Satyajit Biswas v. Assessment Unit

Heard Mr. A.Kiran Manohar, leamed counsel for the petitioner and Ms. J.Sunitha, leamed Junior Standing Counsel flor the Income Tax Department for the respondents. Perused the record.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section l48A and 148 of the Income Tax Act, 1961 (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 taken up today only on one of the grounds, that the notices issued under Section l48A ol the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Officer, whereas in terms of the amendmetrt that was brought to the lncome Tax Act by way of Finance Act,2O2l w.e.f., 01.04.2021 onwards, proceedings 2 under Section l48A ofthe Act as also undei Section 148 ofthe 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 notices under Section 1484' and Section 148 of the Act not being issued in a faceless manner, have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICER' decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section 1484. as also under Section 148 of the Act were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section 151A of the Act read with Notification 1812022 dated29.03.2022. The satd judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were allowed on similar '[(2023) [56 taxmann.com 178 (Telangana)] { 3

5. Down the line, we find that the ssme issue tras also been decided against the ReveRue by various High C)ourts i.e., by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTIIERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UMON OF INDIA3, punjab and Haryana High Court in the case of JATINDER STNGH BANGU vs. UNION OF II\DIA4, and Telangana High Court in the case of SRT VENKATARAMANA REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAX5 where rhe issue was in respect of international taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH vs.INCoME TAx OFFICER, INTERNATIONAL TAXATIOIt' which is again on inremational 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 MANSUKHBHAI 2 lzoz+7464 ITR 430 (Bom) '[(2024) 156 raxmann.com 478 (Gauhati)] " l(2024) 165 taxmann.com I l5 (punjab & Haryana)l ' [2024) 167 taxmann.com 4lI (Telangana)] " [2024) 166 raxmann.com 679 @ombay)] ' 12024) I 65 taxmann.com I I 3 (Himachai pradesh)l 4 a' DAIfYABHAI RADADIYA VS. INCOME TAX OFFICER, WARD 3(3X5)s, Jharkand High Court in the case of SIfYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs' INCOME TAX OFFICER & ANOTHER and batch of writ petitionsro 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 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 alarge number of High Courts, we are still confionted with large filing of identical matters on daily basis ranging between 5 to 10 writ petitions. That upon the instructions being sought from the Department, they have been taking a solitary ground that the decision o t the Bombay High Court in the case of Hqaware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy t20zq scc online Guj 4012 '2025 SCC Online Jhar 287 '012023 : RJ-JD:4984-DBl { ( ) 5 il supral has been subjecte<l to challenge in.a Spocial L,eave Petition i.e., SLp No.l574 of 2024 before the Hon,ble Supreme Court and the Hon,ble Supreme Court is seized of the matter. In addition, there are about 1200 SLps also filed arising out ofthe same issue being decided by various High Courts. 7 - To a query being put to the leamed counsel for the Revenue, they have categoricaily 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 14.09.2U23 and more 16 months have lapsed, till date, we do not find any remedial steps having been taken by the Income Tax Department to take appropnate steps ro either hold back issuance of notice under Section l4gA and under Section 148 of rhe Acr by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions _) a' by all the major Eigh Ccurt; ;rt :ndia are continrrously sti-ii initiating proceedings under Section 148,{ of the 'Act and also initiating proceedings under Section 148 of the Act in contravention to the amendments brought into the Income Tax Ait pursuant to the Finance Act, 2020 as also the Finance Lct 2021 ' g. 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 Kanakala Ravindra Reddy (1 supra), leamed Standing 'l'ax Department contends that those would Counsel for the Income unnecessarily burden the [ncome Tax Department where they would be required to hle equat number of SLPs before the Hon'ble Supreme Court and it woutd be further burdening the exchequer of the Union of tndia' 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 tillthefinalizationofthesLPspendingbeforetheHon,ble Supreme Court and the lact that the petitioner is already enj oytog the benefit of interim protection' Nonetheless' on the earlier query of this Court as to why the Income Tax Departrnent have not come out with a mechanism to issue appropriate instructiols or to take e*., ] appropriate step$ in cnsuring that proceodings under Soction l48A of the Act as also the assessment orders under Soction 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 leamed 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 t 5 I A 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 ol this Court in the case of Kanakala Rafindra Reddy (l 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 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 with the amended provisions of the Act, as amended by the Finance Acl,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, 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.

11. It appears that because of the aforesaid liberty that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a faceless manner, the Income Tax Department wants to take advantage of the same by protracting these proceedings which would enable them to meet the limitation that would otherwise come in the way. I-ikewise, if the writ petition is kept pending for a considerable tong 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 i 9 Depsrtmcnt would get the atlvanlage o{'the liberty that is othErwise protected in favour of the Revenue for initiation of fresb 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 setin Kanakala Ravindra Reddy (l supra), is a matter of grave concem. The Income Tax Departmenth persistent initiation of fresh proceedings, disregarding the established judicial pronouncements, has led to an unprecedented surge io litigation with over 600-700 petitions piling up on the same issue. This deliberate approach not only undermines the principle of judicial precedent but also strains the judicial resources unnec€ssarily. 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 tinre and circumvent limitation periods, rather than adhering to the established legal J ( pciliicr. Suuir -otrduct raises serious questions about the administrative effrciency and the 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 148-4. and 148 should not have been issued in a faceless manner, at least till the Hon'ble Supreme Court decide the twelve hundred (1200) odd SLPs which it is already seized ofor, at least the Income Tax Department should have lound out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-.4 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 Court on the very same issue. This again, the Ineome 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 takeu fbr rhe wholc of. lnclia, and whrch otherwisehas to be by way of aporicy decision and that too at the level of Central Board of Direct Taxes. Though the learoed 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 wtrich are under challenge in this writ petition are forcing the assessee to knock the doors of this High court resulting in firing 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. Admiffedly, in spite of the matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the matter has been reluctant in granting any interim protection to the Income Tax Department. yet, the authorities concemed at the State level are not ready to accept the verdict passed by a 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 l4g_A and 12 148 through the jurisdictional Assessing Offrcer whereas it ought to have been only in the faceless manner'

14. In the case of BANK OF INDIA vs' ASSISTANT COMMISSIONE& INCOME TAXIr' on an issue whether it was justifiable on the part of the Income Tax Department 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. Mr. Paridwalla has rightly drawn out attention to the decision of 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' lTO13 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 mean that till the same is set aside in a manner known to law' it would loose its binding force. Refening to the decision of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd'14 the Court observed that the approach of the officials 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 t' lt2)25) 170 taxmann.com 422 (Bombay)l '' tiqzsl l13lrR 589 (BombaY) "izoz+\ 165 taxmann.com 581/300 Taxmat452 (Bornbay) 't 1t9921 taxmann.com 16155ELT 433 (SC) V 13 "6- Srl Reddy ic perhapa rigrrt in salng thEt the ofllcere wore nol sctuated by any mats 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 overtooks is that we are not @ncerned 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 tro 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 quasijudicial issues before them, revenue officers are bound by the decisions of the appeflate authorities. The order of the Appellte Coflector is binding on the Assis{ant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunat. The principtes of judicial discipline require that the orders of the higher appellate authorities should be fo owed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not ,,acceptabte', the department - in itself an objectionable phrase _ and is the subject matter of an appeal can furnish no ground lcr 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.

12. We have dealt with this aspect at some length, because it has been suggested by the leamed Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. lt is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assessesgublic without any benef'it 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 should be paid by the adjudicating authorities and the appellate authorities to the requirements of iudicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." I 5. 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 nurnber of lJigh Courts all of whom have taken a consistent stand that the action of the Incorne Tax Department being violative of the 15 Finance Act, 2020 and Finance Act, 202 l. Now, in ordcr to prorect the interest of the Revenue as also that olthe assessee, it would be trite at this juncture, if u,e dispose of the writ petition with an observationy'diroction 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 outcorne 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 concerned, we are of the considered opinion that the interest o f the Revenue has already been considered and protected, as has been observed in paragraphs \ t6 36,37 and 38 of the order which, 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 sel 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 Aganval, 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 i' i I I t7 conferred on the Revenue would rernain r€served proceed furttEr if they so want from the stage of the order of the Supreme Court in the case of Ashish Aganral, supra.

18. We would only 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'ble Supreme Court in SLP No.3574 of 2024, prefened by the Income Tax Deparhnent, 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 Kanakala 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 petition stands allowed 1n favour of the assessee so far as the issue of jurisdiction is concerned. As a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed { ( 18 Rr' The consequential orders, if any, also stand set aside/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. To, //TRUE COPY// D/. L. VIJAYA LAXMI S TANT REGISTRAR SECTION OFFICER

1. The AssgssnEn! Ult, lncome Tax Department, Centre, New Dethi. Room No. 401, 2ni, Floor, E Stadium, New Delhi-1 '10003 nal e-Assessment N -Ramp, Jawaharlal Nehru

2. The lncome Tax Officer, Ward-1 , Manchiriyal, Telangana_S042Og 3. The Principal Chief Commis^grgler g[ lncome Tax_2, Signature Towers, P:!?,1::lc-:19.1.,". s.v,Ng 6(p). or Kondapur, s/ r.tb. s"ztF) or rotnaguoa Sentingampa y Mandal, Hyderabad _ 5000g4, T6langana 4. One CC to SRt A.KtRAN MANOHAR, Advocate. tOpUCI 5. One CC to tt/s J.SUN|THA (Jr. SC FOR TNCOME TAX) tOpUCl 6 Two CD Copies o BSK GJP HIGH COURT DATED:2810412025 ORDER WP.No.3595 of 2025 ./a J .) ALLOWING THE WRIT PETITION WITHOUT COSTS Yz I 1HE srA /4: F( o 26 llc E z * o€Sr'^rClie o ,+ ((\(