SRIKRISHNA EXIM LLP v. 1. lncome Tax Officer

ORDER (per Hon'ble Sri Justice P.Sam Koshy) Heard Mr. P.Soma Shekar RfddV, leamed counsel for the petitioner and Ms. J.Sunitha, learne{ Junior Standing Counsel for the [ncome Tax Department for respondent Nos.l to 3' Perused the record.

2. This is a writ petition wherp the proceedings are either challenged to the notices which weie issued under Section l48A and 148 of the Income Tax Act, t96t (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 unfler Section l48A of the Act and the subsequent initiation of progeedings under Section 148 of tbe Act by the jurisdictional Assessing Olficer' whereas in terms of the amendment that was brought (o the lncome Tax Act by way of Finance Act, 2021 w.e.f., 01.0{.2021 onwards, proceedings ( 2 under Section l48A of the Act as also under Sr:ction 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 of proceedings being in violation of the Finance ,\ct,2021 i.e., the impugned notices under Section l48A and Section 148 of the Act not being issued in a faceless manner, have already been dealt with and decided by this Court in the case oll KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided oa 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section 148A as also under Section 148 of the Act were held to be bad with consequt:ntial reliefs on the ground of it being in violation of the provisions of Section l5 I A of the Act read with Notification 1812022 dated 29.03.2022. The said judgment passed by this Court has also been sub;equently followed in a large number of writ petitions which were allowed on similar terms. 'l(2023) 156 taxmann.com 178 (Teiangana)l 3

5. Down the line, we find that the same issue has also been decided against the Revenue by vanous High Courts i.e., by the Bombay High Court in the case of HEXAIilARE TECHNOLOGIES LTD., vs. AS$ISTANT 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 REDDF PATLOOLA vs. DEPUTY COMIVtrSSIONER OF INCOME TAXS where the issue was in respect of international taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH vs.iINCOIVIE TAX OFFICER, INTERNATIONAL TAXATION6 lvhich is again on intemational taxation and central circle, High Coqrt of Himachal Pradesh in the case of GOVIND SINGH vs. IICOME TAX OFFICERT, Gujarat High Court in the I 0ase oI MANSUKHBHAI 'lzoz+1464 rrR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Cauhati)l 'l(2024) 165 taxmann.com 115 (Punjab & Haryana)l ' 12024) 167 taxmann.com 4l I (Telangana)l "12024) 166 taxmann.com 679 (Bomba1,)l '[2024) 165 taxmann.com I l3 (HimachFl Pradesh)] I : : i I I i t t I I t ! i I t t t T t I 4 DAIIYABHAI RADADTYA vs. INCOME TAx OFFICE& WARD 3(3XO8, Jharkand High Court in the r:ase of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHEAJER vs. INCOME TAX OFFICER & ANOTIIER and batch of writ petitionsro which stood decided on 19.03.2024. Similar views hav,: also been taken by the Division Bench of Calcutta High Court in the case of GIRDHAR GOPAL DALMIA vs.IIMON Ot'INDIA & ORS (M.A.T 1690 ot2023), decided on 25.09.2024.

6. Even though the same issue having been decided by a large number of High Courts, we are still confronted w'ith large filing of identical matters on daily basis ranging between 5 to l0 writ petitions. That upon the instructions being r;ought ffom the Department, they have been taking a solitary ground that the decision of the Bombay High Court in the ceLse of Hewtware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy *202+ sCC online Guj 4012 '2025 SCC Online Jhar 287 12023 : RJ-JD:4984-DBl o ' ( 5 (1 supra) has been srbjected to phallenge in a Special Leave Petition i.e., SLP No.3574 of 202! before the Hon'ble Supreme Court and the Hon'ble Supreme Gourt is seized of the matter. In addition, there are about 1200 SlPs also fited arising out ofthe same issue being decided by variousiHigh Courts.

7. To a query being put to the leamed counsel for the Revenue, they have categorically accepted thp fact that there is no interim order granted by the Hon'ble Sugreme Court in any of these matters pending before it. Meanyhile, fresh writ petitions of identical nature are being piled up bgfore this Bench on daily basis and the pendency is getting increaspd 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 tapsed, till date, we do not find anf, remediat steps having been taken by the Income Tax Departmett to take appropriate steps to either hold back issuance of notice inder Section t48A and under Section 148 of the Act by the jurlsdictional Assessing Officer, rather the authorities concerned in the teeth of series of decisions I i I I I I I t i t i I I I :I . i II I 6 by all the major High 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 Finance 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 Kanakala Ravindra Reddy (l supra.t, Ieamed Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Depanment where they would be required to hle equal number of SLps before the Hon'ble Supreme Court and it would be further burdening the exchequer ol thc Union of India. It was also thr: contention of the leamed Standing Counsel that no prejudice wou [d be caused to the interest of the petitioners in case if this wdt petition is kept pending till the finalization of the SLPs pending before the Hon'ble Supreme Court and the lact that the petitioner is already enjoying the beneht ol 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 insh.uctions or to take / t,2 7 appropriate steps in ensuring that prpceedings under Section l48A of the Act as also the assessment opders under Section 148 ofthe 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 onlylbe 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 jurisdictionallHigh Courts'

10. As a result of which, what w6 are facing is steep increase of titigation 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 poncerned are still even now in 2025 also initiating proceedings in contravention to the provisions ofsectionl5lAoftheActandaspresultbynow,morethan600 to 700 petitions have been already got piled up belore this High Courtonanissuewhichotherwisestandssquarelycoveredbythe judgment of this Court in the case of Kanakala Ravindra Reddy (l supra). What is also surprisinp is the fact that though while allowing the writ petitions in thp case ol Kanaksla Ravindra Reddy (l supra), the Division Beuch while reserving the right of the Revenue, has also protected the interest of the petitioners t E insofar as the liberty which was granted to the Revenue for initiating fresh proceedings strictly in accordanc,: with the amended provisions of the Act, as amended by the Finance Act, 2020 and the Finance Act, 2021. The petitioner assessee vrould be entitled to challenge or raise the other legal objections if the Revenue initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was reserved for thr: Revenue. On the contrary, they have been still sticking on to tho stand, which this High Court as well as many other High Courts already held to be I l. It appears that because ofthe aforesaid litrcrfy that this High Court had granted permitting the Revenue f,cr initiating fresh 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 enabl e them to meet the limitation that would otherwise come in the way. Likewise, if the writ petition is kept pending for a considerable l,cng period of time and hnally at a later stage if the Hon'ble Suprerne Court 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 advantago of the liberty that is otherwise protected in favour of the Revpnue for initiation of ftesh proceedings from the disposal of thepe matters at a much later stage which would be advantageous and jbeneficial to the Revenue and would be equally disadvantageous a+d detrimental so far as interest of the assesses are concerned. As a consequence, the Income Tax Department gets an extended perio of time for initiation of fresh g proceedings.

12. The alarming trend of docket Qxplosion in this Court, despite the clear precedent setin Kanakala $.avindra Reddy (l supra), is a matter of grave concern. The Inco(e Tax Department's persistent initiation of fresh proceedings, disre$arding the established judicial pronouncements, has led to an unppecedented surge in litigation with over 600-700 petitions piling up on the same issue. This dcliberate approach not only under$ines the principle of judicial precedent but also strains the judiciaf resources unnecessarily. I'he Department's strategy of awaiting th( Supreme Court's decision on pending SLPs while continuing tp initiate fresh proceedings appears to be a calculated move (o buy time and circumvent lirnitation periods, rather than adhefing to the established legal I 10 position. Such conduct raises serious questions about the administrative efficiency and the respect for judicial pronouncements, particularly when this Court hzrs already provided a balanced approach by preserving both the Rr:venue's rights and assesses rnterests

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 ensurin6l that proceedings under Sections 148-A and 148 should not hav,: been issued in a faceless manner, at [east till the [Ion'ble SuprenLe Court decide the twelve hundred ( I 200) odd S LPs which it is already seized of or, at least the Income Tax Department should hav,: found out some remedial steps to ensure that w herever the authorities intend to initiate proceedings under Sections 148-A and 148, other than in a faceless manner, the proceedings should have been deferred without precipitating rhe marrer further intimatirLg the assessee that they shall initiate appropnate proceedings only rafter the SLP's are decided by the Hon'ble Supreme Court on tht: very same issue. This again, the Income Tax Department, has not been able to give a convincing reply, except fbr the fact that such a decision if at alt 11 has to be taken, has to be taken for frre whole of India, and which otherwise has to be by way of a poligy decision and that too at the level of Central Board ol Direct 'lfaxes. Though the leamed Standing Counsel for the Income Tax Department contended that the Delhi High Court dismissed a wri[ 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 befbre the Hon'ble SuPreme Court having been taken on many occasions, the t{on'ble Supremg Court which is seized of the matter has been reluctant in granting any interim protection to the Income Tax Department. Yet, the authorities concemed at the State level are not ready to accept thl verdict passed by a majority of High Courts of different States on the same issue; and to make things further worse, the lncome fax Department is showing audacity by issuing notices continuoufly under Sections 148-A and I I t 72 148 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 COMMISSIOI\ER, INCOME TAXrr, on an issue whether it was justifiable on the part of the Income Tax Department in not following an order passed by the adjudicating aulhority 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 rightly drawn out attention to the decision of this Court in Commissioner of lncomr: Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decison of the co- ordinate Bench of this Court in Samp Furniture (F') Ltd. v. lTOl3 of which one of us (Justice G.S. Kulkarni) was a member, wherein the Court categorically observed that the Reverue having not "accepted" 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 Surrreme Court in Union of lndia vs. Kamlakshi Finance Corporation 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 the relevant observations made by the Supreme Court. t2 11ZOZS'1170 taxmann.com 422 (Bombay)l 1t9l81l13 ITR 589 (Bombay) '3 IZOZ+1165 taxmann.com 581/300 Tarman 452 (Bombay) 'o 1l99z1taxmann.coml6/55 ELT 413 (SC) ./o 13 "6. Sri Reddy is perhaps ripht in saylng that the officers were not actuated iby any mala fides in passing the imp:gned orflers. They perhaps genuinely felt that the claim qf the assess@ was not tenable and that, if it was Eccepted, the Revenue would suffer. But what Sri Repdy overlooks is that we are not concerned here wfth the conectness or otherwise of their conclusipn or of any factual malafides but with the fact thaf the officers, in reaching in their conclusion, by-passe-d two appellate orders in regard to the same issue wflich were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The Hrgh Courti has, in our view, rightly criticized this conduct of the fssistant Collectors and the harassment to the assessPe caused by the failure of these officers to give eiffect to the orders of authorities higher to them in tfle appellate hierarchy. lt cannot be too vehemently qnphasized that it is of utmost importance that, iin disposing of the quasijudicral issues before thgm, revenue officers are bound by the decisions of t$e appellate authorities. The order of the Appellte Collector is binding on the Assistant Collectors working lyithin his jurisdiction and the order of the Tribunal is birfding upon the Assistant Collectors and the Appellate tCollectors who function under the jurisdictron of the Trf bunal. The principles of judicial discipline require that ithe orders of the higher appellate authorities should bie followed unreservedly by the subordinate authorities, The mere fact that the order of the appellate authori[y is not "acceptable" to the department - in itself ani objectionable phrase - and is the subiect matter of an appeal can furnish no ground for not following it lhless its operation has been suspended by a competpnt court. lf this healthy L4 rule is not followed, the.result will only ee undue harassment to assesses and chaos in adrrinistration of tax laws.

12. We have dealt with this aspect at sonre length, because it has been suggested by tho learned Additional Solicitor General that the obr;ervations made by the High Court, have been harsih on the officers. lt is clear that the observations ol the High Court, seemingly vehement, and zrpparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to bemme 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 H gh 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 bindrng on them."

15. What is worrying this Bench more is the lact that an endeavour is being made whole heartedly to ensrrre 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 E f; l 15 Finance Act,2O20 and Finance Act,202l' Now, in order to protect the interest of the Revenue as also that of the assess@, it would be trite at this junchrr€, if we dispose of the wdt petition with an observation/direction that the disposal ofthe instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (l rrp.[) ,hull however be subject to the outcome of the SLPs which wlere filed by the Income Tax Department and which is pending copsideration before the Hon'ble Supreme Court.

16. In the given facts and circur+stances, this Bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarely coverqd by the decision of this Court and which stands fortified by the {ecisions ol the various other High Courts on the very same issr.ie, the pendency of this High Court would further be burdencd *fich otherwise can be decided and disposed of as a covered matter.

17. So far as the interest of the Revenue is concerned, we are of the considered opinion that the intertst o[ the Revenue has already been considered and protected, as h4s been observed in paragraphs I I I \6 36,37 and 38 ofthe orderwhich, forreadyreferertce, is reproduced hereunder:

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the r:spondent- Department is neither tenable, nor sustainable. The notices so issued and the procedure adc,pted being per se illegal, deserves to be and are acccrdingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to lhe 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 gefting quashed on the pornt of jurisdiction, we are not inclined to proceed lurther and decide the other issues raised by the petitioner which stands reserved to be raised and contenled 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 17 confened on the Revenue would remain reser\ed to further if they so wtsnt from the stage of the prooe€d order of the Supreme Cotlrt in the case of Ashish Agarwal, supra.

18. We would only further like tq make observations that since w€ are inclined to dispose of the ingant writ petition, conscious of the fact that the earlier order of t Kanakala Ravindra Reddy (l supra) is subjected to challenge is High Court in the case of 4 before the Hon'ble Supreme Coutt in SLP No.3574 of 2024, preferred by the Income Tax Depafment, we make it clear that , allowing of the instant writ petitior] is subject to outcome of the aforesaid SLP preferred by the Reve{rue against the decision of this High Court in the case of Kanakalg Ravindro Reddy (l supra). This, in other words, would mean thpt either of the parties, if they so want, may move an appropriate pctition seeking revival of this writ petition in the light of the decision ol'the [{on'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 lthe issue ol jurisdiction ls concemed. As a consequence, fhe impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed. 16 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 pencling, if any, shalt stand closed //TRUE COPY// sp/- L. vTJAYA LAXMT ISTANT REGISTRAR \.,,' \', r q SECTION OFFICER erabad'' 514. sth Floor. Sionature tanical €ardens, Serilingimpally Ll To, BM GJ - ll Hycerabad, lT Towers. IVlasab of Finance Govt. of lndia, New Delhi 1 The lncome Tax Officer, Ward 8(1), Hyd Towers, Kondapur, Kothaguda Opp Bo Mandal R.R District, Hyderabad 2. The Principal Commissioner of lncome Tax Tank. Hyderabad, Telangana - 500004. 3. The National Faceless Assessment Centre 4. The Secretary, Union of lndia, Ministry of 5. One CC to SRl. P. SOMA SHEIGR REDDY, Advocare tOpUCl 6 One CC to Ms. J. SUNITHA (JUNIOR SC FOR TNCOIMETAX) 1OeuC1 7. One CC to SRI. GADI PRAVEEN KUMAR, DY. SoLICITOR GENERAL oF rNDrAloPUCl 8 Two CD Copres o Delhi - 1 10 001 . Finance, 166-8 North Block, New lncomer Tax Department, Ministry HIGH COURT DATED:2410412025 ORDER WP.No.7528 ot 2025 ..a, .,:r: <') {HE S 14 '(' i ri 2 3 AUG 2025 ALLOWING THE WRIT PETITION WITHOUT COSTS 09 \L