Anusha Kamishetti v. 271(1)(b) dated 1510712024 and 1110712024

THE HONOT]RABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITION No.753 OF 2025 ORDER, (per Hon'ble Sri Justice Narsing Rao Nandikonda) Heard Mr. Polkampally Pavan Kumar Rao' learned counsel for the petitioner, Ms. B. Sapna Reddy' leamed Junior Standing Counsel for the Income Tax Department for respondent Nos'1 to 3 and Mr. B. Mukherjee, leamed counsel representing the Union of India for respondent No.4' Perused the record

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 148A and 148 of the Income Tax Act, 1961 (for short 'the Act') or the assessment orders those have been passed under Section 147 of the Act which have been assailed'

3. This writ petition is being taken up today only on one of the grounds, that the notices issued under Section 1484 of the Act and the subsequent initiation ofproceedings under Section 148 of the Act by tht jurisdictional Assessing Officer' whereas in terms oftheamendmentthatwasbroughttothelncomeTaxActbyway 2 of Finance Act, 2021 w.e.f., 01.04.2021 onwards. proceedings under Section 1484 of the Act as also under Section 14g of the Act ought trt have also been issued and proceeded in a faceless manner.

4. The <:ontention of the petitioner is that the issue of proceedings being in violation of the Finance Act, 2021 i.e., the impugned notices under Section 148,{ and Section l4g of the Act not being isstred in a faceless manner, have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERI decided on 14.09.202:i whereby a batch of writ petitions were allowed and the proceedinl;s initiated under Section t48A as also under Section 148 of the Act were held to be bad with consequential reliefs on the ground of it be:ing in violation of the provisions of Section l51A of the Act read with Notification 18/2022 dated 29.03.2022. The said. judgment passr:d by this Court has also been subsequently followed in a large number of writ petitions which were allowed on similar term s. 'l(2023) 156 tax:mann.com 178 (Telangana)l 8fri*,r - -1/z .,

5. Down the line, we f,rnd that the same issue has also been decided against the Revenue by various High Courts i'e'' by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD., VS. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gau[rati High Court in the case of RAM NARAYAN SAH vs' UNION OF INDIA3' Punjab and Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the case of SRI VENKATARAMANA REDDY PATLOOI,A VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue rvas in respect of international taxation, Bombay High Court in the case of ABIIIN ANILKUMAR SHAH vs' INCOME TAX OFFICER' INTERNATIONALTAXATI0N6whichisagainoninternational taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGII vs' INCOME TAX OFFICERT' Gujarat High Court in the case of MANSUKHBHAI 478 (Gauhati)l ' pozq464 ITR 430 (Bom) .-ilzozil 156 Qxmann.com " [(202,4) 165 iix]nann.com 1 15 (Punjab & Haryana)l '12024) 167 taxmann'com 41 1 (Telangana)l "12024) 166 taxmann.com 679 (Bombay)l 'izOz+) 165 taxmann.com 1 13 (Himachal Pradesh)l DAHYABHAI RADADIYA vs. INCoME TAx OFFICER, WARD 3(3X5)8, Jharkand High Court in the case of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER ,& ANOTHER and batch of writ petitionsro which stood decide,l on 19.03.2024. Similar views have also been taken by the Diviliion Bench of Calcutta High Court in the case cf GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 of 2023). decided o.r 25.09.2024.

6. Even ttrough the same issue having been decided by a large number of High Courts, we are still confronted with large filing of identical matt ers on Caily basis ranging between 5 to l 0 iv-rit petitions. That upon the instructions being sought from the Department, they have been taking a solitary ground that the decision of ttLe Bombay [iigh Court in the case of Hexawsre Technologies Ltc., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy 'zoz+ s&brline Guj 4o12 '2025 SCC Online lhar 2g7 'oy2oz3 : RJ-JD:4.984-DBl J 5 (l supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 before the Hon,ble Supreme Court and the Hon'ble Supreme Court is seized of the matter. In addition, there are about 1200 SLps also filed arising out ofthe same issue being decided by various High Courts.

7. To a query being put to the leamed counsel for the Revenue, they have categorically accepted the fact that there is no interim order granted by the Hon'ble Supreme Court in any of these matters pending before it. Meanwhile, fresh writ petitions of identical nature are being pited up before this Bench on daily basis and the pendency is getting increased on matter which otherwise has already been dealt and decided by this very High Court itself.

8. On the one hand, even though the order of this Court that was passed as early as ol 14.09.2023 and more 16 months have lapsed, till date, we do not find any remedial steps having been taken by the lncome Tax Department to take appropriate sreps ro either hold back issuance of notice under Section l4gA and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions ..l 6 by all the major l{igh Coufts in India are continuously still initiating prcceedings under Section I48A of the Act and also initiating proceedings under Section 148 of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act,2020 as also the Finance Act202l.

9. Upon a query being put as to why can't this writ petition be disposed of in the teeth of the decision rendered by this Court in the case of Kanakala Ravindra Reddy (l supra), leamed Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Department where they would be required to file equal number of SLPs before the Hon'ble Supreme Cou( and it would be further burdening the exchequer of the Union of India. It was also the contention of the leamed Standing Counsel that no prejudice would be caused to the interest of the petitioners in case if this writ petition is kept pending till the finalization of the SLPs pending before the Hon'ble Supreme Court and the fact that the petitioner is already enjoying the benefit c,f interim protection. Nonetheless, on the earlier query of this Courr. as to why the Income Tax Department have not come out with a rnechanism to issue appropriate instructions or to take 7 appropnate steps in ensuring that proceedings under Section r4gA of the Act as also the assessment orders under Section l4g of the Act are kept in a hold in the light of the decisions dedcided by the various High Courts, it was submitted by the leamed Standing Counsel that the said steps can only be taken at the level of CBDT as any such steps would have to be taken pan India and cannot be limited to any of these jurisdictional High Courts.

10. As a result of which, what we are facing is steep increase of litigation day in and day odi even though various orders have been passed by this High Corirt allowing writ petitions on the very same issue. The Income Tax authorities concerned are still even now in 2025 also initiating proceedings in contravention to the provisions of Section l5lA of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakala Ravindra Reddy (l supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravindra Reddy (1 supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners insofar as the liberty which was granted to the Revenue for initiating frt:sh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Finance Act, 2020 and the Finance Act,202I. The petitioner assessee would be entitled to challenge or raise the other legal objections if the Revenut initiates fresh procet:dings. The Department has made no endeavour in availing the said liberty that was reserved for the Revenue. On the contrary, the:y have been still sticking on to the stand, which this High Courl rts well as many other High Courts already held to be bad.

11. It appears that because ofthe aforesaid liberty that this High Court had 6Jranted permitting the Revenue for initiating fresh proceedings as a one-time measure in a faceless manner, the Income Tax Department wants to take advantage of the same by protracting these proceedings which would enable them to meet the limitation that would otherwise come in the way. Likewise, if the writ petition is kept pending for a considerable long period of time and lrnally at a later stage if the Hon,ble Supreme Court confirms the decision taken by this High Court as also by the other High Courts in which the SLps are still pending, the Income Tax .J 9 Department would get the advantage of the liberty that is otherwise protected in favour of the Revenue for initiation of fresh proceedings from the disposal of these matters at a much later stage which would be advantageous and beneficial to the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concemed. As a consequence, the Income Tax Department gets an extended period of time for initiation of ftesh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent setin Kanakala Ravindra Reddy (l supra), is a matter of grave concern. The Income Tax Department's persistent initiation of fresh proceedings, disregarding the established judicial pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions piling up on the same issue. This deliberate approach not only undermines the principle of judicial precedent but also strains the judicial resources unnecessarily. The Department's strategy of awaiting the Supreme Court's decision on pending SLPs while continuing to initiate fresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than adhering to the established legal position. Such conduct raises sedous questions about ttie administrative efficiency and the respect for judicial pronouncenrents, particularly when this Court has already provided a balanced approach by preserving both the Revenue's rights and assesses intorests.

13. Another aspect which needs to be considered is that in fact it should have been realized by the lncome Tax Department itself and should havr: found out via media in ensuring that proceedings under Sections 148-A and 148 should not have been issued in a faceless mailner, at least tili the Hon'ble Supreme Court decide the twelve hundred (1200f odd SLPs which it is already seized of or, at least the Income Tax Department should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 148, other than in a faceless mirnner, the proceedings should have been deferred without pre<:ipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only after the SLP's are decided by the Hon'ble Supreme Court on the very same issue' This again, :he Income Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all I ,/ 11 .hps to be taken, has to be taken for the whole of India, and which otherwise has to be by way of a policy decision and that too at the level of Central Board of Direct Taxes. Though the leamed Standing Counsel for the Income Tax Department contended that the Delhi High Court dismissed a writ petition of similar nature, on the one hand when the High Court is struggling to reduce its pendency, such notices which are under challenge in this writ petition are forcing the assessee to knock the doors of this High Court resulting in frling of hindreds of new writ petitions which in the long run not only affects the disposal of the writ petitions but also consumes substantial time of the Bench in hearing these matters again and again on daily basis. Admittedly, in spite of the matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the matter has been reluctant in granting any interim protection to the Income Tax Department. Yet, the authorities concemed at the State level are not ready to accept the verdict passed by a maj ority of High Courts of different States on the same issue; and to make things further worse, the Income Tax Department is showing audacity by issuing notices continuously under Sections 148-A and 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner'

14. In the case of BANK OF INDIA vs' ASSISTANT COMMISSIONER, INCOME TAXIr' on an issue whether it was justifiable on the part of the Income Tax Department in not following atr order passed by the adjudicating authority only on the ground that the appeals are pending' the Division Bench of the High Court of Bombay held at paragraph No'25 as under' viz'' : "25. Mr. Paridwalla has rightly drawn out attention to the decisiorr of this Court in Commissioner of lncome Tax vs' Smt' Godavaridevi Saraf'2 as also the recent decision of the co- ordinatr: Bench of this Court in Samp Furniture (P) Ltd' v' lTO13 of which one of us (Justice G S Kulkarni) was a member' wherein the Court categorically observed that the Revenue having not "accepted' the .iudgment of the High Court would not mean that till the sarne is set aside in a manner known to law' it would loose its binding force. Referring to the decision of the Supreme Court in Unionoflndiavs.KamlakshiFinancecorporationLtd.lo,the Court cbserved that the approach of the officials of Revenue of treatinr] decisions being "not acceptable" was criticized by the Supretne Court. ln such decision' following are the relevant obsen,ations made by the Supreme Court' " [(2025) 170 taxmann.com 422 (Bombay)l '' iiszsl I l3 lrR 589 (BombaY) " izozqll55 taxmann.com 581/300 Taxman 452 (Bombav) 'o 1l99z1taxmann.com 16155 ELT 433 (SC) /t' l ! , / 13 "6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or. of any factual malafides but with the fact that the officers, in reaching in their conclusion, by-passed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal- The High Court has, in our view, rightly criticized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. lt cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasijudicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellte Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to the deparlment - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. lf this healthy !4 '-'.t rule is noi foilowed, the resi,it will only be undue harassment to assesses and chaos in administration of terx laws.

12. \Ne have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations ma,le by the High Court, have been harsh on the offir;ers. lt is clear that the observations of the High Corrrt, seemingly vehement, and apparently ungralatable to the Revenue, are only intended to curb a tendency in revenue mafters which, if allowed to ber:ome widesprea.q, could result in considerable harassmenl to the assesses-public without any benefit to the Revenue. We would like to say that the department should take these observations in the prcper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them."

15. What is worrying this Bench more is the fact that an endeavour i:; being made whole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of lligh courts all of whom have taken a consistent stand that the action of the Income Tax Department being violative of the 15 Finance Ac| 2020 and Finance A ct,.2021 . Now, in order to protect the interest of the Revenue as also that of the assessee, it would be trite at this juncture, if we dispose of the writ petition with an observation/direction that the disposal of the instant writ petition in terms of the judgment rendered by this fligh Court in the case of Kunkanala Ravindra Reddy (l supra) shall however be subject to the outcome of the SLPs which were filed by the lncome Tax Department and which is pending consideration before the Hon'ble Supreme Court.

16. In the given facts and circumstances, this Bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarely covered by the decision of this Court and which stands fortified by the decisions of the various other High Courts on the very same issue, the pendency of this High Court would further be burdened which otherwise can be decided and disposed of as a covered matter.

17. So far as the interest of the Revenue is concemed, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs t6 1 36,37 and 38 ofthe order which, for ready reference, is reproduced hereunder

36. For all the aforesaid reasons, the impugned notices iss;ued and the proceedings drawn by the respondenl Department is neither tenable, nor sustainable. Tl're notices so tssued and the procedure adopted being pe,r se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orlers getting quashed, the consequential orders passed by the respondent-Department pursuant to the notices iss;ued under Section 147 and 148 would also get qLashed and it is.ordered accordingly. The reason we are quashing the consequential order is on the principles thi:t when the initiation of the proceedings itself was prrcedurally wrong, the subsequent orders also gets nu llifi ed automatically. 3;'. The preliminary objection raised by the petilioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices ard orders are gefting quashed on the point of jurisdiction, we are not inclined to'proceed further and de,cide the other issues raised by the petitioner which stilnds reserved to be raised and contended in an ap,propriate proceedings. 3t). Since the Hon'ble Supreme Court had, in lhe case of Ashish Agarwal, supra, as a one-time measure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed urrder the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right / t7 conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashish Agarwal, supra.

18. We would only further like to make observations that since we are inclined to dispose of the instant writ petition, conscious of the fact that the earlier order of this High Court in the case of Kanakala Ravindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLp No.3574 of 2024, preferred by the Income Jax Department, we make it clear that allowing of the instan! writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision ofthis High Court in the case of Kanakala Ravindru Reddy (l sryra). This, in other words, would mean that either of the parties, if they so want, may move an appropriate petition seeking revival of this writ petition. in the light of the decision of the Hon,ble Supreme Court in the pending SLP on the very same issue.

19. Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction ls concerned. As a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed. 18 1 I : The consequential orders, if any, also stand set aside/quashed in similar termsi as have been passed by this High Court in the case of Kankanala Ruvindra Reddy (1 supra)' There shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed Sd/. A.H.S. GOWRI SHANKAR ASSISTANT REGISTRAR //TRUE COPY// SE N OFFICER iant< HyOeratrad, Telangpna' 500004 r-.. , r ,. ,n"o." Tax C'fficer, Ward 4('l I Hyderabad lT Towers' AC Guards' Masab " 2. The Principat commilsi6fier of lncome Tax - l' Hyderabad lT Towers' Masab - i;;i, livd'eraoad, Telansana - 500004 1l rhe Nationar rr""r"iJitl'llt|.iJft"6"ntt"' lncome Tax Department Ministry " oi FinJn"" Govt. of lndia' New Delhi' 4. The Secret"nl, unio,1"oiinii', rvfi"itil.v of Finance 166-8 North Block' New . H'J'iJi3 3l{l PAVAN KUMAR RAo, Advo-ca.te Lq?.ucl 6. one cc to M/s. BOKxiio'si-piu neooV-.tr. sc FoR INCOME TAX z. b",i""c"i to SRI B.MUKHERJEE, SC FoR CENTRAL GOVT loPUCl B. Two CD CoPres "o.*rrALLy TOPUCI PSK. PVL YV HIGH COURT DATED:2810412025 ORDER WP.No.753 of 2025 ,/-- i':, ': 3 l) ) '1. . i i1l- li i-.it r4: () 29AIJEM I +t * i:-5r. I '',i i::_ _:_-_:; ALLOWING THE WRIT PETITION WITHOUT COSTS 10 *64 *4" <-) r'