Telangana High Court Holds That Preliminary Reassessment Steps Under Section 148A Are Not Amenable to Writ Challenge at Inception Stage

Case Overview

Case Name: Nitin Enterprises Vs ITO (Telangana High Court)
**Writ Petition No.😗* 24088 of 2026
Date of Order: 11/08/2026
Assessment Year: 2024-25

The Telangana High Court, in the matter of Nitin Enterprises Vs ITO, dismissed a writ petition filed under Article 226 of the Constitution of India, which sought to challenge a show cause notice dated 26.03.2026 issued under Section 148A(1) of the Income-tax Act, 1961, along with the order dated 24.06.2026 passed under Section 148A(3), and the notice of the same date issued under Section 148 of the Income-tax Act, 1961. The central issue before the Court was whether such preliminary steps in the reassessment process could be interdicted through writ jurisdiction before the assessee had participated in and exhausted the statutory mechanism available under the Act.

Background Facts

The petitioner, Nitin Enterprises, is a partnership firm carrying on business in trading of electrical fittings and retail operations, with its principal place of business at Hyderabad. For Assessment Year 2024-25, the petitioner filed its return of income on 04.10.2024, declaring a total income of Rs.21,01,230/-. The return was processed and an intimation under Section 143(1) of the Income-tax Act, 1961 was duly issued accepting the declared income.

Subsequently, a search and seizure operation under Section 132 of the Income-tax Act, 1961 was conducted on 22.12.2023 in the case of M/s. Polycab India Limited and its group concerns. On the basis of information purportedly derived from this search, the Assessing Officer issued a show cause notice dated 26.03.2026 under Section 148A(1) of the Income-tax Act, 1961, accompanied by an Annexure setting out the recorded information and reasons forming the foundation for the proposed reassessment.

The Annexure alleged that information received through the Insight Portal under the Risk Management Strategy (RMS) formulated by the CBDT indicated that the petitioner had engaged in unexplained and unaccounted transactions aggregating to Rs.3,46,11,545/- during Assessment Year 2024-25, with M/s. Polycab India Limited cited as the source of such information. Notably, neither the show cause notice nor the accompanying Annexure disclosed any specific seized document, invoice, statement, ledger entry or other incriminating material directly attributable to or pertaining to the petitioner.

Petitioner's Response and Objections

The petitioner filed replies dated 03.04.2026 and detailed objections dated 21.04.2026 before the Assessing Officer, categorically denying having undertaken any transaction whatsoever with M/s. Polycab India Limited.

Beyond the factual denial, the petitioner raised two significant jurisdictional objections:

  1. **Applicability of Section 152(3)😗* Since the impugned proceedings traced their origin to the search conducted on 22.12.2023 — a search falling within the period commencing from 01.04.2021 and ending on 01.09.2024 — the reassessment proceedings were required to be governed by Section 152(3) of the Income-tax Act, 1961, as inserted by the Finance Act, 2024 with effect from 01.09.2024. The petitioner contended that the Assessing Officer had failed to consider and apply this provision, thereby vitiating the assumption of jurisdiction.

  2. **Validity of Sanction under Section 151😗* The petitioner questioned the validity of the approval accorded by the Joint Commissioner of Income Tax, described as the specified authority under Section 151 of the Income-tax Act, 1961, on 24.06.2026.

Order Under Section 148A(3) and Consequential Notice

The Assessing Officer passed the order dated 24.06.2026 under Section 148A(3) of the Income-tax Act, 1961, rejecting the petitioner's objections. In doing so, the Assessing Officer referred to additional material connected with the Polycab search, including alleged activities of the Sunrise Group, a parallel set of accounts described as "Ka", and statements of third parties recorded during the course of the search proceedings.