Katam v. Assistant Commissioner of lncome Tax Circle 13(1)

ORDER, (pe r Hon'ble Sri Justice P.Sam,Koshy) Heard Mr. Dundu ManmohEn, learned counsel for the petitioner and Ms. B.Sapna Reddy, learned Junior Standing Counsel for the Income Tax Depanment for respondent Nos. I 2 and 4. Perused the record.

2. This is a writ petition where the proceedings are either challenged to the notices which werp issued under Section l48A and 148 of the Income Tax Act, 196l (for short'the Act') or the assessment orders those have been passed under Section I47 of the Act which have been assailed.

3. This writ petition is being takgn up today only on one of the grounds, that the notices issued un{er Section l48A of the Act and the subsequent initiation of proceedings 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 l48A ofthe Act as also under Section 148 ofthe Act ought to have also been issued and proceeded rn a faceless manner

4. The contention of the petitioner is that the issue ol proceedings being in violation of the Finance Act,202l i.e., the impugned notices under Section 148A and Section 148 of the Act not being issued in a faceless manner, have already been dealt with and decidecl by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section l48A as also 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 ofSeclion l5lA of the Act read rvith Notification 1812022 dated29.03.2022. The said judgment passed by this Court has also been subsequently followed in a large number ol writ petitions which were allowed on similar ' l(2023) I 56 taxmann.com 178 (Telangana)l

5. Down the line, we find that t[re same issue has also been decided against the Revenue by various High Courts i.e., by the Bombay High Court in fhe case of HEXAWARE TECHNOLOGIES LTD., VS. ASStrSTANT COMMISSIONER OF INCOME TAX & OTHERS2, Qauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIAT, Punjab and Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangpna 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, Bonlbay High Court in the case of ABHIN ANILKUMAR SHAH VS. TNCOME TAX OFFICER, INTERNATIONAL TAXATION6 which is again on intemational taxation and central circle, High Couft of Himachal Pradesh in the case of GOVIND SINGH vs. Itr{COME TAX OFFICERT, Gujarat High Court in the cpse of MANSUKHBHAI 'pzoz+l464 ITR 430 (Bom) '[(2024) 156 taxmann.com 478 (Gauhatl)] " l(2024) 165 taxmann.com 1 15 (Punjab & Haryana)l ' [2024) I 67 taxmann.com 41 1 (Telangana)] " [2024) 166 taxmann.com 679 (Bomba$] ' [2024\ 165 taxmann.com 113 (Himachdl Pradesh)] 4 - DAHYABHAI RADADIYA vs. INCOME TAX OFFTCER, WARD 3(3X5)8, Jharkand High Courl in rhe case ol' SIIYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan lJigh 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 in the case of GIRDHAR 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 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 o1' Hexaware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy '2ozq SCC Online Guj 4012 '2025 SCC Online Jhar287 72023, RJ- JD : 49 84- D B l o ' - 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 H[gh Courts.

7. To a query being put to the lear4red counsel for the Revenue, they have categorically accepted the fiact that there is no interim order granted by the Hon'ble Suprgme Court in any of these matters pending before it. Meanwhile, fresh writ petitions of identical nature are being pited up befpre this Bench on daily basis and the pendency is getting increase( 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 14.09.2027 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 thd teeth of series of decisions ,i\ by ,.!i t--:; n;i;t- .g.- ,,r-i:, '.' india are cr,ntinuously still - initiating proceedings under Section l48A of the Act and also initiating proceedings under Section 148 ot- the Act in contravention to the amendrnents brought into the Income Tax Act pursuant to the Finance Act. 2020 as also thc Financc Act 2021 .

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 Ksnakala Ravindra Reddy (l supra), learned Standing Counsel for the lncome Tax Department contends that those would unnecessarily burden the Income Tax Department where they would be required to file equal number of SI-Ps before the Hon'ble Supreme Court and it would be lurther burdening the exchequer of the Union of lndia. lt was also the contention of the leamed Standing Counsel 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 Courl as to why the Income Tax Department have not come out with a mechanism to issue acpropriate instructions or to take 7 appropriate steps in ensuring that prqceedings under Section l48A of the Act as also the assessment orders under Section I48 of the Act are kept in a hold in the light of ithe decisions dedcided by the various High Courts, it was submi(ted 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 Fligh Courts

10. As a result of which, what we pre lacing is steep increase of Iitigation day in and day out even thqugh various orders have been passed by this I{igh Court allowing writ petitions on the very same issue. The Income Tax authorities cqncemed are still even now in 2025 also initiating proceedings in cqntravention to the provisions of Section l5lA of the Act and as a pesult 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 ol this Court in the case qf Kanakala Ravindrt Reddy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the pase of Kanakala Ravindra 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 tiberty 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 Act' 2020 and the Finance Act,202l . The petitioner assessee woul<1 be entitled to challenge or raise the other legal objections ilthe Revr:nue initiates fresh proceedings. The Department has made no cndeavour in availing the said liberty that was reserved for the Revcnue On the contrary, they have been stitl sticking on to the stand, which this High Court as well as many other High Courts alrcatly held to be bad. I l. It appears that because of the aloresaid liberty that this High Court had granted permitting the Revenue for ini tiating fresh proceedings as a one-time measure in a faceless manner' the Income Tax Department wants to take advantage ol the same by protracting these proceedings which would enable thern to meet the timitation that would otherwise come in the way' t'ikewise, if the writ petition is kept pending for a considerable long period of time and hnally at a later stage if the Hon'ble Supreme C()urt confirms the decision taken by this High Court as also by the other High Courts in which the SLPs are stilt pending, the Income Tax - 9 Department would get the advantage of the liberty that is otherwise protected ln favour of the Revsnue for initiation of fresh proceedings from the disposal olthesp matters at a much later stage which would be advantageous and beneficial to the Revenue and would be equally disadvantageous anfl 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 elplosion in this Court, despite the clear precedent setin Kanakala Reddy (l supra), is a tavindra matter of grave concern. The Incomq Tax Department's persistent initiation of fresh proceedings, disreg &rdin g the established judicial pronouncements, has led to an unppcedented surge in litigation with over 600-700 petitions piling pp on the same issue. This deliberate approach not only undenrlines the principle ofjudicial precedent but also strains the judicial resources unnecessarily. The Department's strategy of awaiting thel Supreme Court's decision on pending SLPs while continuing to initiate fresh proceedings appears to be a calculated move to buy time and clrcumvent limitation periods, rather than adhe4ing to the established legal 10 - position. Suci; conriuct raises serious questions about the administrative efficiency and the respect lor judicial pronouncemcnts, particularly when this Court has alrcady provided a balanced approach by preserving both the Revenue's nghts and assesses interests.

13. Another aspect which needs to be considered is that in fact it should have lteen realized by the Income Tax Departnrent itself and should have found out via media in ensuring thaL proceedings under Sections 148-A and 148 should not have becn issued in a faceless manner, at ieast till the Hon'ble Supreme C'ourt decide the twelve hundred (1200) odd SLPs which it is already seized of or, at least the Income Tax Department should have firtrnd out some remedial steps to ensure that wherever the authorrties intend to initiate proceedings under Sections 148-4 and 148, other than in a faceless manner, the proceedings should have been delerred without precipitating the matter further intimating lhc assessee that they shatl 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 11 has to be taken, has to be taken for {he whole of India, and which otherwise has to be by way of a polipy decision and that too at the level of Central Board of Direct Taxes. Though the leamed Standing Counsel for the Income Tqx Department contended that the Delhi High Court dismissed a writ petition of similar nature, on the one hand when the High Couft is struggting to reduce its pendency, such notices which are under challenge in this writ petition are forcing the assessee to llnock the doors of this High Court resulting in filing of hundreds Qf new writ petitions which in the long run not only affects the dispiosat 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 Supremd Court which is seized of the matter has been reluctant in granting Bny interim protection to the Income Tax Department. Yet, the puthorities 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 -l1ax Department IS showing audacity by issuing notices continuouslly under Sections I48-A and 12 .- 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner.

14. [n thc case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAX'r, on an issue rvhether it was .lustitiable on the part of the Income Tax Depanrnent in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division Bench of lhe fligh Court of Bombay held at paragraph No.25 as under, viz., : ivlr. Paridwalla has rightly drawn out attention to the "24. decision of this Couri in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Court in Samp Furniture (P) Ltd. v. lTOl3 of which one cf us (Justice G.S. Kulkarni) was a rnember, wherein the Court categorically observed that the Revenue having not ''accefited' the judgment of the High Court would not mean that till 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.14, the Courl observed that the approach of the officials of Revenue 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. 11zOZs; 170 taxmann.com 422 (Bombay)l r' '' Jl9z81 I t3 trR 589 (Bombay) " 7ZO2+1 [65 taxmann.com 581/300 Taxman 452 (Bombal) 'o 1t9921taxinann.ccm l6155 ELT 433 (SC) 13 "6. Sri Reddy is perhaps rigftt in saying that the officers were not actuated by any mala fides in passing the impugned ordeps. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was aocepted, 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 tlire officers, in reaching in their conclusion, by-passed hyo appellate orders in regard to the same issue which were placed before them, one of the Collector (AppBals) and the other of the Tribunal. The High Court h|s, in our view, rightly criticized this conduct of the Aspistant Collectors and I the harassment to thei assesseq caused by the failure of these officers to give efflct to thei orders of authorities higher to them in the Fppellate 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 Collef tor is binding on the Assistanl Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Cqllectors who function under the jurisdiction of the Tribqnal. The principles of judicial discipline require that thO orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority ls not "acceptable" to the department - in itself an o$jectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unlqss its operation has been suspended by a competenl court. lf this healthy 74 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 length, 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 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 Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities and 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 binding on them." I 5. 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,2020 and Finance Act,2All: Now, in -ord0ntd protect the interest of the Revenue as also that of the assessee, it would be trite at this junchrre, if we disposei of the writ petition with an observation/direction that the dispos4l of the instant writ petition in terms of the judgment rendered by dlr High Court in the case of Kankanala Ravindra Reddy (1 supr4) shall however be subject to the outcome of the SLPs which wpre filed by the Income Tax Department and which is pending corhsideration before the Hon'ble Supreme Court.

16. In the given facis and circumlstances, this Bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarely covere{ by the decision of this Court and which stands fortified by the dpcisions of the various other High Courls on the very same lssu , the pendency of this High s i Court would further be burdened whlich otherwise can be decided and disposed of as a covered matter. 17 . So far as the interest of the Reyenue is concemed, we are of the considered opinion that the intereft of the Revenue has already been considered and protected, as hag been observed in paragraphs .- 1-b 36,37 ano 38 of the order u,hich, foi ready reference, is reproduce:i hereunder:

36. For all the aforesaid reasons, the impugned nolices 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 147 and 148 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 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 Court allowing the petitions only on the procedural flaw, the right t7 E I conlerred on the Revenue would remain reserved to proceed furlher if they so want from the stage of the order of the supreme court iq the case of Ashish Agarwal, supra.

18. We would only further like to m4ke observations that since we are inclined to dispose of the instant writ petition, conscious ol the fact that the earlier order of this kigh Court in the case of Kanakala Ravindra Reddy (l supra),is subjected to challenge before the Hon'ble Supreme Court irir 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 prelerred by the Revenue iagainst the decision of this High Court in the case of Kanakala \avindra Reddy (l supra)' This, in other words, would mean that dither of the parties, if they so want, may move an appropriate petilion seeking revival of this writ petition in the light of the decisiofl of the Hon'ble Supreme Court in the pending SLP on the very saqle issue'

19. Accordingly, the instant writ petition stands allowed in f,avour of the assessee so far as thg issue of jurisdiction IS concemed. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed' 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 ol Kankunala Ravindra Reddy (l supra). There shall be no order as to costs Consequently, rniscellaneous petitions pending, if any, shall stand closed SD/. AHMED ABDULLAH KHAN ASSISTANT REGISTRAR //TRUE COPY// secrEHkrrcen 1 . Assistant Commissioner of lncome Tax Circle 13('l ), Hyderabad, Aaykar Bhawan, Opposite LB $tadium, Basheer Bagh, Hyderabad, Telangana, 500004 2. The Principal Chief Commissioner of lncome Tax AP and TS, lOth Floor, C- Block, LT. Towers, 10-2-3, A.C. Guards, Hyderabad-500004. 3. The Assessment Unit, lncorne Tax Depaltment, Nationa! Faceless Assessmenl Centre, Delhi, Ministry of Finance, Room Nc,. 401 ,znd Floor, E- Ramp, Jawaharlal Nehru Stadrum, Delhi-1 '10003 4. lncome Tax Officer, Ward 15(1), Hyderabad, l.T. Towers AC Guards, Masab 5. One CC to Sri Dundu lt4anmohan, Advocate [OPUC] 6. One CC to IVls Bokaro Sapna Reddy (Jr. SC for lncome Tax) [OPUC] 7. Two CD Copies Tank, Hyderabad-500004 To, TJ GJP HIGH COURT DATED:2410412025 ORDER WP.No.6779 of 2025 tl' € o.. ll.' \, 21 IIJB 2025 .zi/ -_i_-- ALLOWING THE WRIT PETITION WITHOUT COSTS c a /4{ // 5