High Court · 2025

THE HONOURABLE SRI 'TUSTilEDUNESING wRlTPETITI ON NO:1 098 0F2 o25 u"*"-";;",",sa Rao potnuru,-S/o y,'ll'[fi"ifi3iJ,"$T[iitfi$.3?3'LiittU33!'i nC"pp"OS:i f O, A.Y.2O2O-21 ...PETITIONER o-ccuoation. Business' rvu iELANoANe' tno'' AND Stadium, Basheer ;5g;r*ii$$#5ifrqiriqHHi;;ii:="':::'"i:;,"r: Petition under Article 226 of ihe Constituticn of lndia praying that in the cii'cumstances stated in the affidavit filed therewith' the High Court may be pleased to pass an order or direction' especially one in the nature of WRIT OF MANDAM,' hording that the notice issued by the 2nd Respondent u/s '148 of the Act, dt- 3o'03 202+ witn Otr'r No- ITBA/AST l}ll48 1t2O23'24t1O63677158(1 Ay- 2O2O-21' as arbitrary' illegal' baC in law' void ab initio' violation of principles of of lndia, apart from being violative of provisions of section '148A and section 149 of the lncorne Tax Act and also contrary to the circular issued by CBDT and provisions of sect'on 1 51 A of the Act' and consequently set aside the order passed by 2nd Respondent u/s 148 of the Act' dt. 30 03'2024 with DIN No- ITBA/AST/S/14 8 1t2[23-24fi063677158(1) for the Av' 2O2O-21 and all consequential proceedings pursuant thereto' naturaljusticeapartfromviolativeofArticlesl4'19(1)(g)and265ofconstituticn )for the IA NO 10F 20 25 petition under Secl m:ti* :: *i T : :, t :ff i;:,# Jt i : Jr ; "ilj ::::: ;,,: ::l; the 2nd Respondent ,r'S't ''r'r:"'^,.."t:-'"'r._ pursuant to the order passed by .- ,a., ur rne Act, dt. 30.O3.2024 with DIN 3-24/1063677158(1) for the Ay.2O2O_21 No.ITBA/AST/Sl148 1t202. . Counset for the petitionc co u n s e r r". ir," ir counser rcr the Respono.n, ruo.r, ;;t"{[ilvEEN The court rnade the foilowing: oRDER pJ#:.: ft :ljlt[? :ifl,.ffilllyA KU MAR ". KUMAR Dv- solrcrroR IEDDY' JUNIoR sc FoR rrD THE HONOURABLE SRI JUSTTCE P'SAM KOSHY AND THE HoNouRABLE sni JusrrcE NARSING RAo NANDTKONDA WRIT PETITION No .1098 0F 2025 ORDER, (per tlon'ble Sri JLtstice Narsing Rao Nandikonda) Heard Mr. Thanneru ChaitanYa Kumar' leamed counsel for the petitioner and Ms' B' Sapna Reddy' learned Junior Standing Counsel for the lncome Tax Department for the respondents' Perused the record' 2 Thisisawritpetitionwheretheproceedingsareeither challenged to the nottces which were issued under Section 1484 andl4SofthelncomeTaxAct'1961(forshort'theAct')orthe 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 148A of the Act and the subsequent initiation ofproceedings under Section 148 of the Actrby the jurisdictional Assessing officer, whereas in terms of the amendment that rvas brought to the Income Tax Act by way of Finance Act, 2021 w'e'f', 0l '04'2OZl onwards' proceedings under Section l4gA of rhe Act as also uncler Section I 4g of the Act ought to have also been issued ancl proceeded in a faceless manner. 4' The contention o[ the petirioner is that the issue of proceedings being in violation of the Financ e Act, 2021 i.e., the impugned notices under Section i4gA and Section I4g of the Act not being issued in a faceless manner, have 2lrs2dy been dealt with and decided by this Court in rhe case of KANKANALA RAVINDRA REDDY vs. INCOME_TAX OFFICERT decided on 14.09.2023 whereby a batch of w.rit petitions were allowed and the proceedings initiated under Section l4gA as arso under Section 148 of the Act were held to be bad rvith consequential reliefs on the ground of it being in violation of the pror.isions of Section 15lA of the Act read with Notification lg/2022 datcd 29.03.2022. The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were allowed on similar '[Q023) 156 taxmann.corn I 7g (Telangana)] 3

5. Down the line. wc 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 IIEXAWARE TECHNOLOGIES L'l'D', vs' ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2' Gauhati 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 INDIAT, and Telangana High court in the case of SRI VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation' Bombay High Court in the case of ABHIN ANILKUMAR SttAH vs' INCOME TAX OFFICER' 'l'AXATION6 which is again on international INTERNATIONAL taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs' INCOME TAX OFFICEFf' Gujarat High Court in the case of MAI\SUKIIBHAI 'lzoz+1464 ITR 430 (Bom) ' iQOZil I 56 taxrnann.com 478 (Gauhati)l ^l(2024) 165 taxmann'com I l5 (Punjab & Haryana)l '12024) 167 taxIllaq4.com 4l I (Tetangana)l "12024) I66 taxmann.com 679 (B.ombay)l^ r-^L\r ']ZOZ+) 165 taxmann.com ll3 (Himachal Pradesh)l 4 DAHYABTIAT RADADTYA vs. TNCoMU TAx OFFTCER, WARD 3(3XS)8, Jharkand High Court in the case of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasrhan High Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of wrir petirionsr0 which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court in rhe case of CIPJ)IIiAR GOpAr, DALivIiA vs. UiriOFi OF iNDiA & ORS (M.A.T 1690 of 2023), decided on25.09.2024. 6. Even though the same issue having been decided by a large number of High Courts, we are stil[ confronted rvith large filing of identical matters on daily basis ranging betrveen 5 to I 0 writ petitions. That upon the instructions being sought from the Department, they have been taking a solitary ground that the decision of the Bombay High Court in the case of Hexaware Technologies Ltd., (Z supra) as also the one w.hich has been decided by this Court in the case of Kanakala Ravindra Reddy 8202q scconline Guj 4012 '2025 SCC Online Jhar2BT 12023 : RI-JD :4984_D Bl , o 5 (1 supra) has been subjected to chatlenge in a Special Leave Petition i.e., SLP No'3574 ol Z(i,'4 before the Hon'ble Supreme Court and the Hon'ble Supreme Court is seized of the matter' In addition, there are about I 200 SLPs also filed arising out of the same issue being decided by various High Courts'

7. To a query being put to the learned counsel for the Revenue' they have categorically accepted the flact 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 pile<i 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 on 14092023 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 steps to either hold back issuance of notice under Section 148A and under Section 148 of the Act by the jurisdictional Assessing Offrcer' rather the authorities concemed in the teeth of series of decisions 6 by all rhe major High Courts in India are continuously still rnrtrating proceedings under Section l4gA of the Act and also initiating proceedings under Section l4g 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 u,rit petirion be disposed of in the teeth of the decision rendered by this Court in the case of Kanakala Ravindra Reddy (I supra), learned 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 befbre the Hon'ble Supreme Court 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 ro 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 of interim protection. Nonetheless, on the earlier query of this court as to why the Income Tax Department have not come out with a mechanism to rssue appropriate instructions or to take appropriate steps in ensuring that proceedings under Section 148,4 of the Act as also the assessment orders under Section 148 of the Act are, kept in a hold in the tight 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 tndia 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 out even though various orders have been passed by this High Court allowing rvrit petitions on the very same 'l'ax authorities concemed are stitl even now in issue. The Income 2025 alsoinitiating proceedings in contravention to the provisions of Section 151A of the Act and as a resutt by now' more than 600 to 700 petitions have been already got piled up belore this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakala Ravindra Reddy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Ksnakala Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners 8 rnsofar as the iiberty which was granted to the Revenue for tnrtrating fresh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Financ e Act, 2020 and the Finance Act, 2021. The petitioner assess@ would be entitled to challenge or raise the other legal objections if the Revenue initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was reserved for the Revenue. On the contiary-, they have been stili stici<ing on to the stand, which this High Court as well as many other High Courts already helci to be II It appears that because ofthe aforesaid liberty thar this High Court had granted peunitting the Revenue for initiaring fi-esh 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 wourd enabre them to meet the Iimitation that would otherwise come in the way. Likewise. if the rvrit petition is kept pending for a considerable long period of time and finally at a later stage if the Hon,ble Supreme Court confirms the decision raken by this High Court as also by the other High Courts in which the SLps are still pending, the Income Tax 9 Department would get the advantage of the liberty that is otherwtse 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 benehciat 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 fiesh proceedings.

12. The alarming trend of docket explosion in this Court' desptte the clear precedent setin Kanakala Ravindra Reddy {l supra)' is a matter of grave concem' 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 ol judicial precedent but also strains the judicial resources unnecessarily' The Departnrent'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 timitation periods, rather than adhering to the estabtished legal 10 administrative efficiency and the posltlon. Such conduct raises serious questions about the respect for judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revenue,s rights and assesses interests. 13 Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Department itself and should have found out via media in ensuring that proceedings under Sections l4g_A and 14g should not have been issued in a laceless manner, at least till the Hon,ble Supreme Court decide the twelve hundred ( 1200) odd SLps which it is already seized of or, ar ieast the income Tax Department should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 14g_A and l4g, other than in a laceless manner, the proceedings shourd have been dererred rvithout precipitating the matter further intimating the assessee that they shalt initiare appropriate proceedings onry after the SLp,s are decided by the Hon,ble Supreme Court on the very same issue. This again, the lncome Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at alt 11 has 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 Ievel of Central Board of Direct Taxes' Though the learued 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 hundreds 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 ol the matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized ol the matterhasbeenreluctantingrantinganyinterimprotectiontothe Income Tax Department' Yet' the authorities concemed at the State tevel are not ready to accept the verdict passed by a majority 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 72 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner. 14. [n rhe case of BANK OF INDIA vs. ASSISTANT COMMISSTONER, INCOME TAXil, on an issue whether it was justifiable on the part of the lncome Tax Department in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division Bench of the High court orBombay herd at paragraph No.25 as under, viz., : "25' Mr' paridwara has righry drawn out aftention to the decision of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co_ ordinate Bench of this Cour of wh ch one of us,r,.,,." I1.i.,?1,:il:::J:i:::,Iil:" the Court categorically observed that the Revenue having not "accepted" the judgment of the High Court would not mean that till the same is set aside in a manner known to law, it would loose its binding force. Referring to the decision of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.r4, the Courl observed that the approach of the officials of Revenue of treating decisions being "not acceptable" was criticized by the Supreme Court. in such oecision, tbllowing are the relevant observations made by the Supreme Court. ij l1r"g1?,,,t f:rnann.com a22 (Bombay)l '' | 1978] I tj ITR 589 (Bombay) t,t^7202+1 " 1l9921taxmann.com l6155 ELT 433 (SC) 165 taxrnann.corn 5g l/300 Taxman 452 (Bombay) 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 mnclus'on or of any factual malafides but with the fact that the officers' in reaching in their conclusion, by-passed tlvo 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 thern in the appellate hierarchy' lt cannot be too vehemently emphasized that it is of utmost importance that' in disposing of the quasiiudicial 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 lurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the iurisdiction 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 department - in itself an obiectionable phrase - and is the subiect matter of an appeal can furnish no ground for not foltowing it unless 'lts operation has been suspended by a oornpetent court lf this healthy 14 rule is not followed, the result will only be undue harassment to assesses and chaos in administration of tax laws. aspect at some rength,

12. We have dealt with because it has been .this Add*ionar soriciror ;l.j,tT:",t,lJ i::"ff::: made by the High Court, have been harsh on the officers. lt is clear that th oo""*u"ons of the High court, seemingry ,un]" and apparently unpalatable ,o ,n" ^"r"nr,''"n'' a tendency in revenue ;;l,l"Jll"[t]:Til::,: become widespread, could result in considerable harassment to the assesses_public without any benefit to the Revenue. We woutd like to say that the department should take these observations in the proper spirit. The obseryations of ihe High Court should be kept in mind in fut shourd be paid by the ".,,.::T;t,1il,f"'::Til: appellate authoritres to the ", n,r"#'l#"ti:;::::: disciptine and rhe need of the higher appe ate authorities which are binding on them."

15. What is worry.ing this Bench more is the fact that an en<ieavour is being macie whoie heartediy to ensure not to generate further litigation on issues which have been laid to rest by a luge number of High Courts a[[ of rvhom have taken a consistent stand that the action of the [ncome Tax Department being violative of the 15 Finance Act, 2020 and Finance Act'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 High Court in the case of Kankanala Ravindru Reddy (l supra) shall however be subject to the outcome of the SLPs which were frled by the Income Tax Departrnent 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 Coutt and which stands fortihed by the decisions of the various other High Courts on the very same issue' the pendency of this High Court would lurther be burdened which otherwise can be decided and disposed of as a covered matter'

17. So lar as the interest of the Revenue is concemed' we are of the considered opinion that the interest ofthe Revenue has already been considered and protected, as has been observed in paragraphs L6 36,37 and 38 ofthe order which, for ready reference, is reproduced hereunder:

36. For all the aforesaid re issued and tne p,oceeoinssa:TjT;T" i::il:ff: Department is neither tenable, nor sustainable. The notices so issued and fl perseillegal,deserves,o,'""o""o"uadoptedbeing and are accordingry set aside/quashed. o. u all the impugned orders getting quashed, ,nu by the respond"n.o"ornrull ff'# :";: :I:I issued under Section 141 quashed and it is ",.0",."0 """.llolfi;"rT ,:j::.1: are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automaticaiiy "o'unt"' "onr.o"

37. The preliminary otrjection raised by the petitioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are gefting quashed on the point of jurisdiction, we are not inclined lo proceed further and decide the other issues raised by the petitioner which stands rese!.ved to be r-aised and contended in an appropriate proceedings. 38 of Ashish exercising Since the Hon'ble Supreme Court had, in the case Agarwal, supra, as a one-time measure the powers under Article 142 of the tution of lndia, permitted the Revenue to proceed the substituted provisions, and this Court allowing petitions only on the procedural flaw, the right Consti 17 conferred on the Revenue vr'ould remain reserved to proceed further if they so want from the stage of the Court in the case of Ashish order of the SuPreme Agarwal, supra. lS.Weu,oulclonly[urthcrliketomakeobservationsthatslnce we are inclined to dispose of thc instant writ petition' conscious of thefactthattl-reearlic[orderoethisHighCourlinthecaseof Kanakala Ravindra Reddl' ( supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No'3574 of 2024' preierred by the tncorne Tax Depa(ment' we make it clear that altowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision ofthis High Court in the case ol Kanakala Ravindra Reddy (l supra)' This, in other words, rvould mean that either of the parties' if they so want, may move an appropriate pctition seeking revival of this writ petition in the tight o[ the decision of the Hon'ble Supreme Court in the pending SLP on the very same issue'

19. Accordingly, thc instant rvrit petition stands allowed in favour of the assessee so far as the issue of jurisdiction ls concemed. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set asiddquashed I I l'e co,scquenriai orc,:rs, il ar-ry. also staud sct asidc/quas,cr1 in simiiar tenns as have bcen passed by this lJigh Court in thc case of Kenkonala Ravinrlra Reddy (l supra). There shall [rc r.ur orrlcr.as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed. //TRUE COPY// + SD/- K. AMMAJI UTY REGISTRAR SECTION OFFICER 1 . Assessment Unit National Faceless Assessm ent tre, Department, Ministry of Finance, Room No 401 , 2nd Floo Jawaharlal Neh ru Stadium, New Delhi - 1't0 003 The Income Ta x officer, ward 12(6), Hyderabad Aaykar Bhawan. Opposite Lb Stadium, Basheer Bagh, Hyderabad, Telan gana, lndia Oae CC to SRITHANNERU CHAITANYA KUMAR, Advocate [oPUCJ One CC to SR IGADI PRAVEEN KUMAR, Dy. SOLtCiTOR G EN. OF INDIA loPUCl One CC to M/s. B SApNA REDDY, JUNTOR SC FOR rrD [OPUC] Two CD Copies Income Tax r, E-Ramp, 2 3 4 To 6 I'SK (;J P HIGH COURT DATED:2 BtO412O2S ORDER WP.No.1098 of 2O2S ALLOWING THE WRIT PETITION WITHOUT COSTS /"'<;.'\ tl t . (' ,'.,t' | 22l. MUE at' .4 (0( J, 1.: