High Court · 2025

petitioner: Ms. K. pRABHABAfl REPRESENflNG FoR sRr. A v Counsel for rhe Resoond?Ll!.9.1, SRt cADt PRAVEEN KUMAR Dy. SOLICITOR GENERAL Oi II.IOIA fi,?ffi? lfi;" *t'o"ndent No.2: Ms. B. sApNA REDDv (JUNroR sc FoR The Court made the following: ORDER .. ,) THE HONOURABLE SRT JUSTICE P'SAM KOSHY TIIE IIONOURABLE SfiIiU$T, NARSIN G RAO w.P.No.4 550 OF 2025 ORDER' (per Hon'bte Sri Justice P'Sam Koshy) Heard Ms. K' Prabhabati' learned counsel representing Mr. A.V'Raghu Ram' learned counsel for the petitioner and Ms. B.Sapna Reddy' leamed Junior Standing Counsel for the Income Tax Department for respondent No'2' Perused the record' 2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 148A and 148 of the lncome 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 of the Act and the subsequent initiation ofproceedings under Section 148 of the Act by the jurisdictional Assessing Officer' whereas in terms of the amendment that was brought to the lncome TaxAct by way of Finance Lct, 2O2l w'e'f', 01'04'2021 onwards' proceedings I 2 under Section 14gA of the Act as also under Section l4g of the 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,202l i.e., the impugned notices under Section 14gA and Section l4g ofthe 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 OFFICERT decided o, 14.09.2023 whereby a batch of writ petitions were alrowed and the proceedings initiated under Section 14gA as also under Section 148 of the Act were held to be bad with consequential r.eliefs on the ground ofit being in vioration ofthe provisions ofsection r5lA of the Act read with Notification lg/2022 dated 29 .03.2022. The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were alrowed on similar '[(2023) 156 taxmarur.com 178 (Tetangana)] (' ., .:| a. 5 Down the line, we find that the same issue has also been various High Courts r'e'' the case of IIEXAWARE decided against the Revenue bY by the BombaY High Court in TECHNOLOGIES LTD" vs' ASSISTANT COMMISSIONER OF INCOME TAX & OTIIERS2' Gauhati High Court in the case of RAM NARAYAI\I SAH vs' UNION OF INDIA3' Punjab and Haryana High Court in the case of JATINDER SINGTI 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 intemationar taxation, Bombay High court in the case of ABHIN ANILKUMAR SIIAII VS. INCOME TAX OFFICE& fNTERNATIONAL TAXATION6 which is again on intemational taxation and central circle' High Court of Himachal Pradesh in the case of GOVIND SINGII vs' INCOME TAX OFFICERT' Gujarat High Court in the case of MANSUKHBIIAI I \ I I I 1 I I \ 2 r.tn)al464 ITR 430 (Bom) 'iliizil l!6 ta**uott."om 478 (Gauhati)l ^i[oiol165 taxmann.com 115 (Punjab & Haryana)] 'iion+)' w taxmann.com 41 I (Telangana)l "izozql 1 66 taxmann'com 679 (Bombav)l iliirq:li6s *runt'."om I t3 (Himachat Pradesh)l - \ I 4 DAIryABHAI RADADTYA vs. INCOME TAx OFFICER, WARD 3(3xo8, Jharkand High court in the case of sHyAM SUNDAR SAW vs. [I^IION OF INDIAe, Rajasrhan High Court in the case of SIIARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsro which stood decided oo 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 rNDIA & 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 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., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy 8ZOZ+ SCC Online Guj 4012 '2025 SCC Online Jhar287 o ' 72023 -. RI-JD :49 84-DBl 0 I ) I I I 1 5 (1 supra) has been subjected to challenge in a Special kave 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 filed arising out ofthe same issue being decided by various High Courts' '7. To a query being put to the learned counsel for the Revenue' they have categorically accepted the fact that there is no intenm order granted by the Hon'ble Supreme Court in any of these matters pending before it' Meanwhile' fresh writ petitions of identicar 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 atdmore 16 months have lapsed, till date, we do not find any remedial steps having been takon by the Income Tax Department to take appropriate steps t0 either hold back issuance ofnotice under Section 148A and under Section 148 of the Act by the jurisdictional Assessing Offrcer' rather the authorities concemed in the teeth of series of decisions I 6 by ali the major .iigh Courts in India are continuously still initiating proceedings under Section 14gA of the Act and also initiating proceedings under Section 14g of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Arl',2020as also the Finance Act202l. 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 Kanakala Ravindra Reddy (lsupra), learned Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Department where they would be required to file equal number of SLps before the Hon'ble Supreme Court and it would be fi.rrther burdening the exchequer ofthe Union oflndia. 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 thi s writ petition is kept pending till the finalization of the SLps pending before 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 appropriate instructions or to take ,,1 7 appropriate steps in ensuring that prpceedingl under Section 148A of the Act as also the assessment orders under Section 148 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-leamed Standing counser that the said steps can only be taken at the revel of GBDT as any such steps would have to be taken Pan tndia 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 concerned are still even now in 2025 alsoinitiating proceedings in contravention to the provisions of Section 1 5 1A 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 of this Court in the case of Kanakala Ravindta Reddy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravindra Reddy (lsupra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners I i 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 Financ e Act, 2020 and. the Finance Act, 2021. 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 Courls already held to be bad.

11. It appears that because ofthe aforesaid Iiberty thar 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. Likewise, 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 Court confirms the decision taken by this High Court as also by rhe other High Courts in which the SLPs are still pending, the Income Tax 'l 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 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 would be equally disadvantageous proceedings'

12. The alarming trend of docket explosion in this Court' desprte the clear precedent set irt' Kanakala Ravinilra Reddy (l supra)' is a maffer of grave concem' 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 ofjudicial 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 I I 10 raises serious questions posrtion. Such conduct about the administrative efficiency and the respect for judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revsnlrs,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 manner, at least till the Hon,ble Supreme Court decide the twelve hundred (1200) odd SLps which it is arready seized ofor, ar least the Income Tax 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 rhan 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 Income Tax Department, has not been able to give a c0nvincing Ieply, except for the fact that such a decision if at all 11 has to be taken, has to be taken for the whole oflndia' 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 Departrnent' Yet' the authorities concerned at the state rever 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 \ I t I I I i I I I I 72 I 148 through the jurisdictionar Assessing officer whereas It ought to have been only in the faceless manner. 14. In rhe case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXlr, on an issue whether it was justifiable on the part of the Income Tax Department in following 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. paridwalta ''nnt', drawn out attention to the decision of this court ,n "o" ". ]JT:T:J,':H:IT;"r:: Godavaridevi s","r,, ordinate Bench of this Courl in samp Furniture (P) Ltd' v' lrol3 of which one of us (Justice G the court catesoricarry il;.:'llI"I:T",;T T:fl1; 'accepted,, the judgment of tt High court wourd not mean that ti the same is set aside ,n , ,,'u bindins rorce. Rererrins," ;H:H:'":*i-;.jrl,,l :ffi [ Union of lndia vs. Kamlakshi Finance Corporation Ltd.,o, the Court observed that the approach of the officials of Revenue of treating decisions being "not acceptable" was criticized by the Supreme Court. In such decision, following are the relevant observations made by the Supreme Court. il Il1Ht.tr^o gmann.com 422 (Bombay)l '' [978] I l3 tTR 589 (Bombay) '.'. IZOZ+1 1 65 taxmann. com 5 8 I /3 00 T axmar 452 (Bombay) ltg}Zltaxmann.com 16/55ELT 433 (SC) 1' 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 tnem, one of the Collector (Apbeals) 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 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 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 objectionable 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 f i I l l 14 rule is not followed, the resutt 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 learned Additional Solicitor General that the observations made by the High Cou(, have been harsh on the officers. lt is clear that th( court, seemingry ""r"'r""t"::'T;t"jJ::rffl 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 assesses_public without any benefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Cou( should be kept in mind in futr shourd be paid by the ,.,rr,::il;:lili[J:::Jil: appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate 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 the action of the Income Tax Department being violative of the r 15 Finance Act, 2[20and Finance Act'202,1' 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 observatiorvdirection that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of KankanalaRavind,raRefuly(|supra)shallhoweverbesubjectto the outcome of the SLPs which were frled 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 fortifred 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 of as 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 t6 t, ., 36, 37 and 3 g of the order which, for ready reference, hereunder: 1s reproduced :?:;iTJ TJi:: il:::: nor sustainabre. he Procedure adopted being and are accordingly set o'"n"t' all the impugned ""

36. For all the aforesaid re is s ued a n d tn " p,o"u"o i ns Department is neither The notices so issued uno ,t"n"o'u' per se illegal, deserves .o aside/quashed. o, orders getting quashed, ,nu . by the responde",-o"orn,, issued under Section 147 quashed and it is ordered a are quashins tn" that when the initiation of procedurary wrong, the .rolu "ot""o'ngs nurified automaticaly. " "onr.o" ":iT;r:::t,l1,:";: :il::: and 148 would also get "on""q,"ntili"#:l JTJffi :: itself was sequent orders also gets

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 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 of Ashish exercising Since the Hon,ble Supreme Court had, in the case Aganval, supra, as a one_time measure the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court altowing the petitions only on the procedural flaw, the right / - 77 confered on the Revenue would remaln 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 of the instant writ petition' conscious of the fact that the earlier order of this High Court in the case of KanakalaRavindraReddy(|supra)issubjectedtochallenge before the Hon'ble Supreme Court in SLP No'3574 of 2024' preferred by the lncome 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 of this High Court in the case of Kanakala Ravinilra 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' Accordingly, the instant writ petition stands allowed in t9. favour of the assessee so far as the issue of jurisdiction is concemed. As a consequence' the impugned notice under challenge under Sections 148-A and 148 sgnds set aside/quashed' I ( 78 The consequential orders, if any, also stand set aside/quashed in similar tems as have been passed by this High Court in the case of Kankanara Ravindra Reddy (r supra). There shali be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed. //TRUE COPYII SD/. AHM E^D_ABDULLAH KHAN ASSISTANT REGISTRAR .() SECTION OFFICER 6$:'*'#"*'il?,li;l[it"??ilrcere-ssAssessmentcentre,rncomerax Jawaharral Nehru sfadium:il""id I??rJH' 401' 2nd rtobi' E--nimi,^ I|:J::i[EJ;J:TB?d#:" - 1, rncome rax orrice, Near RairUnder One CC to SRt. A V RAGHU RAM Advocate tOpUCl to Ms. B SAPNA REDDY (JUN|OR SC FOR INCOME rAX) [OPUC] to Sri Gadi praveen Kumar, Deputy Solicitor General of lndia [OpUC] Copies \ \ oT 1 2 4 E One CC One CC

6. KKS GJ Two CD o- I HIGH COURT DATED:24 t14t2O2S oi\):) 0B SEP2ffi oi' iiPciClt: .,t 'ir * ORDER WP.No.4550 of 2O2S ALLOWNG THE WRIT PETITION WITHOUT COSTS a