Writ challenging Section 148 notice based on GST order dismissed as reassessment must follow Income-tax Act.
Writ challenging Section 148 notice based on GST order dismissed as reassessment must follow Income-tax Act.
Issue
Whether a notice issued under Section 148 based on an order passed by a Proper Officer under GST legislation can be interfered with by the High Court at the preliminary stage under writ jurisdiction when the assessee claims an appeal and deemed stay under GST law are pending.
Facts
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The petitioner-assessee filed a writ petition challenging a notice issued under Section 148 of the Income-tax Act, 1961.
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The reassessment proceedings were initiated by the Income Tax Department relying on a GST adjudication order passed against the petitioner.
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The assessee had already filed an appeal against the GST adjudication order and claimed that a deemed stay was in operation under GST law.
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The assessee contended that Section 148(3) envisages reassessment based on orders of a tribunal or court, not an adjudication order of a GST Proper Officer, and argued that parallel reassessment could lead to conflicting orders.
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There was nothing on record to indicate whether the CBDT’s risk management strategy covered information derived from GST adjudication orders.
Decision
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The proceedings were only at a preliminary stage where a notice under Section 148 had been issued to the assessee.
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Any reassessment must be independently carried out in strict compliance with the provisions of the Income-tax Act; authorities cannot merely ride piggyback on a GST adjudication order.
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The High Court declined to interfere with the impugned Section 148 notice at this preliminary juncture (ruled in favor of the Revenue).
Key Takeaways
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Premature Writ Intervention: High Courts generally refrain from quashing reassessment notices under Section 148 at a preliminary stage, allowing the statutory assessment process to proceed first.
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Independent Income Tax Adjudication: Income Tax authorities cannot blindly adopt or “ride piggyback” on GST adjudication orders; they must independently establish income escapement under tax law principles.
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Scope of CBDT Risk Strategy: Information sourced from GST proceedings can trigger initial inquiry or notice, but final reassessments must meet the independent jurisdictional parameters of the Income-tax Act.
HIGH COURT OF MADRAS
Ramegowdu Mahendra
v.
Deputy Commissioner of Income-tax
Senthilkumar Ramamoorthy, J.
WP No. 32056 of 2026
W.M.P. Nos. 35253 & 35254 of 2026
W.M.P. Nos. 35253 & 35254 of 2026
AUGUST 20, 2026
Adithya Reddy for the Petitioner. Ms.M.Sheela, Sr. SC and H. Siddarth, Jr. SC for the Respondent.
ORDER
1. Notice dated 27.05.2026 under Section 148 of the Income Tax Act, 1961 (the I-T Act) is challenged in this writ petition.
2. Learned counsel for the petitioner submits that the impugned notice was issued on the basis of an adjudication order under applicable GST enactments. He also submits that an appeal was filed against adjudication order dated 03.02.2025 and that a deemed stay of the adjudication is in operation. Referring to sub-section (3) of Section 148, learned counsel contends that reassessment is permissible on the basis of an order of a tribunal or Court, but not on the basis of an order of the proper officer under applicable GST enactments. He also contends that permitting the Income Tax authorities to proceed with reassessment will result in conflicting orders.
3. Ms.M.Sheela, learned senior standing counsel, accepts notice for the respondent. Referring to the order under Section 148A(3), she submits that contention raised by the petitioner in this writ petition was dealt with in said order. She also submits that the Income Tax authorities are required to undertake re-assessment independently and not on the basis of the adjudication by the GST authorities.
4. Under Section 148A(1), the pre-requisite for initiation of re-assessment proceedings is information suggesting that income chargeable to tax has escaped assessment in the relevant assessment year. The expression “information” is defined exhaustively in sub-section (3) of Section 148. Such exhaustive definition embraces information received in accordance with the risk management strategy formulated by the CDBT from time to time. There is nothing on record with regard to the risk management strategy of the CBDT and whether it includes information in the form of an adjudication order under applicable GST legislation.
5. The matter is at a preliminary stage, where a notice under Section 148 has been issued. Any re-assessment has to be carried out in compliance with applicable provisions of the I-T Act and the Income Tax authorities cannot ride piggyback on the adjudication under GST law. In other words, even if the appeal filed by the petitioner before the appellate authority were to be rejected, such rejection cannot be the sole basis for conclusions in course of reassessment proceedings. The converse is equally true. Therefore, I am not inclined to interfere with the impugned notice at this juncture.
6. Hence, this writ petition is disposed of by declining to grant the relief claimed. It is, however, open to the petitioner to challenge the re-assessment order in accordance with law. Consequently, connected writ miscellaneous petitions are closed. There shall be no order as to costs.