be less thanRs.10 Crores by the Assessing OfFicer. Contrary to this, theauthorities concerned i.e., respondent No.2 has now declared the II PSK.J & NTRJw P.No.l907.l of202l income tax return submitted by the [petitioner ]to be defective [and]invalid, as it has not been [got ]audited and hence it was found to [be]in contravention to the [provisions ]of Section 139(9) of the [Act.]There does not seem to be any [strong ][material available ][with ][the]authority concerned, [particularly ][respondent ][No.2, ][to ][reach ][to ][a]conclusion that the turnover of the [petitioner ][was ][exceeding]Rs.10 Crores, [particularly, ]in the teeth of the [finding given ][by ][the]Assessing Officer i.e., respondent [No.3.] 4. Given the said facts that respondent [No.1 ][in the ][course of]passing the order under Section 264 of the Act reproduced thefindings given by the Assessing Olficer that the turnover [of ][the]petitioner being less than Rs.10 Crores, both the orders ofrespondent No.2, dated 09.08.2022 and [25.12.2022, would ][not ][be]sustainable and the same would have to be [set ][aside ][and ][is ordered]accordingly. 5. 5. As a consequence, the communication, dated [14.L2.2022, ][is]also set aside/quashed and the matter [thereby stand ][remitted ][back]to the Assessing Officer, respondent [No.3, ]to [reexamine ][the ][entire]thing, particularly, the turnover of the [petitioner's ][establishment ][and]thereafter, [pass ]appropriate orders afresh, [in ][accordance ][with ][law.] PSKJ & NTR.JW.P.No 19073 of202l 6. The Writ Petition to the aforesaid extent stands allowed. Theimpugned orders, dated 09.08.2022, t4.t2.2022 and 25.t2.2022,would stand quashed. There shall be no order as to costs. Miscellaneous Petition, if any, pending in this Writ [petition]shall stand closed.shall stand closed. SD/. P.Ch. NAGABHUSHAMBAASSISTANT REGISTRARvSECTION OFFICER //rRUE coPY// To1 . Pr. Commissioner of [lncome ][ltax ][- 2, Hyderabad ]- [lncome Tax towers, A ][C']Guards, Masab Tank, [Hyderabad - 500004]1 . Pr. Commissioner of [lncome ][ltax ][- 2, Hyderabad ]- [lncome Tax towers, A ][C']Guards, Masab Tank, [Hyderabad - 500004] Z. AJst. Oirector of [lncome'Tax Centralized Processing Centre, lncome Tax]Department, Bengaluru [- 560500]Department, Bengaluru [- 560500] 3. - kondapur lnc'ome Tax'Offic6r Sy. No.37(P) of Kothaguda Opp. Botanical Gardens,[Ward-11(1), ][Hyderabad Signature Towers, ][Sy' ][No'6(P) ][of]Serilingampally [[(M) Hyderabad - 500084]]Serilingampally [[(M) Hyderabad - 500084]] Miscellaneous Petition, if any, pending in this Writ [petition]shall stand closed.shall stand closed. SD/. P.Ch. NAGABHUSHAMBAASSISTANT REGISTRARvSECTION OFFICER //rRUE coPY// To1 . Pr. Commissioner of [lncome ][ltax ][- 2, Hyderabad ]- [lncome Tax towers, A ][C']Guards, Masab Tank, [Hyderabad - 500004]1 . Pr. Commissioner of [lncome ][ltax ][- 2, Hyderabad ]- [lncome Tax towers, A ][C']Guards, Masab Tank, [Hyderabad - 500004] Z. AJst. Oirector of [lncome'Tax Centralized Processing Centre, lncome Tax]Department, Bengaluru [- 560500]Department, Bengaluru [- 560500] 3. - kondapur lnc'ome Tax'Offic6r Sy. No.37(P) of Kothaguda Opp. Botanical Gardens,[Ward-11(1), ][Hyderabad Signature Towers, ][Sy' ][No'6(P) ][of]Serilingampally [[(M) Hyderabad - 500084]]Serilingampally [[(M) Hyderabad - 500084]] Serilingampally [[(M) Hyderabad - 500084]]+. ine Sdcretarv, [jnionbt ][lndia, Department of Revenue, Ministry ][of ][Finance,]North Block New Delhi [- ][110001]North Block New Delhi [- ][110001] 5. One CC to SRI C.V.NARASIMHAIVI, [Advocate ] O. On. CC to [tM/s. ]SUNDARI [R PISUPATI, SR.SC FOR INCOME ] DEPARTMENT [OPUCIDEPARTMENT [OPUCI DEPARTMENT [OPUCIz. one Cc to sRt enot [phnvEeN ][KUIMAR. Dv. ][SollclroR ] [oF]rNDrA rNDrA 8. Two CD Copies PSK GJP HIGH COURT DATED:2811212023 ORDER WP.No.19073 of 2023 ALLOWING THE WRIT PETITIONWITHOUT COSTS. @ [oqtq]g\6sa- 5TATEofIIN [1$1\]21oA-.tior:sPf