Mrs. Vasudha Marwah v. Assessment Unit

Petition under Article 226 of lhe Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ of Arlandamus or any other appropriate Writ, Order or Direction, declaring that the assessrnent order passed uls 147 r/w sec. 144 rlw sec. 144b of the lncome Tax Act. 196i, dated 16.03.2024, bearing DIN No. ITBtuAST/S/14712023-2411062759652(1). bv the 1st Respondent' for the Assessment Year 2018 - 19 as arbitrary. illegal, bad in law, void-ab-initio, violative of the principles of naturat justice, apart from being violative of Articles 14' 19(1)(g) and 265 of the Constitution of lndia and Sec '148A of the lncome Tax Act, 1961 , and to consequently set aside the same in the interests of justice. lA NO: 1 OF 2025 Petition under Section 151 CPC praying that in tl'e circumstances stated in the affidavit filed in support of the petition, the High CoLrt may be pleased to stay all further proceed ings, including any recovery, pursuant to the notice issued u/s 148 of the lncome Tax Act, 1961, dated 07.04.2022, be'aring DIN and Notice No. ITBA/AST/S/148_112022-2311042628399(1), by the 2nd Respondent, for the Assessment Year 2018 - 19; pending disposal of the above Writ Petition, pending disposal of the above Writ Petition. Counsel for the Petitioner: SRI A V A SIVA KARTIKEY/\ Counsel for the Respondents: MS. J. SUNITHA (JUNIOR SC FOR INCOME TAX) The Court made the following: ORDER .IHE I{ONOIJRABI,E SRI trTJS'TICE P.SAM KOSHY ANI) THE HONOT]RABLE SRI trUSTTCE NARSING RAO NANDIKONDA WRITPETITION No.l 4144 0F 2025 ORDER (per Hon'bte Sri Justice P'Sam Koshy) Heard Mr. A.V.A.Siva Kattikeya' learned counsel for the petitioner and Ms- J.Sunitha, learned Junior Standing Counsel for the lncome Tax Department fot 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 l48A andl4SoftheIncomeTaxAct,lg6l(forshort'theAct')orthe assessment orders those have b€en 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 issue{ under Section l48A of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Otficer' whereasin terms of the amendment that was broqght to the Income Tax Act by way ) of Finance Act, 2O2l w.e'f', 0l'04 2021 onwards' proceedings 2 under Section 148,4 of the Act as also under Section l4g of the Act ought to have also been issued and proceeded in a faceless manner.

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act,202l i.e., the impugned notices under Section 14EA and Section l4g ofthe Act not being issued in a faceless manner, have already been dealt with and decided by this Court 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 l4gA as also under Section 148 of the Acr were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section l5lA of the Acr rcad wirh Notificati on lg/2022 dated29.03.2022. T.he said judgment passed by this Court has also been subst:quently followed in a large number of writ petitions which were allowed on similar '[(2023) [-56 raxmann.com l7g (Telangana)] 3

5. Down the line, we t]nd that the sarne issue has also been decided against the Revenue by various l{igh Courts i.c., by the Bombay High Court in the case of HEXAWARE TECIINOLOGIES LTD., vs. dSStSraNT COMMISSIONER OF INCOME TAX & OTHER$2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIA3, punjab and Haryana High Court in the case Of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Tefangana High Court in the case of SRI VENKATARAMANA REIDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOIYE TAX5 where rhe issue was in respect of intemational taxation, $ombay High Court in the case of ABHIN ANILKTTMAR SHAH vs. INCOME TAX OFFICER, INTERNATIONAL TAXATION which is again on internarional taxation and central circle, High Court of Himachal pradesh in the case of GO\IND SINGH vs., INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI ' yzoz+1464 ITR 430 (Bom) '1Q024) I 56 taxmann.coln4f8 (Gar{rari)l ^ [(2024) 165 taxmann.coml H (Punjab & Haryana)l '[2024) [ 67 taxmann.com 4l I (Telapgana)] " [2024) 166 taxmann.com 679 (Bombay)] '[2024) 165 taxmann.com ll3 (Himachal pradesh)] 4 DAHYABHAI RADADIYA vs. TNCOME :tAX OFFICER, WARD 3(3X5)E, Jharkand High Court in the case of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsr0 which stood decided on 19.03.2024. Similar views have also 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 lligh Courts, we are still confronted with large filing of identical matters on daily basis ranging between 5 to 10 writ petitions. l hat upon the instructions being sought from the Department, they have been taking a solitary ground that the decision of the Bombay High Court in the case of Hexaware Technologies Ltd., (2 supra) as also the one which has been decided by this C-ourt in the case of Kanakala Ravindra Reddy t202+ SCC Onl-ine Guj 4012 '2025 SCC Online Jhar 287 r012023, RJ-JD:4984-DBl 5 ( I supra) has been subjected ito challenge in a Spmiul l.eave Petition i.e., SLp No.3574 of lO24 before the Hon,ble Supreme court and the Hon'ble suprenfle 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 th4 leamed counsel for the Revenue, they have categorically accept"dl the fact that there is no inrerim order granted by the Hon,ble $upreme Court in any of these matters pending before it. Mepnwhile, fresh writ peririons of identical nature are being piled up before this Bench on daily basis and the pendency is getting incrsased on matter which otherwise has already been dealt and decided by this very High Court itselL 8. On the one hand, even thor,lgh the order of this Courr thar was passed as early as on 14.09.!023 and more 16 months have lapsed, till date, we do not find any remedial steps having been taken by the [ncorne Tax DepartmeDt to take appropriate stcps to either hold back issuance of notice under Section l4gA and under Section 148 of the Act by the jufisdictional Assessing Otflcer, rather the authorities concemed in the teeth of series of decisions 6 by all the major High Courts in India are ccntinuously still initiating proceedings under Section 148A of the Act and also initiating proceedings under Section 148 ol the Act in contraventiontotheamendmentsbroughtintothelncomeTaxAct pursuant to the Finance Act,2020as also theFinance 1,:ct202l'

9. Upon a query being put as to why can't this writ petition be disposed of in the teeth ol the decision rendered by this Court in the case of Kanakala Ravindra Reddy (l supra)' learned Standing Counsel for the Income'[ax Department contends that those would unnecessarily burden the Incomc Tax Department where they would be required to file equat number of SLPs 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 learned Stancling Counsel that no prejudice would be caused to the interest of thc petitioners in case it'this writ petiti'rn is kept pending tillthe|rnatizationoftheSLPspendingbeloretheHon,ble Supreme Court and the fact that rhe petitioner is already enjoying the beneht o I interim protection. Nonetheless, on the earlier query of this Court as to why the Income Tax Department have not come eu1 with a mechanism to issue appropriate instructions or to take 7 app()pnale steps in ensuring th{t proceedings under Secti.n l<lEA of the Act as also the assessmefrt orders under Section l4g of the Act are kept in a hold in the light ofthe decisions dedcided by the various High courts, it was srlbmitted by the leamed standing Counsel that the said steps can olly be taken at the level of CBDT as any such steps would have to lbe taken pan India and cannot be limited to any of these jurisdictio4al High Courts. I0. As a result of which, what we are facing is steep increase of litigation day in and day out eveni though various orders have been passed by this High Court allowiqg writ petitions on the very same issue. The Income Tax authoritieg concemed are still even now in 2025 also initiating proceedings id contravention to the provisions of Section I 5l A of the Act and a$ a result by now, more than 600 to 700 paitions have been alreadf got piled up before this High Court on an issue which otherwis( stands squarely covered by the judgment of this Court in the caso of Kanakala Ravindro Reddy (l supra). What is also surprisin$ is the fact that though while allowing the writ petitions in thd case of Kanakala Ravindra Reddy (l supra), the Division Benph while reserving the right of the Revenue, has also protected the interest of the petitioners ) 8 r- insofar as the liberty which was granted to the Revenue for initiating fresh proceedings strictly in accordance vdth the amended provisions of the Act, as amended by the Finance Act' 2020 and the Finance Act,202l ' The petitioner assessee wolrld be entitled to challenge or raise the other legal objections if the l&evenue 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 stitl sticking on to the stand' which this High Court as well as many other High Courts already held to be bad.

11. It appears that because of the aforesaid liberty 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 advantag'e of the same by protracting these proceedings which would enablr: them to meet the limitation that would otherwise come in the way' Likewise' if the writ petition is kept pending for a considerable Llng period of time and finally at a later stage if the Hon'ble Suprerne Court confirms the decision taken by this High Court as also by the other High CourtsinrvhichtheSLPsarestillpending,thelncomeTax 9 f)epartmenr woultl get thc arJvarltage of the liberty thst is othen&iiie protecred in favour of the ft.evenue for initiation of fiesrr 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 detrimental so far as interest of the assesses are concerned. 4s a consequence, the Income Tax Department gets an extended peqiod of time for initiation of fresh proceedings

12. The alarming trend of dockbt explosion in this Court, despite the clear precedent set in Kanakab Ravindra Reddy(t supra), is a matter of grave concem. The Incrbme Tax Department,s persistent initiation of fresh proceedings, dislegarding the esablished judicial pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions pilidg up on the same issue. This deliberate approach nor only undQrmines the principle of judicial precedent but also strains the judiclal resources unnecessarily. The Department's strategy ol awaiting the Supreme Court,s decision on pending SLps whi le continuing ito initiate fresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather rhan adliering to the established legal 10 (^ position. Such conduct raises serious questions about the and the respect for judicial administrative effrciencY pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revernue's rights and assesses interests.

13. Another aspect which needs to be considererl 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-A and 148 should not have been issued in a faceless manner, at least till the Hon'ble Supreme Court decide the twelve hundred (1200) odd SLPs which it is alrearly 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 proceedings under Sections 148-A and lziS' other than in a faceless manner, the proceedings shoutd have been defened without precipitating the matter further intimatinr; the assessee that they shall initiate appropriate proceedings only zfter 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 reply, except for the fact that such a decision if at all 11 has ro be raken, has to be rakeni tor the whore of India, and whieh otherwise has to be by way of atpolicy decision and that too at th€ level of Central Board of Dirpct Taxes. Though the Ieamed Standing Counsel for the Incomp Tax Department contended that the Delhi High Court dismissed E writ petition of similar nature, on the one hand when the High eourt is struggling to reduce its pendency, such notices which 4re under challenge in this writ petition are forcing the assessee 1to knock the doors of this High Court resulting in filing of hundrdds of new writ petitions which in the long run not only affects ,n" lirporut of the writ petitions but also consumes substantial time of the Bench in hearing these matters again and again on daily hasis. Admittedly, in spite of the matter before the Hon,ble Suprerfre Court having been taken on rnany occasions, the Hon,ble Sup.{.. Court which is seized of the matter has been reluctant in grantiirg any interim protection to the Income Tax Department. yet, the authorities "or.".o.d ut th" State level are not ready to accept lhe ue.dict passed by a majority of High Courts of dilferent States qn rhe sarne issue; and to make things further worse, the Incor., Tax Department is showing audacity by issuing notices continujusly under Sections l4g_A and ) t2 148 through the jurisdictional Assessing Officer rvhereas it ought to have been only in the faceless manner'

14. In the case of BANK OF INDIA vs' ASSISTANT COMMISSIONE& INCOME TAXrr' on an issue whether it was justifiable on the part of the Income Tax Department in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Divisirln Bench of the High Court of Bombay held at paragraph No'25 as under' viz'' : '25. Mr. Paridwalla has rightly drawn out attention to the decision of this Court in Commissioner of lncome Tax vs' Smt' Godavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Court in Samp Furniture (P'f Ltd v' lTo13 of which one of us (Justice G S' Kulkarni) was a member' wherein the Court categorically observed that the Revenrle havinq not 'accepted' the judgment of the High Court would nct mean that till the same is set aside in a manner known to law' it \^/ould loose its binding force. Referring to the decision of the SuF)reme Cou( in Unionoflndiavs.KamlakshiFinancecorporationLtd.]4'the ' Court observed that the approach of the officials of RevenLre of treating decisions being "not acceptable" was crtticized by the Supreme Court. ln such decision' following ar? the relevant observations made by the Supreme Court' " [(2025) 170 taxflraqtr'com422 (Bombay)] " iiszsl 113 ITR 589 (Bombav) "izozq\ 165 taxmann.com 581/300 Taxman 452 (Bombav) ltggZltaxmann.com 16/55 ELT 433 (SC) 13 '6. Sri officerE Reddy ls perhe06 right in saying that tha w6re not actualcd by any mata fides in the impugn€d orders. They perhaps passing genuinely felt that Ure clalm of the assessee was not tenable and that, if it u,Es accepted, the Revenue uould suffer. But what Sri Reddy overlooks is that we are not concerned herd with correctness or otherwise of their condusion of any factual malafides but with the fact [hat the officers, in reaching in their conclusion, byjasled two appellate orders in regard to the same issue which were placed before them, one of the Co ector j(Appeats) and the other of the Tribunal. The High Court has, in our view, righfly criticized this conduct of tfle Assistant Collectors and the harassment to the assqssee caused by the failure of these officers to givei effect to the orders of authorities higher to them inl the appe ate hbrarchy. lt cannot be too vehemenfly emphasized that it is of utmost importance that, i in disposing of the quasijudicial issues before tfrem, revenue officers are bound by the decisions of ithe appellate authorities. The order of the Appeflte qo ector is binding on the Assistant Collectors workinglwithin 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 Tlribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should $e followed unreservedly by tfle subordinate authorities. The mere fact that the order of the appeflate autnority is not ,,acceptable" the department - in itself an obiectionable phrase _ and is the subiect matter of an appeal can furnish no ground for not following it Jntess its operation has been suspended by a competFnt court. lf ths healthy i 14 t-" rule is not followed, the result will only be undue harassment to assesses and chaos in admini'stration of tax laws

12. We have dealt with this aspect at some length' because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. lt is clear that the observations of tne High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intendec to curb a tendency in revenue matters which' if allowed to become wirJespread, could result in considerable harassment to the assesses-public without an y 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 should be paid by the adjudicating authoritiesi and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." I 5. 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 tait' to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the lncome Tax Department being violative of the 5I Finance Act, 2020 and Finance ,Alcr. 202 l. Now. in order ro prorect the intercst of the Revenue as alsb that of the assessee, it would be trite at this juncture, if we disqose of the writ petition with an observation/direction that the distosal of the instant writ petition in terms of the judgment rendered py this High Court in the case of Kankanala Ravindra Reddy (l sirpra) shall however be subject to the outcome of the SLPs whictl were filed by the Income Tax Department and which is pendin$ consideration before the Hon'ble Supreme Court. I i

16. In the given facts and cir$umstances, this Bench is of the considered opinion that unless anid until we do not timely dispose of matters which are squarely cov by the decision of this Court and which stands fortihed by thl decisions of the various other High Courts on the very same ipsue, the pendency of this High Court would further be burdenedlwhich otherwise can be decided and disposed ofas a covered matt 4' i

17. So far as the interest of the iRevenue is concemed, we are of the considered opinion that the in{erest of the Revenue has already I been considered and protected, as has been observed in paragraphs 76 36, 37 and 3 8 of the 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 tht; impugned orders getting quashed, the consequential or,lers passed by the respondent-Department pursuant to the notices issued under Section 147 and 148would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically.

37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are gefting quashed on the point of jurisdiction, we are not inclined to proceed further and decide the other issues raised by the petitioner which stands reserved to be raised and contended in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, suprEl, as a one-tim,e measure exercising the powers under Artide 1 42 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right t7 conferred on the Revenue rrfould remain reserved to proceod finther if they so w{nt from the stage of the order of the Supreme Courft in the case of Ashish Agarwal, supra. i

18. We would only further like tq make observations that since we are inclined to dispose of the instant writ petition, conscious of the fact that the eariier order of tqis High Court in the case of Kanakala Rafindra Reddy (l supfa) is subjected to challenge before the Hon'ble Supreme Cou{t in SLP No.3574 of 2Q24, I I preferred by the Income Tax Depa4tment, we make it clear that -i allowing of the instant writ petitior| is subject to outcome of the aforesaid SLP preferred by the Reveirue against the decision ofthis High Court in the case of Kanakala Ravindra Reddy (l supra). This, in other words, would mean t\at either of the parties, if they I so want, may move an appropriate petition seeking revival of this writ petition in ttre light of the dec[sion of the Hon'ble Supreme Court in the pendurg SLP on the verf, same issue.

19. Accordingly, the instant writ petition stands allowed favour of the assessee so far as the issue of jurisdiction IS concemed. As a consequence, the impugned notice under challenge under Sections 148-4 an( 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 (1 supra). There shall be no order as to costs. Consequently, miscellaneous petitions pencting, if any, shall stand closed //TRUE COPY// SD/- B. REKHA RANI IS ANT REGISTRAR $ecroru oFFrcER

1. Assessment Unit, lncome Tax Department, National bAssessment Center, New Delhi, Room No. 401.2"" Floor, E-Ramp, Jawaharlal Nehru Stadium, New Delhi - 1 10 003..

2. The lncome Tax Officer, Ward 8(1),Hyderabad, Signature Towers,Sy.No.6(P) of KoMapur,Sy.37(P) of Kothaguda, Opp. Botanical Gardens, Serlingampally (M). R.R, Distrrct, Hyderabad - 500 084, Telangana.

3. The Principal Commissioner of lncome Tax, Andhra Pradesh and Telangana, Hyderabad, Room No.922,91h Floor, B Block, l.T. Towers,10-2-3, AC Guards, Hyderabad - 500 004, Telengana

4. One CC to Sri A. V. A. Siva Kartikeya, Advocate [OPUC] 5. One CC to Sri J. Sunitha (JUNIOR SC for lncome Tax) [OPUC] 6. Two CD Copies il. To, TJ GJ I i I I I HIGH COURT DATED:0210512025 ORDER WP.No.14144 of 2025 l. :i 1rl r.i' 23llJE zffi I I"l \.' ALLOWING THE WRIT PETITION WITHOUT COSTS o {.