The High Court · 2025

challenged to the notices which were 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 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 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 2 of Finance Act, 2021 w.e.f., 01.04.2021 onwards, proceedings :.'l under Section 1484' of the Act as also under Set:tion 148 of the Act ought to have also been issued and proceeded in a faceless ma nner.

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance A<t, 2021 i.e., the impugned notices under Section 148,,4. and Section 148 ofthe Act not being issued in a faceless manner, have alreadl been dealt with and decided by this Court in the case ol- KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFI(]ERr decided on 14.09.2023 whereby a batch of writ petitions wDrc allowed and the proceedings initiated under Section l48A as alst under Section 148 of the Act were held to be bad with consequential reliels on the ground of it being in violation of the provisions of Section l5lA of the Act read with Notification 1812022 dated 29.03..1022. The said judgment passed by this Court has also been subsequcntly followed in a large number of writ petitions which were allowed on similar terms. 'l(2023) I56 taxmarLn.com 178 (Telangana)I .,

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. LJNION OF INDIA3, Punjab and l{aryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the case of SRI VENKATARAMANA NbNOY PATLOOLA VS. DEPUTY COMMISSIONER OF II\COME TAX5 where the issue was in respect of intemational taxation, Bombay High Court in the case of ABHTN ANILKTMAR 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 '7zoz+1464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauhati)l ' l(2024) I 65 taxmann.com I l5 (Punjab & Haryana)l ' [2024) 167 taxmann.com 41 I (Telangana)] " 12024) 166 taxmann.com 679 (Bombay)l ' 12024) I 65 taxmann.com I 13 (Himachal Pradesh)l 4 DAHYABHAI RADADIYA vs. INCOME I'r\X OFFICER, WARD 3(3X5)13. Jharkand High Court in the case of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case ol SHARDA DEVI CHHAJER vs. IN(IOME TAX OFFICER & ANOTHER and batch.of writ p,:titionsr0 which stood decided on 19.03.2024. Similar views have rlso 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), decihed on25.09.2024.

6. Even though the same issue having been decided by a large number ol High Courts, we are still confronted witL large filing of identical matters on daily basis ranging between 5 to 10 writ petitions. That upon the instructions being sought ltom the Departme nt, 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 wtrich has been decided by this Court in the case of Kanakala Ravindra Reddy 8202q scc online Guj 4012 '2025 SCC Online lhar 287 o y2023 : RJ- JD : 49ti 4- D B l ' ) 5 (l 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.

1. 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 14.09.2023 and more 1 6 months have tapsed, titl date, we do not find any remedial steps having been taken by the [ncome 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 6 \--,r by all the major IIigh Courts in India are continuously still - initiating 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 Finan:e 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 (1 supra), k:arrred 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 Coun and it would be further burdening the exchequer of the Union of tndia. It was also the contention of the leamed Standing Counsel that no prejudice would br: 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 alr:ady enjoying the benefit of interim protection. Nonetheless, on thc earlier query of this Court as to rvhy the Income Tax Department f ave not come out with a mechanism to issue appropriate instructic,ns 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 hotd in the light ofthe 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 ofCBDT as any such steps would have to be taken Pan lndia 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 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 lavindra Reddy (l supra). What is also surprising is the fact that though while altowing 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 \ "-1 \ \. .l 8 insofar as the liberly which was granted to the Revenue for - initiating fresh proceedings strictly in accordance v.,ith the amended provisions of the Act, as amended by the Financ,: Act, 2020 and the Finance Act,202l. The petitioner assessee worrld be entitled to challenge or raise the other legal objections if the Flerenue initiates fresh proceedings. 1'he Department has made no endeavour in availing the said liberty that was reserved for the Revenue. On the contrary, they have been still sricking on to the stand, which this High Courl as well as many other High Courts alr:ady held to be bad.

11. It appears that because of the aloresaid libert..,that this High Court had granted permitting the Revenue for nitiating fresh proceedings as a one-time mcasure in a faceless manner, the Income Tax Department wants to take advantage c,f the same by protracting these proceedings which would enable thsnr to meet the limitation that wpuld 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 ( ourt confirms the decision taken by this High Court as also by the other High Courts in which the Sl.Ps are still pending, the I ncome Tax ( I I 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 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 oldocket explosion in this Court, despite the clear precedent set in Kanakala Ravindra Reddy (l supra), is a matter of grave concern. The Income Tax Department's persistent initiation of lresh 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 white 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 1 position. Such conduct raises serious questions about the administrative efficiency and the respect for judicial pronouncements, particularly when this Court has iLlready provided a balanced approach by preserving both the Revenue's rights and assesses lnterests

13. Another aspect which needs to be considered is that in fact it should have been realized by the Incorne Tax [)epartnrent itself and should have found out via media in ensuring that 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 fc,und out some remedial steps to ensure that wherever the authorities rntend to initiate proceedings under Sections 148-A and 148, other than 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 beer able to give a convincing reply, except for the fact that such a de,;ision if at all 7 11 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 'faxes. 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 Fligh Court is struggling to reduce its pendency, such notices which are under challenge in this writ petition are forcing the assessec to knock the doors of this High Court resulting in filing of hundreds of new writ petitions which in the long run not only allects the disposal of the writ petitions but also consumes substantial time of the Bench in hearing these matters again and again on daily basis. Admittedty, 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 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 Tax Department is showing audacity by issuing notices continuously under Sections 148-A and 72 l 148 through the jurisdictional Assessing Olficer v"hereas it ought to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs. .,\SSISTANT COMMISSIONER, INCOME TAXrr, on an issuc ri'hether it was justifiable on the pa( of the Income Tax Dcpartmcnt in not foltowing an order passed by the adjudicating authcrity only on the ground that the appeals are pending, the Division f]ench of the High Court of Bombay held at paragraph No.25 as rLnder, viz., : "25. Mr. Paridwalla has rightly drawn out attention to the decision of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafr2 as also the recent decision of the co- ordrnate Bench of this Court in Samp Furniture (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 "accepled" the judgment of the High Court would not nrean that till the same is set aside in a manner known to law, it world loose its binding force. Refernng to the decision of the Suprerne 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 criticized by the Supreme Court. ln such decision, following are t le relevant observations made by the Supreme Court. " [(2025) 170 taxmann.com 422 (Bombay)] t2 yt9781 I 13 ITR 589 (Bombay) " 1ZOZI1l65 taxmann.com 581/300 Taxman 452 (Bornba)'t llggzltaxmanr.com l6155 ELT 433 (SC) -7 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 lhat the clarm 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 wrlh the borrectness or otherwise of their conclusion or of any factual malafides but with the fact that the officers, in reaching in their conclusion, by-p?ssed 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 officgrs 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 wilhin 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 authoritres. 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 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 i I '\] 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 obser/ations made by the High Court, have been harsh :n the officers. lt is clear that. the observations of th3 High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only rntended lo curb a tendency in revenue matters which, if allovred to become widespread, could result in considerable harassment lo the assesses-public without any benefit to the Revenue. We would like to say thirt the department should take these observations n the proper spirit. The observalions 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 jrdicial 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 lact that an endeavour is being made whole heartedly to ensure tot 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 r iolative of the ( 15 Finance Act,2020 and Finance Act,202l . 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 fited 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 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 of as a covered matter. 11 . So far as the interest of the Revenue is concemed, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs

1.6 r-i \ 36,37 and 38 ofthe order which, for ready reference, is reproduced .l hereundt:r 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 procbdure adopted being per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the inlpugned 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 reEtson we are quashing the consequential order is on the p-inciples 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 allcwed 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 petitione' 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 lrreasure exercising the powers under Article 142 cf the Conititution of lndia, permitted the Revenue to p,166ss6 under the substituted provisions, and this Court ellowing the petitions only on the procedural flaw, the right 17 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 Agarwai, 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 Kanakala Ravindra Reddy ll supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, preferred by the Income,Jax Department, we make it clear that ( ( allowing of the instapt 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 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 o[ the Hon'ble Supreme Court in the pending SLP on the very same issue. I 9. Accordingly, the instant writ petition stands allowed ln 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 stands set aside/quashed 18 The consequential orders, if any, also stand set asitle,'quashed in similar terms as have been passed by this High Court in the case of Kankanola Ravindra Reddy (l supra). There shall be no order as to costs Consequently, miscellaneous petitions pending, if any, shall stand closed //TRUE COPY// SD/. AHMED ABDULLAH KHAN ASSISTANT BEGISTRAR fto, SECflOil OFFICER To, 1 . Assessment Unit, National Faceless Assessm^ent^Centre' lncome Tax ' ii;."";;;;i. vinl.t.v of Finance' Room No 401 ' 2nd F loor' E-Ramp' Jaiit'.raaat Nehru Sladiom, Delhi - 110 003' tvlasab Tank, Hyderabad Telangana-500004

2. The lncome tax officer' Ward 1 5(1 ), Hy - 3. The Secretary Union of lndia' Ministry of Finance North Block' New Delhi-110 ^erabad/ I T TCTWER' AC Guards' 001

4. One CC to SRl. THANNERU CHAITANYA KUIVAR Arlvocate [OPUC] 5. One CC to SRI GADI PRAVEEN KUMAR Dy SOLICITOR GEN OF INDIA loPUCl

6. One CC to tvls B.SAPNA REDDY JR SC FOR INCOI/ E TAX DEPARTMENT loPUCl Two CD Copies 6 7 KKS T HIGH COURT DATED:24104t202s I ..:i?, j\'\. /,./ ii' !) -l ' 4,, \. lts sEP 206 t- ,, a ,.,:l ORDER WP.No.7171 of 2O2S ALLOWING THE WRIT PETITION WITHOUT COSTS \