Mr. Shiva Shankar Reddy Laknapuram v. Assessment Unit

TTIE IIONOTJRABLE SRI JUTTICE P.SAM KOSHY AND TIIE HONOT]RABLE SRI JUFTICE NARSING RAO NANDIKONDA WRIT PETITION Nq.12053 of 2025 hv) Heard Mr. Paturi Rama Kris , leamed counsel for the 4nu petitioner and Ms. B.Sapna Reddy, learned Junior Standing Counsel for the Income Tax Depaftment for the respondents. Perused the record

2. This is a writ petition where the proceedings are either challenged to the notices which werg issued under Section l48A and 148 of the Income Tax Act, 196 I (for short 'the Act') or the assessment orders those have been assed under Section 147 of I the Act which have been assailed

3. This writ petition is being take$ up today onlyon one of the grounds, that the notices issued undpr Section l48A of the Act and the subsequent initiation of procQedings under Section 148 of the Act by the jurisdictional Assessiflg Officer, whereas in terms of the amendment that was brought to the IncomqJax Act by way of Finance Act,.2o2l w.e.f., 01.04]2021 onwards, proceedings 2 under;Section l4gA of the Act as also under Section t4g of the Act ou,ght to have also been issued and proceeded in a faceless malrner.

4. T.he contention of the petltioner is that the issue of proceedings being in violation of the Finance Act, 2021i.e., the impugne,J notices under Section I4gA and Section l4g of the Act not being issued in a faceless manner, have already been dealt with and decided by this Court in rhe case of KANKANALA RAWNDRA REDDY vs. INCOME_TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section I4gA as also under Section 148 of the.,tct were held to be bad with consequenrial reliefs on the ground of il being in violation of the provisions of Secrion I 5l A of the Act reaot with Notification lg/2022 dated 29.03.2022. The said judgment passed bythis Court has also been subsequently followed in a large number of writ petitions which were allowed on similar terms. ' [Q023) 156 tarmann.com I7g (Telangana)] l I 1 ,a 3

5. Down the line, we find that [he same issue has also been decided against the R.evenue by various High Courts i.e., by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMIvIISSIONER OF INCOME TAX & OTHERS2, Cauhati High Court in thE case of RAM NARAYAN SAH vs. UNION OF INDIA3, Punjab and Haryana High Court in the case of Jnf txoe R SINGH BA {GU vs. LIMON OF INDIA4, and Telangana High Court in the case of SRMNKATARAMANA REDDIY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAXS where the issue was in respect of international taxation, Botnbay High Court in the case of ABEIN AMLKUMAR SHAH VS, INCOME TAX OFFICE& INTERNATIONAL TAXATION6 which is again on intemational taxation and central circle, High Cqurt of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKIIBHAI 21ZOZ+1464 ITR 430 (Bom) 3 l(2024) 156 taxmann.com 478 (Gauhati)l ' [(2024) 165 taxmann.com I I 5 (Punjap & Haryana)] ' 12024) I 67 taxmarur.com 4 t I (Telangana)l "12024) 166 taxmann.com 679 (Bombay)l ' 12024) 165 taxmann.com lII (Himaqhal Pradesh)l I d N ! I i i i i $it 4 DAITYAIIHAI RADADIYA vs. INCOME TAX OFFICE& WARD 3(3X5)8, Jharkand High Court in the case of SHyAM SUNDAR SAW vs. UMON OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs. TNCOME TAX OFFICER & ANOTIIER and batch of writ petitionsr0 which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of carcutta High Court in the case of GIRDHAR:GOPAL DALMIA VS. UNION OF INDIA & ORS (M.A.T I 690 ot 2023),decided on 25.09.2024.

6. Even though the same issue having been decided by a large number of Ftigh Courts, we are still confronted with large filing ol identical matters on daily basis ranging between 5 to l0 writ petitions. That upon the instructions being sought from the Department, they have been taking a solitary grrtund that the decision of the Bombay High Court in the case ot- Hexaware Technologies Ltd., (Z supra) as also the one which has been decided by ttis Court in the case of Kanakala Ravindra Reddy '202+ SCC ont,ine Guj 4012 '2025 SCC Onl-ine Jhar 287 72023 : RI-JD: 4984-DBl ._ o ' 5 ,-') (l supra) has been subjected to ohallenge in a Special Leave Petition i.e., SLP No.3574 of 202! before the Hon'ble Supreme Court and the Hon'ble Supreme Court is seized of the matter. In addition, there are about 1200 SIiPs also hled arising out ofthe srme issue being decided by various High Courts.

7. To a query being put to the lePrned counsel for the Revenue, they have categorically accepted ttlp fact that there is no interim order granted by the Hon'ble Supreme Court in any o[ these matters pending before it. Meanphile, fresh writ petitions of identical nature are being piled up bpfore this Bench on daily basis and the pendency is getting increaged on matter which otherwise has already been dealt and decided !y this very High Court itself.

8. On the one hand, even though the order ol this Court that was passed as early as on 14.09.2Q23 and more 16 months have lapsed, till date, we do not find any remedial steps having been taken by the lncome Tax Departm nt to take appropriate steps to 4 either hold back issuance of notice under Section l48A and under Section 148 of the Act by the ju[isdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions 6 by all th,: major High Courts in lndia are continuously still initiating proceedings under Section l48A of the Act and also initiating proceedings under Section 148 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 rendered by this Court in the case ol' Kanakala Ravindra Reddy (l supra), learned Standing Counsel for the Income Tax Deparhaent contends that those would unnecessarily burden the Income Tax Department where they would be required to file equal number of SLPs before the Hon'ble Srrpreme Court and it would be further burdening the exchequer :f the Union of India. It was also 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 tilt the firLalization of the SLPs pending before the Hon'ble Supreme Court and the fact that the petitioner is already enjoying the benefit cf 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 tafke ) ) 7 appropriate steps in ensuring that proceedings under Section 148A ofthe Act as also the assessment qrders under Section 148 ofthe Act are kept in a hold in the light of the decisions dedcided by the various High Courts, it was subruitted 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 w1 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 pontravention to the provisions of Section 151,{ of the Act and as 0 result by now, more than 600 to 700 petitions have been already got piled up belore this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakala Ravindra Reddy (1 supra). What is also surprisin[ is the fact that though while allowing the writ petitions in thq case of Kanakala Ravindra Reddy (l supra), the Division Benph while reserving the right of the Revenue, has also protected the interest o[ the petitioners I insofar as the liberty which was granted to the Revenue for initiating fiesh 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 assess@ would be entitled to challenge rtr raise the other legal objections if the 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. I l. It appears that because ofthe aforesaid libety that this High Court had granted permitting the Revenue for initiating fresh proceeding; as a one-time measure in a facelcss manner, the Income Ta.K Department wants to take advantage of the same by protracting these proceedings which would enable them to meet the limitation trat would otherwise come in the way. Likewise, if the writ petition is kept pending for a considerable long period of time and hnalty at a later stage i[ 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 still pending, the Income Tax 9 l Department would get the advantage of the liberfy that is otherwise protected ln favour of the Revgnue for initiation of fresh proceedings from the disposal of the{e matters at a much later stage which would be advantageous and $eneficial to the Revenue and would be equally disadvantageous afd 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 {plosion in this Court, despite the clear precedent set it Kanakala \avindra Reddy (l supra), is a matter of grave concern. The Incomf Tax Departrnent's persistent initiation of fresh proceedings, disre$arding the established judicial pronouncements, has led to an unpfecedented surge in litigation with over 600-700 petitions piling up on the same issue. This deliberate approach not only unden+ines the principle ofjudicial precedent but also strains the judicial resources unnecessarily. The Department's strategy of awaiting thg Supreme Court's decision on pending SLPs while continuing qb initiate fresh proceedings appears to be a calculated move !o buy time and circumvent limitation periods, rather than adh{ing to the established legal ( . t t I .l 10 position. Such conduct raises serious questions about the administrative effrciency and the respect for judicial pronouncements, particularly when this Court has already provided a balanced approach by presewing both the Revenue's rights 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 ha're lound out via media in ensuring that proceedings under Seclions 148-4, and 148 should not have been issued in a faceless m,tnner, at least till the Hon'ble Supreme Court decide the twelve hur dred ( 1200) odd SLPs which it is already seized of or, at least the Income Tax Department should have found out some remedial steps to ensure that wherever the authorities intend to initiate prcceedings under Sections 148-A and 148, other than in a faceless nlanner, the proceedings should have been deferred without prr:cipitating the matter further intimating the assessee that they shatl initiate appropriate proceedings only after the SLP's are decided b1, the Hon'ble Supreme Court on the very same issue. This again. the lncome 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 lthe 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 Tpx Denarbnent contended that the Delhi High Court dismissed a wfit petition of similar nature, on the one hand when the High Co,i.t is struggling to reduce its pendency, such notices which are under challenge in this writ petition are forcing the assessee to loock the doors of this High Court resulting in filing of hundreds of new writ petitions which in the long run not only affects the digposal of the writ petitions but also consumes substantial time o the Bench in hearing these d matters again and again on daily ba$is Admittedly, in spite of the matter belore the Hon'ble SupremE Court having been taken on many occasions, the Hon'ble Suprerfe Court which is seized of the matter has been reluctant in grantinf any interim protection to the Income 1-ax Department. Yet, the authorities concerned at the State level are not ready to accept t{e verdict passed by a majority ol 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 continuopsly under Sections 148-A and 72 148 through the jurisdictional Assessing Offrcer whereas it ought to have been only in the faceless manner

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXrr, on an issue whether it was justifiable on the part of the Income Tax Department in not following ;rn order passed by the adjudicating authority only on the ground that the appeals are pending, the Division Bench of the High Cour: of Bombay held at paragraph No.25 as under, viz., : "25. Mr. Paridwalla has rightly drawn out attention to the decisicn of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Saraf'2 as also the recent decision of the co- ordinate Bench of this Courl in Samp Furniture (P) Ltd. v. lTOl3 of which one of us (Justice G.S. Kulkarni) was a member, wherein the Ccurt categorically observed that the Revenue having not "accep:ed" the iudgment of the High Court would not mean that till the sarre 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.l1, the Court observed that the approach of the officials of Revenue of treatin_c decisions being "not acceptable" was criticized by the Suprenre Court. ln such decision, following are the relevant observations made by the Supreme Court. '] ttzozs) I l'0 taxmann.com 412 ( Bombay)l '" 119781 I l:i ITR 589 (Bomhay) 1202+116:i taxmann.com 5ttl/300 Taxman 452 (Bombay) lLggZltaxmann.com t6155 ELT 433 (SC) 13 "6. Sri Reddy is pefiaps ribht in saying that the officers were not actuated hy any mala fides in passing the impugned or{ers. They perhaps genuinely felt that the claim of the assess€e 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 wlth the conectness 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 (Adpeals) 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 cannol be too vehemently ermphasized that it is of utmost rmporlance that, in disposing of the quasijudicial issues before theln, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellte Collector is binding on the Assrstant Collectors working wlthin 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 discrplne require that the orders of the higher appellate authorities should b€i folbwed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to the department - in itself an pbjec{ionable phrase - and is the subiect matter of ar1 appeal can fumish no ground for not following it unless its operation has been suspended by a competent court. lf this healthy - t4 (', rule is not followed, the result will only be uMue harassment to assesses and chaos in administration lf tax laws.

12. tNe have dealt with this aspect at some length, because it has been suggested by the learned l\dditional Solicitor General that the observations rnade by the High Court, have been harsh on the c,fficers- lt is clear that the observations of the High Oourt, 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 tc, the Revenue. We would tike to say that the drlpartment should take these observations in the proper spirit. The observations of the High Court sfrould be kept in mind in fulure and the utmost regard should be paid by the adjudrcating authorities and the aprpellate authorities to the requirements of .udicial di:;cipline and the need for giving effect to the orders of the higher appellate authorities which are binding orr them."

15. What is worrying this Bcnch 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 u.igh courts alt of, whom have taken a consistent stand that the action of the Income Tax Department being violative of the 15 (-" Finance Act,2O20 and Finance Actl2021 . Now, in order to protect the interest of the Revenue as also fhat of the assess@, it would be trite at this juncture, if we dispo{e of the writ petition with an observation/direction that the dispo$al of the instant writ petition in terrns of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (l supfa) shall however be subject to the outcome of the SLPs which ere filed by the Income Tax Department and which is pending cQnsideration before the Hon,ble Suprerne Court.

16. In the given facts and circu+lsrances, this Bench is of the considered opinion that unless and ntil we do not timely dispose of matters which are squarely cove by the decision ofthis Court and which stands lortified by the {lecisions of the various other High Courts on the very same iss e, the pendency of this High ,1 Court would further be burdened w ich otherwise can be decided i and disposed of as a covered matter.

17. So far as the interest o[the R enue is concerned, we are of the considered opinion that rhe interfst of the Revenue has already been considered and protected, as h ,f U".n observed in paragraphs 76 36,37 and.]8 ofthe order which, for ready reference, is reproduced f hereunder: 3ri. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondenl Department is neither tenable, nor sustainable. The notices so issued and the procedure adopted being p,-,r se illegal, deserves to be and arei accordingly set ar;ide/quashed. As a consequence. all the mpugned 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 a[e quashing the consequential order is on the principles tl'at when the initiation of the proceedings tself was procedurally wrong, the subsequent orders also gets nullified automatically.

37. The preliminary ob.iection raised by the petrtroner is sustained and all these writ petitions stands a lowed on this very jurisdictional issue. Since the impugned notices arrd orders are gefting quashed on the point of jurisdiction, we are not inclined to proceed further and dr>cide the other issues raised by the petitroner which slands reserved to be raised and contended in an appropriate proceedings.

33. Since the Hon'ble Supreme Court had, irr the case ol Ashish AgaMal, supra, as a one{ime measure exercising the powers under Articie 142 of the Ccnstitution of lndia, permitted the Revenue tc proceed under the substituted provisions, and this Coud allowrng the petitions only on the procedural flaw, the right 71 conferred on the Revenue would remain resen@d 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 !o make observations that since we are inclined to dispose of the ingtant writ petition, conscious of the fact that the earlier order of tf,i, Uigt, Court in the case of Kanakala Ravinilra Reddy (l su{ra) is subjected to challenge before the'Hon'ble Supreme Coult in SLp No.3574 of 2024, preferred by the Income Tax Depaftment, we make it clear that allowing of the instant wnt petitiorlp is subject ro outcome of the aforesaid SLP preferred by the Reveirue against the decision ofthis High Court in the case of Kanakala Rsvindra Reddy (l stpra). This, in other words, would mean tttat either of the parties, if they so want, may move an appropnare $etition seeking revival of this writ petition in the light of the deo sion of the Hon'ble Supreme Court in the pending SLP on the very same lssue

19. Accordingly, the instanr wrir petition stands allowed in favour of the assessee so f'ar as the issue of jurisdiction is concemed. As a consequence, fhe impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed. l l i L ; I 1E 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 closeC. //TRUE COPY// ASSI SD/. A. JAYASREE ANT REGISTRAR To, ECTION OFFICE 1 TheAssessment Unit, lncome lq1 D-epa{ment, National e_Assessment 40 1, 2 rid F r*,.; E- ii, ilpl .r, *u rr a rr i j ir e n ru ffi?l?|n)ft N-'3'l,h,T??b,#B: 3 4 8?'"of i'JIi'iff .?f,ii,i,U'#r'oJt1iT"Ti3:lrncomeraxorrice,Deo commissioner of lncome Tax 4, AC Guards, r\,4asab rank, IffiJr:ffi5'' One CC to SRt pATURI RAMA KRISHNA, Advocate. tOpUCl One CC to i\4s.B.SAPNA REDDY, SC for lncome Tax Deparrment. [OpUCl 6 Two CD Copies dSK JP a HIGH COURT DATED:30,t0412025 c.) ? 6( 2 5 AUE 2025 \1 (') t '. ,; ,;/ ,l .t ORDER WP.No.120t53 of 2025 ALLOWING THE WRIT PETITION WITHOUT COSTS O I I ) l 1 l I i x I t I I j I ! I I i t I I i I I i r I i I I I I l : I 5 I