Padmalatha Kopalle v. 1. lncome Tax Officer

THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE IIONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA W.P.No.436 r oF 2025 ORDER' (per Hon'ble Sri Justice P'Sam Koshy) Heard Mr. Polkampally Pavan Kumar Rao' learned counsel for the petitioner and Ms' B'Sapna Reddy' learned Junior Standing Counsel for the Income Tax Department for respondent Nos.l and 2. Perused the record'

2. This is a writ petition where the proceedings are either challenged to the notices w'hich rvere issued under Section 148A and 148 of the Income lax Act, 196 I (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 148A of the Act and the subsequent initiation ofproceedings under Section 148 of the Act by the jurisdictional Assessing Olficer' whereas in terms of the amendment that was brought to the Income Tax Act by way of Finance Act, 2O2l w'e'f', 0t'04'2021 onwards' proceedings 2 under Section I48A of the Act as also under Sect;on I4g of the Act ought to have also been issued and proceedec in a faceless manller.

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 noticcs under Section l4gA and Section l4g of the Act not being issued in a faceless manner, have already lrcen dealt with and decided by this Court in the case of ftANKANALA RAVINDRA REDDY vs. INCOME_TAX OFFICER, decided on 14.09.2023 whereby a batch of writ petitions welc allou,ed :rnd the proceedings initiated under Section I4gA as arso u.der Section 148 of the Act were held to be bad with consequential relicts on the ground of it being in violation of the provisions of St,crio. r5 r A ol the Acr read n,irh Notification lg/2022 dated 29.03 .2022 .l_hc judgrnent passed by this Court has also been subsequ,:nrly tbllowed in a large number of writ petitions which were allov ecr on sirni rar terms. '[(202]) I56 raxmann.com l7g (Telangana)l ( 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 HEXAWARE 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 SRI VENKATARAMANA REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation, Bombay t{igh Court in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICER, INTERNATIONAL TAXATION6 which is again on international taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. INCOIVIE TAX OFFICERT, Gujarat High Court in the case ol MANSUKHBHAI 2 lzoz+1464 rrR 430 (Bom) ' [(2024) 156 taxmann.com 478 (Cauhati)] "l(2024) 165 taxmann.com 115 (Punjab & Haryana)l '[2024) 167 taxmann.com 4I I (Telangana)] " [2024) 166 taxmann.com 679 (Bombay)] '[2024) 165 taxmann.com I I3 (Himachal Pradesh)] 4 DAHI'ABHAI RADADIYA vs. INCOME TA): 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 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 i'r the case of GIRDHAR GOPAL DALMIA vs. UNION OF II{DIA & ORS (M.A.T 1690 of 2023), decided on25.09.2024.

6. Even though the same issue having been decided by a large number of High Courts, we are still confronted with large filing of identical mattcrs on daily basis ranging betrveen 5 to l0 writ petitions. That upon the instructions being sought frorn the Department, they have been taking a solitary glound that the decision of thc 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 tz02+ SCC Online Guj 4012 "2025 SCC Online Jhar287 'o 72023 : RJ-JD :4984-DB l 5 (l supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 before the Hon'ble Supreme Court and the Hon'ble Supreme Court is seized of the matter. In addition, there are about 1200 SLPs also 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 itselL

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 stcps having been taken by the Income Tax Department to take appropriatc steps to either hold back issuance ofnotice 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 alt the major l{igh Courts in India are conlinuously srill initiating proceedings under Section 148A. of the Act and also initiating proceedings under Section 148 of the Act in contravention to the amendments brought into the Inoome Tax Act pursuant to the Finance Act,2020 as also the Finance Act2O2l.

9. Upon a query being put as to why can't this vrit petition be disposed of in the teeth of the decision rendered b1. this Court in the case of Kanakala Ravindra Reddy (l supra), leamed Standing Counsel for the Income Tax Department contends thrrt those would unnecessarily bu rden the Income Tax Departmer t where they would be required to hle equal number of SLps before the Hon'ble Supreme Court and it would be further burdening the exchequer of the Union of India. [t was also the cotrtention of the leamed Standing Counsel that no prejudice would bt: caused to the interest of the petitioners in case if this writ petition is kept pending till the finalization of the SLPs pending before the Hon'ble Supreme Court and the lact that the petitioner is al.eady enjoying the benefit ol- interim protection. Nonetheless, on the earlier query of this Court as to why the Income Tax Department have not corne out with a mechanism to issue appropriate instruct:ons or to take 7 appropriate steps in ensuring that proceedings under Section l4gA ofthe Act as also the assessment orders under Section l4g ofthe Act are kept in a hold in the light of the decisions dedcided by the various High Courts, it was submitted by the learned Standing Counsel that the said steps can only be taken at the level of CBDT as any such steps would have to be taken pan India and cannot be limited to any of these jurisdictional High Courts.

10. As a result of which, what we are facing is steep increase of litigation day in and day out even though various orders have been passed by this High Court allowing writ petitions on the very same issue. The Income Tax authorities concemed are still even now in 2025 atso initiating proceedings in contravention to the provisions of Section l5lA of the Act and as a result by now, more than (r00 to 700 peritions have been already got piled up belore this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakala Ravindra Reddy (l supra). What is also surprising is the fact that though white allowing the writ petitions in the case of Kanakala Ruvindra 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 witt the amended provisions of the Act, as amended by the Finance 4rct,2020 and the Finance Act, 2021. The petitioner assessee would be entitled to challenge or raise the other legal objections if the Re'renue initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was resewed for the Revenue. On the contrary, they have been sti[[ sticking on to the staltd, which this High Court as rvell as many other High Courts alreirdy held to be bad. I l. It appears that because of the aforesaid liberty that this High Court had granted permitting the Revenue for i:-ritiating fresh proceedings as a one-time measure in a facelest; manner, the Income Tax Department wants to take advantage cf the same by protracting these proceedings which would enable them to meet the Iimitation that would otherwise come in the way. t.ikewise, if the writ petition is kept pending lor 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 Cou( as also by :he other High Courts in which the SLPs are still pending, th: Income Tax Department woui<i get the advantage of the liberfy that is other,,...s.; 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 set in Kanakala Ravindra Reddy (l supra), is a matter of grave concern. The Income Tax Department's persistent initiation o f fresh proceedings, disregarding the established j udicial pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions piling up on the same issue. This deliberate approach nor only undermines 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 fiesh proceedings appears to be a calcu lated move to buy time and circumvent limitation periods, rather than adhering to the established legat -rA positioq. Such co:ld'tct raises :erious questionli about tiLc administrative efficiency and the respect for judicial pronouncements, particularly when this Court has alrt:ady 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 Departnrent itselfand should have found out via media in ensuring thar 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 of or, at least the Income Tax Department should have fotLnd out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 148, c,ther than in a faceless manner, the proceedings should have treen deferred without precipitating the matter further intimating th<: 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 Income Tax Department, has not been able to give a convincing reply, except for the fact that such a de,:ision if at all 7t 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 o[ 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 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 tinre of the Bench in hearing these matters again and again on daity 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 lncome 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 lncome Tax Department is showing audacity by issuing notices continuously under Sections 148-A and \2 t48 through the jurisdictional Assessing Officer wh:reas it ought to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs. ASSISTANT COMI{ISSIONER, INCOME TAXrr, on an issue rvhether ir was justifiable on the part of the Income Tax Department ln not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division Bcnch of the High Court of Bombay held at paragraph No.25 as urder, viz., : "25. Mr. Paridwalla has rightly drawn out attent on to the decision of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision :f the co- ordinate Bench of this Court in Samp Furniture (P) Ltd. v. lTOl3 of which one of us (Justice G.S. Kulkarni) was a membi)r, wherein the Court categorically observed that the Revenue raving not "accepted" the judgment of the High Court would not mean that tilt the same is set aside in a manner known to law, it would loose its binding force. Referring to the decision of the Suprerre Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.r4, the Court observed that the approach of the offlcials of ftevenue of treating decisions being "not acceptable" was critici,red by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. i] ttZozSl 170 raxmann.com 422 lBombay)l '" ll978l I l3 ITR 589 (Bombay) '3 1ZO2+1165 taxmann.com 581i300 Taxman 452 (Bomt,av) 'o leqZltaxmann.com l6155 ELT 433 (SC) 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 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, rightly criticized this mnduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. lt cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasi,udicial 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 lhe Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require thal 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 oblectionable phrase - and is the subiect matter of an appeal can furnish no ground for not following it unless ils operation has been suspended by a competent court. lf this healthy rule is not followed, jsult will only be urdue harassment to assesses and chaos in administrartion of tax laws.

12. We have dealt with this aspect at some ler)gth, because it has been suggested by the lea.ned Additional Solicitor General that the observa ions made by the High Court, have been harsh on the officers. lt is clear that the observations of the High Court, seemingly vehement, and appar:ntly unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowe d to become widespread, could resull in conside'able harassment to the assesses-public without any bonefit to the Revenue. We would like to say that the department should take these observations ir the proper spirit. The observations of the High (lourt should be kept in mind in future and the utmost re,gard should be paid by the adjudicating authorities anJ the appellate authorities to the requirements of juCicral discipline and the need for giving effect to the o.ders of the higher appellate authorities which are bi,rding on them."

15. What is worrying this Bench more is thr fact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been taid to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the Income Tax Department being violarive o[ the 15 Finance Act,2020 and Finance Act, 2021 . Now, in order to protect the interest ofthe 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 terrns 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 untit 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 ofthe Revenue has already been considered and protected, as has been observed in paragraphs 16 36, 37 and 38 ofthe order which, for ready reference, is reproduced hereunder:

36. For all the aforesaid reasons, the impugned [otices issued and the proceedings drawn by the respc,ndent- Department is neither tenable, nor susta inable. The notices so lssued and the procedure adopte(J 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 148would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the prrnciples that when the initiation of the proceedings its-.lf was procedurally wrong, the subsequent orders al:ro gets nullifi ed automatically.

37. The preliminary objection raised by the petiiioner is sustained and all these writ petitions stands allcwed on this very jurisdictional issue. Since the impugned notices and orders are getting quashed on the l)oint of jurisdiction, we are not inclined to proceed furlher and decide the other issues raised by the petitioner which stands reserved to be raised and contende,i in an appropriate proceedings.

38. Since the Hon'ble Supreme Courl had, in the case of Ashish Agarwal, supra, as a one{ime 'neasure exercising the powers under Article 142 of the Constitution of lndia, permifted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, :he right 77 conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashish Aganrrral, 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 [{igh Court in rhe case of Kanakala Ravindra Reddy (l supra) is subjected to challenge before the Hon'bre Supreme court in SLp No.l574 of 2024, preferred by the Income Tax Department. we makc it clear that allowing of the instant writ petition is subject ro ourcome o[-the aforesaid SLp preferred by the Revenue against the dccision ofthis High Court in the case of Kanakala Ravirtdro Rcdd.y (L supra). This, in other words, would mean that either ot.rhe parries. i{-rhey so want, may move an appropriate pctition sccking rcvival ol this writ petition in the light of the decision ol rhc t{on.blc Suprcme Court in the pending SLp on the very same issuc. l.9. Accordingly, the instant writ petition stands allou,ecl in favour of the assessee so far as thc issuc ol' ju risdicr ion IS concemed. As a consequence, thc irnpugned rlotice under challenge under Sections l4g_A and I48 stands sct asiclc/r;uashed. 18 The consequential orders, if any, also stand set aside/quashcd in similar tcrrns as have been passed by this High Court in llre casc of Kankanala Ravindra Red'dy (l supra)' There shall be no order as to costs Consequently, miscellaneous petitions pending' if any' shail stand closed. /TTRUE COPY// SD/.K.BHAVANI SWAMY ASSISiTANT REGISTRAR SECTI $fr FFICER To The lncomc Tax Officer, Ward 12(1), Hyderabad lncome: Tax Towers' lvlasab Tank 500004 The Prrncipal Commissioner of lncome Tax 4' lncome Tax Towers lr4asab Tank i>00004. ri" r,l,,t,"t*| racetess Assessment Centre, lncome Tal Department N/inistry of [ ,;, ,r, ,' Govr. of lndia, New Delhi' onr: cc ro sRl PoLKAHapA*iLf FAvnN KUMAR RAo' Advocate [OPUC] 5;; C; in r,,rt aornno SAPNA REDDY (Jr' SC FoR INCoME TAX ) ACvocat3 [OPUC] Turo CD OoPtes

1. 2 3 4 5 6 SA GJP {-:. ,r'/*\-;-" 10 sEP 2[25 \\' HIGH COURT DATED:2 410412025 ORDER WP.No.4361 of 2025 ALLOWING THE W.P WITHOUT COSTS. '.'i i')

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