Meena fVlirmira v. 1. The lncome Tax Officer

Order

(per llon'ble Sri Justice p.Sam Koshy) Heard Ms. Himangini Sanghi, leamed counsel for the petitioner and Ms. B.Sapna Reddy, learned Junior Standing Counsel for the lncome Tax Department for respondent No. 1 . Perused the record.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section l4gA 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 l48A of the Act and the subsequent initiation of proceedings under Section l4g 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 T 2 under Section l4gA of the Act as also under Ser:r ion l4g of the Act ought to have arso been issued and proceedr) tin a faceless manner.

4. The contention of the petitioner is that the issue of proceedings being in violation of the Financ e Act 2021 i.e., the impugned notices under Section r4gA and sectior t4g of the Act not being issued in a faceless manner, have alrcady. l een dealt with and decided by this Court in the case of t( TNKANALA RAVINDRA REDDY vs. INCOME_TAX OFn_l( tERr decided on 14.09.2023 whereby a batch of wdt petitions \r.er ) allowed and the proceedings initiated under Section l4gA as arsc rnder Section 148 of the Act were held to be bad with consequentiel reliels on the ground of it being in violation of the provisions of S.r tion r51A of the Act read with Notification 1g/2022 dated.29.03.2)22. The said judgment passed by this court has also been subsequ.r tly followed in a large number of writ petitions which were allor.r t C on similar terms. ' [Q023) 156 taxmann.com I7g (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 TECIINOLOGIES LTD., VS. ASSISTANT 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 REDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOI\{E TAX5 where the issue was in respect of intemational taxation, Bombay 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 Court of Himachal Pradesh in the case of GOVIND SINGH vs' INCOME TAX OFFICERT' Gujarat High Court in the case of MANSUKTIBHAI 'pzozq464 ITR 430 (Bom) ' i}ozi) 156 taxmann.com 478 (Gauhati)l ^l(2024) 165 taxmann.com 115 (Punjab & Haryana)l ' 12024) 167 taxmann.com 41 I (Telangana)l " 12024) 166 taxmann.com 679 (Bombay)l 'iZOZqi 165 taxmann.com I t3 (Himachal Pradesh)l 4 DAHYABHAI RADADIYA vs. INCOME TA\ OFFICER, WARD 3(3X5)8, Jharkand High Court in the cas: of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasrhar Jigh Court in the case of SHARDA DEVI CHHAJER vs. IN( TONIE TAX OFFICER & ANOTHER and batch of wrir peri ionsro which stood decided on 19.03.2024. Similar views have a ro been taken by the Division Bench of Calcutta High Court in the case of GIRDHAR GOPAL DALMIA vs. UNION OF lt,t)IA & ORS (M.A.T 1690 ot2023\, decided on25.09.2024.

6. Even though the same issue having been deci J :d by a targe number of High Courts, we are still confronted with I irge filing of identical matters on daily basis ranging between to I 0 writ petitions. That upon the instructions being sou I lt liom the Department, they have been taking a solitary gr,r rnd that the decision of the Bombay High Court in the case r f Hexaware Technologies Ltd., (2 supra) as also the one u,ti:h has been decided by this Court in the case of Kanakala Rartndra Reddy 82024 SCC Online Guj 4012 '2025 SCC Online Jhar287 'o 72023 : RJ-JD :4984-DBl 7 (I supra) has been subjected to chailenge 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 fited 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 o by all the major High Courts ln India are cor linuously still initiating proceedings under Section 148,{ of thr Act and also initiating proceedings under Section 148 ol the Act in contravention to the amendments brought into the lr come Tax Act pursuant to the Finance Act,2020 as also the Finant t Act 2021 .

9. Upon a query being put as to why can't this vrit petition be disposed of in the teeth of the decision rendered t,' this Court in the case of Kanakala Ravindra Reddy (l supra), lr,i med Standing Counsel for the Income Tax Department contends trr rt those would unnecessarily burden the Income Tax Departmer I where they would be required to file equal number of SL.'s belore the Hon'ble Supreme Court and it would be further rurdening the exchequer of the Union ofIndia. It was also the cor tention of the learned Standing Counsel that no prejudice would tt caused to the interest ofthe petitioners in case if this writ petition i kept pending till the finalization of the SLPs pending befor: the Hon'ble Supreme Court and the fact that the petitioner is alr:ady enjoying the benefit of interim protection. Nonetheless, on thr earlier query of this Court as to why the Income Tax Department I ave not come out with a mechanism to issue appropriate ins[u_cti, ,ns or to take I 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 submitted by the leamed 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 though various orders have been passed by this High Court allowing writ petitions on the very same issue. The Income Tax authorities concerned are still even now in 2025 also initiating proceedings in contravention 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 belore this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakala Ravindra Reddy ( 1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kqnqkala Ravindra Reddy (l supra), the Dlvision Bench while reserving the right of the Revenue, has also protected the interest o[ the petitioners -''*"'".'l 8 insofar as the tiberty which was granted to th: Revenue for initiating fresh proceedings strictly in accordance wit r the amended provisions of the Act, as amended by the Finance . rct, 2020 and the Finance Act,202l . The petitioner assessee wotrlc be entitled to challenge or raise the other legal objections if the Rt. enue initiates fresh proceedings. The Department has made nc endeavour in availing the said liberty that was reserved for the Rcr:nuc. On the contrary, they have been still sticking on to the star l, u,hich this High Court as well as many other High Courts alrer ly held to be

11. It appears that because ofthe aforesaid liberty r rat this High Court had granted permitting the Revenue lbr irr tiating fresh proceedings as a one-time measure in a faceless manner, the Income Tax Department wants to take advantage o - lhe same by protracting these proceedings which would enable thc r r to meet the limitation that would otherwise come in the way. I-iL :wise, if the writ petition is kept pending for a considerable long p, riod of time and finally at a later stage if the Hon'ble Supreme C: .r rt confirms the decision taken by this High Court as also by tht other High Courts in which the SLPs are still pending, the ncome Tax a 9 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 beneftcial 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 fiesh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set rt 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 position. Such conduct raises serious questio rs about the administrative efficiency and the respect for judicial pronouncements, particularly when this Court has a[ eady provided a balanced approach by preserving both the Revcrr Le's rights and assesses lnterests.

13. Another aspect which needs to be considered i;that in fact it should have been realized by the Income Tax Depar_r rent itself and should have found out via media in ensuring the. proceedings under Sections 148-4 and i48 should not have bs n issued in a faceless manner, at least till the Hon'ble Supreme Cc urt decide the twelve hundred (1200) odd SLPs which it is already s:ized ofor, at least the Income Tax Department should have fc r nd out some remedial steps to ensure that wherever the authori ies intend to initiate proceedings under Sections 148-A and 148, c:her than in a faceless manner, the proceedings should have b:en deferred without precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only after he SLp,s are decided by the Hon'ble Supreme Court on the ver., same is-sue. This again, the Income Tax Department, has not beer rble to give a convincing reply, except for the fact that such a de: sion if at all .lr 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 ievel of Central Board of Direct Taxes. Though the learned Standing Counsel for the Income Tax Department contended that the Delhi High Court dismissed a writ petition of simitar 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 tong 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 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 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 L 12 148 through the jurisdictional Assessing Ofhcer wlt 'teas it ought to have been only in the faceless manner'

14. In the case of BANK OF INDIA vs' {SSISTANT COMMISSIONER, TNCOME TAXI', on an issue vhether it was justifiable on the part of the Income Tax Depz'r :ment in not following an order passed by the adjudicating autho:i y only on the ground that the appeals are pending, the Divisior Bench of the High Court of Bombay held at paragraph No'25 as ur 1er, viz'' : "25. tvlr. Paridwalla has rightly drawn out atter t decision of this Court in Commissioner of lncome Tl Godavaridevi Sarafl2 as atso the recent decision ordinate Bench of this Court in Samp Furniture (P) Lt of which one of us (Justice G S. Kulkarni) was a meml; the Court categorically observed that the Revenue "accepted" the judgment of the High Court would not rr the same is set aside in a manner known to law, it wou binding force. Referring to the decision of the Supren Union of lndia vs. Kamlakshi Finance Corporatiotr Court observed that the approach of the officials of I treating decisions being "not acceptable" was crilici: Supreme Court. ln such decision, following are J observations made by the Supreme Court' rn to the l vs. Smt. )f the co- L v. lTO13 r, wherein raving not :an that till d loose its e Court in Ltd.14, the evenue of ed by the e relevant " 11ZOzS1 170 taxmann.com 422 (Bombay)l '' 1tsz81 113 ITR 589 (Bombav) t3 'o ]t99z1taxmann.com l6155 ELT 433 (SC) TzOz+1165 taxmann.com 581/300 Taxman 452 (Bomt ry) 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 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 correctness 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 lhe 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 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 within his jurisdiction and the order of the Tribunal is binding upon the Assistant Cbllectors 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 matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent cotrf- lf this healthy - - E L4 c.' rule is not followed, the result will only be u1 lue harassment to assesses and chaos in adminishe ion of tax laws.

12. We have dealt with this aspect at some ler;th, because it has been suggested by the leilt ted Additional Solicitor General that the observ€ t )ns made by the High Court, have been harsh orr the officers. lt is clear that the observations of the I igh Court, seemingly vehement, and appa 1 ntly unpalatable to the Revenue, are only intended to urb a tendency in revenue matters which, if allow',' to become widespread, could result in conside r rble harassment to the assesses-public without any b ; refit to the Revenue. We would like to say that the department should take these observations irl the proper spirit. The observations of the High ' )urt should be kept in mind in future and the utmost rr) ard should be paid by the adjudicating authorities arc the appellate authorities to the requirements of it-c cial discipline and the need for giving effect to the cr lers of the higher appellate authorities which are bir ling on them."

15. What is worrying this Bench more is tht: fact that an endeavour is being made whole heartedly to ensure n )t to generate further litigation on issues which have been laid to r :st by a large number of High Courts all of whom have taken a cc :Isistent stand that the action of the [ncome Tax Department being v olative of the 15 Finance Act,2020 and Finance Act,202I. 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 Kqnkanala Ravindra Reddy (l supra) shall however be subject to the outcome of the SLPs which were f,rled by the Income Tax Department and which is pending consideration before the Hon,ble Supreme Court.

16. [n 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 ofas 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 76 36,37 and 38 of the order which, for ready referenc() is reproduced hereunder: . \S-1 \i \ -

36. For all the aforesaid reasons, the impugne j issued and the proceedings drawn by the resl Department is neither tenable, nor sus t The notices so issued and the procedure adopt3 per se illegal, deserves to be and are accord r aside/quashed. As a consequence, all the irn orders getting quashed, the consequential order; by the respondent-Department pursuant to th€ issued under Section '1 47 and '148 would a { quashed and it is ordered accordingly. The rel are quashing the consequential order is on lhe p r that when the initiation of the proceedings it; procedurally wrong, the subsequent orders arl nullified automatically.

37. The preliminary obiection raised by the pet t sustained and all these writ petitions stands all,> this very jurisdictional issue. Since the impugnec and orders are getting quashed on the ) jurisdiction, we are not inclined to proceed fur t decide the other issues raised by the petitionor stands reserved to be raised and contende,l appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in t of Ashish Aoarwal, supra, as a one-time rr exercising the powers under Article '142 r Constitution of lndia, permitted the Revenue to p under the substituted provisions, and this Court a the petitions only on the procedural flaw, tlr conferred on the Revenue would remain res(rr notices )ndent- inable. jbeing gly set )ugned rassed rotices c get ,on we rciples lf was l gets f,ner ts led on rotices ,int of lr and in an 3 CaSe )as u re f the lowing red to 7 ! \ proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashish Aqarwal, 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 (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, preferred byJhe Income Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP prefened by the Revenue against the decision ofthis High Court in the case of Kanakala Ravindra Reddy (l stpra)' 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. lg. Accoidingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction 1S concerned. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed ! The consequential orders, if any, also stand set as delquashed in similar terms as have been passed by this High Cour in the case of Kankanala Ravindra Reddy (l supra). There shall re no order as to costs. Consequently, miscellaneous petitions pendin I if any, shall stand closed SD/ ;. GOWRI SHANKAR iTANT REGISTRAR I //TRUE COPY// i5 SECTION OFFICER To

1. The lncome Tax Officer, ward 12(1), lncome Tax bepar nent, Hyderabad 2. The Assessment Unit, lncome Tax Department, Na\on: e- Assessment Center New Delhi, Room No 401, 2nd Floor, E-Ramp -z waharlal Nehru Stadium, New Delhi '1 10 003.

3. One CC to Ms. HIIVANGINI SANGHI, Advocate [OPU['] 4 One CC to Ms BOKARO SAPNA REDDY (Jr SC FOF NCOME TAX) Advocate [OPUC]

5. Two CD Copies SA GJP \ ( t' I I i 16 Lri Zffi ..2 I HIGH COURT DATED:2410412025 ORDER WP.No.9314 of 2025 ALLOWING THE W.P WITHOUT COSTS. @ MMT ,iffi:r