tv1/s. Adarsha Thrift Mutually Aided Cooperative Society Limited v. '1 . Assessment Unit

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act, 2021 i.e., the impugned rotices under Section i48A and Section 148 of the Act not being issued in a faceless manner, have already been dealt with and decided by this Courl in the casc 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 148A as also under Section 148 of the Act were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Sectjon 151A of the Act reac with Notification 1812022 dated 29.03.2022. The said judgment passed by this Courl has also been subseqtrentll, followed in a large nrmber of writ petitions which were allowed on similar '[(2023) 156 taxmann.com 178 (Telangana)] 3

5. Down the line, we find that the same issue has also been decided against the Revenue by vanous Iligh Coults i.c., by the Bombay High Courl in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIA3, Punjab and Haryana High Courl in the case of JATINDER SINGH BANGU vs. UNIC)N OF INDIAT, 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 intemational taxation, Bombay High Courl in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICER, INTE,RNATIONAL TAXATION6 which is again on international taxation and central circle, High Courl of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI I I 'Tzoz+1464 ITR 430 (Bom) 'l(2024) 156 taxrnann.com 478 (Gauhati)l 'l(2024) [65 taxmann.com 115 (Punjab & Haryana)] '12024) 167 taxmann.com 41 I (Telangana)l "12024) 166 taxmann.com 679 (Bombay)l 'L2024) 165 taxmann.com 113 (Himachal Pradesh)l r 4 DAHYABTIAI RADADIYA vs. INCOME TAX OFFICER, WARD 3(3X5)8, Jharkand l{igh Court in the case ol SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan l-ligh Court in the case o1'SHARDA DEVI CHHAJER vs. INCOME TAX OFFICEIT & ANOTHER and batch of writ petitionsr0 which stood decidcd on 19.03.2024. Similar views havc also bcen taken by the Division Bench of Calcutta High Court in the case of GIRDHAR (;OPAL DALMIA vs. UNION OF I\l)lA & ORS (M.A.T 1690 o1-2023), decided on25.09.2024

6. Even though the same issue having been decided by a large number of lligh Courts, we are still confronted with large filing of identical urltters on daily basis ranging betwe en 5 to l0 writ petitions. I hat upon the instructions being soughl fi.om tlte Department. they have been taking a solitary ground that the decision of the Bombay High Court in the case ot' Heraware Teclrnologie,s Ltd., (2 supra) as also the one wirich l.ras been decided by this Court in the case of Kanakala Ruvindro Reddy 8202+ SCC Onl.ine Guj 4012 'g2025 SCC Orrl.ine )har 287 12023 : RJ-.r I) : 4 9 84-DBl o ' 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 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 r t. 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 itsetf.

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 Depadment to take appropriate steps to either hold back issuance of notice under Section 148A and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions 6 by all thc major High Courts in India are continuously still initiating p-oceedings 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 thc Finance {ct,,2020 as also the Finance Act 2021 .

9. Upon a rluery 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 o1- Kanakalo Ravindra Reddy (I supra), leartrcd Standing Counsel lbr the Income Tax Department contends that thosc would unnecessarily burden the lncome Tax Deparlrncnt u,hcrc they would be recluired to file equal number of SLPs before the Hon'ble Supreme Court and it would be further burdenins the exchequer ol'the Union of India. It was also the contcntion of the leamed Standing Counsel that no prejudice would be caused to the interest of the petitioners in case if this writ petition is kept pending till the finalization of the SLPs pending beforc the Hon'ble Supreme Court and the fact that the petitioner is already enjoying the benefit of jnterim protection. Nonetheless, on the earlier query of this Cour. as to why the Income Tax Department have not come out with a mechanism to issue appropriate instructions or to take ./ i \/ n 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 decided by the various High Courts, it rvas 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 l5lA of the Act and as a result by now, n.rore 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 Kunakala Rovindra 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 insolar AS the liberty which was granted to the Revenue for initiating fiesh proceedings strictly in accordance with the arnended provisions of the Act, as amended by the Finance Act, 2020 and the Finance AcL, 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 reserved for the Revenue. On thc contrary, they have been still stickin[ on to the stand. which this High Court as well as many other High Courts alreadv hetd to be bad.

11. It appears that because ofthe aforesaid liberty that this High Court had granted permitting the Revenue lor initiating fiesh proceedings as a one-time measure in a faceless manner, the Incorne Tax Depafiment wants to take advantage of the sanre by protracting these proceedings which would enable them to rneet the lirnitation that .,vould otherwise come in the way. Likeu,ise, if the writ petition is kept pending for a considerable long period of tirre and finally at a later stage if the Hon'ble Supreme Court confirms the decision taken by this High Court as also by the other High Courts in r.vhich the SLPs are still pending, the Income Tax 9 Department would get the advantage of the libefty that is otherwise protected in favour of the Revenue for initiation of lresh 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 detrimentai 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 Konokala Rovindro Reddy (l supra), is a matter of grave concern. The Income Tax Department's persistent initiation of fresh proceedings, disregarding the established j udicial pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions piling up on the same issue. Tl.ris deliberate approach not only undennines the principle of judicial precedent but also strains the judicial resources unnecessarily. The Deparlment's strategy of awaiting the Supreme Courl's decision on pending SLPs while continuing to initiate fresh proceedings appears to be a calculated move to buy time and circumvent Iimitation periods, rather than adhering to the established legal I 10 position. Such conduct raises serious questior-rs attout the adrninistrativc efficiency and the respect ft>r judicial pronouncenrents, particularly when this Court has already provided a balanced approach by preserving both the Revenur:'s rights and ASSCSSCS I IItcTCSIS

13. Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Department itself and should have found out via media in ensuring that proceedings under Sections 148-4 and 148 should not have been issued in a faceless rlanner, at least till the Hon'ble Supreme Court decide the twelve hunclred (12C0) odd SLPs which it is already seized of or, at least the Incorne Tax Department should have found 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 furthdr 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 leply, except for the fact that such a decision if at all // 1l 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 Departrnent contended that the Delhi High Court dismissed a writ petition of similar nature, on the one l.rand when the High Courl 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 thc matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the rnatter has been reluctant in granting any interim protection to the lncome 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 cpntinuously under Sections 148-A and "t2 I 48 througlr the j urisdictional Assessing Officer whereas it ought to have beeir only in the faceless manner.

14. In tlre case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXI', on an issue whether it was .justifiable on thc part of the Income Tax Deparlrnent in not following an ortler passed by the adjudicating authorit),only on the ground that tlrc appeals are pending, the Division Bench of the Iligh Court o1'I3ombay held at paragraph No.25 as under, viz., : "25. lVr. Paridwalla has rightly drawn out attention to the decisior of this Court in Commissioner of Income Tax vs. Smt. Godavaridevi Sarafl2 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 would not mean that till the same is set aside in a manner known to law, it would loose its binding lorce Referring to the decision of the Supreme Court in Union of India vs. Kamlakshi Finance Corporation Ltd.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. 'l ttZOZsl l7t) 1111,l,unn..om 422 tBombay)l '' [978] I l3 I IR 589 (Bombay) t3 12OZ+1165 raxrnann.corn 581/300 Taxman 452 (Bombay) llggZl taxmann.com l6155 ELT433 (SC) I I 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 correetness or otheruise 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 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 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 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 appeltate authority is not "acceptable" to 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 I I L4 ruie 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, becaJse it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, hav€ 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 lo the assesses-public without any benefit to the Revenue. We would like to say that the depadment 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 thern."

15. What is r.r,orrying this Bench more is the fact tllat an endeavour is being made whole heartedly to ensure not to generate further titigation on issues which have been laid to rest by a large number of I-tigh Courls all of whom have taken a consistent stand that tlie actjon of the Income Tax Department being violative of the 15 Finance Act, 2020 and Finance Act.,202l . Now, in order to pl'otect the interest ol 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 tcrms of the judgment rendered by this High Courl in the case of Kunkanala Ravindra Reddy (1 supra) shall however be subject to the outcorne of the SLPs which were filed by the Incorne Tax Depaftment and which is pending consideration before the Hon'ble Suprerne Court.

16. In the given facts and circumstances, this Bench is of the considered opinion that unless and until we do not timely dispose ol- rratters which are squarely covered by the decision of this Court and which stands fortified by the decisions of the various other Iligh Courts on the very same issue, the pendency of this High ('ourt u,ould I'urlher be burdened which otherwise can be decided and disposed of as a covered matter.

11. So lar as the interest of the Revenue is concemed, we aLe ol' the considered opinion that the interest of the Revenue has already bcen considered and protected, as has been observed in paragraphs '16 36,37 and 38 of tl.re order which, for ready reference, is reproduced hereunder:

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the. respondent- Department is neither tenable. nor sustainable. The notices so issued and the procedure adopted being 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 ouashing 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 rssue. Since the impugned notices and orders are getting quashed on the point of junsdiction, 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 aporopriate proceedings.

38. Since the Hon'ble Supreme Court had, in the case of .Ashish Agarwal, supra, as a one-time measure exercising the powers under Article 142 of the Constitution of lndia, permifted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw. the right 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 ofAshish 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 Kanukulu Ruvindro Rectdy (l supra) is subjected to challenge t belbre the F{on'blc Supreme Court in SLP No.3574 of 2024, preferred by the Income Tax Departrnent, 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 Courl in the case of Kanukala Ravindra Reddy (1 supra). This, in other words, would mean that either of the parties, if they so want, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Supreme Court in the pending SLP on the very same issue.

19. Accordingly, the instant writ petition stands allowed in lavour of the assessee so lar as the issue of jurisdiction IS concerned. 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 asidc/quashed in similar tenns as have been passed by this High Court in the case of Kankanalo Rttt,indro Reddy (l supra). -lhere shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed //TRUE COPY// SD,.L,VIJAYA LAKSHMI GISTRAR ASSIS'TANT RE 'sECTlott OFFICER / .7 Assessment Unit, lncome Tax Department, National e-Assessment Center, Room No.401, 2nd Floor, E-Ramp, Jawaharlal Nehru Stadium, New Delhi-1 10 003. lncome Tax Officer, Ward - 1, # 6-2-15613, Aayakar Bhavan, Subhash Nagar, Nizamabad-503 002. The Principal Chief Commissioner of lncome Tax, Andhra pradesh and Telangana, Hyderabad # 10-2-3, Room No.922, 9th Floor, 'B' Block, lT Towers, AC (iuards, Hyderabad-500 004. Uniorr of lndia, rep. by its Secretary, Ministry of Finance, Government of lndia, 3_ " Flogr, Jee.van Deep Building, Sansad Marg, New Dethi-1 10 001 One CC to SRl. S. VIJAY ADITHYA, Advocate IOPUCI One CC to tV1s. J. SUNITHA (JUNIOR SC FOR TNCON/'E TAX) tOpUCl Two CD Copies B M /BSK To, 1 2 3 4 5 t) ry) HIGH COURT DATED:2910412025 I I ORDER WP.No.13218 ol 2025 .-- S l.t ;. /. J J !) ?6JuN2m , c) Y,, * o€SPATCH E_O I ALLOWING THE WRIT PETITION WITHOUT COSTS w J t6 t \