Madras High Court
Sooriya Hospital vs Deputy Commissioner Of Income Tax on 3 November, 2025
Author: C.Saravanan
Bench: C. Saravanan
WP No. 13607 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 03-11-2025
CORAM
THE HONOURABLE MR JUSTICE C. SARAVANAN
WP No. 13607 of 2022
AND
WMP NO. 12827 OF 2022,WMP NO. 12829 OF 2022
1. Sooriya Hospital
Rep. by its Partner, Dr.C.P.Sreekumar,
1/1, Arunachalam Road, Saligramam,
Chennaii-600 026.
Petitioner(s)
Vs
1. Deputy Commissioner of Income Tax
Non-Corporate Circle 8(1),
Nungambakkam, Chennai-600 024.
Respondent(s)
PRAYER
Calling for the entire records of the respondent contained in DIN and Letter
No.ITBA/ COM/F/ 17/ 2022-23/ 1043118001(1) dated 23.05.2022 for AY 2014-
15, for PAN AALFS1340N and to quash the same as arbitrary, unjust and
unlawful and consequently forbear the respondent or its superiors, subordinates,
agents etc. from re-assessing the petitioners income for the Assessment Year
2014-15 under Section 147 of the Income Tax Act, 1961
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WP No. 13607 of 2022
For Petitioner(s): M/S Suhrith Parthasarathy
Arun Karthik Mohan
Ashwini Vaidialingam
Sithara Sarangan
Amritha Sathyajith
For Respondent(s): Ms. S. Premalatha
Senior Standing Counsel
ORDER
This is the second round of litigation before this Court. Earlier, the
petitioner was issued with a notice under Section 148 of the Income Tax Act,
1961 as per the provisions as stood till 31.03.2021. The petitioner has
challenged the jurisdiction of the assessing officer for issuing the aforesaid
notice before this Court in W.P. No.15567 of 2021.
2. By a common order dated 04.02.2022, the Division Bench of this Court
quashed all notices in a batch of writ petitions. There, the Court had followed
the views taken by the Allahabad High Court. Relevant portion from the order
of the Division Bench dated 04.02.2022 is reproduced below:
"19. In view of the ratio propounded by the Allahabad and
Delhi High Courts on the subject, the reassessment notices
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under Section 148 of the Act of 1961 served on the
petitioners on or after 1.4.2021 are set aside having been
issued in reference to the unamended provisions and the
Explanations are to be read as applicable to reassessment
proceedings if initiated on or prior to 31.3.2021, but it
would be with liberty to the assessing authorities to initiate
reassessment proceedings in accordance with the
provisions of the Act of 1961, as amended by the Finance
Act, 2021, after making all the compliances as required by
law, if limitation for it survives."
3. Later, the Honourable Supreme Court passed order in Union of India
Vs. Ashish Agarwal., (2023) 1 SCC 617 on 04.05.2022, had observed as under:
''26. In view of the above and for the reasons stated
above, the present appeals are allowed in part. The impugned
common judgments and orders [Ashok Kumar Agarwal v.
Union of India, 2021 SCC OnLine All 799] passed by the
High Court of Judicature at Allahabad in WT No. 524 of
2021 and other allied tax appeals/petitions, is/are hereby
modified and substituted as under:
(i) The impugned Section 148 notices issued to the
respective assessees which were issued under unamended
Section 148 of the IT Act, which were the subject-matter of
writ petitions before the various respective High Courts shall
be deemed to have been issued under Section 148-A of the IT
Act as substituted by the Finance Act, 2021 and construed or
treated to be show-cause notices in terms of Section 148-
A(b). The assessing officer shall, within thirty days from
today provide to the respective assessees information and
material relied upon by the Revenue, so that the assessees
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can reply to the show-cause notices within two weeks
thereafter.
(ii) The requirement of conducting any enquiry, if
required, with the prior approval of specified authority under
Section 148-A(a) is hereby dispensed with as a one-time
measure vis-à-vis those notices which have been issued under
Section 148 of the unamended Act from 1-4-2021 till date,
including those which have been quashed by the High Courts.
(iii) Even otherwise as observed hereinabove holding
any enquiry with the prior approval of specified authority is
not mandatory but it is for the assessing officers concerned
to hold any enquiry, if required.
(iv) The assessing officers shall thereafter pass orders
in terms of Section 148-A(d) in respect of each of the
assessees concerned; Thereafter after following the
procedure as required under Section 148-A may issue notice
under Section 148 (as substituted).
(v) All defences which may be available to the
assessees including those available under Section 149 of the
IT Act and all rights and contentions which may be available
to the assessees concerned and Revenue under the Finance
Act, 2021 and in law shall continue to be available.''
4. It is in this background, the impugned notice has been issued to the
petitioner on 23.05.2022 under Section 148A(b) of the Income Tax Act, 1961.
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5. The above decision was later clarified by the Hon'ble Supreme Court in
Union of India vs. Rajeev Bansal, 2024 SCC Online SC 2693. In Paragraph
No.114, it was concluded as follows:-
“114. In view of the above discussion, we conclude
that:
(a) After April 1, 2021, the Income-tax Act has to be
read along with the substituted provisions;
(b) Taxation and other Laws (Relaxation and
Amendment of Certain Provisions) Act, 2020 will continue to
apply to the Income-tax Act after April 1, 2021 if any action
or proceeding specified under the substituted provisions of
the Income-tax Act falls for completion between March 20,
2020 and March 31, 2021;
(c) Section 3(1) of the Taxation and other Laws
(Relaxation and Amendment of Certain Provisions) Act, 2020
overrides section 149 of the Income-tax Act only to the extent
of relaxing the time limit for issuance of a reassessment
notice under section 148;
(d) Taxation and other Laws (Relaxation and
Amendment of Certain Provisions) Act, 2020 will extend the
time limit for the grant of sanction by the authority specified
under section 151. The test to determine whether Taxation
and other Laws (Relaxation and Amendment of Certain
Provisions) Act, 2020 will apply to section 151 of the new
regime is this : if the time limit of three years from the end
of an assessment year falls between March 20, 2020 and
March 31, 2021, then the specified authority under section
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151(i) has extended time till June 30, 2021 to grant
approval;
(e) In the case of section 151 of the old regime, the test
is : if the time limit of four years from the end of an
assessment year falls between March 20, 2020 and March 31,
2021, then the specified authority under section 151(2) has
extended time till March 31, 2021 to grant approval;
(f) The directions in Union of India v. Ashish Agarwal
[(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] will extend to all
the ninety thousand reassessment notices issued under the old
regime during the period April 1, 2021 and June 30, 2021;
(g) The time during which the show-cause notices were
deemed to be stayed is from the date of issuance of the
deemed notice between April 1, 2021 and June 30, 2021 till
the supply of relevant information and material by the
Assessing Officers to the assessees in terms of the directions
issued by this court in Union of India v. Ashish Agarwal
[(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] , and the period
of two weeks allowed to the assessees to respond to the show-
cause notices; and
(h) The Assessing Officers were required to issue the
reassessment notice under section 148 of the new regime
within the time limit surviving under the Income-tax Act read
with the Taxation and other Laws (Relaxation and
Amendment of Certain Provisions) Act, 2020. All notices
issued beyond the surviving period are time barred and liable
to be set aside;
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6. Reading of the Return of Income filed for the Assessment Year 2013-
14 and Assessment Order dated 09.12.2016 makes it clear that the information
for the Assessment Year 2013-2014 has been relied by the Respondent from the
information relevant for reopening the assessment for the Assessment Year
2014-2015.
7. The impugned notice pertains to the Assessment Year 2014-15
(Previous year 2013-14). The impugned notice, however, relies upon the Return
of Income dated 05.09.2013 filed for the Assessment Year 2013-14 (Previous
year 2012-13).
8. In fact, the impugned notice also states that "Later on it was noticed
from the copy of P&L account and balance sheet that the firm has inter-alia
claimed expenditure towards bad debts written off to the extent of Rs.
1,19,16,875/- in the P&L account for the year ended 31-03-2013 under the
head Operational Expenditure and the same was allowed by the A.O during the
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assessment. No details regarding the bad debts was furnished by the assessee
during scrutiny.".
9. Thus, the information that has been relied upon by the Department /
respondents for issuing the impugned notice under Section 148A(b) of the
Income Tax Act, 1961 for the Assessment Year 2014-15 is based on the
information for the Assessment Year 2013-14 (previous year 2012-13). Thus,
there are no foundational fact available with the Department to issue the
impugned notice or to pass the impugned order.
10. Even otherwise, the impugned proceedings initiated by the
jurisdictional assessing officer was beyond the period of limitation and contrary
to Section 149 of the Act as amended with effect from 01.04.2021. Show Cause
Notice dated 23.05.2022 itself is not based on any information available with
the Department for the Assessment Year 2014-15. The impugned proceedings
are therefore liable to be quashed on this ground as well. Accordingly, they are
quashed.
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11. This Writ Petition thus stands allowed with the above observations.
No costs. Connected Writ Miscellaneous Petitions are closed.
03-11-2025
Index:Yes/No
Speaking/Non-speaking order
Internet:Yes
Neutral Citation:Yes/No
ab
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To
1.Deputy Commissioner of Income Tax
Non-Corporate Circle 8(1),
Nungambakkam, Chennai-600 024.
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C.SARAVANAN J.
ab
AND WMP NO. 12827
OF 2022,WMP NO.
12829 OF 2022
03-11-2025
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