The High Court · 2025

THE HONOT]RABLE SRI JUSTICE P.SAM KOSHY AND THE HONOT]RABLE SRI JUSTICE NARSING RAO NANDIKONDA W.P.No.l I 118 ()F 2025 QEDEB, (per Hon'ble Sri Justice P'Sam Koshy) Heard Ms. K. Prabhabati, leamed counsel representing Mr. A.V.Raghu Ram, leamed counsel for the petitioner and Ms. B.Sapna Reddy, leamed Junior Standing Counsel for the Income Tax Department for respondent No'2' Perused the record'

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 148,{ 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 148A of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Officer' whereas in terms of the amendment that was brought to the lncome Tax Act by way of Finance Act, 2021 w.e.f', O1'04'2021 onwards' proceedings 2 under Section l48A 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 violation of the Financ e Act, 2021 i.e., the impugned notices under Section l4gA and Section l4g of the Act not being issued in a faceless manner, have already been dealt with and decided by this Court in the case of KANKANALA RA\TINDRA REDDY vs. INCOME_TAX OFFICERT 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 viotation of the provisions of Sectr.on r 5 l A ol the Act reaci with Notihcation 1g/2022 dated29.03.2022. The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were allowed on similar terms. '[(2023) 156 raxmann.com l7g (Telangana)] ( .,

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 COMMISSIONER OF INCOME TAX & OTIIERSz, Gauhati High Court in the case of RAM NARAYAN SAH vs. LNION 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. DBPUTY 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 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 MANSUKHBHAI 'lzoz+1464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauhati)l " [(2024) 165 taxmann.com I l5 @unjab & Haryana)] '12024) 167 taxmann.com 4l I (Telangana)l "12024) 166 taxmann.com 679 (Bombay)l '[2024) 165 taxmanq.com I l3 (Himachal Pradesh)] DAHYABHAI RADaDIYA vs. INCOME TAx OFFICER, WARI) 3(3X5)8, Jharkand High Court in the case of SHyAM SUNDAR SAW vs. UNION OF I^[DIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsro which stood decided oo 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 on25.09.2024.

6. Even though the same issue having been decided by a large number ol High Courts, we are still confionted with large filing of identical matters on daily basis ranging between 5 to l0 writ pehhons. 'fhat upon the instructions being sought from the Department, they have been taicing a solitary ground that the decision ol the Bombay High Court in the case of Hacaware Technologies Ltd., (Z supra) as also the one which has been decided by this Court in rhe case of Kanakala Ravindra Reddy 8202+ scc online Guj 4012 '2025 SCC Online lhar 287 'op2o23 : RJ-JD :4984-DBl 5 (1 supra) has been subjected to challenge in a Special kave 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 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, tilt 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 148,{ 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 India are continuously still initiating proceedings under Section l4gA of the Act and also initiating proceedings under Section I4g of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act,2020 as also the Finance Act202l. 9' Upon a query being put as to why can't this writ petition be disposed of in the teeth of the decision renciered by this Court in the case of Kanakala Ravindra Reddy (I supra), learned Standing Counsel for the Income Tax Department contends that those would unnecessanly 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. It was also the contention of the leamed Standing Counsei that no prejudrce 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 enjolng 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 148A 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 concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section I 5 I A 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 (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 Bench while reserving the right of the Revenue, has also protected the interest of the petitioners 8 insofar as the liberfy which 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 Act, 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 resei-,red for the Revenue. Cn 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 ofthe 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 Deparlment wants to take advantage of the same by protracting these proceedings which would enable them to meet the limitation that would orheru,ise come in the way. Likewise, if the writ petition is kept pending for a considerable long period of time and finally at a later stage if the Hon'ble Supreme Clourt confirms the decision taken by this High Court as also by the other High Courts in which the SLps are still pending, rhe lncome Tax 9 Departmentwouldgettheadvantageofthelibertythatisotherwise 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 fresh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanakals Ravindra Reddy (l supra)' is a matter of grave concern' 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 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 Revenue,s nghts 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 l4g 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 have fbund out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections t4g_A and l4g, 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 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 11 has to be taken, has to be taken for the whole oflndia, 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 leamed Standing Counsel for the Income Tax Department contended that theDelhiHighCourtdismissedawritpetitionofsimilarnature'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 alsoconsumessubstantialtimeoftheBenchinhearingthese 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 maj ority of High Courts of different States on the same issue; and to make things further worse, the lncome Tax Department is showing audacity by issuing notices continuously under Sections 148-A and 72 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner.

14. In rhe case of BANK OF INDIA vs. ASSISTANT COMMISSIONE& INCOME TAXU, on an issue whether it was justifiable on the part of the Income Tax Department in not following an order passed by the adjudicating authority oniy on the ground that the appeals are pending, the Division Bench of the High Court oiBornbay held at paragraph No.25 as uncier, viz., : "25. Mr. pariduralla has righfly dray;n out attention to the decision of this Court in Commissioner of Income 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. Kulkarni) was a member, wherein the Court categorically observed that the Revenue having not "accepted" the judgment of the High Court woutd not mean that ti 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 Gorporation Ltci.14, the Court observed that the approach of the officials of Revenue of trealing decisions being "not acceptable" was criticized by the Supreme Cou(. ln such decision, following are the relevant observations made by lhe Supreme Court. ll [tr^o_li. [. ggann.com 422 (Bombay)) '- [978J I t3 ITR 589 (Bombay) t,t.1202+1 165 taxmann.com 5g l/300 Taxman 452 (Bombay) 'o lt}gZlraxmann.com l6155 ELT433 (SC) 13 "6. Sri Reddy is perhaps right in saying that the olficers 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 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 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 .iurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the iurisdiction 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 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 \ \ _.1_ 74 rule is not followed, the result will only be undue harassrnent to assesses and chaos in administ!.efion of tax laws.

12. We have dealt with this aspect at some length, bocause it has been suggested by the learned 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 R.evenue. 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." I 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 large number of High courts arl of whom have taken a consistent stand that the action of the Income Tax Department being violative of the 15 FinanceAct,2O2}andFinanceAct,202l'Now,inordertoprotect 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 Kankanala Ravindra Reddy (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 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 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 responden! 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, al! the impugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to the notices issued under Section .147 and 14g would also get quashed and it is oi.de,-ed accordingiy. 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 nullif ied automatically.

37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are 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 of Ashish Since the Hon,ble Supreme Court had, in the case Agarwal, supra, as a one_time measure the powers under Article 142 exercising of the Constitution of lndia, permitted the Revenue to prcceed under the substiluted provisions, and this Court allowing the petitions only on the procedural flaw, the right L7 confened on the Revenue would remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashish Agarwal, 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 Kanukala Ravindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No'3574 ol 2024' prelerred by the Income Tax Department' we make it clear that atlowing of the instant writ petition is subject to orrtcotne of thc aioresaid SLP preftned by the Revenue against the decision of this ttighCourtinthecaseofKanakalaRavindruReddy(lslpra). This, in other words, would mean that either ol the parties' i[ they so want, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Supremc Cou( in the pending SLP on the very same issue' I I

19. Accordingly, the instant writ petition stands allowed favour of the assessoe so far as the issue of jurisdiction ts concerned. As a consequence' the impugned notice under chatlenge under Sections 148-A and 148 stands set aside/quashed' 18 The consequential orders, if any, also stand set aside,/quashed in similar terms as have been passed by this High Court in the case of Kankanara Ruvindra Reddy (r supra). There shail be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closcd sD/-s. ALLIKARJUNA RAO TANT REGISTRAR //TRUE COPY// To \ t \ The Assessment Untl. National Faceless Ass..rmenl Departmcnt, Ministry of Finance, Room No_ 4O1,2nd Jawaharlal Nehru Stadium. Delhi .1 10 003. SECTION OFFICER Centre, lncome Tax Floor, E-Ramp. under Bridge. Nalgonda. z. The Income Tax Officer, Ward 1, Nalgonda, lncome Tax Office, Near Rail : One CC to SRI A.V.RAGHU RAtVt, Advocate tOpUCI a One CC to lvls EOKARO SAPNA REDDY (Jr. SC FOR INCOME s Two CD Copies TAX) Advocate IOPUCI SA GJP 2aa- 1".\:'- 4'..' 10 sEP 2 0fi 'r a C').\ t.) I. _.r r9 * SpATCH(: HIGH COURT DATED:24t04t2025 ORDER WP.No.11118 ot 2O2S ALLOWING THE W.P WITHOUT COSTS. 7 1.4- /? ,/26 //