Writ Petition No. 3349 of 2025 · The High Court · 2025

ORDER, (per Hon'ble Sri Justice P.Sam Koshy) Heard Ms. Pulipati Vandapa, leamed counsel for the petitioner, Mr. B. Mukherjee, fearned counsel representing the Union of India for respondent ]tlo. l and Ms. B.Sapna Reddy, leamed Junior Standing Counsel fq the Income Tax Department for respondent Nos.2 to 5. Perused tfre record

2. This is a writ petition where the proceedings are either chaltenged to the notices which we4e issued under Section l48A and 148 of the Income Tax Act, 196l (for short'the Act') or the assessment orders those have been passed under Section 147 of the Act which have been assailed.

3. This writ petition is being taksn up today only on one olthe grounds, that the notices issued un$er Section 148A of the Act and the subsequent initiation ofprocpedings under Section 148 of the Act by the jurisdictional Assessing Officer, whereas in terms of the amendment that was brought t0 the Income Tax Act by way 2 of F-inance Act, 2021 w.e.f., 01.04.2021 onwards, proceedings under Section l48A of the Act as also under Section l4g of the Act ought to rrave also been issued and proceeded in a faceress ma nner -

4. The contention of the petitioner is that the issue of proceedings being in violation of the Financ e Act, 2021 i.e., the impugned notices under section r4gA and Section I4g of the Act not being issued in a faceless manner, have already been dealt with and decided by rhis Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME_TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section l4gA as also under Section 148 of the Acr were held to be bad with consequential reliett on the ground of it being in violation of the provisions of Secrion 15lA of thc Acr read with Notification lgl2o2T dated29.03.2022. The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were allowed on simirar '[(2023) 156 taxmann.com l7g (Telangana)] 3

5. Down the line, we find that the same issue has also been dccided against the Revenue by vanous High Courts i.e., by the Bombay High Court in fthe case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Cauhati High Courr in the case ol RAM NARAYAN SAH vs. UNION OF INDIAT, punjab and llaryana High Court in rhe case of J.dTINDER SINGII BANGU vs. UNION OF INDIA4, and Telangana High Court in the case of SRI VENKATARAMANA REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF'INCOME TAX5 where the issue was in respect of international taxation, Bombtay High Court in the case of ABHIN ANILKUMAR SHAH VS. INCOME TAX OFFICER, INTERNATIONAL TAXATION" which is again on inlernational taxation and central circle, High Court of Himachal pradesh in the case oI GOVIND SINGH vs. INcoME TAx OFFICERT, Gujarat High Court in the case of MANSUKHBHAI '120211464 ITR 430 (Bom) ' l(2024) 156 taxmann.com 478 (Gauhati)l " [(2024) I 65 taxmann.com I l5 (punjab & Haryana)] ' [2024) I 67 taxmann.corn 4l I (Telangana)] " [2024) 166 taxmann.com 679 (Bombay)] ' 12024) 165 taxmann.com I l3 (Hirnachal pradesh)l 4 DAHYABHAI RADADIYA VS. INCOME TAX OFFICER' WARD 3(3)(5)tr, Jharkand High Court in the case of SIIYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan IIigh Court in - the case of SIIARDA DEVI CHHAJER vs. INCOME TAX OFFICFIR & ANOTHER and batch of writ petitionsr0 which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court in the case of GIRDIIAR GOPAL DAI,MIA vs. UNION OF I),IDIA & ORS (M.A.T 1690 o1'2023), decided on25.09.2024.

6. Even though the same issue having been decided by a large number o{'High Courts, we are still confronted with large filing of identical matters on daily basis ranging between 5 to l0 writ petitions. 'l'hat upon the instructions being sought from the Departrnent, they havc been taking a solitary ground that the dccision of the Bombay High Court in the case of Hexaware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy '202+ scc onLine Guj 4012 '2025 SCC Online .lhar 287 "'12023, R.t-JD :49lt4-DBl 5 (l supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 beflore the Hon'ble Supreme Court and the Hon'ble Supreme Coun is seized of the matter. In addition, there are about 1200 SLPs also filed arising out of the same issue being decided by various fligh 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 Supleme Court in any of these matters pending before it. Meanwhile, fresh writ petitions ol identical nature are being piled up before this Bench on daily basis and thc pendency is getting increased on matter which otherwise has already been dealt and decided by this very High Court itsetf.

8. On the one hand, even though the order of this Court that was passed as early as on 14.09.202p and more I 6 months have lapsed, titl date, we do not find any, remedial steps having been taken by the Income Tax Departmen{ to take appropriate steps to either hold back issuance of notice uqder Section l48A and under Section 148 of the Act by the juriqdictional Assessing Officer, rather the authorities concerned in ths teeth of series of decisions 6 by all the rnajor High Courts in India are continuously still initiating proceedings under Section l48A of the Act and also initiating procecdings under Section 148 ol the Act in contravention to tllc amendments brought into the Income Tax Act pursuant to the Finance Act,2020 as also the Finance 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 this Court in the case ol Kanakals Ravindra Reddy (l supra), learned Standing Counsel for the Ltcome Tax Department contends that those would unnecessarilv burden rhc Incorne Tax Departrnent where they would be rcquirecl to file equal number of SLps before the Hon'ble Supreme Courl and it woutd be further burdening the exchequer ol the Union of India. It rvas also the contention of the learned Standing Counsel that no prejudice would be caused to the interest of the petitioners in case ilthis writ petition is kept pending till the finalization of the SLps pending befbre the Hon,ble Supreme Court and the lact that the petitioner is already enjoying the benefit of interim protection. Nonetheless, on the earlier query of this Court as to why the Income Tax Department have not come out with a mechanism to issue appropriate instructions or to take 7 appropriate steps in ensuring that proceedings under Section l48A of the Act as also the assessment orders under Section 148 of the Act are kept in a hold in the light oflhe decisions dedcided by the various High Courts, it was submitted by the learned Standing Counscl that the said steps can only bp taken at the level of CBDT as any such steps would have to be taken Pan India and cannot be timited to any of these jurisdictional tligh Courts i

10. As a rcsult of which, what we 4re facing is steep increase of litigation day in and day out even thopgh various orders have been passed by this I'ligh Court allowing wlit petitions on the very same issue. The lncome Tax authorities concemed are still even now in 2025 also initiating proceedings in coptravention to the provisions of Section l5lA of the Act and as a rpsult by now, more than 600 to 700 petitions have been already gpt piled up before this High Court on an issue which otherwise st4nds squarely covered by the judgment of this Court in the case of Kanakala Ravindra Reddy ( I supra). What is also surprising i$ the fact that though while atlowing the writ petitions in the cpse of Kanakala Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue. 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 r'vith the amended provisions ol- the Act, as amended by the Finance Act, 2020 and the Finance Act, 2021. 'l'he pet itioner assessee would be entitled to challenge or raise the other legal objections if the Rer enue initiates fresh proceedings. The Departmcnt has made no endeavour in availing the said tiberty that rvas reserved fbr the ReveDue. On the contrary, they have been still sticking on to the stand, which this High Court as well as many other l{igh Coufts already held to be I 1. It appears that because of the aforcsaid tiberty that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a laceless manner, the Income Tax Departrnent wants to take advantage of the same by protracting these proceedings which would enable them to meet the limitation that would otherwise corne in the way. Likewise, if the writ petition is kept pending for a considerable long period of time and finally at a later stage if the Hon'blc Supreme Court confirms the decision taken by this High Courl as also by the other High Courts in which the SLPs are still pending, the Income Tax 9 Depaftment would get the advantage of the liberty that is otherwise protected in lavour of the Revenue for initiation of fresh proceedings from the disposal of these matters at a much later stage which would bc advantageous and beheficial to the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concerned. As a c6nsequence, the Income Tax Department gets an extended period of time for initiation of fresh proceedings. t2 The alarming trend of docket explosion in this Court, despite the clear precedent set in Ksnakala Rqvindra Reddy (l supra), is a matter of grave concern. The Income Tax Department's persistent initiation of fresh proceedings, disregarlding the established judicial pronouncements, has led to an unprepedented surge in litigation with over 600-700 petitions piling up on the same issue. This deliberate approach not only undermi4es the principle of judicial precedent but also strains the judicial rpsources unnecessarily. The Department's strategy of awaiting the Supreme Court's decision on pending SLPs while continuing to i initiate fresh proceedings appears to be a calculated move to , buy time and circumvent limitation periods, rather than adheri{Tg to the established legal 10 -- position. Such conduct raises serious questions about the administrative efficiency and the respect lbr 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 148-,4' and 148 should not have been issued in a faceless manner, at least till the Ilon'ble Supreme Court decide the twelve hundred (1200) odd SLPs which it is already seized of or, at least the Income Tax Department should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 148, other than in a faceless manner, the proceedings should have been deferred without precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only after the SLP's are decided by the Hon'ble Supreme Courl 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 if at all 11 has to be taken, has to be taken lor the whole of India, and which otherwise has to be by way of a pollcy decision and that too at the level of Central .Board of Direct Taxes. Though the learned Standing Counsel for the lncome T Department contended that the Delhi High Court dismissed a **t petition of simitar nature, on the one hand when the High Couft is struggling to reduce its pendency, such notices which are under challenge in this writ petition are forcing the assessee to rknock the doors of this High Couft resulting in filing of hundreds bf new writ petitions which in the long run not only aflects the disposat of the writ petitions but also consumes substantial tinre of the Bench in hearing these matters again and again on daily bas S Admittedly, in spite of the matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supremp 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 thq verdict passed by a majority of High Courts of diflerent States on the same issue; and to make things further worse, the Income lax Department IS showing audacity by issuing notices continuou ly under Sections 148-A and P 1\ 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. ASSISI'ANT COMMISSIONER, INCOME TAXrr, on an issue rvhether it was justifiable on the part of the Income 'fax Deparlrnent in not fotlowing 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. Ivlr. Paridwalla has rightly drawn out attentron to the decision of this Couri in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Court in Samp Furniture (P) Ltd. v. lTOr3 of which one of us (Justice G.S. Kulkarni) was a member, wherein the Court categorically 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 force. Referring to the decision of the Supreme Court in Union of India vs. Kamlakshi Finance Corporation Ltd.14, the Court observed that the approach of the offlcials of Revenue of treating decisions being "not acceptable" was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. (2025) 170 taxmann.corn 422 (Bombay)l 19781 113 I'lR 589 (Bombay) 20241 165 taxmann.corn 581/300 Taxman 452 (Bomhay) 19921 taxmann.com l6155 ELT 433 (SC) ,tI ,, ,o I I I 13 "6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned or(ers. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was 4ccepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here wilh 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 ltwo appellate orders in regard to the same rssue wnifh were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our vrew, rightly criticized this conduct of the ALsistant Collectors and the harassment to the assessep caused by the failure of these officgrs to give efiect to the orders of authorities higher to them in thd appellate hierarchy. lt cannot be too vehemently eJphasized that it is of utmost impo(ance that, iri disposing of the quasijudicial issues before therir, revenue officers are bound by the decisions of th( appellate authorities. The order of the Appellte Colloctor is binding on the Assistant Collectors working wif,rin his iurisdiction and the order of the Tribunal is binding upon lhe Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribpnal. The principles of judicial discipline require that thB orders of the higher appellate authorities should be unreservedly by the subordinate aulhorities. fhe mere fact that the flollowed order of the appellate authority is not "acceptable" to the department - in ilself an objectionable phrase - and is the subject matter ot an ippeal can furnish no ground for not following it unlEss its operation has been suspended by a competenl court. lf this healthy 14 -r- 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 lenllth, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh on the offrcers. lt is clear that the observations of the High Court, seemingly vehement, and apparerrtly unpalatable to the Revenue, are only inlended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assesses-public without any benefit lo 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 should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authoritres which are bindrng on them."

15. What is worrying this Bench more is the lact that an endeavour is being made whole heartedly to ensure nol to gellerate further litigation on issues which have been laid to rcst 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 Irinance Act,2020 and 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 observat ion/d irect ion that the dispospl ol'the instant writ petition in terms of the judgment rendered by [his High Court in the case ol Kankanula Ravindra Reddy (l sup4a) shall however be subject to the outcome of the SLPs which were filed by thc Income Tax Department and which is pending consideration before the Hon'ble Supreme Court.

16. ln the given facts and circunlstances, this Bench is of the considered opinion that unless and qntil we do not timcly dispose of matters which are squarely covered by the decision of this Court and which stands fortified by the (ecisions ol' the various other High Courts on the very same issup, 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 intertjst of the Revenue has already been considered and protected, as haq been observed in paragraphs 1,6 36, 37 and 38 ofthe order whrch, for ready reference, is reproduced - hereunder

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent- Department is neither tenable, nor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to the notices issued under Section 147 and 148 would also 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 automatically.

37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are getting quashed on the point of jurisdiction, we are not inclined to proceed further and decide the other issues raised by the petitioner which stands reserved to be raised and contended in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one-time measure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the nght 17 conferred on the Revenue lwould 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 observations that since we are inclined to dispose ol the in$tant writ petition, conscious oI the fact that the earlier order of t[ris High Court in the case of Kanakala Ravindra Reddy (1 supra) IS subjected to challenge before the Hon'ble Supreme Court in SLP No.i574 of 2024, preferred by the Income Tax Depaftment, we make it clear that ,l allowing of the instanl writ petiti on ls subject to outcorne of the aloresaid SLP preferred by the Revefrue against the decision of this High Court in the case of Kanakala Ravindra Reddy (1 supra) This, in other words, would mean ttiat 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 lavour of the assessee so far as the issue of jurisdiction IS concerned. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed The consequential orders, il- any, also stand set astde/quashed in similar terms as have been passed by this High Court in the case of Kankanala Ravindra Reddy (l supra). There shall be no order as - to costs Consequently, miscellaneous petitions pending, if any, shall stand closed //TRUE COPY// i SD /. M.NAGAMANI NT REGISTRAR \iE:-'-'l t..l , \ \/ue, vrnistrv of Finance, sraroN oFFicER ---a To Sansad tt,4arg, New Delhi- 1 i 0001. Temple fVain Road, KOthagudem_S07.101 .

1. The Secretary, Union of lndia, Department of Re 2. The Principal Chief Commissioner of lncome Tax 4, Telangana and Ap, - Hyderabad, lT Towers, AC Guards, IVlasab Tank, Hyderabid. 3. The lncome Tax Officer, Ward_1, Kothagudem lncome Tax Offrce, Ganesh 4 The centrar Board of Direct raxes, Department of Revenue, Ministry of Finance, Government of lndia, Secretariat Buildings, New Delhi. 5. The Assessment Unit, The National Faceless Assissment Centre,lncome Tax 6. One CC ro trrts. pULtpATt VANDANA, Advocate [OpUC] 7. ONE CC tO SRI B.IVUKHERJEE, LEARNED COdIISEI RCPRESENTING _ IHE UNION OF tND|A, Advocate [OpUC] 8. One CC to Ms. B.SAPNA REDDY, LEARfIEO lUtttOn STANDTNG 9. Two CD Copies COUNSEL FOR THE TNCOME TAX DEPARTMENT, Advocate (OPUC) Department, New Delhi. SA TK ,o ( l; L .) t) 7 ..,1: S T4; luE 206 2 1 f 51:,6i,''-' ') :L--_==t1-/ HIGH COURT DATED:2810412025 ORDER WP.No.3349 of 2025 ALLOWING THE W.P WITHOUT COSTS. \ \6 J