High Court · 2025

Judgment

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Petition under Article 226 of lhe Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith' the High Court may be pleased to pass an order or direction' especially one in the nature of WRIT OF IVANDAMUS holding that the notice dated 30 03 2024 issued by 2nd Respondent under section 148 of the Act (with DIN and Notice No ITBA/AST/S/148 112023- ab initio, apart from being violative of provisions of section 148A and section 149 of the Act and arso contrary to the circurar issued by cBDT and provisions of .151A of the Act, and consequenfly set aside the notice under section '148 dated 30.03.2024 and ihe assessment order passed by 1st Respondent for asst' year 2O2O-21under section 147 r'w s 144 r'w s 144B of the Act' dt 10 02'2025' 2411063690038(1))asbeingwithoutiurisdiction'arbitrary'illegal'badinlaw'void section t: IANO:1 oF2025 petition under section 1 51 cpc praying that in the circumstances stated in the affidavit fired in support of the writ petition, the High court may be preased to stay a' pending penarty proceedings incruding stay of corection of tax demand raised by .l st Respondent for the Ay 2O2O_21 . Counsel for the petitione ., y;i s E N fl N G co u nse r ror the Res po nr",,, i x:,iT^"Jli,, AIhREPRE j":*:li,Iji,5::Ifl?F"? .",", 3EE1._"#.J^:+" Respondent 2: Ms. J. suNtrHA, Jr. sc FoR tNcoME rAx The Court made the following: ORDER TIIE IIONOURABLE rHE HoNouRABLmffiS:E Sru JUSTICE P'SAM KOSIIY NAR'ING RAo w.P.No.621 OF 025 7 1 ORDER' (per Hon'ble Sri Justice P Sam Koshy) Heard Ms' K' Prabhabati' learned counsel representing Mr. A.V.Raghu Ram' Iearned counsel for the petitioner and Ms. J.Sunitha, learned Junior Standing Counsel for the Income Tax Department tbr 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 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 148A of the Act and the subsequent initiation ofproceedings under Section 148 of the Act by the jurisdictional Assessing Ofhcer' 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 l4gA ofthe Act as also under Section I4g ofthe Act ought to have also been issued and proc _,"_vu <uru proceeded in a faceless manner.

4. The contention of the petitioner is that the issue of proceedings being in violation of the Financ e Act, 2021i.e., the impugned notices under Section 14gA and Section 14g of the Act not being issued in a faceless manner, have alreadybeen dealt with and decided by this Courr in rhe case of KANKANALA RAVINDRA REDDY vs. INCOME_TAX OFFICERT decided on 14.09.2023 whereby a babhof writ petitions were allowed and the proceedings initiated under Section l4gA as also under Section 148 of the Act were held to be bad with consequential reliefs on the ground ofit being in violation of the provisions of Section r51A of the Act read with Notification t8/2022 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 allowed on similar terms. '(2023) 156 taxmann.com 178 (Telangana)l I J

5. Down the [ine, we hnd that the same issud''tras also been decided against the Revenue by various High Courts i'e" by the Bombay High Court in the case of IIEXAWARE TECHNOLOGIES LTD., VS. ASSISTANT COMMISSIONER oFINCOMETAx&oTIIERS2,GauhatiHighCourtinthecase of RAM NARAYAN SAH vs' IINION 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 TA)t' where the issue was in respect of intemational taxation' Bombay High Court in the case of ABHIN ANILKTIMAR SHAH VS. INCOME TAX OFFTCER' INTERNATIONAL TAXATION6 which is again on international taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND STNGH vs' INCOME TAX OFFICEFf' Gujarat High Court in the case of MANSUKIIBIIAI 'eozql464 ITR 430 (Bom) 'ifznzil I56 taxmann.com 478 (Gauhati)l " l(2024) 165 taxmann.com 115 (Punjab & Haryana)l 'i)ozq)' $l taxmann.com 411 (Telangana)l "izozq 166 taxmann.com 679 (Bombav)l 'i;;;i;I65 ,*rnuon'tom I l3 (Himachal Pradesh)l t" I DAHYABHAI RADADIIA vs. TNCOME TAX OF,F,ICER, WARD 3(3X5)8, Jharkand High Court in the case of SIfyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Courr in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsr0 which stood decided an 19"03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court in the case of GIRDIIAR 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 confronted with large filing of identical matters on daily basis ranging between 5 to i 0 writ petitions. That upon the instructions being sought flom the Department, they have been taking a solitary ground that the decision of the Bombay High Court in the case of Hexuh,are Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanukala Ravindra Reddy 8202q SCC Online Gtj 4012 '2025 SCC Online Jhar2gT 12023 : RI_JD:49g4_DB , u I \ 5 (f.supra)'has, been subjected 'to chpllenge 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 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 of notice 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 ( I 6 i. by ail the major High Courts in India are continuously still 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 Income Tax Act pursuant to the Finance Act,2020as also the Finance Act2O2l . 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 (l supra), 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 equar nunber of slps 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 counser that no prejudice would be 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 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 l I I I I I appropriate steps in ensuring that proceedings 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 level of GBDT 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 alsoinitiating proceedings in contravention to the provisions of Section 151A 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 (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners . -'*1n:ir&.rtt--...t&1l .tr'. -: D ins:iar as the iri;n.r rvirici wao granted to the Revenue fcr 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,202r. The petitioner assessee wourd be entitled to challenge or raise the other Iegal objections if the Revenue initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was reseryed 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 aforrsaid liberty that this High cou( had granted permitting the Revenue for initiating fiesh 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 the other High Courts in which the SLps are still pending, the Income Tax i I ! 9 Department,wogld get thc aqvar\tage:of the liberty that isothenrtse 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 fresh proceedings'

12. The alarming trend of docket explosion in this Court' despite the clear precedent set irt 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 buy time and circumvent limitation periods, rather than adhering to the established'legal ) 10 administrative efficiency and the position. Such conduct raises serious questions about 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 l4g-A and 14g 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 ifis already seized ofor, at Ieast the Income Tax Department should have fbund out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections l4g-A and l4g, other rhan in a faceless rnanner, 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 convincing reply, except for the fact that such a decision if at all \ \ L\ 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 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 simiiar 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 before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the matterhasbeenreluctantingrantinganyinterimprotectiontothe lncome Tax Depaftment' 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 Tax Department is showing audacity by issuing notices continuously under Sections 148-A and 12 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAX[, on an issue whether it was justifiable on the part of the Income Tax Department in not 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. paridwalla has righfly drawn out attention to the decision of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also lhe recent decision of the co_ ordinate Bench of this Court in Samp Ftirniture (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 judgment of the High court wourd not mean that ti the same is set aside in a manner known to law, it would loose its binding force. Referring to the decision of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.r4, 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. ',',112g_Z1l tlO taxmann.com 422 (Bombay)l '' Ll978l I I 3 ITR 589 (Bombay) '3 IZOZ+1 165 raxmann.com 5g t/300 Taxman 452(Bombay) 'o lgeZl taxmann.com l6155 ELT 433 (SC) \^\ 73 "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 conectness 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 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 Sisposing 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 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 - and is the subject mafter of an appeal can fumish no ground for not following it unless its operation has been suspended by a comPetent court lf this healthy 1 i 'l 14 rule is not followed, the result will only be undue harassment to assesses and chaos in administration of tax laws. aspect at some rength, ggested by thd rearned ""r-,'i'".I;"I"^::T::'il: oo"u*u"ons of the High t"nt' and apparenry u'" on'' intended to curb

12. We have dealt with because it has been .this Additionar soticitor cene made by the Hish officers. lt is clear that th court, seemingry ,"n." unparatab,e ,o ,nu *"r"nr. a tendency in revenue ,r' become widesp*"., "",in"i]J:::' :;,"#::r: harassment to the assesses to the p.evenue *" *"Jr'ol;"-f::;'l^::T: department should take th proper spirit. rnu oo"e,.rriili"Tfft';ln:':"1; should be kept in rnind in fuir shcurtr be paid by,,e "il,ff;t lil,f"'#il: appellare authoiities to the a;;iorine ano tne neeJ ;;; -.i'Ho" ;::::: of the higher appellate autho rrities 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 15 Finance Act,2020and Finance Act,ZOZl. 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 facts and circumstances' this Bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarely covled bV the dectlon of this Court and which stands fortified b;. 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 ofthe Revenue is concerned' we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs ' 't'.t' -- 75 36,31 and 38 ofthe order y[j6[, 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 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 142 and 14g 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 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 Agarwal, supra, as a one_time measure the powers under Article 142 of the Constitution of lndia, permitted the Revenue lo proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the 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 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 Kunakala Ravindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No'3574 of 2024' preferred by the Income Tax Department' we make it clear that allowing of the instant writ petition is subj ect to outcome of the aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravindta Reddy (l sttpra)' 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 in 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' 't 18 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 //TRUE COPYII SD/- L. VIJAYA LAXMI ASSISTANT REGISTRAR l { SECTION OFFICER Assessment Unit, National Faceless Assessment Centre, lncome Tax Department. Ministrv of Finance, Room No. 4Oi,-Z"O Ffobr, E-R;r;;' Jawahartat Nehru Siadium, Dethi - i iO OO5. 119-,ll:?Ti^Igx_officer, ,Ward -. 1 1(1 ), sisnature Towers. opp. Botanicat uaroens, Kondapur, Hyderabad _ 500094. 9n. 99 tc Sri A. V. Raghu Ram, A.dvocjte IOPUCI t-lne CC to Sri Dominic Fernandes (senior Sta'nding iounsel for CBIC) loPUCl One CC to SRI J. SUNTTHA,SC FOR INCOME TAX. [OPUC] Two CD Copies To, 2 3 4

6. TJ GJP Pprq. HIGH COURT DATED:2410412025 ORDER WP.No.6217 of Z0Zs ( + .-., ,,{ , ,"-t- e 1"\ ilJ 1E SEP 2025 \'\{\. l:^ ALLOWING THE WRIT PETITION WITHOUT COSTS P$&. s\+\'<