Courts i.e., by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD v. ASSISTANT CONIMISSIONER OF INCOME TAX OTHERS

GDEB' (per Hon'ble Sri Jusrice P.Sam Koshy) Heard Mr. A.V.Raghu Ram, leamed counsel for the petitioner and Ms. J.Sunitha, leamed Junior Standing Counsel for the Income Tax Department for the respondents. 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 148.{ of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Officer, whereas in terms of the amendment that was brought to the Income Tax Act by way .,

5. Down the line, we find that the same issue has also been decided against the Revenue by vanous Higr Courts i.e., by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT CONIMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Crurt in the case of RAM NARAYAN SAH vs. UNION OF INDL\r, Punjab and Haryana High Court in the case of JATINDER SII{GH BANGU vs. UNION OF INDIA4, and Telangana High Cour. 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 Courl in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICER, INTERNATIONAL TAXATION6 which is again on intemational taxation and central circle, High Court of .Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MAI\JSUKHBHAI ' 1zozt1464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauhati)l ^ l(2024) 165 taxmann.com 115 (Punjab & Haryana)l '[2024) 167 taxmann.com 4l I (Telangana)] " [2024) 166 taxmann.com 679 (Bombay)] '[2024) 165 taxmann.com 113 (Himachal Pradesh)] 4 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 decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court in the case of GIRDHAR GOPAL DALMIA VS. UNION OF INDIA & ORS (M.A.T I 690 ot 2}Z3),deciited on 25.09.2024.

6. Even though the same issue having been decided by a large number of High Courts, we are still confronted with large filing ol identical matters on daily basis ranging between 5 to l0 writ petitions. That upon the instructions being sought fiom the Department, they have been taking a solitary ground that the decision of the Bombay High Court in the case of Hexaware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy 82024 SCC Online Guj 4012 '2025 SCC Online lhar 287 'o 12023 : RI-JD :4984-DBl 5 (l supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 before thr: tlon,ble Supreme Court and the Hon'ble Supreme Court is se zed of the matter. In addition, rhere are about 1200 SLps also filed arising out ofthe same issue being decided by various High Courts.

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

8. On the one hand, even though the order rf this Court that was passed as early as on 14.09.2023 and more 16 months have lapsed, tilt date, we do not find any remedial steps having been taken by the Income Tax Department to take ap.rropriate steps to either hold back issuance of notice under Section 14gA and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concerned in the teeth of series of decisions 6 by all the major High Courts in India are continuously still initiating proceedings under Section 148A 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' g. 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), learned Standing Counsel for the Income,Tax Department contends that those would unnecessarily burden the Income Tax Department where they would be required to f,rle equal number of Sl'Ps before the Hon'ble Supreme Court and it would be further burdening the exchequer of the Union of tndia. It was also the contention of the learned 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 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 issue appropriate instructions or to take appropriate steps in ensuring that proceedings un,Jer Section l4gA of the Act as also the assessment orders under S:ction 14g of the Act are kepr in a hold in the light ofthe decisions dedcided by the various High Courts, it was submitted by the leamed Standing Counsel that the said steps can onlybe faken at tht: Ievel of CBDT as any such steps would have [o be taken pan India and cannot be Iimited to any of these jurisdictional High Courts.

10. As a result of which,"what we are facing is s eep increase of litigation day in and day out even though various or.ders have been passed by this High Court allowing writ petitions or the very same issue. The Income Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section 151,4. of the Act and as a result by now, nore than 600 to 700 petitions have been already got piled up bebre 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 Kanakt,la Ravindra Reddy (l supra), the Division Bench whire reserving rhe right of the Revenue, has also protected the interest of th: petitioners 8 insofar as the liberty which was granted to the Revenue for initiating fresh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Finance Act, 2020 and the Finance Act, 2Q2l . The petitioner assessee would be entitled to challenge or raise the other legat objections if the Revenue initiates fresh proceedings. The Department has made no endeavour in avaiting the said liberty that was reserved for the Revenue' On the contrary, they have been still sticking on to the stand, which this High Court as well as mady other High Courts already held to be bad.

11. It appears that because ofthe aforesaid liberty that this High Court had granted 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 finally 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 9 Department would get the advantage of the liberty tlLat is otherwise protected in favour of the Revenue for initiation of fiesh proceedings from the disposal of these matters at a rr uch later stage which would be advantageous and beneficial to the. Revenue and would be equally disadvantageous and detrimental sc far as interest of the assesses are concemed. As a consequence, the lncome Tax Department gets an extended period of time for init ation of fresh proceedings.

12. The alarming trend of docket explosion in this lourt, despite the clear precedent set in Kanakala Ravindra Reddy (.1 supra), is a matter of grave concem. The Income Tax Departmert,s persistent initiation of fresh proceedings, disregarding the estirblished judicial pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions piling up on the samo issue. This deliberate approach not only undermines the princip e ofjudicial precedent but also strains the judicial resources unnecessarily. The Department's strategy of awaiting the Supreme Court,l; 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 -.r- rri'}8*r 10 position. Such conduct raises serious questions about the administrative efficiency and the respect for judicial pronouncements, particularty 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 148-A,and 148 should not have been issued in a faceless manner, at least till the Hon'ble Supreme Court decide the twelve hundred (1200) odd SLPs which it is already seized ofor' 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 manner, the proceedings should have been deferred without precipitating 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, the lncome Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all 11 has to be taken, has to be taken for the whole of Irdia, and which otherwise has to be by way of a policy decision anc that too at the level of Central Board of Direct Taxes. l.hough the leamed Standing counsel for the Income Tax Department :o,tended that the Delhi High Court dismissed a writ petition of sinrilar nature, on the one hand when the High Court is struggling ro reduce its pendency, such notices which are under challeng. in this writ petition are forcing the assessee to knock the doors of this High Court resulting in filing of hindreds of new writ petirions which in the long run not only affects the disposal of the writ petitions but also consumes substantial time of the Bench in lrearing these matters again and again on daily basis. Admittedly, in spite of the matter before the Hon,ble Supreme Court having bcen taken on many occasions, the Hon'ble Supreme court which is seized of the matter has been reluctant in granting any interim prot:ction to the Income Tax Department. yet, the authorities concr:nred at the State level are not ready to accept the verdict passed by a majority of High Courts of different States on the same issue; rrnd to make things further worse, the Income Tax Department is showing audacity by issuing notices continuously under Sections l4g-A and 72 148 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 COMMISSIONE& INCOME TAXrr, 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 of Bombay held at paragraph No'25 as under, viz', : "25. Mr. Paridwalla has rightly drawn out attention 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 Court in Samp Furniture (P) Ltd' v' lTOl3 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 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'10, the Court observed that the approach of the officials of Revenue of treating decisions being "not acceptable" was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. " 11zozs; 170 taxmann.com 422 (Bombay)l '' 1t97s1 113 ITR 589 (Bombay) t3 'o llggzltaxmann.com l6155 ELT 433 (SC) TZOZ+1165 taxmann.com 581/300 Taxman452 (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 Revr:nue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctnes:, or otheruvise of their conclusion or 'of any far;tual malafides but with the fact that the officers, in reac'ring in their conclusion, by-paseed two appellate orde[s in regard to the same issue which were placed before them, one of the Collector (Appeals) and the othor of the Tribunal. The High Court has, in our view, rilthtly criticized this conducl.of the Assistant Collectors and the harassment to the assessee caused by the failure of these officerc to give effect to the orders of authorities higher to them in the appellate hierarch\/. lt cannot be too vehemently emphasized that it il; of utmost importance that, in disposing of the quasijudicial issues before them, revenue olficers are bound by the decisions of the appellate authorilies. The order of the Appellte Collector is binding on the Assistant Collectors working within his jurisdiction rnd the order of the Tribunat is binding upon the Assis ant Collectors and the Appellate Collectors who func:ion under the jurisdiction of the Tribunal. The principle; of judicial discipline require that the orders of the higher appellate authorities should be followed unreserv(rdly by the subordinate aulhorities. The mere fact that the order of the appellate authority is not "acceptable' to the department - in itself an objectionable phras'l - and is the subject mafter of an appeal can fumish no ground for not following it unless its operation has been suspended by a competent court. lf this healthy \i \i\ L4 rule is not iollowed, the resuit will only be undue harassment to assesses and chaos in administration of tax laws.

12. We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General ' that the observations made by the High Court, have been harsh on the officers. lt is clear lhat the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue mafters which, if allowed to become widgFPread, could result in considerable haiassment to the assesses-public without any benefit to the Revenue. !{e would like to say that the department should take these observations in the proper 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 appeliate authorities to the requiremenls 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 is being made whole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the Income Tax Department being violative of the 0 15 Finance Act, 2020 and Finance Act,2021.. Now,. in rtrder 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 pctition with an observation/direction that the disposal ofthe instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (l .supra) shall however be subject to the outcome of the SLPs which were filed by th,: Income Tax Department and which is pending consideration before the Hon,ble Supreme Court.

16. In the given facts and circumstances, this B,:nch is of the considered opinion that unless and until we do not rimely 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 concenred, we are of the considered opinion that the interest of the Revemre has already been considered and protected, as has been observed in paragraphs t5 36,37 and 38 ofthe order which, for ready reference, is reproduced hereunder:

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent- Department is neither tenable, nor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are accordingly set aside/quashed. As a oonsequence, all the impugned orders getting quashed, the consequential orders passed by the respondent-Department pursuanl to the notices issued under Section 147 and 148 would also get quashed and it is.grdered accordingly. The reason we are quashing the consequential order is on the principles that when ths initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically.

37. The preliminary objection 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 getting quashed on the point of jurisdiction, we are not inclined to proceed further and decide the other issues raised by the petitioner which stands reserved to be raised and contended in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in the 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 under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right -2- t I t7 conferred on the Revenue would remain reserved to proceed further if they so want from the :;tage of the order of the Supreme Court in the cas e of Ashish Agarwal, supra.

18. We would only further like to make obse 1/ations 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.Tax Department, we rnake it clear that allowing oI the instgnt 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 Ravindra Reddy (l supra). This, in other words, would mean that either of ttLe parties, if they so want, may move an appropriate petition seekirLg revival of this writ petition in the light of the decision of the tton,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 ol jurisdiction is concerned. As a consequence, the impugnerl notice under challenge under Sections 148-A and l4g stands sei aside/quashed. I I 18 The consequential orders, if any, also stand set aside/quashed in similar terms as have been passed by this High Court in the case of Kankanala Ravindra Retldy (l supra)' There shall be no order as to costs. Consequently, miscellaneous petitions pending, if any' shatl stand closed //rRuE coPY/' SD/.A. PRATHIMA DEPUTY REGISTRAR "6Kott't=* n-siln*r-g.m$,siffi:+#*;:" Two CD CoPies \v To 1 2 J 4 E PSK, GJP HIGH COURT DATED:2810412025 L ORDER WP.No.1561 of 2025 -,-:a=.' : r i-i 5 .l .1' )r 1 0 sEP 2025 ,,-.. \..,! i' ALLOWING THE WRIT PETITION WITHOUT COSTS A- V 7)