Srinivasa Rao Ramisetty v. Assessment Unit. National Faceless Assessment Centre

challenged to the notices which were issued under Section i48A 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 rvrit 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 Income Tax Act by way of Finance Act, 2021 w.e.f., 01.04'2021 onwards, proceedings 2 under Section 148,4 of the Act as also under Section l4g of the Act ought to have also been issued and proceederl in a faceless manner.

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance Acr, 2021 i.e., the impugned notices under Secrion l4gA and Section I4g of the Act not being issued in a faceless manner, have already been dealt with and decided by this Court in the case of I(ANKANALA RAVINDRA REDDY vs. INCOME_TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions w(.re allowed and the proceedings initiated under Scctio, l4gA as als. under Section 148 of the Act were held to be bad *,ith consequenri rr reliefs on the ground of it being in violation oIthe pro'isions of Scction l5l A of the Act read with Notihcarion lgl2022 dated 29.01..1022. The said judgment passed by this Court has also been subseqtrcntly followed in a large number of writ petitions which were allowed on similar terms. ' l(2023) 156 taxmann.com I 78 (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 High Court in the case of ABHIN ANILKUMAR SIIAH vs. INCOME TAX OFFICE& INTERNATIONAL TAXATION('which is again on intemational taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. TNCOME TAX OITICER?, Gujarat High Court in the cas€ of MANST KHBHAI 'lzozq464ITR 430 (Bom) '[(2024) 156 taxmann.com 478 (Gauhati)] 'l(2024) 165 taxrnann.com I 15 (Punjab & Haryana)l '12024) 167 taxmann.com 4l I (Telangana)l " [2024) 166 taxmann.com 679 (Bombay)] ' 12024) 165 taxmann.corn I t 3 (Himachal Pradesh)l 4 4 DAHYABHAI RADADIYA vs. INCOME TAx OFFICE& WARD 3(3X5)8, Jharkand High Court in the case of StIyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs. II\TCOME TAX OFFICER & ANOTHER and batch o[ writ peritionsro which stood decided on 19.03.2024. Similar views have elso been taken by the Division Bench of Calcutta High Court n the case of GIRDHAR GOPAL DALMIA vs. UNION OF I\DIA & ORS (M.A.T 1690 of 2023), decided on25.09.2024.

6. Even though the same issue having been decrded by a large number of High Courts, we are still confronred with largc frling of identical matters on daily basis ranging betu,ee n 5 to t 0 writ petitions. That upon the instructions being sousht lrom the Department, they have been taking a solitary groLrnd that the decision of the Bombay High Court in rhe case o| Herawure Technologies Ltd., (2 supra) as also thc one which has been decided by this Court in the case of Kanakala Rc,virtdrs Reddy 82024 SCC Online Guj 40t2 '2025 SCC Online lhar 287 '' 12023 : RJ-JD :49 84-DBl I 5 (1 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 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 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 itself.

8. On the one hand, even though the order of this Court that was passed as early as on t4.09.2023 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 appropriate steps to either hold back issuance of notice under Section l48A and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities conccrncd in the tecth of series of decisions 6 by all the major High Courts in India are continuously still rnrtrating proceedings under Section l48A of the Act and also initiating proceedings under Section 148 of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act, 2020 as also the Financ: Act ZOZI .

9. Upon a query being put as to why can,t this .vnt petition be disposed of in the teeth of the decision rendered by rhis Court in the case of Kanakala Ravindra Reddy (l supra), lelmed Standing Counsel for the Income Tax Department contends ttat those would unnecessarily burden the Income Tax Departntent where they would be required to file equal number of SLps befbre the tlon'ble Supreme Court and it would be further burdening the exchequer of the Union of India. It was also the co.terntion of the learned Standing Counsel that no prejudice would b,: caused ro the interest olthe petitioners in case ifthis writ petition is kept pending till the finalization of the SLps pending belore rhc Hon'ble Suprcme Court and the fact that the petitioner is aLeady enloying the beneht of interim protection. Nonetheless, on the earlier qucry of this Court as to why the Income Tax Department rave not coure 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 of the 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 l5lA of the Act and as a result by now, more than 600 to 700 petitions have been already got pited up before 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 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 o insoiar as the liberty which was granted to the Revenue for initiating lresh proceedings strictly in accordance wirh the amended provisions o[ thc Act, as amended by the Finance Act,2020 and the Finance Act,202l. The petitioner assess@ woul,l be entitled to challenge or raise the other legal objections if the Rr,venue 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 w.ell as many other High Courts already held to be bad. I l. It appears that because of the aforesaid libertl rhat rhis High Court had granted permitting the Revenue for initiating Iiesh proceedings as a one-time measure in a faceless manner, thc Income Tax l)epartment 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, il 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 rhe othcr High Courts in which the SLps are still pending, th: [ncorne -[ax 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 Iater 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 lncome 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 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 ol 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 fresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than adhering to the established legal 10 position. Such conduct raises serious questicns about the administrative efficiency and the respect for judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the ReverLue,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 Depar ment itself and should have found out via media in ensuring that proceedings under Sections 148-,4 and 148 should not have bt:en issued in a faceless manner. at least till the Hon'ble Supreme Court decide thc twelve hundred ( 1200) odd SLps which it is already seized of or, at least the Income -[a x Department should have fc,und out some remedial stcps ro ensure that wherever the authorities intend to initiate proceedings under Sections l4g-A and l4g, other than in a faceless manner, the proceedings should have been deferred without precipitating trre matter further intimating tlLe assessee that they shall initiate appropriate proceedings only afte. the SLp,s are decided by the Hon'ble Supreme Court on the very same issue. This again, the lncomc Tax Department, has not beel able to give a convincing reply, exccpt for the lact that such a dt:cision if at all lL has to be taken, has to be taken for the whole of lndia, 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 learned Standlng 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 time of the Bench in hearing these matters again and again on daily basis. Admittedly, in spite of the matter belore the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized olthe matter has been reluctant in granting any interim protection to the Income 1'ax Department. Yet, the authorities concemed at the State level are not ready to accept the verdict passed by a majority oi High Courts of different States on the same issue; and to make things further worse, the Income Tax Department tS showing audacity by issuing notices continuously under Sections 148-A and t2 148 through the jurisdictional Assessing Officer wlereas it ought to have been only in the faceless manner.

14. In the ease of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXIt, on an issue whether it was justifiable on the part of the lncome Tax Department rn not following an order passed by the adjudicating autho;ity only on the ground that the appeals are pending, the Division Bench of the High Court of Bornbay hetd at paragraph No.25 as under, viz., : "25. Mr. Paridwalla has righfly drawn out aftertion 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. lTOl3 of which one of us (Justice G S. Kulkarni) was a memtrer, wherein the Court categorically observed that the Revenue having not "accepted" the judgmeni of the High Court would not nrean thal till the same is set aside in a manner known to law, it wotld loose its binding force. Referring to the decision of the Suprere Court in Union of lndia vs. Kamlakshi Finance Corporatiorr Ltd.14, the Court observed that the approach of the officials of Revenue of treating decisions being "not acceptable" was critic zed by the Supreme Court. ln such decision, following are lhe relevant observations made by the Supreme Courl. ll tfzOZsl 170 taxmann.corn 422 (Bornbay)l '' 119281 I t] rrR 589 (Bombay) " 120241 165 raxrnann.com 581/300 Taxman 452 (Bombay) 'o 1t9921raxmanr1.com l6155 ELT 431 (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 conectness or otherwise of their conclusion or of any factual malafides but with the fact that the officers, in reaching in therr 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 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 quasijudicial 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 jurisdiction 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 ob,ectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been susoended by a competent court. lf this healthy 14 rule is not followed, the result will only be undue harassment to assesses and chaos in adminis,ration of tax laws.

12. We have dealt with this aspect at some k)ngth, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh c n the officers. lt is clear that the observations of the High Court, seemingly vehement, and appzrenfly unpalatable to the Revenue, are only rntended tO curb a lendency in revenue matters which, if alloraed to become widespread, could result in considr.,rable harassment to the assesses-public without any t enefit to lhe Revenue, We would like to say thirt the department should lake these observations in the proper spirit. The observalions of lhe High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities arrd the appellate authorities to the requirements of jrjdicial discipline and the need for giving effect to the orders of the higher appellate authorities which are b nding on them."

15. What is worrying this Bench more is th: 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 alr of whom have taken a (onsistent stand that the action of the lncome Tax Department being violative of the ( 15 Finance Ac| 2020 and Finance Acq 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 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 flacts 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 flortified 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 ol the Revenue is concerned, we are of the considered opinion that the interest ofthe Revenue has already b-"n considered and protected, as has been observed in paragraphs n-r^. fly." 76 36,37 arld 38 of the order which, for ready reference, is reproduced hereunder:

36. For al! the aforesaid reascns, the impugne( notices issued and the proceedings drawn by the respondent- Department is neither tenable, nor sus:ainable. The notices so issued and the procedure adopk:d being per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the irtpugned orders getting quashed, the consequential orden; passed by the respondent-Department pursuant to the notices issued under Section 147 and 148 would a so get quashed and it is ordered accordingly. The reilson we are quashing the consequential order is on the principles that when the initiation of the proceedings it;elf was procedurally wrong, the subsequent orders a so gets nullified automaticatly.

37. The preliminary objection raised by the pel troner is sustained and all these writ petilions stands all)wed on this very jurisdictional issue. Since the impugnerl notices and orders are getting quashed on the Dornt of jurisdiction, we are not inclined to proceed furiher and decide the other issues raised by the petition _.r whrch stands reserved to be raised and contended n an appropriate proceedings.

38. Since the Hon'bte Supreme Court had. in the case of Ashish Agarwal, supra, as a one-time measure exercising the powers under Article 142 ot the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court a owing the petitions only on the procedural flaw, he right 77 confened 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 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 ol this l{igh Court in the case of Kanakala Ravindra Reddy (l supra) rs subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, prefened by the lncome Tax Department, we make it clear that allowing of the instant writ pctition is subject to outcome of the aforesaid SLP preferred by the Ro,enuc against the decision of this High Court in the casc ol' Kunakula Ravindra Reddy (l supra). This, in other words, would mean that e ither o[ the parties, if they so want, may move an appropriatc pctition sceking revival of this writ petition in the tight o{- the clecision of the Hon'ble Supreme Court in the pending SLP on the very sar.r.rc issue

19. Accordingty, the instant rr rit petition stands allowed in favour of the assessee so {hr as the issue ol jurisdiction IS concerned. As a consequcnce, thc irnpugncd notice under challenge under Sections 148-A anrl 148 stands set aside/quashed. *4'1 18 The consequential orders, if any, also stand set asiCciquashed in similar terms as have been passed by this High Court in the case of Kankar,ala Rdviiedru Reddy (1 supra). There shall l;e no ordci as to costs. Consequently, miscellaneous petitions pending, il' any, shatt stand closed. //TRUE COPY// SD/. A.H,S. GOWRI SHANKAR ASSISTANT REGISTRAR secrr$ffiiicen

1. The Assessment Unit, National Faceless Assessment Oerrtre, lncome Tax Department, Ministry of Finance, Room No.401, 2nd flcor, E-Ramp, Jawahadal Nehru Stadium, Delhi - 110 003. Khammam - 507 001, Telangana State. 2 The lncome Tax Officer, Ward - 1, Rajeev Chowk, Nea K nn€)Tasanr Theatre, 3. One CC to tVl/s AYYAGARI JAYASHREE, Advocate [OeUC] 4 One CC to Ms. BOKARO SAPNA REDDY (Jr SC FOR tNCOt4E 5 Two CD Copies TAX)Advocate [OPUC] To SA GJP a f ) /t' .i' 10 sEP 1025 .iatu:--' HIGH COURT DATED:2410412025 ORDER WP.No.4959 of 2025 ALLOWING THE W.P WITHOUT COSTS. f' \