The High Court · 2025

Judgment

1. 2 3 ...RESPONDENTS petition under Articre 226 0f the constitution of rndia praying that in the circumstances stated in the affidavit filed therew pteased to issue a writ, order or direction, ,"r" or'l:r,tj;:::J :;T"ff::; Writ of l\4andamus, declaring the Assessment Ord dt 24'01 .2024 passed by the 3rd respondent urs 147 r.w.s 144r1448or trre r,e 20 vide DIN No IrBA/ASr/s/1 4 7 / 2023.24t 1 o6.r;".ffiI'":iljr,l;i,jr,ir" order passed u/s 148A(d) dt. 31 .03.2023 vide DrN No. ,.BA/AST rFr148At2o22_ 2311051734722(1) ano the notice urs 148 dt. 31.03.2023 vide DrN No. ITBA/AST/S/148-1t2022-23t1os1t34Bo7(1), issued by the JAo(1sr respondent) instead of FAO(3rd respondent) and consequentiat penarty orders passed vide order u(s 2T0A of the Act dt.25.062024, order uts 2?2A(1xd) or the Acr dr. 20062o24,andorder'l';JJ"?:"":]::l"i::::::":il:i;:l?il;'fi1; and contrary to the Provisit Natural J ustice ' IA NO: 10F 2025 CPC praying that in the circumstances stated ,i" 0"i0,"", the High court may be pleased to suant to the Assessment Order dI 2401 2024 ,. lo, ,.* ' 144t1448 of the lncome-tax Act for /AsT/S/1 47l2023-24l1 06004s5S3(1 )

Petition under Section 151 in the a{fidavit filed in support of stay all further Proceedings Pur passed bY the 3rd resPondent u AY 2019-20 vide DIN No ITBA Counsel for the Petitioner: SRI DUNDU MANMOHAN Counsel for the Respondents: Ms' J'SUNITHA' Jr' SC FOFI 1T The Court made the following: ORDER THE ITONOURABLE SRI JUSTICE P.SAM KOSHY rHE HoNouRAu., .*TrrrrcE NARSTNG RAo NANDIKONDA PE TTTTO NNo.129830 F 2025 ORDER, (per Hon'ble Sri Justice Narsing Rao Nandikonda) Heard Mr. Dundu Manmohan, reamed counser for the petitioner and Ms. J.Sunitha, leamed Junior Standing Counsel for the Income Tax Department 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 14gA 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 l4gA of-the Act and the subsequent initiation ofproceedings under Section l4g of the Act by the jurisdictiona[_Assessing Offrcer, whereas in terms of the amendment that was brought to the Income Tax Act by way 2 t of Finance Lct, 2O2l w'e'f'' 01 04'2021 onwards' proceedings under Section 148A of the Act as also under Section 148 of the Act ought to have also been issued and proceeded i:n a faceless manner.

4. The contention of the petitioner is that rhe issue of proceedings being in violation of the Finance Acl' 2021 i'e'' the impugned notices under Section l48A and Section 148 of the Act not being issued in a faceless manner' have already h'een dealt with and decided by this Couft in the case of KANKANALA RAVINDRA REDDY vs' INCOME-TAX OFFICERT 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 ol the Act were heid to be bad with consequential reliefs on the ground of it being in violation of the provisions of 'section l51A of tlre Act read with Notihcation l8l2)22 dated2g'03 2022' The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were all'rwed on similar ' l(2023) 1 56 taxmann.corr-pS (Telangana)l 3 5 decided Down the line, we find that the same tssue has also been agarnst the Revenue by various High Courts I.€., by the Bombay High Courl in the case of HEXAWARE TECIINOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Courr in the case of RAM NARAYAN SAH vs. UNION OF INDIAT, punjab and Haryana High Court in rhe case of JATINDER SINGH BANGU vs' UNION o['INDIA4, and Terangana 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 ABIIIN ANILKUMAR SHAII vs. TNCOME TAx OFFICER, INTERNATIONAL TAXATION6 which is again on intemational taxation and central circre, High court of Himachal pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICER?, Gujarat High Court in the case of MANSUKHBHAI SRI VENKATARAMANA '1zoz+1464 ITR 430 (Bom) 'LQ024l I56 raxmann.com 47g (Cauhali)l 'l(2024) 165 taxmann.com l15 (punjab & Uaryana)1 '12024) I67 taxmann.com 4l ltlelangana)l "-12024) 166 taxmann.com 679 (Bombay)l ' 12024) 165 taxmann.com I 13 (Himac[ai pradesh)] 4 INCOME TAX OFFICER' DAHYABHAI RADADIYA vs' WARD 3(3X'E' Jharkand High Court in the case of SHYAM SUNDAR SAW vs' UNfON OF INDIAe' Rajasthan Fligh Court in thecaseofSIIARDADEVICHHAJERvs'INCoMETAx OFFICER & ANOTHER and batch of writ peti';ionsro which stood decided on 19'03'2024' Similar views have al;o 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 of High Courls, we are still confronted wittr large friing of identicalmattersondailybasisrangingbetweer,5tol0writ petitrons. That upon the instructions being sought from the Department, they have been taking a solitary 6iround that the decision of the Bombay High Court in the cas': of Hexaware Technologies Ltd', (2 supra) as also the one rvhich has been decided by this Coi't in the case of Kanakala Ravindra Reddy "2024 sCC online Guj 4012 "2025 SCC OnLine Jhar287 72023 : RJ-JD :4984-DBl o ' j l t I t I I I I I I I I I I i I I 5 (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 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 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. Meanwhile, fresh writ petitions of identical nature are being piled up before this Bench on daily basis and the pendency is getting increased on matter which otherwise has already been dealt and decided by this very High Court itself. 8. On the one hand, even though the order of this Court that was passed as early as on 14.09.2023 and,more 16 months have lapsed, till date, we do not find any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance of notice under Section l4gA and under Section I48 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions 5 by ail the major High Courts in India are continuouslY still initiating proceedings under Section 148A of the lr'ct 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 '\ct202l'

9. Upon a query being put as to why can't this writ petition be disposed of in the teeth of the decision rendered by this Court in the case of Kanakala Ravindru Reddy (I supra)' learned Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Deparlmen t where they would be required to frle equal number of SUPs 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 Counsel that no prejudice would be caused to the interest of the petitioners in case if this writ petition is kept pending tillthefinalizationoftheSLPSpendingbeforetheHon,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 instruciions or to take I t I I I -a 7 appropnate steps in ensuring that proceedings under Section l4gA of the Act as also the assessment orders under Section l4g of the Act are kept in a hold in the iight of the decisions dedcided by the various High Courts, it was submitted by the learned 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 Iitigation 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 l5lA of the Act and as a result bynow, 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 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 liberty which was granted to the llevenue for initiating fresh proceedings strictiy 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 entitied to challenge or raise the other legal objections if the Rer enue initiates fresh proceedings' The Department has made no endeavour rn 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 weil as many other High Courts alreirdy held to be bad. 1 1. It appears that because of the aforesaid liberl1' that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a faceless manner' the Income Tax Department wants to take advantage of the same by protracting these proceedings which would enable t'nem 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 alater stage if the Hon'ble Supreme Court confirms rhe decision taken by this High Court as also by the other High Courts in which the SLps are still pending, the Income Tax I l I 9 Department would get the advantage of the liberty that is otherwise protected in favour of the Revenue for initiation of fresh proceedings from the disposai 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 clearprecedent set in Kanakala Ravindra Reddy (lsupra), is a matter of grave concern. The Income Tax Depaftment,s persistent lnrtration of fresh proceedings, disregarding the established judicial pronouncements, has led to an unprecedented surge in litigation with over 600_700 petitions piling up on lhe same issue. This deliberate approach not only undermines the principle ofjudicial precedent but also strains thejudicial 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 I 1 10 administrative position. Such conduct raises serious questlons about the efficiency and the respect firr judicial pronouncements, particularly when this Court has alrerrdy provided a balanced approach by preserving both the Revenuds rights and assesses interests'

13. Another aspect which needs to be considered is that in fact it should have been realized by the lncome Tax Departrnent itself and should have found out via media in ensuring that proceedings under Sections 148-A and 148 should not have been issued in a faceless manner, at least till the Hon'ble Supreme Ccurt decide the twelve hundred (1200) odd SLPs which it is already seized ofor' at least the Income Tax Department shouid have frlund out some remedial steps to ensure that wherever the authorities 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 shal1 initiate appropriate proceedings only after the SLP's are decided by the Hon'ble Supreme Court on the \1ery same issue' This again, the Income Tax Department, has not beren able to give a convincing reply, except for the fact that such a rlecision if at all 7L 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 leamed Standing Counsel for the Income Tax Departm*, .*r*O**o 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 continuousry under Sections l4g-A and 12 Ofhcer.wheleas it ought COMMISSIONER' 148 through the jurisdictional Assesstng to have been only in the faceless manner' 14. In the case of BANK OF INDIA vs' '\SSISTANT INCOME TAXIr' on an issue vuhether it was justifiable on the part of the Income Tax Depaltrnent in not lollowing an order passed by the adjudicating authonty 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' Lodavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Court in Samp Furniture (P) l-td' 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 would not mean that till the same is set aside in a manner known to law' it wr:uld loose its binding force. Referring to the decision of the Supreme Court in Unionoflndiavs.KamlakshiFinanceCorporationLtd'14'the Court observed that the approach of the officials 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' r.7-0. t ax m a nn. c o m 4 22 ( B o mb a y)l : : !,,1o:s., . ,:!:::?l I r] rrR 58e (Bombay) ,"i?:;:l:,1:;:r:#",';,:';:::**452(Bonbay) x I l iI i t *f f 13 "onl. "6. Sri Reddy is perh right in saying that fhe officers were ,o, by any mala fides in ""nuo" passing the ,aornnu'utuo o'0"" They perhaps genuinery fert that the .l . laim of the assessee was not tenabre and that, if it *" "t"ot"o' the Revenue would suffer. But what R"dov o'urlooks is that we are not concerned n.;'i the correctness or l"n otherwise of their or of any factuar marafides but with the ,u""'u"'on officers, in reachins in rheir concrusio", * ,":l1i':ne two appellate orders in regard. to the same ,arra'"uo which were placed before them, one of tne cottector (Anoeats) and the other or the Tribunar. The High in our view, righfly "- criticized this conduct o, ,;'*-n'., Assistant corectors and the harassment to tn" a.".' or these orricers to ;;;';ilT';:'I:J:,,:; authorities higher to them in cannor be too vehemenryffij"Tl"Hff:]J 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 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 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 14 rule is not followed' the result will only be undue to assesses and chaos in administration ;;"".";, of tax laws

12. We have dealt with this aspect at some lerLgth' because it has been suggested by thb learned OOO,i"^"' Solicitor General that the observations ;;;; * the Hish court' have been harsh orr the on,""r. lt is clear that the observations of the High tourt, seemingly vehement' and appa'ently unpalatable to the Revenue' are only intended tc' curb ,,"no"n"V in revenue matters which' if allowed to o"ao*" widespread' could result in consid':rable harassment to the assesses-public without any benefit to the Revenue We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard shoutd be paid by the ad.iudicating authorities and the appellate 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."

15. What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of High Courts all of whom have taken a consistent stand rhat the action of the Income TaxDepartment being violative of the I ! I I i I I i i i I l t I : I i I I I , j i l ; 15 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 trite 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 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 ofas a covered matter.

17. So far as the interest of the Revenue ts 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 L5 36,3'7 and38 of the order which' for ready reference' is reproduced hereunder:

36. For all the aforesaid reasons' the impugned llotices issued and the proceedings drawn by the respondent- ,"Ornr"*, is neither tenable' nor sustziinable' fn" noti"", so issued and the procedure adopte'J being deserves to be and are accordingly set Or. "" '*n"', aside/quashed As a consequence' all the impugned orders getting quashed' the consequential orders passed pursuant to the notices by tne ssued under Section 147 and 148would also get quashed and it is ordered accordingly The reason we are quashing the consequential order is on the prrinciples that when the initiation of the proceedings itself was procedurally wrong' the subsequent orders also gets nullif ied automatically' -respondenlDepartment

37. The preliminary ob.lection raised by the petitioner is sustained and all these writ petitions stands allowed on this very iurisdictional issue Since the impugnc'd 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 Agarwal, suPra, as a one-time measure of Ashish of the the powers under Article 142:' exercising Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Cor.,'rt allOWing the petitions only on the procedural flaw, the right I I I I I I i t t I I I I I I I , t I I i I I , I I I 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 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 Kanakala 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 preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravindru Reddy (l 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.

19. Accordingly, the instant writ petition stands allowed 1n favour of the assessee so far as the issue of jurisdiction ls concemed. As a consequence, the impugned notice under challenge under Sections 148-4 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 Kankanala Ravindra Reddy (l supra). There shall be no order as to costs Consequently, miscellaneous petitions pending, if any, shall stand closed //TRUE COPY' SD/. M. NAGAMANI ASSISTANT REGISTRAR SE o OFFICER To, 1 rhe rncome. rax officer;.Ee'So,i,"?3i3fJ;:+Xi,|.l!SllBortt office Veerabhadra Nagar, Net 2. The Principal Commissioner of lncome Tax-2' Hyderabad Siqnature Towers' Sv No.6(P) ot xonoap'ii'"dfi;iPi;i r<oftraguo'a' opp Botanical Gardens' 56rlingampally, Ranga tii'iov' ui'o'"*bad' Telangana-50O084' 3. The Assessment Unit' lncome Tax Department National Faceless - n.i"...Lni centre, P"iti,S'il*#ii??633,,U"" No 401' 2nd Froor' t- 4. One CC to SRI DUNDU MANI/OHAN' Advocate [OPUCI 5. One CC to tr,4s. J.SUNITHA' Jr. SC FOR INCOIUE TAX IOPUCI 6. Two CD CoPies RamP, Jawaharlal Nehrt BSR GJP - )X i. I I HIGH COURT DATED:2810412025 --,'^a:-. == l|;r'6t t t'''"' "t'-:\ - --.::r l:.) i. r.r !-; '1.,., \-,, \'. 0I sEP 2025 'ii,1!I,., ORDER WP.No.12983 of 2025 ALLOWING THE WRIT PETITION, WITHOUT COSTS

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