The High Court · 2025

TTIE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA W.P.No.6l24 OF 2025 QRDER, (per Hon'ble Sri Justice p.Sam Koshy) Heard Mr. Dundu Manmohan, learned counsel for the petitioner and Ms. B.Sapna Reddy, learned Junior Standing Counsel for the Income Tax Department for respondent No.3. Perused the record.

2. This is a writ pelition where the proceedings are either challenged to the notices which were issued under Section 14gA 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 p"ti#n is being taken up today only on one of the grounds, that the notices issued under Section l4gA of the Act and the subsequent initiation of proceedings under Section l4g of the Act by the jurisdictional Assessing Officer, whereas in rerms 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 under Section 148,{ of the Act as also under Secticn 148 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 ol proceedings being in violation of the Finance Acq202l i.e., the impugned notices under Section 148,4. and Section l4tt of the Act not being issued in a faceless manner, have already tteen dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.09.2023 whereby u 6rt.t of writ petitions were allowed and the proceedings initiatdd under Section 148A as alsc 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 l5lA ol the Act read with Notification 1812022 dated 29.03.;1022. The said judgment passed by this Court has also been subseqrrently followed in a large number of writ petitions which were allowed on similar terms. ' l(2023) I 56 taxmann.com 178 (Telangana)l tI l .t I 3

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 TBCHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTIIERS2, 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 SHAH vs. INCOME TAX OFFICER, INTERNATIONAL TAXATION6 which is again on intemational taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI ' 1zoz11464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauhati)l ' l(2024) 165 taxmann.com I 1 5 (Punjab & Haryana)l ' 12024) I 67 taxmann.com 41 1 (Telangana)l " 12024) 166 taxmann.com 679 (Bombay)l ' 12024) 165 taxmann.com I 13 (Himachal Pradesh)l , 4 DAHYABHAI RADADIYA vs. INCOME TAX OFFICE& WAR-D 3(3X5)8, Jharkand High Court in the ca:;e of SHYAM .l SUNDAR SAW vs. UNION OF INDIAe, Rajasthar High Court in the case of SHARDA DEVI CHHAJER vs. II,{COME TAX OFFICER & ANOTHER and batch of writ petitionsr0 which stood decided on 19.03.2024. Similar views have irlso been taken by the Division Bench of Calcutta High Court in the case of GIRDHAR GOPAL DALIWA 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 a large number of High Courts, we are still confionted witJr large filing of identical matters on daily basis ranging betweer, 5 to 10 writ petitions. That upon the instructions being so rglrt fiom the Department, they have been taking a . solitary ground that the decision of the Bombay High Court in the casr of Hexaware Technologies Ltd., (2 supra) as also the one u'hich has been decided by this Court in the case of Kanakala Ravindra Reddy '202+ scc online Guj 4012 '2025 SCC Online lhar 287 12023 : Rr- J D :498 4-DB l l o ,/,../ ,/ 5 (1 supra) has been subjected to chattengti 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 thp learned 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 14.09.2023 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 ofnotice under Section 14gA and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concerned in the teeth of series of decisions a , L by ail tirc mz:jol. .{igh Courts -r india are cotittnuc usly siii initiating proceedings under Section l4gA of the Act and also initiating proceedings under Section l4g of the Act in contravention to the amendments brought into the krcome Tax Act pursuant to the Finance Act,2020 as also the Financt, Act202l.

9. Upon a query being put as to why:can,t this r,,rit petition be disposed of in the teeth of thedecision rendered b1 this Court in the case of Kanakala Ravindra Reddy (l supra), lezmed Standing ..1 Tax unnecessarily burden the Counsel for the Income Tax Department contends that those would 'income Departm i ent where they would be required to' file equat number of SLI,s before the Hon'ble Supreme Court and it would be further burdening the exchequer of the Union of India. It was also the contention of the learned Standing Counsel that no prejudice would be caused to the interest of the petitioners in case if this writ petition is kept pending tiil 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 hlve not come out with_a mechanism to issue appiopriate instruclions or to take :.'rllISEE--.,. .--.-rrlc-- --,----*.-+-r-E- - -i 7 .appropnate, s tops. i n ensuring tbat, Broceedingq under.S ection I 4 gA of the Act as also the assessment orders under Section l4g of the Act are kept in a hold in the light ofthe decisions dedcided by the various High courts, it was submitted by the reamed 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 limired to any of rhese jurisdictional High Courts.

10. As a result of which, what we are facing is steep increase of litigation day in and ouy 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 bynow, more than 600 to 700 peritions 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 Ravindra Reddy (l supra). What is also surprising is the fact that though while ::;,il:,,:T., :: : J;,,m- : ^::::: :, the Revenue, has also protected the interest of the petitioners {l 8 1 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 ,\ct, 2020 and the Finance Act,2021 . The petitioner assessee woulc be entitled to challenge or raise the other legal objections if the Revenue initiates fiesh proceedings. The Department has made no endeavour in availing the said liberty that was reserved for the Re renue. On the contrary, they have been still sticking on to the stand. which this High Court as well as man! other High Courts already held to be bad.

11. It appears that because ofthe aforesaid libertl that this High Court had granted permitting the Revenue for initiating fiesh proceedings as a one-time measure in a laceless manner, the Income Tax Department wants to take advantage of the same by protracting these proceedings which would enable tlem to meet the limitation that would otherwise come in the way. l.ikewise, 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 the other High Courts in which the SLPs are stitl pending, the Income Tax t 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 ofthese 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 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 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 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 fresh proceedings appears to be a calculated move to fftrn" and circumvent limitation periods, rather than adhering to the established legal i.' : i.t,,.t jucir ,.c :.*i;t ,-aises seious questions about the adn{nistrative efficiency and the respect for judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Reverrue's rights and assesses lnterests

13. Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Department itself and shculd have found out via media in ensuring ttat proceedings under Sections 148-,4. and 148 should not have b,)en issued in a faceless manner, at least till the Hon'ble Supreme ( ourt decide the twelve hundred (1200) odd SLPs which it is already seized ofor, at least the Income Tax Department should have flrund 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 defened without precipitating the matter further intimating t te assessee that they shall initiate appropriate proceedings only after the SLP's are decided by the Hon'ble Supreme Court on the vr-'ry same issue. This again, the Income Tax Department, has not bet'n able to give a ca"' . incing regl.i, exc.:-:i icr tle 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 learned 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 h'undreds 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 beien reluctant in granting any interim protection to the Income Tax Department. Yet, the authorities concerned 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 tu* nspi.t-ent is showing t' audacity by issuing notices continuously under Sections 148-A and a & I 72 148 through the jurisdictional Assessing Ofhcer whereas it ought to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXrr, on an issue wherher it was justifiable on the part of the Income Tax Dcprrrtrnent tn not following an order passed by the adjudicating autho -it1, only on the ground that the appeals are pending, the Divisior Bench of the High Court of Bombay held at paragraph No.25 as under, viz., : "25. Mr. Paridwalla has rightly drawn out attertion to the decision of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as atso 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 memt er, wherein the Court categorically observed that the Revenue having not "accepted" the judgment of the High Court would not nrean that till the same is set aside in a manner known to law, it wo ld loose its binding force. Referring to the decision of the Suprerne Court in Union of lndia vs. Kamlakshi Finance Corporatior Ltd.14, the Court observed that the approach of the officials of levenue 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.com 422 (Bombay)l Ir '' [978] I I3 ITR 589 (Bombay) 720241165 taxmann.com 581/300 Taxman 452 (Bomtay) 'o |gg2ltaxmann.com 16155ELT 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 wilh the fact that the officers, in reaching in their conclusion, by-pagsed 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 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 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 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 funclion 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 objectionable phrase _ l' and is lhe 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 t t4 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 longth, because it has been suggested by the learned 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 k) 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 thzLt the department should take these observations ir 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 arrd the appellate authorities to the requirements of judicial 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 all ofwhom have taken a (onsistent stand that the action of the Income Tax Department being violative of the 7 15 Finance 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 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 lncome Tax Department and which is pending consideration before the Hon'ble Supreme Court. I 6. 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. 11 . So far as the interest ofthe Revenue is concerned, we are of the considered opinion that the interest of the Revenue has alread v been considered and protected, as has been observed in b 16 36, 37 and,38 of the order which, for ready referencc, is reproduced hereunder 36 For all the aforesaid reasons, the impugnei notices issued and the proceedings drawn by the rescondent- Department is neither tenable, nor sus tainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are accordrngly set aside/quashed. As a qonsequence, all the irnpugned orders gelting quashed, the consequential order; passed by the respondent-Department pursuant to tho notices issued under Section 1 47 and 148 would a lso get quashed and it is ordered accordingly. The reason we are quashing the ionsequential order is on the t)rinciples that when thq initiation of the proceedings ilself was procedurally wrong, the subsequent orders elso gets nullified automalically.

37. The preliminary objection raised by the pe itioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugne 1 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{ime measure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Courl allowing the petitions only on the procedural flaw, .he right 77 conferred on lhe 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 o[ the fact that the earlier order of this High Court in the case of Kanakala Ravindra Reddy (l supra) is subjected to challenge I I before the Hon'ble Supreme Court in SLP No.3574 of 2024, I I preferred by the Income TOx 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 Ravindra Reddy (l stpra). 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 ln favour of the assessee so far as the issue of jurisdiction ls concemed. As a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed. e II I I 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 Kunkanala Ravindra Reddy (l supra). There shall be no order as to costs. Conseque ntly, miscellaneous petitions pendinl;, if any, shalt stand closed //TRUE COPY// SD/. M. OSMAN ALI BAIG ASSISTANT REGISTRAR se$fr^r oFFrcER I Income Tax Officer Ward 15(1), Hyderabad, IT Tower, AC Guards, Masab Tank, Hyderabad-500004. The Principal Commissionerof lncome Tax_4 Hyderab;td, l.T. Towers, 10_2_ 3,A. C. Guards. Hyderabad-S00004 I he Assessment Unit. lncom.e Tax Department, Nation al Faceless Assessmenr centre Derhi rrr^si.v_oiFinlii.li,'ALTiI'i.r" 4c1 .2ndFroor, E- Ramp, Jawatrarla I Nehru StaO ium,' Oerni-il bo"di-""'' Une CC to Sri Dundu Nrlanmohan, eOvocate IOpUCt one cc to Ms Bokaro s,nnj ntdovij.:5cf;i;;i" ) rax) lopuc] Two CD Copies Ou\i Ii To,

2. J. 4 q 6 TJ GJP HIGH COURT DATED:2410412025 t ORDER WP.No.6124 of 202,5 i,r' ., .., z,'i'..-..:' +"\' 10 sEP 2025 --a:*- .? '1..,. \., ALLOWING THE WRIT PETITION WITHOUT COSTS ?+- r u 24