The High Court · 2025

" .,;::; ::l,],T:l:Hi ;,T;ffiJ,fi]"::}; the affidav t r .d direct the Department to lift the attachment and :"o '", the recoverv or demand pursuanr to the Assessnre"; ;;::^":":::l section 1 47 r twsection ;.. ;n:f ::",X f ; :::[,,:";;T:,:T;; :::T 1110312024 for Assessment year 201g-1g and direct the [)epartment to not take any coercive steps for recovery of demand Counset for the petitioner : SRt POLKAMPALLY PAVAN KUMAR RAO counser for the Respondents No'1to3: Ms.J-suNrrHA (Jr,SC FOR rNcoME TAX) Counsel for the Respondent No.4 : SRI MUKHERJEE, rep., SRI GADI PRAVEEN KIINAAR, DY.SO.GEN The Court made the foltowing: ORDER TIIE HONOURABLE SRT JUSTICE P'SAM KOSITY AND THE TIONOURABLE SNT TUSTTCN NARSING RAO NANDIKONDA WRIT PETTTION No.3l690F 2025 @EB' @er Hon'ble sri Justice P Sam Koshy) Heard Mr. Polkampalty Pavan Kumar Rao' leamed counsel for the petitioner, Ms' J'sunitha' learned Junior Standing Counsel for the Income Tax Department for respondent Nos'l to 3 and Mr. B. Mukherjee, learned counsel representing the Union of India for respondent No 4' Perused the record'

2.Thisisawritpetitionwheretheproceedingsareeither challenged to the notices which were issued under Section 148,4 andl48ofthelncome-I'axAct'1961(forshort'theAct')orthe assessmentordersthosehavebeenpassedunderSectionl4Tof 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 i48A of the Act and the subsequent initiation ol proceedings under Section 148 of the Act by the jurisdictional Assessing Offrcer' whereas in terms of the arnendment that was brought to the Income Tax Act by way ,, ,/ 2 of Finance Act, 20ZI w.e.f., 01.04.2021 onwards, proceedings under Section l4gA of the Act as also under Scctron 14g of the Act ought to have also been issued and proceeded in a faceless manner.

4. Ihe contention of the petitioner is thi t the issue of proceedings being in violation of the Financ e Att,202l i.e., the impugned notices under Section l4gA and Sectior. l4g of the Act not being issued in a faceless manner, have alreadt,been dealt with and decided by this Court in the case ol I(ANKANALA RAVTNDRA REDDY vs. INCOME_TAX OFI._ICERr rtecided on i4.09.2023 whereby a batch of writ petitions w.cr.e allow,ed and the proceedings initiated under Section l4gA as also under Section 148 of the Act were held to be bad with consequentlal reliefis on the ground of it being in violation of the provisions of Sccrion l5lA of the Acr read wirh Notification lB/2022 dated 29.03)t)22. The said judgment passed by this Court has also been subsequcnrly followed in a large number of writ petitions w,hich were allow ctj on similar terms. '[(2023) 156 taxmann. com I 78 (Telangana),1 3

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 & 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 INDIA4, and Telangana High Court in the case of SRIVENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMVISSIONER OF INCOME TAX5 where the issue was in respect of intemational taxation, Bornbay High Court in the case of ABHIN ANILKUMAR SHAH VS. INCOME TAX OFFTCER, INTERNATIONAL TAXATION6 which is again on intemational taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs' TNCOME TAX OFFICER?' Gujarat High Court in the case of MANSUKHBHAI 2 lzoz+l464 ITR 430 (Bom) ' llzOzi'1 156 taxmann.com 478 (Gauhati)l ' l(2024) 165 taxmann.com I I 5 (Punjab & Haryana)l '12024) 167 taxmann.com 4l I (Telangana)l " 12024) 166 taxmann.com 679 (Bombay)l 'iZOZqi 165 taxmann.com I I 3 (Himachal Pradesh)l ,/ ,/ 4 DAHYABHAI RADADIYA vs. INCOME I./,,X 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 CIIHAJER vs. litCOME TAX OFFICER & ANOTHER and batch of writ petirionsro which stood decided on 19.03.2024. Similar views have i,lso been taken by the Division Bench of Calcutta High Cout n the case ol GIRDHAR GOPAL DALMIA vs. UNION OF I\|)IA & ORS (M.A.T 1690 of 2023),decided on25.09.2024.

6. Even though the same issue having been dccirled by a large number of High Courts, we are still confronted with large filing of identical matters on daily basis ranging betweerr 5 to I0 writ petitions. That upon the instructions beiog sourrhr liom the Department, they have been taking a solitary ground that the decision of the Bombay High court in the case ot Hexau,are Technologies Ltd., (2 supra) as arso the one which has been decided by this Court in the case of Kanakala Ravindra Reddy sz\z+ SCcOnLine Guj 4012 '2025 SCC Online Jhar2BT o y2o 23, RJ-JD:4984-DBl ' \E/-Y 5 (1 supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 before rhe 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 lor 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 pited 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 [6 months have lapsed, till date, we do not find any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance d[ notice under Section l48A and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions 6 by all the major High Courts in India are conlinuously still initiating proceedings under Section 148A of the Act and also initiating proceedings under Section 148 of the Act in contravention 1o the amendments brought into the Inr:ome lax Act pursuant to the Finance Act,2020 as also the Financc Act202l.

9. Upon a query being put as to why can't this r..rit petition be disposed of in the teeth of the decision rendered by, this Court in the case of Kanakala Ravindra Reddy (l supra), learxed Standing Counsel lor the Income Tax Department contends tlrat rhose would unnecessarily burden the Income Tax Departmerrt wherc they would be required to file equal number of S[-['s belore the Hon'ble Supreme Court and it would be further rurdening the exchcquer of the Union of India. It was also the corrtention of the learned Standing Counsel that no prejudice would bc caused to the interest of the petitioners in case ifthis writ petition i:; kept pending till the linalization of the SLPs pending before the l{on'ble Supreme Court and the fact that the petitioner is alr.cady enjoying the benefit of interim protection. Nonetheless, on th: 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 l4gA of the Act as also the assessment orders under Section l4g 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 ofCBDT 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 titigation 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 concerned are still even now in 2025 also initiating proceedings in contravention to the provisions of Section 15lA of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before rhis High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kuakala 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 reserving the righr of the Rqvenue, has also protected the interest of the 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 .a.ct, 2020 and the Finance Act,202l. The petitioner assessee would be entitled to challenge or raise the other legal objections if the R*enue initiates fresh proceedings. The Department has made no endeavour in availing the said tiberty that was reserved for the Revenue. On the contrary, they have been still sticking on to the star.d. which this High Court as well as many other High Courts already held to be bad. I 1. It appears that because of the aforesaid libertt, that this High Court had granted permitting the Revenue for initiating lresh proceedings as a one-time measure in a faceless rnanner, the lncome Tax Department wants to take advantage o['lhe same by protracting these proceedings which would enable tht:m to meet the limitation that would otherwise come in the wav. I-ikewise. 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 (lourt confirms the decision taken by this High Court as also by lhe other High Courts in wh ich the SLPs are still pending, the lncome Tax \ 9 Department would get the advantage of the liberty that is otherwise 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 fiesh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent setirl Kanakala Ravindra Reddy (I supra), is a matter of grave 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 undermines the principle of judiciat 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 _a / 10 position. Such conduct raises serious question:r about the administrative efficiency and the respect lor judicial pronouncements, particularly when this Court has alrt:ady provided a balanced approach by preserving both the Revenue's rights and assesses lnterests. i3. Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Departnrent itself and should have found out via media in ensuring tha': proceedings under Sections 148-.4 and 148 should not have bee,n issued in a faceless manner, at least till the Hon'ble Supreme Court decide the twelve hundred (1200) odd SLPs which it is already -.eized of or, at least the Income -Iax 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 th,: assessee that they shall initiate appropriate proceedings only after the SLP's are decided by the Ilon'ble Supreme Court on the very same issue. This again, the Income Tax Department, has not beerr able to give a convincing reply, except for the fact that such a decision if at all 77 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 hling 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 audacity by issuing notices continuously under Sections 148-A and LZ 148 through the jurisdictional Assessing Offrcer whr:reas it ought to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAX1r, on an issue rvhether it was justifiable on the part of the Income Tax Departnlent in not following an order passed by the adludicating authonty 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 Tai( vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Courl in Samp Furniture (P) Lt,J. v. tTO13 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 mr:an that till the same is set aside in a manner known to iaw, it wou d loose its binding force. Referring to the decision of the Suprenre Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.14, the Cour-t observed that the approach of the officials of Flevenue 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. 'r 112025; 170 taxmann.com 422 (Bombay)l '' 119281 I l3 ITR 589 (Bombay) t'7202+1 165 taxmann.com 581/300 Taxman 452 (Bombry) 'o 1l99z1rax-mann.com l6155 ELT 433 (SC) 13 '6. Sri Reddy is perhaps right in salng 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 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, righfly 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 vehemenfly 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 jurisdiction 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 objectbnable 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 L4 rule is not followed, the result will only be unCue 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 leatned Additional Solicitor General that the observat ons made by the High Court, have been harsh on the officers. lt is clear that the observations of the lligh Court, seemingly vehement, and apparontly unpalatable to the Revenue, are only intended to :urb a tendency in revenue matters which, if alloweC to become widespread, could result in considerable harassment to the assesses-public without any benefit to the Revenue. We would like to say that the department should take these observations rn the proper spirit. The observations of the iiigh i)ourt should be kept in mind in future and the utmost regard should be paid by the adiudicating authorities and the appellate authorities to the requirements of jtrCicial discipline and the need for giving effect to the orders of the higher appellate authorities which are b nding on them." I 5. What is worry.ing this Bench more is the fact that an endeavour is being made whole heartedly to ensure tlot 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 c()nsistent stand that the action of the Income Tax Department being ,ziolative of the r ( 15 Finance Act,2020 and Finance Act,202l. Now, in orderto 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 filed by the Income Tax Department 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 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.

17. So far as the interest of the Revenue is concemed, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs \ \ 75 36,37 and 38 ofthe order which, for ready reference. is reproduced hereunder:

36. For all the aforesaid reasons, the impugneo notices issued and the proceedings drawn by the respondent- Department is neither tenable, nor sustrinable. 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 orde,-s passed by the respondent-Department pursuant to the notices issued under Section 147 and 148 would i:ll;o get quashed and it is ordered accordingly. The reason we 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 automaiically.

37. The preliminary ob.iection raised by the peti ioner is sustained and all these writ petitions stands allowed on this very iurisdictional issue. Since the impugned notices and orders are getting quashed on the poir.rt 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 contendec in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in t1e case of Ashish Agarwal, supra, as a one{ime n)easure 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, tf e right ( ( t7 conferred on the Revenu€ \rrould remain reserved to proceed further if they so want from tfrc stage of the order of the Supreme Court in the case of Ashish Aganrral, supra.

18. we would onry further 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 Ravindra Reddy (l supra) is subjected to challenge before the Hon'bte Suprerne 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 subject to outcome of the aforesaid SLP preferred by the Revenue against the decision ofthis High Court in the case of Kqnakala Ravindra Reddy (l supra). 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 pctition stands allowed in favour of the assessee so far as the issue of jurisdiction is concemed. As a consequence, the impugned notice under I I challenge under Sections [48-A and 148 stands set asidey'quashed. \ \ \ \ t I 18 The consequential' orders, if any, atso stand set asid':/quashed in similar terms as have been passed by this High Court in the case of Kankanaln Ravindra Reddy (I supra)' There shall bt: no order as to costs. Consequently, miscellaneous petitions pending, if any' shall stand closed. To, ,/TRUE COPYII r''p SD/.V.KAVITHA REGISTRAR ' \EcrloN oFFlcER 1 The lncome Tax Officer, Ward 17(1), Hyderabad Sigrtature Towers, Kondapur,.Kothaguda, Opp. Botanical Gardens, Se"Airrg a,npalty.-R. it Oistrict, Hyderabad 500084 2 The Principal-commissioner of rncome Tax - 2. Hyderarrad, signature Towers , Kondapur,_[qtlraguda, opp. Botanicat Gardens,'Seaing";aritt, i{ R oiJin=ct, Hyderabad 500084.

3. The National Faceless Ass-essment cenke, rncome Ta>r Department, Ministry of Finance, Govt. of lndia, New Delhi. Delhi - 110001 4 The Secre^tary, Union of lndia, Ministry of Finance 166_8 North Block, New 5 One CC to SRI POLKAMPALLY PAVAN KUMAR RAO, Advocate tOpUCI 6. one CC to Ms.J SUN|THA, (JUNIOR SC FOR TNCOME TAX) tOpUCl 7 . Two CD Copies. BSK GJP I i- ,-_: -1: ..- 1ii- !,. -. - -', -. ')\,. il3 srp &f z t,+ !, :) 't:a \-:\') \ \i HIGH COURT DATED:28104t2025 ORDER WP.No.3169 of 2OZs ALLOWING THE WRIT PETITION WITHOUT COSTS p{ 1 I