A division bench of the Telangana High Court ruled that the reassessment proceedings under the Income Tax Act, 1961, cannot be challenged at preliminary stage by involving the writ jurisdiction under Article 226 of the Constitution of India.
The petitioner, Nitin Enterprises, a partnership firm engaged in trading electrical fittings, challenged reassessment proceedings for AY 2024-25. The petitioner had declared an income of Rs.21,01,230/- in its return, which was processed under Section 143(1) of the Income Tax Act.
Following a search conducted in the case of M/s. Polycab India Limited and its group concerns, the Assessing Officer issued a notice under Section 148A(1), alleging unexplained transactions of Rs.3,46,11,545/- based on information received through the Central Board of Direct Taxes (CBDT’s) Risk Management Strategy. The petitioner denied any transactions with Polycab and contended that the notice disclosed no specific seized material connecting it with the alleged transactions.
The petitioner also raised jurisdictional objections and questioned the validity of the sanction. Without considering the objections, the Assessing Officer passed an order under Section 148A(3) and issued a consequential notice under Section148 of the Income Tax Act. The petitioner therefore challenged the proceedings under Article 226 as being without jurisdiction and contrary to the provisions of the Income Tax Act.
The issue for consideration was whether a show cause notice issued under Section 148A(1) of the Income Tax Act, and the consequential order issued under Section 148A(3) and notice under Section 148 of the Income Tax Act, initiating reassessment proceedings, can be challenged in a petition under Article 226 of the Constitution of India.
The counsel for the petitioner submitted that the authority concerned was required to examine and initiate the reassessment proceedings in accordance with Section 152(3) of the Income Tax Act and that the Income Tax Officer in the instant case has, however, failed to consider the applicability and effect of Section 152(3) while issuing the impugned notice and passed the impugned order, thereby vitiating the assumption of jurisdiction.
Reliance was also placed upon the judgment of the Bombay High Court in the case of Ananta Landmark (P) Ltd. vs. CIT wherein it has been held that the validity of reassessment proceedings must be tested only on the basis of the reasons recorded and the same cannot subsequently be supplemented or improved upon.
The Senior Standing Counsel for Income Tax Department contended that the impugned show cause notice issued under Section 148A(1) of the Income Tax Act and other processes were all issued strictly in exercise of the statutory power vested in the Income Tax Officer to reopen an assessment where information suggesting escapement of income has come to the notice of the Assessing Officer, and that the same could not be equated with a final or concluded determination of tax liability.
Justice P.Sam Koshy and Justice Narsing Rao Nandikonda observed that “We are conscious that the Income Tax Officer while passing the order under Section 148A(3) of the Income Tax Act, has not, in terms dealt with the petitioner’s specific objections regarding the applicability of Section 152(3) and the validity of the sanction under Section 151 of the Income Tax Act. This omission however does not in our considered view convert what is otherwise a preliminary step in a reassessment proceeding into a final and concluded order amenable to challenge under Article 226 at this stage.”
“It is held that the impugned show cause notice issued under Section 148A(1) of the of the Income Tax Act, the impugned order under Section 148A(3) of the of the Income Tax Act, and the consequential notice under Section 148 of the of the Income Tax Act being steps preliminary to and forming part of an ongoing reassessment proceeding, cannot be assailed at this stage in exercise of the writ jurisdiction of this Court” the bench concluded.
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Nitin Enterprises vs Income-tax Officer
CITATION : 2026 TAXSCAN (HC) 1343Case Number : WRIT PETITION No.24088 of 2026Date of Judgement : 11 August 2026Coram : JUSTICE P.SAM KOSHY AND THE JUSTICE NARSING RAO NANDIKONDA
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