The High Court · 2025

Petition under section 15'1 cPC praying that in the cirr;rmstances stated in the affidavit filed in support of the petition, the High court may, be pleased to stay all further proceedings pursuant to the notice u/s 148 dl 13.04.2024 vide DIN No. lrBA/AST/s/148 112024-2511064078372(1) issued by the .J,A0(1st respondent) instead of FAO(3rd respondent) for A.Y. 2012-18. Counsel for the Petitioner: SRI DUNDU MANMOHAN Counsel forthe Respondents: MS.BOKARO SAPNA REDDY (Jr. SC FOR INCoME TAX) The Court made the following: ORDER ,;s THE TIONOT]RABLE SRI JUSTICE P.SAM KOSHY AND THE TIONOURABLE SRI JUSTICE NARSINGRAO NANDIKONDA WRIT PETITION No. 14259 0F 2025 ORDER, (per Hon'ble Sri Justice P'Sam Koshy) ' Heard Mr. Dundu Manmohan, learned counsel for the petitioner and Ms. B.Sapna Reddy, leamed Senior 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 1484. 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 ofproceedings under Section 148 of the Act by the jurisdictional Assessing Officer' whereas in tems oftheamendmentthatwasbroughttothelncomeTaxActbyway of Finance Act,202l w.e.f., 0l'04'2021 onwards' proceedings I 2 under section 1484 of the Act as arso under Sectiorr r4g of the Act ought to have also been issued and proceeded i.r a faceless manner.

4. The contention of the petitioner is that tl.re issue of proceedings being in violation of the Finance Act, 2O2I i.e., the impugned notices under Section l4gA ancl Section l,1g of the Act not being issued in a faceless manner, have already br:t:n dealt with and decided by this Court in the case of Kd\KANALA RAVINDRA REDDY vs. INCOME_TAX OFFICIIRT decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section 14gA as also under Section 148 of the Act were held to be bad with consequential :rr:liefs on the ground of it being in violation of the provisions of Section t5lA of ,the Act read wirh Notification lgl2o2T dated,29.03.20112. The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were allowecl on similar terms. ' 1Q023) I 56 raxmann.com l7g (Telangana)l 3

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 & OTHERS2, Gauhati High Court in the case of.RAM NARAYAN SAII vs. UNION OF INDIAI, 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 R-EDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation, Bombay F{igh Court in the case of ABHIN ANILKUMAR SHAII vs' INCOME TAX OFFICE& INTERNATIONAL TAXATION6 which is again on international taxationandcentralcircle,HighCourtofHimachalPradeshinthe case of GOVIND SINGH vs' INCOME TAX OFFICERT' Gujarat High Court in the case of MANSUKHBHAI 'eozql464ITR 430 (Bom) ' llzoz+1 156 taxmann.com 478 (Gauhati)l ^ll2}24) 165 taxmann'com I l5 (Pgrjab & Haryana)l '12024) 167 taxmann.com 4l I (felangana)l "12024) 166 taxmann.com 679 (Bombay)l 'izoZ+1165 taxmann.com 1 I3 (Himachal Pradesh)l 4 DAHYABHAI RADADIYA vs. INCOME TAX OFFICE& WARD 3(3)(5)8, Jharkand I{igh Courr in the case of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan Ftigh Courl in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsr0 which stood decided on 19.03.2024. Similar views have alsc, 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 deciderl by a large number of Iligh Courts, we are still confronted with lar.ge hling of identical matters on daily basis ranging between 5 to 10 writ petitions. That upon the instructions being sought from the Department, they have been taking a solitary grourLd that the decision of the Bombay High Court in the case ol- Ilexaware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy 8zo2q SCC online Guj 4012 " 2025 SCC Online Jhar 287 p2023, RJ-JD : 4984-DBl 'o il &r;dlXlti* *:r. r n 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 of the same issue being decided by various High Courts' To a query being put to the leamed counsel for the Revenue' 1 . 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 1484. and under Section 148 of the Act by the jurisdictional Assessing offrcer, rather the authorities concemed in the teeth of series of decisions 5 by all the major High Courts in India are continuously still initiating proceedings under Section r4gA of the .r\ct and also initiating proceedings under Section 14g of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act,2020 as also the Finance lot202l.

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 Ravindra Reddy (l supra), learned Standing Counsel for the Income Tax Department contends that _hose would unnecessarily 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 bru.dening the exchequer of the Union of India. 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 kr:pt pending till the finalization of the SLps 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 Income Tax Department ha,,.t: not come out with a mechanism to issue appropriate instructions or to take n 7 appropriate steps in ensuring that proceedings under Section 148A ofthe Act as also the assessment orders under Section 148 ofthe Act are kept in a hold in the light ofthe 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 ofCBDT 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 151-.4. of the Act and as a result by now' more than 600 to 700 petitions have been already got piled up before this High Courtonanissuewhichotherwisestandssquarelycoveredbythe 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 Kanakula 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 Revenue fer initiating fresh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Financ e A:t, 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 ,:ndeavour in availing the said liberty that was reserved for the Revr:^ue. on the contrary, rhey have been still sticking on to the stand which this High Courl as r.vell as many other High Courts alreadlr held to be I 1. It appears that because ofthe aforesaid liberty thrrt this High Court had granted permitting the Revenue for initi lting fresh proceedings as a one-time measure in a faceless rLanner, the lncome Tax Department wants to take advantage of the same by protracting these proceedings which would enable them ro meet the limitation that would otherwise come in the way. Likervise, 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 Court confirms the decision taken by this High Court as also by the other High Courls in which the SLps are still pending, the Inc,ome Tax \, '. r-) 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 disposal ofthese matters at a much later stage which would be advantageous and benehcial 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 fiesh proceedings.

12. The alarming trend of docket explosion in this Court' despite the clear precedent setin Kanakala 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 ofjudicial precedent but also strains the judicial resources unndcessarily' The Department's strategy of awaiting the Supreme Court's decision on pending SLPs while continuing to initiate fiesh proceedings appears to be a' calculated move to buy time and circumvent limitation periods, rather than adhering to the established legal L r 10 a:. position. Such conduct raises serious questions about the administrative efhciency and the respect lbr judicial pronouncemen[s, particularly when this Court has alrr:irdy provided a balanced approach by preserving both the Revenue,s rights and assesses interests.

13. Anrther aspect which needs to be considered is that in fact it should have been realized by the Income Tax Departme.nt itself and should have found out via media in ensuring that oroceedings under Sections 148-4. and 14g should not have beerL issued in a faceless manner, at least till the Hon,ble Supreme Court decide the twelve hundred (1200) odd SLps which it is already sei:red of or, at least the Income Tax Department should have founcl out some remedial steps to ensure that wherever the authoritier; intend to initiate proceedings under Sections 14g-A and 14g, otht:r 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 sirme issue. This again, the Income Tax Department, has not been able to give a convincing reply, except for the fact that such a decisic,n if at all i; 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 leamed Standing Counsel for the Income Tax Depafiment contended that the Delhi High Court dismissed a writ petition of similar nature' on theonehandwhentheHighCourtisstrugglingtoreduceits 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 daity 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 continuously under Sections 148-4 and 't2 s -} 148 through the jurisdictional Assessing Offlcer wliereas it ought to have been only in the faceless manner

14. ln the case of BANK OF INDIA vs. A.SSISTANT COMMISSIONER, INCOME TAXr1, on an issue v,hether it was justifiable on the part of the Income Tax Departrnent in not following an order passed by the adjudicating authonty only on the ground that the appears are pending, the Division fi,rnch of the High Courl of Bombay held at paragraph No.25 as uncler, viz., : "25. Mr. paridwalla has righfly drawn out attention to the decision of this Court in Commissioner of lncome Tax v$. Smt. Godavaridevi Sarafl2 as also the recent decision of the co_ ordinate Bench of this Court in Samp Furniture (p) Ltd. v. lTOl3 of which one of us (Justice G.S. Kulkarni) was a member, v*herein the Court categorically observed that the Revenue having not "accepted" the judgment of the High Court would not mear 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 0)urt in Union of lndia vs. Kamlakshi Finance Corporation Ltd.14, the court observed that the approach of the officiars of Reve.ue 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,r:::, .,.r^u,:lL n a nn. c o m 422 ( B o mb ay)l '.'.119781 ll3 ITR 58e lBombay) ",120211165 taxtnann.com 5gt/300 Taxman 452 (Bombay) 'o 1l9921taxmann.com 1 6/55 ELT433 (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 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 harassmer( to the assessee caused by the failure of these ofiicers to give effect to the orders of authorities higher to them in the appellate hierarchy' lt cannot be too vehemenUy 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 Coltectors 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" 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, .? t4 rule is not followed, the result will only be unriue harassment to assesses and chaos in administralion of tax laws.

12. We have dealt with this aspect at some len! th, because it has been suggested by the learred Additional Solicilor General that the observalc ns 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 c,r rb a tendency in revenue matters which, if allowecl to become widespread, could result in considerable harassment to the assesses-public without any ben€fit 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 rega.d should be paid by the adjudicating authorities and .:he appellate authorities to the requirements of judici3l 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 lact that an endeavour is being made whole heartedly to ensure no1 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 that the action of the Income Tax Department being viol,tive of the \. 15 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 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 {1 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. 11 . 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 l5 36,31 and 38 ofthe order which, for ready reference, ts reproduced hereunder

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent_ Department is neither tenabte, nor sustainable. The notices so issued and the procedure adoptecl being per se illegal, deserves to be and are accordinr; y set aside/quashed. As a consequence, all the impLtgned orders getting quashed, the consequential orders;rassed by the respondent-Department pursuant to the notices issued under Seclion .147 and 14g would also get quashed and it is ordered accordingly. The reasgn we are quashing the consequential order is on the prin()iples that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders alsc, gets nullified automatically.

37. The preliminary objection raised by the petiticrer is sustained and all these writ petitions stands alloweC on this very jurisdictional issue. Since the impugned n,ltices 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 r,,vhich stands reserved to be raised and contended in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in the (;ase of Ashish Agarwat, supra, as a one{ime meal;ure exercising the powers under Article 142 of the Constitution of India, permitted the Revenue to proceed under the substituted provisions, and this Court allov/ing the petitions only on the procedural flaw, the right t7 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 (l supra) is subjected to challenge before the Hon'ble Supreme Cour-t 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 HighCourtinthecaseofKanakalaRavindraReddy(|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 favour of the assessee so far as the issue of jurisdiction 1S concemed. As' a consequence' the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed' I r 18 The consequential orders, if any, also stand set as irle/qu2rh.6 ., similar terms as have been passed by this High Cour1. in the case of Kankanala Ravindra Reddy (I supra). There shall be no order as to costs Consequently, miscellaneous petitions pending., if any, shall stand closed i/TRUE COPY// SD/- M. NAGAMANI TANT REGISTRAR tflP \ To, t.

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4. 5. 6. TJ GJ \r - ' '' l[e^Depqty Commissionerof .lncome Tax, Circte f lrf Hyc AC G_uards l\rlasab Tank, Hyderabad _ S0OO0i. lhe Princip_al Chief Commissioner of lncome Tax Ap and Block, l.T Tower. '10-2-3, A.C. Guards, HVOLraOuO_SOiOft rne Assessment Unit, lncome Tax Depaiment, National F Assessment Centre, Delhi, It/inistry of Finance, Room No. Kamp, Jawaharlal Nehru Stadium, Delhi_1 10003. Qn" QQ to Sri Dundu Manmohan, nOvocate fdpUCt 9n" 99 to tvts. Bokaro Sapna Recidy tLr. SC rirrlniome Two CD Copies o ,\i ECTION OFFICER lerabad, lT Tower, fS, 1Oth Floor, C- 1..aceless 401 ,2nd Floor, E- ax) [OPUC] /- I ',6 () C) ) o.,.t * .-=: ,r ine S ( 1s iul 206 z t ltpAT HIGH COURT DATED:0210512025 ORDER WP.No.14259 of 2025 I r I t I I ALLOWING THE WRIT PETITION WITHOUT COSTS