Mr.Rajesh Kumar Satturu v. The lncome Tax Officer

THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSTNG RAO NANDIKONDA WRIT PETITION No.ll739 of2025 ORDER; (per Hon'bte Sri Justice Narsing Rao Nuntlitontla) Heard Ms.Shaik Vaheeda Sushma, Iearned counsel for the petitioner and Ms.B.Sapna Reddy, Iearned Senior Standing Counsel for the Income Tax Deparlment appearing for the respondents. Perused the record.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 148A 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 i48A of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictiona[ 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., 0l .04.2021 onwards, proceedings I .l 2 under Sectlon l48A of the Act as also under Section 148 ol the Act ought to have also been issued and proceeded in a lacelcss manner

4. 'l'he contention of the petitioner is that the issue ol procccdings being in violation of the Finance Act,,202l i.e., the impugned notices under Section 148A and Section 148 of the Act not being issued in a faceless manner, have already been dealt with and decided by this Court in the casc of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decidcd on 14.09.2023 whereby a batch of writ petitions were allowed and the procecdings initiated under Section 148A as also under Section 148 of the Acr were held to be bad with consequential reliefs on the ground ol it bcing in violation of the provisions of Section l5lA of the Act read rvith Notification 1812022 dated,29.03.2022. The said judgment passed by this Court has also been subsequently followed in a large nurnber of writ petitions which were allowed on similar '[(2023) 156 tirxrnann.com 178 (Tetangana)] -/ / l,\ .,

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 Courl in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in rhe 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 INCOME TAX5 where the issue was in respect of international taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICER, INTERNATIONAL TAXATIOIt' 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 'Tzoz+1464 ITR 430 (Bom) ' 1Q024) 156 taxmann.com 478 (Gauhati)l " l(2024) 165 taxmann.com 1 15 (Punjab & Haryana)l ' 12024) 167 taxmann.com 4 I I (Tetangana)l " [2024) 166 taxmann.com 679 (Bombay)] ' 12024) 165 taxmann.com 113 (Himachal Pradesh)l \ ) 4 -1 DAHYABHAI RADADIYA VS. INCOME TAX OFFICER, WARD 3(3X5)8, Jharkand High Court in the case of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs' INCOME TAX OFFICBR & ANOTHER and batch of writ petitionsro which stooddecidedonlg.0]-2024.Similarviewshavealsobeentaken by the Division Bench of Calcutta High Court in the case ol 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 Courls. we are still confronted with large filing of idenlical lnatters on daity basis ranging between 5 to l0 writ petitions. That upon the instructions being sought lrom the Deparlment, they havc been taking a solitary ground that the decision of the Bombay High Court in the case ot Hexaware Technologies Lttl., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy t2024 scc on[.ine Gu.l .10 l2 '2025 SCC Onl-ine Jhar 187 '0y2023, Rj-JD:4984-DB I -7 * 5 (l 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 Supreme Court is seized of the matter. In addition, there are about 1200 SLPs also filed arising out of the sarne issue being decided by various Fligh Courls.

7. T'o a query being put to the learned counsel for the Revenue, they have categorically accepted the fact that there is no interim ordcr granted by the Hon'ble Supreme Court any of these nlatters pending before it. Meanwhile, lresh 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 rvas 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 b1'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 concerned in the teeth of series of decisions 5 ( by all the major High Courts in India are continuously still '.l initiating proceedings under Section l48A ol the Act and also initiating proceedings under Section 148 of the Act in contravention to the arnendments brought into the Income Tax Act pursuant to the Finance A,ct,2020 as also the Finance '\ct 2021'

9. Upon a query bcing put as to why can't this writ petition be disposed ol in thc teeth of the decision rendered by this Courl in the case of Ktnakilu Ravindra Reddy (l supra), learned Standing Counsel for the Incomc Tax Deparlment contends that those would unnecessarily burden the Income Tax Department where they would be required to file equal number of SI 'Ps belore the Hon'ble Suprerne Court and it would be further burdening the exchequer ol the Union of tndia. It was also the contention of the learned 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 ol the SI-Ps pending before the Hon'ble Supreme Courl 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 Incotne Tax Deparlment have not come out with a tnechanism to issue appropriate instructions or to take ,//// 7 ,i 7 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 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 Courls.

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 issuc- The Income Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions ol Section I 5l 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 Courl on an issuc which otherwise stands squarely covered by the .iudgnrent of this Court in the case of Kanukala Ravindra Reddy ( I supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravintlra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners \\ \\ l 8 insofar as the liberly 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,202l . 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 libefty that rvas reserved for the Revenue. On the contrary, they have been still sticking orr to the stand, which this High Court as well as many other High Courts already held to be bad. 1 1. It appears that because of the aforesaid liberty that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-tirne lreasure in a faceless manner, the Income Tax Department wants to take advantage ol 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 [ong period of time and finally at a later stage if the Hon'ble Supreme Court confirms the decision taken by this High Couft as also by the other High Courts in which the SLPs are still pending, the Income Tax ,r. i 9 Departrnent would get the advantage of the tiberty that is otherwise protected in favour o f the Revenue for initiation of fresh proceedings lrom 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 fbr as interest of the assesses are concerned. As a consequence, the Income Tax Department gets an extended period of time l.or initiation of fresh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedcnt set in Kanakala Ravinclra 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 cif awaiting the Supreme Court,s decision on pending SLps while conrinuing to tnrtiate fresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than adhering to the established iegal 'Y'I I 70 administrative efficiency and the posttion. Such conduct raises serious questions about the respect for judicial 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 considerecl is that in fact it should have been realized by the Incorne.lax Department itself and should have found out via media in ensuring that proceedings under Sections 14g_A and 14g should not havc been issued in a faceless manner, at least till the Hon,ble Supreme Court decide the twelve hundred (1200) odd SLps which it is ah.eady seized of or, ar least the Income Tax Dgpsrtrnsnt should have fbund out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections l.lg_A and t4g. other than in a faceless manner, the proceedings should have been deferred without precipitating the matter further intirnating the assessee that they shall initiate appropriate proceedings only after.rhe slp,s are decided by the Hon,ble Supreme Coufi on the very same issue. This again, the Income Tax Department, has not been able to give a convincing reply, except fbr the fact that such a decision if at all ./ ,/ &- 1,-r 17 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 lncome 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 fiting 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 ol' 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'bte 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 lax Department is showing audacity by issuing notices conrinuously under Sections l4g_A and I i 72 ( 148 through the jurisdictional Assessing Officer whereas it ought .l to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXrr, on an issue rvhether it was justifiable on the parl of the Income Tax Department rn 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 Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decisron of the co- ordinate Bench of this Court in Samp Furniture (P) Ltd. v' ITO'l 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 Corporation Ltd.'t, the Court observed that the approach of the officrals of Revenue of treating decisions being "not acceptable" was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. " 11zozsl 170 taxr.nann.com 422 (Bombay)l '' 1t9281 113 ITR 589 (Bombay) '3 120241165 taxmann.com 581/300 Taxtnan 452 (Bombay, 'o ltsszl taxmann.com 16155 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 are not concerned here with the correctness or otherwise of their conclusion or of any factual malafides but with the fact thal the offrcers, 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, righfly criticized this conduct of the Assistant Collectors and the harassment lo 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 vehemen y 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 appejlate 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 Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The princrples 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', 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 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, because 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 apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assesses-public without any benefit to the Revenue. We would like to say that the department should take these observalions 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 ar.r endeavour is being made whole heartedly to ensure not to generatc further litigation on issues which have been laid to rest by a large number of High Courts all of whom have taken a consistcnt stand that the action of the Income Tax Department being violative of tl-re 15 Finance Act, 2020 and Finance Act, 2021 . Now, in order to protect the interest of the Revenue as also that ol 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 Ravindro 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 ol.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 concerned, 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 I i 36, 37 and 38 ofthe order which, tbr 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 per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to the notices 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 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 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. Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one{ime measure exercising the powers underArticle 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 17 conferred 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 furlher tike 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 KanakalaRavintlraReddy(|supra)issubjectedtochallenge belore the Hon'ble Supreme Cour.t in SLP No'3574 of 2024' prelerred by the Income Tax Department' wc make it clear that allowing of the instant writ petition is subject to outcome of the aloresaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravindra Reddy (l supra)' This, in other words, would mean that either of the parties' if they so want, may move an appropriate petition sceking revival of this writ petition in the light of the decision of the Hon'ble Supreme Courr in the pending SLP on the very satne issue'

19. Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction 1S concemed. As a consequence'' the impugned noticc under challenge under Sections 148-A and 148 stands set aside/cluashed \ t 18 \ The consequential orders, if any, also stand set aside/quashed in t.l similar terms as have been passed by this High Courl in the case o[ Kankanokt Ravindra Reddy (1 supra). There shalt be no order as to costs Consequently, miscellaneous petitions pending, if any, shall stand closed. To, //TRUE COPY// sD/- M. OSMAN ALI BAIG TANT REGISTRAR SECTION OFFICER 1 The lncome T91off!cqr, Ward - 10 (1), Hyderabad, ln Guards, Masab Tank, Hyderabad_50d 004. me Tax Towers, AC 2 The Commissioner of lncome Tax (Appeals), Government of lndia, Ministrv of Income rax Departmenr, ivition-l'iaceies;'ffi;;i $fii;'iiiFA6;' 5,!,fll.* The Chief Commissioner of lncome Tax Income Tax Towers, AC Guards Masab Tank, Hyderabad-500 004. The Assessment Unit, lncome Tax Department National Faceless Assessmenr Centre Room, No +or, zrio rio;; tR;;':;;hartat Nehru Stadium, Delhi 1 10 003 One CC to SRt. SHATK VAHEEDA SUSHMA Advocate [OpUC] One CC to Ms. BOKARO SAPNA REDDY (Jr. SC FOR TNCOME TAX) loPUCl Two CD Copies 4 5 6 7 KKS TJ ; S T,17 € 1t\ stP 2$6 ..',,i ; .,/ * .// .,D1.,Cv'\ "-),'/ !-'-..:=z'' HIGH COURT DATED:0210712025 ORDER WP.No.11739 of 2025 z,: ^,', ,'/ or t1t-' /i'---qI'l 11 -\1".--i_ 'r^.-i' ALLOWING THE WRIT PETITION WITHOUT COSTS \qo\ \x