High Court · 2025

Judgment

3. E:iff ii},!,,;:,8:[%?:j[1il,"k:x,1n.*t"",ijo,r,?fi r'o*,R1,t"J] ..PETITIONER ili#!!:.rtr?rl{"ft Y.ili B6?.H vd e ra b a d, r r ro we r, A c G ua rd s, Ma s a b 1[:#4:ltri;':,9:ru^ue;ift BBB.^.'[hF"rc. " iitTl. Fi".""i : E: 9,?""? fl $il,,\, +l"iriL'.:Hffi A ss e s s m e n t ce n t ie, oe ri i, if, ,i,,$i^9iplr Kamp. Jawahartat Nehru Stadium.betni_iiijoob.."",, ...RESPONDENTS

Petition under Article 226 0f the constitution of rndia praying that in the circumstances stated in the affidavit fired therewith, the High court may be pleased to issue an appropriate writ order or direction more particurarry one in the nature of writ of ft/andamus, decraring the Assessment order dt. 13.03.2024 passed by the 3rdrespondent u/s 147 r.w.s 14411448 of the lncome-tax Act for 4.Y.2o16-17 vide DtN No. |rBA/ASTlst147l2o23-24r1o6zs1rog2(j), consequent to the order passed u/s 148A(d) dt. 21 .O3.2O23 vide DtN No. |rBA/AST/F/148A12022-23t10s1068s50(1) and the notice u/s 148 dt. 28.03.2023 vide DIN No. lrBA/AST/sl14B_1tzo22-23110514 s697s(1), issued by the JA0(1st respondenl) instead of FAo(3rd respondent) and consequential penalty orders passed vide order u/s 271F of the Act dt. 09.09.2024 and order u/s 271(1)(b) of to the Provisions of lncome- the Act dt 0e 0s 2024 :' ;"::"[::::,ilil,T::] tax Act and contrary to the IANO: 10F2 o25 Petition under Sec the affidavit filed in suPPo staY all f urther Proceedings P pass ed bY the 3rdresPondent A.Y 2016-17 vide DIN No ) a pass such other order(s iustice ' interests of substantial irreparable loss and severe iniury' tion 'l 51 CPC PraYing that in rt of the writ Petition' the Hig ursuant to the AsseSsm u/s 147 r.w s 144/1448 tTBA/Asr/s/1 4 7 t2023-2 s the Hon'ble Court dee as otherwise the Pe stated in the circumstances h Court maY be Pleased to ent Order dt 13 03 2024 of the lncome-tax Act {or 411062517O92(1 )and maY ms fit and ProPer in the titioner would be Put to 8:il::l B: l[:'.::x:ffi: ":ll ?f, : t'"1 $'5""i;: i: lffi,lffi''o *o * = ?l*ts"HlmiT#] RE D DY THE HONOURABLE SRIJUSTICE P.SAM KOSHY rHE HoNorrRA*.n r$T?rrrcE NARSTNG RAo NANDIKONDA W.P.No .95580F 2025 ORDER, (per Hon,ble Sri.tustice p.Sap1 1165py1 Heard Mr. Dundu Manmohan. leamed counsel for the petitioner and Ms. B.Sapna Reddy, leamed Junior Standing Counsel for the Income Tax Department for respondent Nos.l & 2. Perused the record.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 14gA 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 l4gA of the Act and the subsequent initiation ofproceedings 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 2 under Section 148A of the Act as also under Section 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 Act' 2021 i'e'' the impugned notices under Section 148A and Section 148 ofthe Act not being issued in a faceless mannerl have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs' INCOME-TAX OFFICERI decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section 148,\ 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 of Section i 5 1A of the Act read with Notihcation l8l2}22 dated 29'03'2022' The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were allowed on similar ' (2023) 1 56 taxmann.com 178 (Telangana)l a_; 3 TECHNOLOGIES

5. Down the line, we find that the same issue has also been decided against the ftsysnus by various High courts i.e., by the Bombay High Court in rhe case of HEXAWARE LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTIfERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIA3, punjab and Haryana High Court in rhe case of JATINDER SINGII BANGU vs' UNION oF INDIA4, and Telangana High court in the case of REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation, Bombay High Court in the case of ABIITN ANILKUMAR SHAH vs. INCOME TAx OFFTCER, 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 OFFICER?, Gujarat High Court in the case of MANSUKHBIIAI SRI ITNKATARAMANA 2lzoz+1464 ITR 430 (Bom) 'LQ024l I56 taxmann.com 478 lGauhati)l '[(2024) 165 raxmann.com 115 (punjab & Haryana)] ' 12024) I 67 taxmann.com 41 1 (Telangana)l "12024) 166 taxmann.com 679 (Bombay)l '[2024) 165 taxmann.com l 13 iHimachaipradesh)] 4 DAHYABHAI RADADIYA VS. INCOME TAX OFFICER, WARD 3(3X5)8' Jharkand High Court in the case of SIIYAM SUNDAR SAW vs' UNION OF INDIAe' Rajasthan High Court tn the case of SI{ARDA DEVI CHHAJER vs' INCOME TAX OFFICER & ANOTHER and batch of writ petitions'o which stood decided ort 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 1690 of 2023)' decided ot25'09'2024'

6. Even though the same issue having been decided by a large number of High Courts, we are still confronted with large filing of identicalmattersondailybasisrangingbetween5tot0writ petitions. That upon the instructions being sought from the Department, they have been taking a solitary ground that the decision of the Bombay High Court in the case of Hexswsre Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kunakula Ravindra Reddy 'zoz4 scc online Guj 4012 '2025 SCC Online lhar287 72023 : RI-JD :4984-DBl 5 2 (1 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 Suprerng Court is seized of the matter. In addition, there are about 1200 SLps also filed ansing out ofthe same issue being decided by various Higb Courts. 7. 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. N,{eanwhile, fresh writ petitions of identical nafure are being piled up before this Bench on da,y 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 l4gA and under Section 148 of the Act by the jurisdictional Assessing Offrcer, rather the authorities concemed in the teeth of series.of decisions 6 initiating Proceedings by alt the major High Courts in India are continuouslY still under Section 148,\ of the Act and also under Section 148 ol the Act in initiating proceedings contravention to the amendments brought into the Income Tax Act pursuant to the Finance Lct' 2020 as also the Finance Act2021 ' g. 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 Kanakalu Ravindra Reddy (l supra)' learned Standing Counsel for the Income'fax Department contends that those would unnecessarily burden the Income Tax Department where they would be required to hle equal ntilnber of SI.Ps before the Hon'b1e Supreme Court and it would be further burdening the exchequer of the Union of India. It was aiso the contention of the leamed Standing Counsel 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 14gA of the Act as also the assessment orders under Section l4g of the Act are kept in a hold in the Iight 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 au{horities 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 befbre 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 r*rit petitions in thp case of Kanakaru Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners I insolar as the liberty whi;h' 'was granted to the Revenue for initiating fresh proceedings strictly in accordance with the amended provisions of the Act' as amended by the Finance Act' 2020 and the Finance Lct,2021'The petitioner assessee would 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 reserv ed 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.

11. It appears that because of the afoYesaid liberty that this High Coufi 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 otherwise come in the way. Likewise, if the writ petition is kept pending for a considerable long period of time and finally at alatet stage if the Hon'ble Supreme Court conf,trms the decision taken by this High Court as also by the other High Courts in which the SLPs are still pending, the Income Tax :9 o 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 concerned. 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 in Kanakala Ravindra Reddy (l supra), is a matter of grave concern. Jf,e.,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 rhe same issue. This deliberate approach not only undermines the principle ofjudicial 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 I l 10 position. Such conduct raises serious questions about the administrativeefficiencyandtherespectfbriudicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revenue's rights and assesses interests

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 wtrlctr it is already seized of or' at least the Income Tax Department shoutd have found out some remedial steps to ensure that wherever the authonties intend 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 Cburt on the very same issue' This again, the Income Tax Departrnent, has not been able to give a convincing reply, except for the fact that such a decision if at all i I I i I t I I I I i ! 'I I I T ;:'a: 11 I I i I I I I I I i has to be taken, has to be taken for the whole of India, and which otherwise has to be by wayof a policy decision and that too at the level of Central Board of Direct Taxes. Though the leamed 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 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 l4g_A and 72 148 through the jurisdictional: Asssssing Offrcer whereas it ought to have been only in the faceless manner' 14. In the case of BANK OF INDIA vs' ASSISTANT COMMISSIONER, INCOME TAXIr' on an issue whether it was justifiable on the part of the lncome Tax Department in not following an order passed by the 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. Paridwalla has rightly drawn out attention to the decision of this Court in Commipsioner of lncome Tax vs, Smt. Godavaridevi Saraflz as alEo tle rPcent decision of the co- ordinate Bench of this Court in Samp F+rniture (P) Ltd' v' lTOl3 of which one of us (Justice G S',Kulkarni) was a member' wherein the Court categorically observed that the Revenue 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 Supreme Court in Union of lndia vs. Kamlakshi Finance Co(poration Ltd'14' the Court observed that the approach of the officials of Revenue of treating decisions being "not qcceptable" was criticized by the Supreme Court. ln such decision' following are the relevanl observations made by the Supreme Court' I t7ozsl 77o taxmann.com a22 @onbay)l ,,, Ite78l r r3 rTR 589 (Bombay) ,)' tzozll I 65 taxmann.com : ,,ireez j,u*,,nii,*;:;;;-,";r:r;::rrffi452(Bombay) I i r l l I I 13 "6. Sri Reddy is perhz -;;';r:l,t risht in savins that the offi""r. *u,u not by any mala fides in passing the ,rrrnn",'"t"0 o'ou" They perhaps genuinely felt that the ot ,n" assessee was not ",1, tenable and that, if it ,"'' accepted' the Revenue would suffer. But what suas *"oo'overlooks is that we are not concerned n"nt' *"n the correctness or otherwise of their .onl lusion or of any factuar marafides but with the fact tn"t the officers' in reaching in their conclusion, or-o". two appellate orders in regard to the same ,r"ru't"o rvhich were praced before them, one of the corector (APPeals) and the other of the Tribunar. The High n", in our view, righfly criticized this conduct o, ,n'n "o Assistant corectors and the harassment to the asse or rhese officers ro ;;,:-Til'["t.:']:J:'':; authorities higher to them in cannot be too vehemenry ffij#:Hf[,|] J utmost importanbiri .ihat. in disposing of the quasijudicial issues befoie I bound by the decisions ",li]"rrlll[ ffi:: The order of the Appellte Co ector is binding on the Assistant Collectors working within 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 hisher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not ,.acceptable,, the department - in itself 2n objectionable phrase _ and is the subject mafter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. lf this healthy , 14 ' -^r ('tllowed the resr-tlt will only be undue and chaos in administration ;'":l:.;' tl '"'""""" of tax laws

12. Wehave dealt with this aspect at some length' because it has been suggested by thb learned ooi,o"""' Solicitor General that the observations t the High court' have been harsh on the ;r; ' lt is clear that (he observations of the High ;;;;r, a.rn seemingly vehement' and apparently unpalatable to the Revenue' are only intended to curb ,,"nO"n"y in revenue mafters which' if allowed to O""om" *id""pread' could result in considerable harassment to the assesses-public without any benefit to the Revenue We would like to say that the department should takglihese observations in the proper spirit. The obsqrvations of the High Court should be kept in mind in future arid the utmost regard should be paid by the adjudicating authorities and the appeltate authorities to the requirements of iudicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." 1 5. 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 latge number of High Courts all of whom have taken a consistent stand that the action of rhe Income Tax Department being violative Of the I n I5 observation'/direction Finance Act, 2020 and Finance Act, 2021. Now, in order to protect the interest of the Revenue as also that of the assessee, it would be frite at this juncture, if we dispose of the writ petition with an that the disposar of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindro Re,ddy (l supra) shall however be subject to the outcome of the SLps which were filed 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 unleis and until we do not timely dispose of matters which are squarely covered by the decision of this Courr 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.

17. 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 16 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 proceedings drawn by the respondent- Department is neither tenable' nor sustainable' The notices so issued and the procedure adopted being iff"g,f' deserves to be and are accordingly set p", aside/quashed As a consequence' all the impugned' orders getting quashed; the consequential orders passed pursuant to the notices by the respondent-Department 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 initiatiori:'6f the proceedings itself was procedurally wrong, the.subsequeqt orders also gets nullified automaticallY' \

37. The preliminary obiLction 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 gettlng 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. Since the Hon'ble Supreme Court had' in the case of Ashish Agarwal, supra, as a one-time 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 \ 77 conferred o proceed ,rnl 'nl Reve.qu would remain reserved to tn"' so want from the stage of the order of ,nlt: " Agarwar, .ro=o "'o'"" court in the case of Ashish 18. We would only further Iike to make observations that since we are inclined to dispose of the instant lv.it p"titioo, conscious of the fact that the earlier order of this High Court in the case of Kqnakala Ravindra Reddy (1 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 prefened by the Revenue against the decision of this High Court in the case of Kanakola Ravindra Reddy (1 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 of the Hon,ble Supreme Court in the pending SLp on the very same issue. I ) 19' Accordingly, the instant writ petition stands alrowed favour of the assessee so far as the issue of jurisdiction concerned. As a consequence, the impugned notice under challenge under Sections l4g-A and 14g stands set aside/quashed 18 The consequential orders' if any' also stand set aside/quashed in similar terrns 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 COPY// D/. L. VIJAYA LAXMI SI TANT REGISTRAR SECTION OFFICER To, 1 T , AC Guards, lvlasab The lncome Tax Officer, Ward 9(1) HYderabad' I Tank, HYd erabad. Telang ana-500004 2. The PrinciP al Chief Comm issioner of lncome Tax P and TS, 10th Floor, C- Block, l.T. Towers, 10-2-3, A.C. G uard s, Hyderabad-s00004 3. The Asses sment Unit, lnco rne Tax DePartmenr., Naticnal Faceless Assessment Centre, Delhi, Ministry of Finance, Room No. 401 , 2nd Floor, E- Ramp, Jawa harlal Nehru Stadium, D elhi-1 10003.

4. One CCto S RI. DUNDU IVANIUOHA N ,Advocate [OPUC] 5. One CC to tt4s BOKARO SAPNA REDDY (Jr. SC FO R INCOME TAX) toPUCl

6. Two CD CoPies B I\,1 GJPn^ Yr 1 i J i ! I t t { d\c HIGH COURT DATED:2 41O4t2025 1 'r/rrc; 1E SEP 2ffi o J \. '. + ( ( '.a r; ,'r -ry' ORDER WP.No.9558 of 2025 ALLOWING THE WRIT PETITION WITHOUT COSTS (Y -il,T:{il. : i t ! I I I I I i t I l I Il i l