2024 (5) TMI 1557 - HC - Income Tax

Reopening of assessment under old regime - scope of new regime - scope of TOLA - as argued notice has been issued on the basis of the provisions which have ceased to exist and are no longer in the statute - HELD THAT - We are informed by counsel for Petitioner/s that these Petitions will be covered by the judgment in Hexaware Technologies Limited. 2024 (5) TMI 302 - BOMBAY HIGH COURT Counsel for Respondent/s concur. Therefore the notices and orders impugned in these petitions are quashed and set aside. In case any re-assessment order is passed the same also will stand quashed. So also consequential demand notice or penalty notice will also stand quashed and set aside. Petitions disposed accordingly. In view of disposal of petitions interim application if any pending therein shall also stand disposed. Whichever contention raised in the Petition not covered by the Hexaware Technologies (Supra) is kept open to be raised should the need arise.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in the present batch of writ petitions, as informed by counsel and reflected in the order, revolve around the validity of notices and orders issued by the Revenue authorities, including reassessment orders, consequential demand notices, and penalty notices. These issues pertain to the legality and correctness of such actions under the relevant tax laws and procedural safeguards. The petitions collectively challenge the impugned notices and orders, seeking their quashing and setting aside.

Additionally, the Court considered whether the legal principles and findings laid down in the judgment in Hexaware Technologies Limited v. Assistant Commissioner of Income Tax Circle 15(1)(2) Mumbai and Ors. (Writ Petition No. 1778 of 2023 decided on 3.5.2024) would be applicable to the present petitions, thereby covering the issues raised.

Further, the Court kept open the possibility for any contention not covered by the Hexaware Technologies judgment to be raised in the future, indicating an issue regarding the scope and applicability of precedent to the facts of these petitions.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Notices and Orders Issued by Revenue Authorities

Relevant legal framework and precedents: The legal framework governing reassessment orders, demand notices, and penalty notices is primarily derived from the Income Tax Act and allied procedural rules. The Court relied on the precedent set in Hexaware Technologies Limited v. Assistant Commissioner of Income Tax, which dealt with the validity and procedural correctness of such notices and orders.

Court's interpretation and reasoning: The Court, after hearing counsel for both petitioners and respondents, accepted the submission that the issues raised in these petitions are substantially covered by the Hexaware Technologies judgment. By doing so, the Court implicitly endorsed the legal reasoning and principles established therein, which presumably scrutinized the procedural compliance and substantive legality of the reassessment and penalty proceedings initiated by the Revenue.

Key evidence and findings: The Court was informed by counsel that the impugned notices and orders were challenged on grounds that align with those considered in the Hexaware Technologies case. The concurrence of the respondents' counsel further supported the applicability of the precedent.

Application of law to facts: Given the factual matrix and legal submissions, the Court applied the principles from the Hexaware Technologies judgment to quash and set aside the impugned notices, orders, reassessment orders, demand notices, and penalty notices across the batch of writ petitions.

Treatment of competing arguments: Although the detailed arguments of the parties are not recorded in the order, the acceptance of the precedent and concurrence by respondents indicate that competing contentions were considered but found not to warrant deviation from the established legal position.

Conclusions: The Court concluded that the impugned notices and orders are liable to be quashed and set aside in light of the Hexaware Technologies judgment.

Issue 2: Scope for Raising Contentions Not Covered by Precedent

Relevant legal framework and precedents: The principle of judicial precedent and the doctrine of res judicata govern the scope of issues that can be raised in subsequent proceedings. However, courts also recognize that not all possible contentions may be covered in a single judgment.

Court's interpretation and reasoning: The Court explicitly stated that any contention raised in the petitions but not covered by the Hexaware Technologies judgment is kept open to be raised if the need arises. This approach balances the finality of decisions with the right to seek redress on novel or distinct issues.

Key evidence and findings: The order reflects a procedural safeguard, preserving the petitioners' rights to raise additional issues in future proceedings.

Application of law to facts: The Court applied this principle to ensure that the disposal of the present petitions does not preclude future challenges on matters not addressed by the precedent.

Treatment of competing arguments: The Court did not find it necessary to rule on any such uncaptured contentions at this stage, leaving the door open for future adjudication.

Conclusions: The Court's order preserves the petitioners' rights to raise uncaptured contentions in the future, ensuring procedural fairness.

3. SIGNIFICANT HOLDINGS

The Court held that the impugned notices and orders issued by the Revenue authorities, including reassessment orders, demand notices, and penalty notices, are quashed and set aside in light of the legal principles established in the Hexaware Technologies Limited judgment.

Verbatim from the order: "Therefore, the notices and orders impugned in these petitions are quashed and set aside. In case any re-assessment order is passed, the same also will stand quashed. So also, consequential demand notice or penalty notice will also stand quashed and set aside."

This holding confirms the application of the precedent to a large batch of writ petitions challenging similar Revenue actions, thereby establishing a uniform legal position on the issues addressed in the Hexaware Technologies judgment.

Additionally, the Court established the principle that contentions not covered by the precedent remain open for future consideration: "Whichever contention raised in the Petition not covered by the Hexaware Technologies (Supra) is kept open to be raised, should the need arise."

The final determination is that all impugned actions are set aside, interim applications pending are disposed of, and petitioners retain the right to raise any further issues not adjudicated by the precedent.