High Court · 2025

petition under section 15.1 cpc praying. that in the circumstances stated in ' the affidavit fired in support of the writ petiiion", ,i" H,gn court may be pieased to stay alr further proceedings, incruding stay of corection of demand raised pursuant to the order passed by the _lst Respondent u/s. 147 r.w.s. 144 r.w.s 1 448 of the Act, dt. 1 0.0.1 .2025 f or the Ay.2OZO_ZI. Counsel for the petitioner : SRI A.V.RAGHU RAM Counsel for the Respond ents: Ms,J.SUN|THA (JR.SC FOR TNCOME TAX) The Court made the following: ORDER TT{E HONOURABLE SRI JUSTICE P'SAM KOSHY AND THE HONOURABLE SNT TUSTTCE NARSING RAO NAIIDIKONDA WRIT P TITION No. 2407 0 2025 E F ORDER, (per Hon'ble Sri Justice P'Sam Koshy) Heard Mr. A.V'Raghu Ram' leamed counsel for the petitioner and Ms. J'sunitha' leamed Junior Standing Counsel for Perused the the lncome Tax Department for the respondents' record

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section l48A andl4SoftheIncomeTaxAct,lg6l(forshort.theAct,)orthe assessmentordersthosehavebeenpassedunderSection147of the Act which have been assailed'

3. This writ petition is being taken up today only on one ol the grounds, that the notices issued under Section i48A of the Act and 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 Incorne Tax Act by way of Finance Act, 2021 w'e't-', 01'M'2021 onwards' proceedings 2 under Section l4gA ofthe Act as also under Section l4g ofthe Act ought to have also been issued and proceeded in a faceless maturer.

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 l4g of the Act not being issued in a faceless rnanner, have already been dealt with and decided by rhis Court in rhe case of KANKANALA REDDY vs. TNCOME_TAX OF,FICER, decided IVrNDRA on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section I4gA as also under Section 148 of the Act were held ro be bad with consequential reliefs on the ground of it being in violation olthe provisions of Section l5lA of the Acr read wirh Notificarion rgr2022 dated 2g.03.2022. The said judgment passed by this Court has also been subsequently followed in a large number ol writ petitions which were allowed on similar terms. '[(2023) 156 raxmann.com t7g (Telangana)] J

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 IIEXAWARE TECHNOLOGIES LTD', vs' ASSISTANT COMMISSIONER oF INCOME TAx & OTI{ERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs' UNION OF INDIAT' Punjab and Haryana High Court in the case of JATINDER SINGII BAI\GU vs. UNION OF INDIA4, and Telangana High Court in the case of SRT VENKATARAMANA REDDY PATLOOLAVS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation' Bombay High Court in the case of ABHTN ANILKUMAR SHAH VS.INCOME TAX OFFICER, 'I-AXATION6 which is again on international INTERNATIONAL taxation and centra[ circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs' INCOME TAX OFFICER?' Gujarat High Court in the case of MANSUKHBHAI ' lzoz+1464 ITR 430 (Born) 'tizOz+) 156 taxmann.com 478 (Gauhati)l " LQO24) l6i taxmann'com I l5 (Punjab & Haryana)l ' 12024) 167 taxmann.com 41 t (Telangana)l " 12024\ I 66 taxmann.com 679 ( Bombay)l - '[zOZ+l [65 taxmann.com I l] (Himachal Pradesh)l 4 DAHYABHAI RADADIYA vs. INCOME TAx OFFICER, WARD 3(3X5)E, Jharkand High Court in the case of SIfyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasrhan High Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and barch of writ peritionsro which stood decided oo 19.03.2024. Similar views have also been taken by the Division Bench of Calcurta High Court in rhe case of GIRIIHAR GOPAL DALMTA vs. UNION OF IND[A & ORS (M.A.T 1690 of 2023), decided 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 of identical matters on daily basis ranging between 5 to l0 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 which has been decided by this Court in the case of Kattakala Ravindra Reddy 8zo2q scconline Guj 4012 '2025 SCC Online Jhar 287 'o1zo23 : RI-JD:4984_ DB I 5 (1 supra) has been subjected to challenge in a Special Lear'e 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 hled arising out ofthe same issue being decided by various High Courts'

7. To a query being put to the leamed counsel for the Revenue' they have categorically accepted the fact that there is no interim order granted by the Hon'ble Supreme Court in any of these matters pending before it' Meanwhile' fresh writ petitions of identical nature are being piled 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 14'09'2023 and more 16 months have lapsed, till date' we do not hnd any remedial steps having been taken by the [ncome I'ax Deparlment to take appropriate steps to either hotd back issuance of notice under Section 148A and under Section 148 ol the Act by the jurisdictional Assessing Offrcer' rather the authorities concemed in the teeth of series of decisions -ndia are conri-riio.:: li, by all tha 'ma-io,,.,:rgh Cor:its initiating proceedings under Section I4gA of the Act and also initiating proceedings under Section l4g of the Act in contravention to ttre amendments brought into the Income Tax Act pursuant to the Finance Act,2020 as also the Finance Act20Zl. 9. Upon a query being put as to why can.t this writ petition be disposed of in the teeth of the decision rendered by this Court in the case of Ksnakala Ravindra Reddy (I supra), lear-ned Standing counsel for the Income Tax Department contends that those wourd unnecessarily burden the Income Tax Department rvhere they would be required to file equal number of SLps betbre 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 counser that no prejudice wourd be caused to the interest of the petitioners in case if this writ petition is kept pending till the finalization of the SLps pending belore 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 appropriare instructrons or to take 7 appropriate steps in ensuring that proceedings uncler Section 148A of the Act as also the assessment orders under Section 14E of the Act are kept in a hold in the light of the decisions dedcided by the various High Courts, it was submitted by the teamed 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 jurisdictionat 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 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 C ourt on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakala Ravindra Reddy (t supra). What is also surprising is the fact that though while allowing the wnt petitions in the case of Kanakala Ravindra Reddy (1 supra), the Division Bench while reserving the right of tl-r€ Rewenue, has also protected the interest of the petitioners 8 insofar as the liberty which was granted to the Revenue for initiating liesh proceedings strictry in accordance with the amended provisions of the Act, as amended by the Financ e Act, 2020 and, the Finance Act, 202r. The petitioner assessee wourd be entitred to challenge or raise the other legar objections ifthe Revenue initiates fresh proceedings. The Department has made no endeavour in availing 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 many other High Courts already held to be bad. I l' It appears that because ofthe aforesaid riberty that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one_time measure in a faceless rnanner, the Income Tax Department wants to take advantage of the same by protracting these proceedings which wourd enabre thern to meet the limitation that would otherwise come in the way. Likervise, if the writ petition is kept pending for a considerable long penod of time and finally at a later stage if the Hon,ble Supreme Couft confirms the decision taken by this High Court as also by the other High Courts in which the SLps are still pending, the [ncome 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 benehcial to the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concemed' As a consequence' the lncome 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 irt Kanakala Ravindra Reddy (l supra)' is a matter of Srave concern' The Income Tax Department's persistent initiation of fresh proceedings' disregarding the established judicial pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions piling up on the same issue' This deliberate approach not only undennines 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 ti rne and circumvent limitation periods, rather than adhering to the established legal 10 efficiency and the posrtion. Such conduct raises serious questions about the administrati ve 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 l4g should not have been issued in a faceless rnanner, at Ieast till the Hon,ble Supreme Court decide the twelve hundred (1200) odd SLps which it is already seized of or, ar least the lncome lax Department should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections l4g_A and I4g, other than in a faceless manner, the proceedings should have been deferred without precipitating the matter further intimating the assessee rhat they shall initiate appropriate proceedings only after the SLp,s are decided by the [{on'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 it at all v 17 has to be taken, has to be taken for the whole of India' and which otherwise has to be by way of a poticy 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 Court 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' Admittedty' in spite of the matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Courr 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 majority of High Courts of different States on the sal.ne issue' and to make things further worse, the Income Tax D epartr-nent is showing audacity by issuing notices continuously uncler Sections 148-A and t 12 cer whereas it ought I48 through the jurisdicrional Assessing Offi to have been oniy in the faceless manner. 14. In rhe case cf BANK OF. INDIA vs. ASSiSTANT COMMISSIONER, INCOME TAXrr, on an issue whether ir was justifiable on the part of the Income Tax Department in not following an order passed by the adjudicating authority only on the ground thar rhe appeals are pending, the Division Bench of the High Courr o| Bombay herd at paragraph No.25 as under, viz., : h "25. Mr. pai.idwaria decision oI lhis court ,n "," Godavaridevi sarafr2 as crdrnate Bench of this cou of which one of us (Justice drawn out attention to the ''nnt', issioner of lncome Tax vs' smt- arso the recent decision of the co- rt in samp Furniture (P) t-to' v' lrol3 rhe co urr cateso rica r ry "r"::":'l['J ]:,:i,]ilT:,,fl; "accepted" lhe iudgrnent of the High court wourd not mean that ti the same is set aside in a m bindrns rorce R"r",.,."e to ;:nllilll"",",li-;l;::: :ffi ; Union of lndia vs. Kamlakshi Finance Corporation Ltd.,o, the Court observed that the approach of the officials of Revenue of treating decis;ons being "not acceptable" was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. l] Itltt:,.Io raxmann...om 422 (Bombay)l rr3 trR sr{e (Bombay) --r,r ;l1]?l8J '.'_ [2024] 165 taxmann.corn " i tsszj";;,;,; ;; ,;;;;!if:#,fr' 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 conclusion or of any factual malalides but with the fact that the officers' in reaching in their conclusion, by+assed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has' in our view' rightly criticized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these offtcers to give effect to the orders of authorities higher to them in the appellate hierarchy lt cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasijudicial issues before them' revenue officers are bound by the decis'ons 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 lurisdiction of the Tribunal' The principles of .iudicial 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 th€ 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 following it unless its operation has been suspended by a competent 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. apparenfly ded to curb

12. We have dealt with thir because it has been "rr;::,::';tTl":::J Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. lt is clear that the observation s of the High Court, seemingly vehement, and unpalatable to the Revenue, are only inten a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assesses_public without any benefit to lhe 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 fuh shourd be paid by the r.,,.,"::ilt"1;#[J::Tn: appellate authorities to the disci pl ine a nd the need ", n,r"#'""#j,": ;: :::: of the higher appeltate 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 r' -etion of the Income Tax Department being violative of the 15 Finance Act, 2020 an<i Ftnance Lct'2021' Now' in order to protect the interest of the Revenue as also that ofthe 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 filed by the lncome Tax Department and which is pending consideration before the Hon'ble Suprerne Court'

16. In the given tacts and circumstances' this Bench is ol 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 fortihed by the decisions of the various other I{igh Courts on the very same issue' the pendency of this Higtt Court would further be burdened which otherwise can be decided and disposed sf35 6 ssver€d matter'

17. So lar as the interest of the Revenue is concerned' we are of the co nsidered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs :€ 36, :'i aoa _18 oi :.te.rr- -_ w'irich, ic,r ready reference, is reprod,-ic.:.: hereunder:

36. For. all the afcresaid reascns, the lrnpugned nolices issued and the proceedings drawn by the respondent_ Department is neither tenable, nor sustainable. The notices so issued and I per se iresar, deserves,"':: ::T':,:"":::::il":: aside/quashed. As a cons orders settins q uashed,,r" ;T;:"#: I:":] ::::; by the respondent_Department pursuant to the notices issued under Section 14i quashed and it is od".."d ,;:;ffT[ ,:r::r 1: are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the sut )sequent orders also gets nurified automaticary.

37. The preliminary objeclion 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 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 a7 conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of lhe Supreme Court in the case of Ashish Agarwal, supra-

18. We would onty further like to make observations that since we are inclined to dispose of the instant writ petition' coflscious of the fact that the earlier order,of this High Court in the case ol Kanakala Ravindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No'3574 of 2024' prelerred by the Income Tax Department' we make it clear that allowing of the instant writ petition is subject to outcome oe the aforesaid SLP preterred by the Revenue against the decision ofthis HighCourtinthecaseofKanakalaRavindraReddy(|supra). This, in other words, would mean that either of the parties' il they so walrt, may move an appropriate petition seeking revival o[ this writ petition in the light of the decision of the Hon'ble Supreme Court in the pending SLP on the very same issue' l9 Accordingly, the instant writ petition stands allowed in lavouroftheassesseesofarastheissueofjurisdictionis concerued. As a consequence, the impugned notice under challengcunderSectionsl48-Aandt48Standssetaside/quashed. ) 18 The consequentiai orders, if any, also stand set aside/quashed in similar terms as have been passed by this High Court in the case of Kankanaia Ravintlra Reddy (i supra). There shaii be no orcier as to costs. Consequerrtly, miscellaneous petitions pending, if any, shall stand closed. To, //TRUE COPYII .ASSISTANT SD/. L. VIJAYA LAXMI REGISTRAR SECffk;..,..* 1 The Assessment Unit. National Faceless Assessment Centre, lncome Tax Department, Minisrrv oI Finance. noo,'fVo. +O]]'ZiJ'ffoor, E_Ramp, Jawahartat Nehr-u S[adium. Dethi _ i io d03. The lncome Tax Ofricer. W Nagar, Nizamaoao - sorooSd-1' lncome Tax Office' 6-2-156t3' subhash '" " '"" 2

3. One CC to SRt A.V.RAGHU RAlVl, Advocate. [OpUC] 4. One CC to Ms.J SUN|THA. (JUt.JtOR SC FOR INCOME TAX) tOpUCl 5. Two CD Copies BSK GJP HIGH COURT DATED:2BiAq2A2S 10 sEP 20ffi '-l:. 1., l: 't ORDER WP.No.2407 of 2O2S ALLOWING THE WRIT PETITION WITHOUT COSTS +*R(ub Y<^-s i5''"-