SRl. A v. A. SIVA KART KEYA

Petition under Article 226 ot lhe Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith' the High Court may be pleased to issue a Writ of lvlandamus or any other appropriate Writ' Order or Direction, declaring that a the order u/s 148A(d) of the lncome Tax Act' 1961' dated 14.03.2024, passed by the 1st Respondent' bearing DIN and Notice No' +dxtzozz-2att062594591(1)' for the Assessment Year 2o2o - 21' ""rotriirt and b. the notice u/s 148 of the lncome Tax Act' 1961' dated 14 03'2024' issued bythe'lstRespondent,bearingDlNITBA/ASTlsl148-112023-24/1062594698(1)' respectively, for the Assessment Year 2O2o - 21' as arbitrary' illegal' bad in law' barred by time, void_ab-initio, viorative of the principres of naturar justice, apart from being violative of Articles 1+' 19(f Xg) and 265 of the Constitution of lndia and Sec 148A of the lncome Tax Act, 196.1 , and to consequen,y set aside the same in the interests of justice lA NO: 1 oF 2025 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed irr support of the petition, the High court may be pleased to stay all further proceedrngs, including any recovery, pursuant the notice u/s 14g of the lncome Tax Act, .1 1161, dated 14.03.2024, issued by the 1,t Respondent. bearing DrN r.BA/ASTrsrl4B-1t2023-24r1062594698(1) respectivery, for the Assessment Year 2020 - 21, pending disposal of the above Writ petition Counsel for the petitioner: SRl. A. V. A. SIVA KART|KEYA Counsel for the Respondents: Ms. BOKARO SAPNA REDDy (Jr. SC FOR INCOME TAX) The Court made the following: ORDER -1 a TIIE HONOURABLE SRI JUSTICE P'SAM KOSHY AND THE HONOURABLE SNT TUSTTCB NARSING RAO NANDIKONDA WRIT PETITTON No.19700F 2025 ORDER, (per Hon'ble Sri Justice Narsing Rao Nandikonda) Heard Mr' A'V'A'Siva Kartikeya' leamed counsel for the learned Junior Standing petitioner and Ms. B. SaPna ReddY' Counsel for the Income Tax Deparlment 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 shorl'the Act') or the assessment orders those have been passed under Section 147 of the Act which have been assaiied'

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 aild the subsequent initiation ofproceedings under Section 148 of the Act by the jurisdictional Assessing Offrcer' whereas in terms of the amendment that was brought to the Income Tax Act by way of Finance Lct, 2021 w'e'f', 01'04'2021 onwards' proceedings a&?{ 2 under Section I4gA of the Act as also under Section 14g of the Act ought to have also been issued and proceeded in a faceless manner

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act, 2021 i.e., the impugned n,rtices under Section l4gA and Section l4g of the Act not being issued in a faceless manner, have already been dealt with and decidecl by this Court in the case of I(ANKANALA RAVINDRA REDDY vs. INCOME_I.AX OFFICERT decided on 14.09.2023 rvhereby a batch of writ petitions were allowed and the proceedings initiated under Section 14gA as also under Section 148 of ttre Act were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section i5lA of the Act read wirh Notification lgl2L22 dated 29.03.2022. The said judgment passed by this court has also been subsequentry folrowed in a large number of writ petitions which were allowed on similar terms. 'l(2023) 156 taxmann.com l7g (Telangana)l a

5. Down the line, we find 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 TECIINOLOGIES LTD., VS. ASSISTANT COMMTSSIONER OF INCOME TAX & OTHERS2' Gauhati High Court in the case of RAM NARAYAN SAH vs' LNION OF INDIA3' Punjab and Haryana High Court in the case of JATINDER SINGI{ BANGU vs. uNION oF INDIA4, and Telangana High court in the case of SRI VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER Ol'INCOME TAX5 where the issue was in respect of interrrational taxation, Bombay High court in the case of ABHIN ANILKUMAR SHAH vs' INCOME TAX OFFICER' INTERNATIONAL TAXATION6 which is again on international taxation and central circle' High Court of Himachal Pradesh in the case of GOVIND SINGH vs' INCOME TAX OFFICER?' Gujarat High Court in the case of MANSUKIIBHAI 'lzoz+1464 ITR 430 (Bom) ' irzozil 1 56 taxmann'com 478 (Gauhati)l tY"- '' -- " [(2024) 165 taxmann.com 'i)ozql' ,fi taxmann.com 411 (Telangana)l "izoz+\ 166 taxmann.com 679 (Bombay)l 'i;i;;l iZ;;;;;; ;"'" r r 3 (H iqachar Pradesh)l I 15 (Punjab & Haryana)l I i*-rti r 4 OFFICER, DAHYABHAI RADADIYA vs. INCOME .rAX WARD 3(3X5)8, Jharkand High Courr in the case of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Courr in the case o1- SHARDA DEVI CHHAJER vs. TNCOME TAX OFFICER & ANOTIIER and barch of writ petitionsro which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Couft in the case of GIRDHAR GOPAL DALMIA vs. UNION 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 still confronted with large filing of identical matters on daily basis ranging between 5 to l0 writ petitions. That upon the instructions being sought liom the Department, lhey have been taking a solitary ground that the decision of the Bombay High Court in the case of l{exawqre Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy t2O2+ SCC online Guj 4012 ' 2025 SCC Online Jhar 2g7 'o7zo23 : RI-JD :4984-DBl n 5 (1 supra) has boen 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 frled arising out ofthe same issue being decided by various High Coutts'

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 befbre it' Meanwhile' fresh writ petitions of identical nature are being piled up before this Bench on daily basis and the pendency is getting increased on 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 find any remedial steps having been taken by the Income 1'ax Department to take appropriate steps to either hold back issuance of notice under Section 148,{ and under Section 148 of the Act by the jurisdictional Assessing Offrcer' rather the authorities concerned in the teeth of series of decisions d.r €1 6 : by all the major High courts in India are continuousry still initiating proceedings under Section 14gA of the Act and also initiating proceedings under Section 14g of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act,2O2O as also the Finance Act202l. 9' upon a query being put as to why can,t this wr.it petition be disposed of rn the teeth of the decision rendered by this Court in the case of lt-anakala 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 fire equal number of SLps before 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 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 Courl and the fact that the petitioner is already enjoying the beneht 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 7 appropriate steps in ensuring that proceedings under Section 148,{ 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 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 writ petitions on 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 1514. 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 Ravindra Reddy (l supra), the Division Bench while reseruing the right of the Revenue, has also protected the interest of the petitioners i i I I i i I I I 8 insofar as the liberty which was granted to the Revenue for initiating fr,:sh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Financ e Act,2020 and, the Finance Act,202l. The petitioner assessee 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 contrary, thev hays been still sticking on to the stand, which this High Court ar; well as many other High Courts already held to be bad.

11. It appears that because ofthe aforesaid liberty that this High Court had gra.nted permitting the Revenue for initiating tiesh proceedings as a one_time measure in a faceless rnanner, the Income Tax Department wants to take advantage of the same by protracting thesr: proceedings which would enable them to meet the limitation that would otherwise come in the way. Likewise, if the writ petition is l,:ept 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 a 9 Department would get the advantage of the liberty that is otherwrse protected in favour of the Revenue for initiation of fiesh 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 fresh proceedings.

12. The alarming trend of docket explosion in this Court' despite the clear precedent set\n Kanakala Ravinilru Reddy 1l supra)' is a matter of grave concern' The Income Tax Department's persistent initiarion of fresh proceedings, disregarding the estabtished 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 ofjudicial 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 10 position. Such conduct raises serious questions about the administratrve efficiency and the respect for judicial pronouncements, particularly when this Court has already provided a balanced ,rpproach by preserving both the Revenue,s rights and assesses interests. i3. 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 l4g should not have been issued in a l-aceless rnanrrer' at reast tiil the Hon'ble Supreme court decide the twelve hundred (1200) odd SLps which it is already seized ofor, at least the Incc,me Tax Department should have fbund out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections l4g_A and l4g, other than in a faceless manner, the proceedings shourd 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 [ncome Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all 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 learned 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 Courl resulting in filing 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 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 concerned 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; and to make things further worse, the Income Tax Department is showing continuously under Sections 148-A and audacity by lssuln .,] ,. l ! i , l i i

1.2 148 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 TAXI r, on an issue whether it was justifiable on the paft of the Income Tax Deparlment 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 tr4r. paridwara has righry drawn out attention to the decision cf this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafr2 as also the recent decision of the co_ ordinate Bench of this Court in Samp Furniture (p) Ltd. v. lTOr3 of which one of us (Justice G.S. Kulkarni) was a membel wherein the cou( categoricary 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 forr;e. Referring to the decision of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.1a, the Court observed lhat the approach of the officials of Revenue of treating de()isions being,,not acceptable', was criticized by the Supreme Oourt. ln such decision, following are the relevant observations made by the Supreme Court. I70 ra,<mann.com 422 (Bombay)l t,t,1y2}.21) '' | 19781 I l3 ITt{ 589 lBombay) " L20241 165 taxmann.com 5g l/300 Taxman 'o llgeZl taxmann.com 16/55ELT 433 (SC) 452(Bomb -_-l i '1 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 correetness 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 tnem, 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 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 iurisdiction 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 obiectionable 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 \ I I I I I I I t I i i i t! I ! i ! !l 7 L4 rule is not 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. It is clear that the observations of the High Co.rrt, seemingly vehement, and apparenfly unpalatable to the Revenue, are only intended to curb a t-.ndency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assesses-public without any beneflt 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 future and the utmost regard shoLrld be paid by the adjudicating authorities and the appr:llate 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 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 a i t I I 15 Finance Act,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 Ravindra Reddy (l supra) shall however be subject to the outcome of the SLPs which were f,rled by the Income Tax Department and which is pending consideration before the Hon'ble Supreme Court'

16. In the given tacts 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 fortitied 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 concerned' we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs 1-6 36,37 and -18 ofthe order which, for ready reference, is reproduced hereunder: 36r. For all the aforesaid reasons, the impugned notlces issued and the proceedings drawn by the respondent_ D(,partment 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 consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to lhe notices issued under Section .147 and 14g would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles thal when the initiation of the proceedings itself was procedurally wrong, lhe subsequent orders also gets null fied 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 jurisrJiction, we are not inclined to proceed further and decirje the other issues raised by the petitioner which stands reserved to be raised and contended in an appr,:priate proceedings. of Ashish Since the Hon'ble Supreme Court had, in the case Agarwal, supra, as a one{ime measure the powers under Article 142 exercising 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 77 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 fufther 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 Rsvindr(t Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No 3574 of 2024' preferred by the tncome 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 Ravindru Reddy (l sltpta)' 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 concemed. As a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed' 18 Lll The conse,quential orders, if any, also stand set aside/quashed in similar tenns as have been passed by this High Court in the case of Kankanqro. Ravindra Reddy (r supra). There shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closecl . , i To, //TRUE COPY// DEpuwsD/RtG:SlffiH / & sEcTtoN OFFICER :ffiiHfltiifiH,iJ{{:1.1$'ffi l: izi; f,?#:' B h a wa n o p p L s g:ilil: 'l . The lncome Iax Offir , :l::'y* g"1'f l'TI; & y1: %:,,' i x,'fi ts3lt 3I; il; I::;},f, j;l ",i:T,".i L ^ xiw r. r ne Principal comn . l pJ{^3,Li: {t'rx;n+iffi'F;*1fl.'e,,, Hil ff ';, :

6. Two CD Copi,:s "',1 BIV bJP HIGH COURT i DATED:28104t2025 /,:1::.:,:,]....\ -. ' JL-ii. -/a'' - -,i .:''- '1- ,: ,' /.,.1- /.': '., .-,, .:,,, '.) 2 0 sEP 2025 ,<-, \-_: ORDER WP.No.1970 of 2025 ALLOWING THE WRIT PETITION WITHOUT COSTS i I I i i I I I i I q