High Court · 2025

SRI DUNDU MANMOHAN 3sil_:1r;3Hft ilii[1",fi Eifl i;tBi[I#ai,LEARNEDJUNToRSTANDTNG The Court made the following ORDER THE IIONOURABLE SRI JUSTICE P'SAM KOSHY AND THE TIONOT'RABLE SRI JUSTICE NARSING RAO NANDIKONDA \il.P.No. 93640F 2025 ORDER: (per Hon'ble Sri Justice P'San Koshy) Heard Mr. Dundu Manmohan' learned counsel for the petitioner and Ms. J.Sunitha, learned Junior Standing Counsel for the Income Tax Department for respondent Nos'l and 2. Perused the record' z.Thisisawritpetitionwheretheproceedingsareeither challenged to the notices which were issued under Section 148A andt4SoftheIncomeTaxAct,lg6l(forshort.theAct,)orthe 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 148A of the Act and the subsequent initiation ofproceedings under Section 148 of the Act by the jurisdictional Assessing Officer' whereas in terms o f the amendment that was brought to the Income Tax Act by way of Finance Act, 202L w.e'f., 01.04.2021. onwards, proceedings 2 under Section l4gA of the Act as also under Section 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 vioratisn of the Finance ,{ er; 2Q27 i.e., the impugned notices under Section 14gA and section r4g of the Act not being issued in a faceress manner, have already been dealt with and decided by this Court in the case of KAITIKANALA RAVTNDRA REDDY vs. INCOME-TAX OF,F.ICERT decided on 14.09.2023 whereby a batch of writ petitions were a,owed and the proceedings initiated under Section l4gA as also under Section l4g of the Act were herd to be bad with consequentiar reriefs on the ground of it being in violation of the provisions of Section l5lA of rhe Acr read with Norificarion Lg/2022 dated2g.03.2022. The said judgment passed by this court has arso been subsequently fo,owed in a rarge number of writ petitions which were allowed on sim,ar terms. '[(2023) 156 taxmann.com l7g (Telangana)] 3 5 Down the line, we find that the same issue has also been decided against the Revenue bY vanous High Courts t.e'' of IIEXAWARE by the BombaY High Court in the case TECHNOLOGIES LTD', vs' ASSISTANT COMMISSTONER OF INCOME TAX & OTERS2' Gauhati HighCourt in the case of RAM NARAYAN SAII vs' IINION OF INDIAT' 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 VENKATARAMANAREDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of intemational taxition' Bombay High Court in the case of ABTIIN ANILKUMAR SHAII VS. INCOME TAX OFFICER" INTERNATIONAL TAXATIOIf which is again on international taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGII vs' INCOME TAX OFFICERT' Gujarat High Court in the case of MANSUKHBHAI 'pozq1464 ITR 430 (Bom) 'i}ozil l56 taxmann.com 478 (Gauhati)l " l(2024) 165 taxmann.com 115 (Punjab & Haryana)l 'lZO24) 167 taxmann.com 41 I (Tetangana)l " 12024) I66 taxmann.com 679 (B-ombay).1 ^ , . -L\., ' izOz+l 1 65 taxmann.com 1 1 3 (Himachal Pradesh) l 4 DAHYABHAI RADADIYA vs. INCOME TAx OFFICER, WARD 3(3x5)8, Jharkand High court in rhe case of SrryAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Courr in the case of SIfARDA DEVI CIIHAJER vs. INCOME TAX OFF'ICER & 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 t69O 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 10 writ petitions. That upon the instructions being sought from the Department, the_v have been taking a solitary ground that the decision of the Bombay High Court in the case of Hexaware Technologies Ltd-, (Z supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy 8202+ SCC online Guj 4012 "2025 SCC Online Jhar 2g7 'o 72023 : RJ-JD:4984_DBl 5 (1 supra) has been subjected to challenge in a Special [rave 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 categoricalty 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 hotd back issuance ofnotice under Section 148A and under Section 148 of the Act by the jurisdictional Assessing Offrcer' rather the authorities concemed in the teeth of series of decisions 6 by all the major High courts in lndia are continuously still initiating proceedings under Section l4gA of the Act and also initiating proceedings under Section l4g of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act,,2020 as also the Finance Act2021. 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 wourd unnecessarily burden the [ncome Tax Depaftment 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. [t was arso the contention of the leamed standing Counser 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 Court as to why the Income Tax Department have not come out with a mechanism to issue appropriate instructions or to take 7 appropriate steps in ensuring that proceedings under Section l48A ofthe Act as also the assessment orders under Section 148 ofthe Act are kept in a hold in the light of the 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 ol 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 t5lA 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 Ravindra Reddy (1 supra). What is atso surprising is the fact that though while allowing the writ petitions in the case of Kanakals Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners insofar as the liberfy which was granted to the Revenue for initiating fiesh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Financ e Act, 2020 and, the Finance Act,202r. The petitioner assessee wourd be entitled to ghatlgngg or raisg the other legal objections if rhe 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 Courts already held to be bad. ll. It appears that because of rhe aforesaid liberty that this High Court had granted permitting the Revenue for 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 enable them to meet the limitation that would orherwise come in the way. Likewise, if the writ petition is kept pending for a considerable tong penod 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 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 in favour of the Revenue for initiation of fresh proceedings from the disposal of these matters at a much later stage which woutd be advantageous and benef,rcial 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 fresh proceedings.

12. The alarming trend of docket explosion in this Court' despite the clear precedent set in Kanakala Ravindra Rerkty (l supra)' is a matter of grave concern. The lncome 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 sarne 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 poceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than adhering to the established legal 10 posltlon. Such conduct raises serious questions about the administrative efficiency and the respect tbr judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revenue,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 ensuring that proceedings under Sections l4g-A and l4g should not have been issued in a faceless manner' at least t,r the Hon'bre Supreme Court decide the twelve hundred (1200) odd SLps which it is already seized ofor, at least the Income Tax Department should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections t4g_A and l4g, orher rhan 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 been able to give a convincing reply, except for the fact that such a decision if at all F\ 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 Taxes' 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 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 rime of the Bench in hearing these matters again and again on daity 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 Siate tevet 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 lncome Tax Department is showing - 'issuing notices continuously under Sections 148-A and ?s9 { v-n 12 148 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 TAxr,, on an issue wherher it was justifiable on the part of_tle Iaeome Tax Department in not following an orderpassed bythe adjudicating authority 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. paridwara has righry dfawn out attention to the decision of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co_ ordinate Bench of this C or wh ch one or us u*,,J:: iil:;il:::J::::, ;r::; the Court categorically observed that the Revenue having not "accepted" the judgment of the High Court woutd nol mean that tilt 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 Co.porution Ltd.,4, the Court observed that the approach of the officials of Revenue of lreating decisions being "not acceptable" was criticizect by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court_ "I "I t, I I (2025) 170 taxmann.com 422 (Bombay)l 19781 I l3 ITR 589 (Bombay) 20241 165 taxmann.com 581/300 Taxman 452 (Bombay) 19921 taxmann.com 16/55 ELT 433 (SC) 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 the conectness or are not concerned here with or of any factual otheMise of their conclusion malafrdes 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 C-ollector (Appeals) and the other of the Tribunal. The High Cou( has' in our view' righ{ly criticized this conduct of the Assistant Collectors and the 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 &nnot G 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 App€llte Collector is binding on the Assistant Collectors working within his iurisdiction 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 jud'cial discipline require that the orders of the higher hb authorities should be followed unreservedly a 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 - afld is tfe subiect mafter of an appeal can furnish no ground for not foltowing it unless its operation has been suspended by a competent 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, the learned because it has been suggested by 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 apparenfly 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." 15 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,2020and Finance Act,ZoZl. Now, in order to protect the interest of the Revenue as also that of the assessee' it would be trite at this jurrcture, if we dispose of the writ petition with an obsewation/direction that the disposal of the instant writ petition in terms of the judguent 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 filed by the lncome Tax Department and which is pending consideration before the Hon'ble Supreme Court. In the given facts and circumstances' this Bench is of the 16. considered opinion that uuless 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' 17 . So far as the interest of the Revenue is concemed' we are of the considered opinion that the interest ofthe Revenue has already been considered and protected, as has been observed in paragraphs

1.6 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 proceedlngs drawn by the respondent_ Department is neither tenable, nor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to b6 arid are accordingly set aside/quashed. As a conse orders sertins quashed, ,n" *T.";?.;: I:"H::::: by the respondent-Department pursuant to the notices rssued under Section 147 and 14g 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 stiands 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 supra, as a one_time e 142 of Ashish exercising the powers under Const Since the Hon'ble Supreme Court had, in the case measure of the itution of India, permitted the Revenue to proceed the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right conferred on the Revenue would remain reserved to !7 proceed further if they so want from the stage of the order of the Suprerne Court in the case of Ashish Aoarwal, suPra.

18.Wewouldonlyfurtherliketomakeobservationsthatsince 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 by the Income Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision ofthis High Court in the case of Kanakata Ravindra Reddy (l supra)' This, in other words, would mean that either o[ the parties, if they so want, may move an appropriate petition seeking revival of this writ petitioo in the tight of the decision o[ the Hon'ble Supreme Court in the pending SLP on the very same issue'

19. Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction IS concerned. As a consequence, the impugned noticc under challenge under Sectiom 148-4 and [48 stands set aside/quastred. i t 18 The consequential orders, if any, also stand set asidey'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 pending, if any, shall stand closed. //TRUE COPYII SD/-K.BHAVANI SWAMY ASSISTANT REGISTRAR sec*fKoFFicER 1. The lncome Tax Offic_erWargll(1), Hyderabad, Signature Towers, Sy.No.6(p) of Kondapur.Sv No.3T(p) .lk"th6;;"-, Opp]aotanicat Gardens, Serlinsampailv. naigg neoov, iydffi;;, ietangana_500084. 2. The principat bommissjo_n.. irf f ri,rcmJfai _f, nyOeraOaO, Signature ^ Towers, Opp. Botanical Caroers, Xon-0.i,i., fryo.rroad_500084. 3. The Assessmenl Unit, lncome fax Oepaftmlni, ruational Faceless Assessment Cenlre, Dethi, M,.ri.ir;iH;;n"u*, noo..,, No. 401, 2nd Ftoor. E_ . Brrnp, Jawahartat r.rerrru stjoium]d"ri,i:i'i btds 4. one cc ro sRt DUND.U MANMb*Ai:Ajr;";L topUCI 5 ONC CC tO MS. J.SUNITHA, LEANr.rEb'JirriiSlSTANDING COUNSEL FOR TH E I N Co M E TAX DE PARTMT Ni: il;"**ie,ioPuc] 6. Two CD Cooies SA GJP ( .,,1/ ( LlhL i^t/ $( z a ) r.) ,5 t 21 AUS Zffi nr.tEO T HIGH COURT D{T!D:2 4to4t2o2s ORDER WP.No.9364 of ZO2S ALLOWING THE W.P WITHOUT COSTS. 0) // / 1l r4/