NKANALA RAVINDRA REDDY v. INCOME

Petition Under Article 226 of the Constitution of lndia praying that in the circumstances 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 MANDAtvIUS holding that the notice dated 22'042022 issued by 2nd Respondent under section 148 of the Act (with DIN and Notice No.|TBA/AST/S/148 112022- 23t1042826008(1) as being without iurisdiction' arbitrary' illegal' bad in law' void ab initio, apart from being violative of provisions of section 148A and section 149 of the Act and also contrary to the circular issued by GBDT and provisions of section 1 51A of the ACt, and consequenfly set aside the notice under section 148 dated 22-04.2022 and the assessment and penalty orders passed by 1st a Respondent for asst. year 2Oj5-16 under section 141 r.w.s 1448, u/s.271(1)(b) and uts.271(1)(c) of the Act, respectivety. uls.271F, I.A.NO :1 OF 2025 Petition Under Section 151 CPC praying that in the ,lrrcurnstances stated in Court xay be pleased to stay by 15{ ft6lsp6nCent for the rt of the petition, the High penalty demands raised the affidavit filed in suppo the col!ection of tax and Ay.2O1S-16. Counsel for the petitioner : SRI A.V.RAGHU RAM ,i,..ffi? loll:he Respondents : Ms. BoKARo sApNA REDDY (.rr. sc FoR The Court made the following ORDER r.'t THE TIONOURABLE SRT JUSTTCE P'SAM KOSHY ANI) THE TIONOURABLE SN TUSTTCN NARSING RAO NANDIKONDA WRIT PETITIONN o.1608 OF 2025 ORDER, (per Hon'ble Sri Justice P Sam Koshy) Heard Mr' A.V'Raghu Ram, learned counsel for the Reddy, learned Junior Standing petitloner and Ms. B.SaPna Counsel for the lncome 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 ed under Section 147 of assessment orders those have been pass 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 Act by the jurisdictional Assessing Officer' whereas in terms of the amendment that was brought to the Income Tax Act by way of Finance Act, 2021 w.e'f', 01'04'2021 onwards' proceedings 1 2 under Section l4gA ofthe Act as also under Section l4g ofthe Act ought to have also been rssued and proceederi in a taceless manner

4. The contention of the petitioner is that the issue of proceedings being in violation of the Financ e Act, 2021i.e., the impugned notices under Section l4gA and Section t4g c,f the Act not being issued in a faceless manner, have already been clealt with and decided by this Courl in rhe case of I({NKANALA RAVINDRA REDDY vs. INCOME_TA-X OFFIC,ERT decided oa 14.09.2023 whereby a batch of writ petitions wer€. allo.,ved and the proceedings initiated under Section t'4gA as also rLnder Section 148 of the Act were helcl to be bad with consequential reliefs on the ground of it being in violation of the provisions of Secrion l5lA of the Act read wirh Notification lg/2022 dated 29.03_2022. T.\e said judgment passed by this Court has also been subsequently fo,lowed in a large number of writ petitions which were ailowec on similar terms. ' [(2023) I56 taxmann.com l7g (Telangana)] 3 5 Down the line, we frnd that the same issue has also been decided against the Revenue by various High Courts t'e'' by the BombaY High Court in the case of HEXAWARE TECHNOLOGTES LTD., VS. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2' Gauhati High Court in the case of RAM NARAYAN SAII vs' UNION OF INDIA3' Punjab and Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION oF INDI#, and Telangana High Court in the case of SRT VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of intemational taxation' BombaY High Court in the case of ABIIIN ANILKUMAR SIIAH vs' INCOME TAX OFFICER' INTERNATIONAL TAXATION6 which is again on intemational taxation and central circle, High court of Himachar pradesh in the case of GOVTND SINGH vs' INCOME TAX OFFICEil' Gujarat High Court in the case of MANSUICIBHAI , yzoz+1464 trR 430 (Bom) ,i-tznzi l56 taxmann.com 478 (Gauhati)l ^i6oioi 165 taxmann com 115 (Punjab & Haryana)l 'i)oro1' te, taxmann.com 411 (Telangana)l "irozql166 taxmann.com 679 (Bombay)l . .- 'i;i;;; i ;; ;;il.;"m 1 I 3 (H imachar Pradesh)l - ..- 4 DAHYABHAI RADADIYA vs. TNCOME T,{X OFFTCER, WARD 3(3X5)8, Jharkand High Couft in rhe case of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SI{ARDA DEVI CHHAJER vs. I.\COME TAX OFFICER & ANOTHER and batch of writ petitions,0 which stood decided on 19.03.2024. Similar views have also treen taken by the Division Bench of Calcutta High Courl .n the case of GIRDITAR GOPAL DALMIA vs. UNION OF INDIh & ORS (M.A.T 1690 of 2023), decided on25.09.2024. 6. Even though the same issue having been decirled by a large number of High Courts, we are still conTronted with large filing of identical matters on daily basis ranging between 5 to 10 writ petitions. That upon the instructions being sought fi.om the Department, they have been taking a solitary gro,lnd that the decision of the Bombay High Court in the case of llexaware Technologies Ltd., (2 supra) as also the one whi<:h has been decided by this Court in the case of Kanakala Ravindra Reddy s2O24SCCOnLine Gg 4012 '2025 SCC OnLine Jhar 287 72023 : RJ_JD :a98 4_DBl I o 5 (1 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 learned 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 betbre it' Meanwhile' fresh writ petitions of identical nature are being piled up before this Bench on daily basis and the pendency is getting increased GI matter which otherwise hasalreadybeendealtanddecidedbythisveryHighCourtitself.

8. On the one hand, even though the order of this Court that was passed as early as on 14'09'2023 and more 16 months have lapsed, till date, we do not hnd any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance of notice under Section l48A and under Section 148 of the Act by the jurisdictional Assessing Offrcer' rather the authorities concemed in the teeth of series of decisions k, 6 Ul att ttre major High Cdfrrts iii rlndia are c,rntinrrously still initiating proceedings under Section 14gA of tfLe Ac;t and also initiating proceedings under Section l4g o I thr: Act in contravention to the amendments brought into the l.nconre Tax Act pursuant to the Finance Act, 2020as also the Finan<:e Act 2021 . 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 thir; Court in the case of Kanakala Ravindru Reddy (t supra), leamed Standing Counsel for the lncome Tax Department contends that those would unnecessarily burden the lncome Tax Depaftment wfrere they would be required to file equal number of SLI,s be,fols th. Hon'ble Supreme Court and it would be further burdening the exchequer of the Union of India. [t was also the contention of the leamed Standing counsel that no prejudice wourd be cause:d to the interest of the petitioners in case if this writ petition is kept.rending till the finalization of the SLps pending before the l{on,ble Supreme Court and the fact that the petitioner is already e.:tjoying 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 ro take ,,:. ,i' ing that pro;eeclings under Section 14liA approPriate steps' ln ensur of the Act as also the assessment orders under Section 148 of the Act are kept in a hold in the light ofthe decisions dedcided by the various High Courts, it was submitted by the learned 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 Coutts' l0.Asaresultofwhich,whatwearefacingissteepincreaseol litigation day in and ciay out even though various orders have been passed by this High Court allowing writ petitions on the very same issue. The Income Tax authorities concerned are still even now in 2025 alsoinitiating proceedings in contravention to the provisions of Section 151A 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 (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravindru Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners rnscfar.as, the liberty which w. _ 3ranted to tl:i_ p-;v,;nne ii,:l initiating fresh proceedings strictly in accordance i.r.ith ttLe amended provisions of the Act, as amended by the Finance: Act, 2020 and the Finance Act, 2021. The petitioner assessee would be entitled to challenge or raise the other Iegal objections if the R:ven.e initiates fresh proceedings. The Department has made n() encleavour in availing the said libefty that was reserved for the Revenue. On the contrary, they have been still sticking on to the stand, vrhich this IJigh Court as well as many other High Courts already held to be bad.

11. proceedings lt appears that because of the aforesaid libefty that this High Court had granted permitting the Revenue for initiating lresh as a one{ime measure in a faceless man ner, the Income Tax Department wants to take advantage of the same by protracting these proceedings which would enable thent to nreet the limitation that would otherwise come in the way. Lik:wise, if the writ petition is kept pending for a considerable long period rf time and finally at a later stage if the Hon,ble Supreme Court cc,nfirms the decision taken by this High Courl as also by the othe.: High Courts in which the SLps are still pending, the Income Tax 9 Department' would get the advantage of the liberty that is otlerwtse 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 concerned' As a consequence' the Income Tax Department gets an extended period of time for initiation of fresh proceedings

12. The alarming trend of docket explosion in this Court' despite the clear precedent set it Kanakala Ravindra Reddy (l supra)' is a matter of grave concern' The Income Tax Department's persistent initiation of fresh proceedings, disregarding the estabrished judicial pronouncements, has led to an unprecedented surge in litigation withover600.T00petitionspilinguponthesameissue.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 -.,. -,,:, ,,,, F.i: 70 J posrtlon. Such conduct raises serious questions about the administrative efflciency and the respect for judicial pronouncements, particularly when this Court has a.lready provided a balanced approach by preserving both the Revenue,s rights and assesses interests

13. Another aspect which needs to be considered is tha.t 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 l4g should not have ber:n isr;ued in a faceless manner, at least till the Hon,ble Supreme Cc,urt decide the twelve hundred ( I 200) odd SLps which it is already seized of or, at least the [ncome Tax Department should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections l4g_A and 14g, other than in a faceless manner, the proceedings should have beren rleferred without precipitating the matter further intimating the asses;ee 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 Income Tax Department, has not been able to give a convincing reply, except for the fact that such a decision il at all 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 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 filing of hundreds of new writ petitions which in the long run not only at'fects 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 148-4 and ' r:r ,r' -: 'f .,r ... r..x!- ,!''l*;. . t.-rgl'& ..'.r' 72 i48 thrcugh thc juris<iictional Assessing Officer rvhere,as it ought to have been only in the faceless manner. 14. In rhe case of BANK OF INDIA vs. ASSISTANT COMIWSSIONER, INCOME TAX] ,, on an issue: wheth er tt was justifiable on the part of the Income Tax Department in not following an order passed by the adjudicating author.ity 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. paridwara has righry drawn out attent on to the decision of this Court in Commissioner of lncome Tax vs. limt. Godavaridevi Sarafl2 as also the recent decision of the co_ ordinate Bench of this Cc of which one of us (rr.,,""':.:.tff:r:il:::J::::1:;^:r:: the court categoricary observed that the Revenue h,rving not "accepted,, the judgment of the High Court would not meiln that till the same is set aside in a rn2nnsr known to law, it would loose its binding force. Referring to the decision of the Supreme Cour: in Union of lndia vs. Kamlakshi Finance Corporation Ltd.14, 1:he court observed that the approach of the officiars of Revenue of treating decisions being .not acceptable,, was criticizec by the Supreme Court. ln such decision, following are the relevernt observations made by the Supreme Court. ',) t1,22311 o r,xmann.com 422 (B ombay)l .t.t '' [ 978] I I3 ITR 589 (Bombay) ','.120241 I65 taxmann.com 5gl/300 Taxman 452 (Bombay) Io ytggzl raxmann.com t6/55 ELT433 (SC) i I I I t t3 "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 hvo 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 Sisposing 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 department - in itself an objectionable phrase - and is the subiect mafter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court' lf this healthy 14 rule is nof followed, the result 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 that th( ootut't'ons of the High court, seemingry ,"nu' ' and apparently unpalatable to the Revenue a tendency in revenue ,,"[: "J.'Jt:iTil:,:': become widespread, could result in considerable harassment to the assesses_public without any bernefit to the Revenue. We 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 futu shoutd be paid by the r.,r.,:r:,ilt lil:[J::"oon: appellate authorities to the J:"T:#""i:;::::: disciprine and the need ",. of the higher appellate authorities which are binding on them." 15' what is worrying this Bench more is the lact lhat an endeavour is being made whole heartedly to ensure nol. 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 15 Finance Lct,2020and 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 Ruvind'ru Reddy (l supra) shall however be subject to the outcome of the SLPs which were hled by the Income Tax Department and which is pending consideration before the Hon'ble Supreme Coun.

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 ofas a covered matter' l'7. So far as the interest of the Revenue is concemed' we are ol the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs ;r 16 ,,..at' 36,37 and 38 ofthe order which, for ready referen,:e, rs reproduced hereunder: "no ,tunuo'"'

36. For all the aforesaid re issued and tn" p,oc""oinss":TljT, TJi::ilH": Department is neither nor sustainarrre. The notices so issued perseillegal,deserves.oheProcedureadop[edbeing and are accordingly set aside/quashed. o. a o'"n"u' all the irnpugred orders getting quashed, ,n" . bytheresponde",-r"ornr""rlo"rorlr#:";:tff ::: issued under Section 147 quashed and * is ".o",."o r.1lorolff;Tl .:"::.:,: are quashing the consequential order is on the principlos that when the initiation of fl itself wers procedurary wrong, the sequent orders als;o ge:s nulified automaticary. "o""".'ngs "rolu "ona.o"

37. The preliminary objection raised by the petitioner is sustained and a, these writ petitions stands arovr'ed on this very jurisdictional issue_ Since the impugned noticet; and orders are gefting quashed on the point o.. jurisdiction, we are not inclined to proceed further and decide lhe other issues raised by the petitioner which stands reserved to be raised and contended n an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one{ime measure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed under tfre substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right conferred on the Revenue wculd 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 obseruations 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 KanakalaRavind'raReddy(lsupra)issubjectedtochallenge before the Hon'ble Supreme Court in SLP No'3574 of 2024' preferred by the Income Tax Department' we make it clear that allowing of the instant writ petition is subj ect to outcome of the aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravinclra Reddy (l stryta)' 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 is concerned. As. a consequence, the impugned notice under challengeunderSectionsl48-Aandl48standssetaside/quashed. , ; 'I ; t The conseouential cri:is, ir. a_i, . sc stand set trsicieiquashe , ;- similar terms as have been passed by this High Court in the case of Kunkanala Ravindra Reddy (1 supra). There shall be no order as to costs Consequently, miscellaneous petitions pending, if any, shall stand closed IITRIJE COPYII "it.i s ff lx1.,AP6, s,.Ri{ i-f ;pffi;g*,',,#f#ril. To 1 2 J- 4.

5. SA TKS PMc, , i rr:-- S l..r .. .:i\., ,21' ' to' I 20 5[P ilffi c|^" t/. \\'i. i r i I I I I I I I t ! HIGH COURT DATED:2810412025 ORDER WP.No.1608 of 2025 ((^. 6 \+\,r ALLOWING THE W.P WITHOUT COSTS.