The High Court · 2025

Petition under Section 151 CPC praying that in th€, circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay all further proceedings pursuant to the Assessment Order dt. 13.03.2023 passed by the 3'd respondent uts 147 r.w.s 14411448 of the lncorne-tax Act for A.Y. 2015- 16 vide DIN No. ITBA/AST/S/14712022-231105069863'1 ('l)and may pass such other orde(s) as the Hon'ble Court deems fit and proper in the interests of substantial justice, as otherwise the Petitioner would be put to irreparable loss and severe in,ury. Counsel for the Petitioner: SRl. OUNOU MANMOHAN Counsel for the Respondents: Ms. J. SUNITHA (JUNIOR SC FOR INCOME TAX) The Cou( made the following: ORDER I THE HONOTJRABLE SRI JUSTICE P.SAM KOSHY AND THE HONOTJRABLE SRI JUSTICE NARSING RAO NANDIKONDA W.P.No.7674 OF 2025 ORDER, (per Hon'ble lri Jttstice P.Sam Koshy) Heard Mr. Dundu Manmohah, learned counsel for the petitioner and Ms. J.Sunitha, leamed Junior Standing Counsel for the Income Tax Departmedt for respondent Nos. I and 2. Perused the record.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section l48A and 148 olthe lncome Tax Act, 196! (for short 'the Act') or rhe assessment orders those have been ppssed under Section 147 of the Act which have been assailed. l. This writ petition is being taken up today only on one of the grounds, that the notices issued undetr Section l48A of the Act and thc subsequent initiation of proce$dings under Section 148 ol the Act by the jurisdictional Assessing Offrcer, whereas in terms olthe amendment that was brought to the Income Tax Act by way ol lrinance Act, 2021 w.e.f., 01.04.2021 onwards, proceedings ( .. -\ 2 under Section l48A of the Act as also under Slection l4g 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, ZOZI i.e., the impugned notices under Section l4gA and Section l4g ofthe Act not being issued in a faceless manner, have already been dealt with and decided by rhis Court in the case oI. KANKANALA RAVINDRA REDDY vs. INCOME_TAX OI.FICERT decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section r4gA 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 o:l Section l5lA of the Act read with Notification lgl2022 dated29.03.2022. T\e said judgment passed by rhis Courr has also been subsequently followed in a large number oI writ petitions which were allowed on similar terms. '[(2023) 156 raxrnann.corn 178 (Telangana)] 3

5. Down the line, we find that the same issue has also been decided against the Revenue by various High Courts i.e., by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIOI\ER OF INCOME TAX & OTIIERSz, Qauhati 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 REDDYPATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of intemational taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICE& INTERNATIONAL TAXATION6 which is again on international taxation and central circle, High Court of Himachal Pradesh in the case ol GOVIND SINGH vs. IflCOME TAX OFFICERT, Gujarat tligh Court in the case of MANSUKIIBHAI '1zozq 464 ITR 430 (Bom) '[(2024) 156 taxmann.com 478 (Gauhati)] ' [(2024) [65 taxmann.com I 15 (Punjab & Haryana)] ' [2024) 167 taxmann.com + t I (Telangana)J " [2024) 166 laxmann.com 679 (Bombay)] '12024) 165 taxmann.com I 13 (Himachal Pradesh)l H 4 DAIIYABHAI RADADIYA vs. INCOME TAx OFFICE& WARD 3(3X5)8, Jharkand High Court in the case of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Ra.lasthan High Court in the case of SHARDA DEV| CHHAJER ,i,s. INCOME TAX OITICER & ANOTIIER 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 c.urt in the case of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 of 2023),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 with large filing of identical matters on daily basis ranging betvreen 5 to l0 writ petitions. That upon the instructions being sought from the Department, they have been taking a solitarl ground that the decision of the Bombay High Court in the c:ase of Hexaware Technologies Ltd., (2 supra) as also the one: which has been decided by this Court in rhc case of Ksnakala Ravindra Reddy I i E2OZ4 SCC Online Guj 40 I 2 '2025 SCC Online Jhar 2g7 12023, RI-JD :49 84- DB l o ' 5 (1 supra) has been subjected to dhallenge in a Special Irave 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 le4rned 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 beflore it. MeanrVhile, fresh writ petitions of identical nature are being piled up bgfore 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 thougih the order of this Court that was passed as early as on [4.09.2023 arrd more 16 months have lapsed, titt 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 ol 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 h 6 by att the major High Courts in India are continuously still initiating proceedings under Section 148,4' of the Act and also initiating proceedings under Section 148 of the Act in contravention to the amendments brought into the Income Tax Act pumuant 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), leamed 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 Court and it would be further burdening the exchequer of the Union of India. lt was also the: contention of the leamed Standing Counsel that no prejudice would be caused to the interest ofthe petitioners in case if this writ petiticn is kept pending till the finalization of the SLPs pending belore the Hon'ble Supreme Court and the fact that the petitioner is, already enjoying the beneht of interim protection. Nonetheless, on thc earlier query of this Court as to why the Income Tax Departmr:nt have not come out with a mechanism to issue appropriate instructrons or to take 1 i I i I I I I I i i I i : ! i i I i i i I I 7 'l 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 hold in the light ofthe decisions dedcided by the various High Courts, it was submit[ed 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 High Courts.

10. As a result of which, what we are facing is steep increase of litigation day in and day out even thonrgh 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 cqntravention to the provisions of Section l51A of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Coud on an issue which otherwise stBnds squarely covered.by the judgment of this Court in the case al Kanakala Ravindra Reddy (l 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 Bencti white reserving the right of the Revenue, has also protected thB interest of the petitioners E \ insofar as the liberty which was granted to the Revenue for initiating &esh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Financ e Act, 2020 and, the Finance Act,2021. The petitioner assessee u,,ould be entitled to challenge or raise the other legal objections if thr: Revenue initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was reserved 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 Couns already held to be bad. I l. It appears that because ofthe aforesaid liberty that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a facelt:ss manner. the Income Tax Deparhent wants to take advantage ot-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 pcnod 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 rhe other lligh Courts in which the SLps are still pending, rhr: Income Tax l I I I i 9 1r r Department would get the advantage o[ 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 be[reficial to the Revenue and would,be equally disadvantageous and detrimental so far as interest of the assesses are concerned. As a consequence, the Income Tax Department gets an extended period o[ time for initiation of fresh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanakala Rdvindra Reddy (l supra), is a matter of grave concem. The Income ffax Department's persistent initiation of fresh proceedings, disregafding the established judicial pronouncements, has led to an unprebedented surge in litigation with over 600-700 petitions piling up on the same issue. This deliberate approach not only undermihes the principle ofjudicial precedent but also strains the judicial desources unnecessarily. The Department's strategy of awaiting the $upreme 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 adherihg to the established legal \ a 10 position. Such conduct raises serious questions about the administrative efficiency and the respect for judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Rt:venue's rights and assesses lnterests.

13. Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Department itself and should have found out via media in ensuring that proceedings under Sections 148-4. and 148 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 it is already seized ofor, at least the Income Tax Department should hav,o found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 148, other than in a laceless manner, the proceedings should have been deferred without precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only rlfter the SLP's are decided by the Hon'ble Supreme Court on thr: 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 it at all 11 has to be taken, has to be taken for [he whole of India, and whic*r otherwise has to be by way of a polipy decision and that too at the level of Central Board of Direct Taxes. Though the learned Standing Counsel for the Income T4x Department contended that the Delhi High Court dismissed a wrlt 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 before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Suprenie Court which is seized of the matter has been reluctant in grantin! any interim protection to thc Income Tax Department. Yet, the authorities concemed 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 furttrer worse, the Income Tax Department is showing audacity by issuing notices continuously under Sections 148-A and L2 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 COMMISSIONE& INCOME TAXrr, on an issue whether it was justifiable on the part of the Income Tax Department ln not following an order passed by the adjudicating auttrority only on the ground that the appeals are pending, the Division Bench of the High Courl of Bombay held at paragraph No.25 rls under, 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- ordinate Bench of this Court in Samp Furniture (P) Ltd. v. lTO13 of which one of us (Justice G.S. Kulkami) was a member, wherein the Court categorically observed that the Revenue having not "accepted" the iudgment of the High Court would rot mean that till the same is set aside in a manner known to law, il would loose its binding force. Refening to the decision of the Supreme 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 Courl. ln such decision, following are the relevant observations made by the Supreme Court. " 1120251 170 taxmann.com 422 (Bombay)l '2 1t9281 I li ITR 589 (Bombay) " 7Z0Z+1 I 65 raxrnann.com 581/300 Taxman 452 (Bombay) 'o 1t9921taxrnann.com l6155 ELT 433 (SC) I 1 13 "6. Sri Reddy is perhap,s right in saying that the officers were not actuated py any mala fides in passing the impugned ordprs. They perhaps genuinely felt that the claim oi the assessee was not tenable and that, if it was apcepted, the Revenue would suffer. But what Sri Re(dy overlooks is that we are not concerned here wifr the correctness or otherwise of their oonclusion or of any factual malafides but with the fact that lhe officers, in reaching in their conclusion, by+assed t\lo appellate orders in regard to the same issue whiDh were placed before them, one of the Collector (ApPeals) and the other of the Tribunal. The Hbh Court has, in our view, rightly criticized this conduct of the AFsistant Collectors and the harassment to the assessep caused by the failure of these officers to give efhct to the orders of authorities higher to them in thq appellate hierarchy. lt cannot be too vehemently enlphasized that it is of utmost importance that, irf disposing of the quasijudicial issues before thern, revenue officers are bound by the decisions of thq 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 bin(ing upon the Assistant Collectors and the Appellate Qollectors who function under the jurisdiction of the Triurnal. The principles of iudicial discipline require that the orders of the higher appellate authorities should bei foltowed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authorityt is not ?cceptable" to the department - in itself an obiectionable phrase - and is the subFct matbr of anrappeal can furnish no ground for not following it unless its operation has been suspended by a oompetent court. lf this healthy I i i L4 rule is not followed, the result will only lce undue harassment to assesses and chaos in adrrinistration of tax laws.

12. We have dealt with this aspect at sonle length, because it has been suggested by tk) -leamed Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. lt is clear that the observations o{ 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 [o 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."

15. What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to enslrre not to generate further litigation on issues which have been laid to rest by a large number of High Courts all of whom have takm a consistent stand that the action of the Income Tax Department being violative of the / 15 Finance Act,2020 and Finance Act,?021. Now, in order to protect the interest of the Revenue as also lhat of the assessee, it would be trite at this juncture, if we dispose, of the writ petition with an observation/direction that the dispos4l of the instant writ petition in terms of the judgment rendered by (his High Court in the case of Kukanalo Ravindra Reddy (l suprP) shall however be subject to the outcome ol the SLPs which wbre filed by the lncome Tax Dcpartment and which is pending cofrsideration before the Hon'ble Sr-rprerne Court l() ln the given facts and circur4stances, this Bench is of' thc considercd opinion that unless and until we do not timely dispose ol nlatters which are squarely covered by the decision of this Courr and n'hich stands fortified by the decisions of the various other llieh Courts on the very same issule, the pendency of this Iliglr C ourl riould furthel be burdened yhich otherwise can be dccidcd and d isposed of as a covered matter.

17. So (ar as the interest of the R(venue is concemed, we are of thc considercd opinion that the intergst of the Revenue has alreadl bcen considered and protected, as h1s been observed in paragraphs i E- 16 I 36,37 and 38 ofthe order which, for ready reference, is reproduced hereunder: 36 For all the aforesaid reasons, the impugned notices issued and the proceedrngs 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 crders passed by the respondent-Department pursuant to the notices issued under Sectron 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 initration of the proceedings itself was procedurally wrong, the subsequent orders also gets nullifred automatically.

37. The preliminary objectron raised by thr: petitioner is sustained and all these writ petitions stands allowed on this very jurisdrctronal rssue Since the impugned notices and orders are gettrng quashed on the point of junsdictron, we are not inchned to proceed further and decide the other issues raised by the petitioner which stands reserved to be raised and contended in an appropnate proceedings 38 Since the Hon'ble Supreme Court ha<J, in the case ofAshrsh Aoarwal. supra, as a one{irne measure 42 of the exercising the powers under Article Constrtution of lndra. permitted the Revenue to proceed under the substituted provrsions, and this Court allowing the petitions only on lhe procedural flaw, the right conferred on the Revenue would remain reserved to / ,/ L7 A proceed further if tfrcy so want from the stage of the order of the Supreme Coun in the cese of Ashish Aqanval, supra. r (

18. We would only further like t9 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 (l supra) is subjected to challenge belore the Hon'ble Supreme CouF in SLP No.3574 of 2024, pref'erred by the Income Tax Depaftment, we make it clear that allowing of the instant writ petition is subject to outcome of the albresaid SLP prelerred by the Reveirue against the decision of this I{igh Court in the case of Kanakala Ravindra Reddy (I supra). -fhis, in other words, would mean [\at either of the parties, if they so want, may rnove an appropriate petition seeking revival of this writ petition in the light of the declsion of the Hon'ble Supreme Court in the pcnding SLP on the very same issue. I 9. Accordingly, the instant writ petition stands allowed in thvour ol lhe assessee so far as the.issue of jurisdiction IS conccmed. As a conscquence, the impugned notice under challenge under Sections t48-A and 148 stands set aside/quashed I 18 =::\ \ The consequential orders, if any, also stand sr:t aside/quashed in similar terms as have been passed by this High (lourt in the case of Kankanala Ravindra Reddy (1, supra). There shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed. //TRUE COPY// SO/. A.H.S. GOWRI SHANKAR STANT REGISTRAR 1 \I SECTION OFFICER ure Towers, Sy.No.6(P) of ;al Gardens, na-500084. TS, 1Oth Floor, C-Block, t4. ional Faceless m No. 401, 2nd Floor, E- To,

1. lncome Tax Officer, Ward 11(1), Hyderabad, Sigrfl Kondapur, Sy.No.37(P) of Kothaguda, OPP. Botanir Serlingjampally, Ranga Redd y, Hyderabad, IqlanS? 2. The Principal Commissioner of lncome lax AP ano l.T. TowerS, 10-2-3, A.C. Guards, Hyderabad-Sooo( 3. The Assessment Unit, lncome Tax Department' Nal Assessment Centre, Delhi, tvlinistry of Finance, Roo Ramp, Jawaharlal Nehru Stadiumitpelhi-1 10003.

4. One bC to sRt. DUNDU MANMOHAN, Advocate [i]PUCI 5. One CC to Ms. J. SUNITHA (JUNloR SC FOR INCOI\4E TAX) [OPUC] 6. Two CD Copies - ^ . I I I I l.i cC\ /;:,.:* C e3 ilB 20ffi I / '-) I, ,)l "4, \+ \- HIGH COURT DATED:2410412025 ORDER WP.No.7674 of 2025 ALLOWING THE WRIT PETITION WITHOUT COSTS o