Venkaleshwar Reddy Rachala' S/o Rachala Nlohan Reddy' Aged about 53 v. The lncome Tax Officer

petitioner and Ms.B.Sapna Reddy, learned Junior Standing Counsel for the Income Tax Departrnent for the respondents. l)erused the record.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section l48A and 148 of the Income Tax Act, 196 I (for short'the Act') or the assessment orders those have been passed under Section [47 of the Act which have been assailed. i. This writ petition is being taken up today only on one of the grounds, that the notices issued under Section l48A of the Act and the subsequent initiation ofproceedings under Section 148 of the Act by the jurisdictional Assessing Officer, whereas in terms o[the amendment that was brought to the Income Tax Act by way of Finance Act, 2021 w.e.f., 01.04.2021 onwards, proceedings 2 under Section l48A 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 Financ e Act, 2021 i.c.. the impugned norices under Section l4gA and Section l4g of thc Act not being issued in a faceless manner, have already been dealt with and decidccl by this courl in the case of KANKANALA RAVINDRA REDDY vs. INCOME_TAX OFI-ICERT decided on !4.09.2()23 ,"vherebv a batch of writ petitions were allow.eci and the proceedings initiated under Section 14gA as also under Section I48 olthe r\cl. wer-e held to be bad with consequential reliefs on the ground ol it being in violation of the provisions of Section I 5 I A of the Act read rvirh Notification lg/2022 d,ated 29.03.2022. The said judgrnent passed by this Court has also been subsequently followcd in a large nurnber of u,rit petitions which were alror.yed on similar terms. '[(2023) 156 taxmann.com l7g (Telangana)] J

5. Down the line, we find that the same issue has also been dccided 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 INDIA3, 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 REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of intemational taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICER, INTERNATIONAL TAXATION6 which is again on international taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI t lzot+1464 ITR 430 (Bom) ' [(2024) 156 taxmann.com 478 (Gauhati)] ' [(2021) 165 taxmann.com 115 (Punj ab & Haryana)] ' 12024) 167 taxmann.com 4 t 1 (Telangana)l '12024) [66 taxmann.com 679 (Bombay)] ' 12.024) I 65 taxmann.com I 13 (Himachal Pradesh)l \ 4 DAHYABIIAI RADADIYA vs. TNCOME TAx OFFICER, WARD 3(3)(5)8, Jharkand High Court in the case of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case bl SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsr0 which stood decidcd on 19.03.2024. Simitar views have also been taken by the Division Bench of Calcutta High Court in the case of GIRDHAR GOPAL DALMIA vs. UNION OF tNDiA & ORS (M.A.T 169(t of lQlli, decided on25.09.2024.

6. Ilven ihougir the same issue having been decided by a targe number ol tligh Courrs, we are still confronted with large filing of identical rnatters on daily basis ranging between 5 to I0 writ petitions. -l'hat upon the instructions being sought from the Department, they have been taking a solitary ground that the decision ol' the Bornbay High Court in the case of Hexaware Technologies Ltd-, (2 supra) as arso the one which has bee, decided by his Court in the case of Kanakala Ravindra Redd1, 8Z0Z+ SCC Online Cuj 4012 '2025 SCC Onlinc Jhar2BT 'o 12023, RI-J | ):4984-DB l 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. tn addition, there are about 1200 SLPs also filed arising out ofthe same issue being decided by various High Courts. l. 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 ol these ruratters 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 itselI

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, titl date, we do not find any remedial steps having been takcn by the lncome Tax Department to take appropriate steps to either hold back issuance of notice under Section l48A and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series o[ decisions \ 6 by all the ntajor High Courts in India are continuously still initiating proceedings under Section r4gA of the Act and arso initiating proceedings under Section l4g of the Act in contravention to the amendments brought into the rncome Tax Act pursuant to the Finance Act,2020 as also the Finance Act 202r.

9. Upon a query being put as to rvhy can,t this writ petition be disposed of in the reerh of the decision rendered by this court in the case of Ktnakalo Ravintlra Redd1, ( supra), leamed Standing counsel for the Inco,re Tax Department contends that those would unnecessarii,i, burden tire lncome Tax Departrnent where they would be rcquircd to file equal number ol 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 stanrring counsel that no pre.iudice wourd be caused to the interest of thc petitioners in case irthis writ petition -rs kept pending Jill-the -finar i zat ion o f . . the.-.s Lps- pendi ng before_the_Honrbre_ Supreme Court and the fact that the petitioner is already enjoying the benefit of intcrirn protection. Nonetheless, on the earrier query of this Court as to why the Income Tax Department have not come out with a mechanism to issue appropriate instructions or to take 7 appropriate steps in ensuring that proceedings under Section l4gA of the Act as also the assessment orders under Section 14g of the Act are kept in a hold in the light ofthe decisions dedcided by the various High Courts, it was 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 linrited 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.'I-he lncome Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions ol Section I 5 lA of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Coun on an issue which otherwise stands squarely covered by the judgment of this Cour-t in the case of Kanakala Ravindra Redtty ( I supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravindra Redtty (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 for initiating fresh proceedings strictly 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 entitled to ffi1::r.}.- challenge or raise the other regal objections if the Revenue initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was rcserved lor the Revenue. On the contrary, the.,, have been still sticking on to the srand. which this High Court as well as rnany other High Coufts alrcady held to be bad. 1 1. It appears that because of rhe aforesaid libcrty rhat this High Court had granted permitting the Revenue for initiating fresh proceedings as a onc-time lneasure in a faceless manner, the Income Tax Departntent u,ants to take advantage of the same by protraetinE these proceedings rvhich would enable them to meet the limitation that would otherwise come in rhe rvay. t_ikewise, if the writ petition is kept pending lor a considerable long period of time and finally at a later stage i[ the Hon,btc Supreme Court confirms the decision taken by this High Court as also by the orher High Courts in which the SLPs are still pending, rhe lncome Tax 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 of these matters at a much later stage which would be advantageous and beneficial to the Revenue and would be equatly 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 clear precedent set in Kaflokalt Ravindra Reddy (l supra), is a matter of grave concern. The lncome Tax Department's persistent initiation oI fiesh proceedings, disregarding the established judicial pronouncements, has lcd 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 of judicial precedent but also strains the judicial 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 nlove to buy time and circumvent limitation periods, rather than adhering to the established legal .\ 10 posltlon. Such conduct raises serious questions about the administrative efficiency and the respect for j udicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revenue,s rights and assesses interests.

13. Another aspect which needs to be considered is that in fact it should have been realized by the Inconre Tax Departrnent itselfand should have found out via media in cnsurins tltat proceedings under Sections I4g_A and l4g should not have bcen issued ir.r a faceless manner, at least till thc Ilon,ble Suprc,re C.ourt ciecide the twelve hundred (1200) odd slps which it is already seized of or, at least the Income Tax Depaftment shourd have tirund oul some remedial steps to ensure that rvherevcr tl_re authorities intend to initiate proceedings under Sections l4g_A and l4g, other than in a faceless-manner, the proceedings should have been deferred without precipitating the matter further intirnating the assessee that they shall initiate appropriate proceedi.gs onry after the SLp,s are decided by the Hon'ble supreme court on the very same issue. This again, the Income Tax Departrnent, has not been able to givs 2 convincing reply, except for the lact that such a decision if at all ,,,Y 11 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 lncome Tax Departrnent contended that 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 ol new writ petitions which in the long run not only atfects the disposal of the writ petitions but also consumes substantial tirne of the Bench in hearing these matters again and again on daily basis. Admitredly, in spite of the matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'bte Supreme Court which is seized of the matter has been reluctant in granting any interim protection to the Income Tax Department. Yet, the authorities concerned at the State level are not ready to accept the verdict passed by a majority of High Courts of dift-erent States or.r the same issue; and to make things further worse, the Income Tax Department is showing audacit- hv issuing notices continuously under Sections 148-A and )-\fv r 1-:$r-:,€rc+--: -e t2 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXIT, on an issue wherher ir was justifiable on the part of the Income Tax Depanrnent in not following an order passed by the adjudicating autl.ror.ity 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. r,iz., : "25. Mr. Paridwalla has righfly drawn out attention to the decision of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decrsion of lhe 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 woutd nor mean that till the same is set aside in a manner known to law, !t woutd loose its binding force. Referring to the decision of the Supreme Court in Union of lndia 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. " 1{2025) 170 raxmann.com 422 (Bombay)l '' [978] l l ] ITR 589 (Bombay) '3 7202+1165 taxmann.com 5gl/300 Taxman 452 (Bornbay) 'o TtOOZl raxmann.com l6155 ELT 433 (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 harassment to the assessee caused by the failure of these officers to give etfect 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 drsposing 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 hrs 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" to the department - in itself an objectionable phrase - and is the subiect 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 74 rule is not followed, the result will only be undue harassment to assesses and chaos in administration of tax laws. We have dealt with this aspect at some length, the learned because it has been suggested by Addttional Solicitor General that the observations 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 curb a tendency in revenue mafters which, if allowed to become widespread, could result in considerable harassment to the assesses-public without any benefrt to the Revenue. We would like to say that the department should take these observations in the prooer 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 apF,ellate authorities to the requirements of ludicral 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 f-act thar an endeavour is being made whole heartedly to ensure not to generate lurther litigation on issues which have been laid ro rest by a large nurnber of High Courts all of whom have taken a consistent. stand that the action of the lncome Tax Department being violative ol-the Y 15 Finance Act,2020 and Finance Act,202l. 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 Konkanala Ravindra 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 timety 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, rhe pendency of this High Corrrt wntrld trtstherbe-burehqed whieh sfhenv ise can be decided and disposed ofas a covered matter

17. So far as the interest of the Revenue is concemed, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs 't6 36,37 and,38 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 pel se illegal, deserves to be and are accordingly set asrde/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 i47 and 14g woulcj 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 getting quashed on the point of jurisdiction. we are not inclined to proceed fur.ther and decrde the other issues raised by the pelitioner 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, supra, as a one_time measure exercising the powers under Article 142 of the Constitution of lndia, permifted the Revenue to proceed under the substitutetj provisions, and this Court allowing the petitions only on the procedural flaw, the right I \ 17 conferred on the Revenue Would remain reservd to prod 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 Court in SLP No.3574 of 2024, prefcrred by the lncome Tax Department, we make it clear that allowing of the instant writ petition is subjcct to outcome ol the aloresaid SLP pre ferred by the Revenue against the decision ofthis High Court in the case of Kanakala Ravindra Reddy (l supra) This, in other words, would mean that either oI the parties, iI they so want, may move an appropriate petition seeking revival of this writ petition in the light ol the decision of thc I{on'ble Supreme Court in the pending SLP on the very same issue t9. Accordingly, the instant writ petition stands allowcd in favour o[ thc assessee so far as the issue of jurisdiction ls concerned. As a consequence, the impugncd notice under challenge under Sections 148-4. and 148 stands set aside/quashed. ( I r8 The consequential orders, i[ any, also stand set aside/quashed in similar tenns 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, misce[[aneous petitions pending, if any, shall stand closed. To, //TRUE COPY// SD/.P. PONNAKRISHNA ISTANT REGISTRAR SECTION OFFICER i{;ii"L"r?rjsbo6oq 1 The lncome Tax Officnr Wrld. 1, Mahabubnagar, lnconre Tax Oftice, DEO ^ 9ffice Road, Mahabubnasar, rera;oina_s-ds*oif"'' " -' z. r ne Hnnqpat Chief Commissioner 6f lncome Tax Ap and TS, 10,h Ftoor, C_ " gLTk,l r rower, 10_2_3, Aa -c;il.: J. I ne Assessment Unit lncome Tax- Department. National Faceless Assessmenr Centre. Dettri,. tr,tinirt.y oi Finun-.E RU;'i.J" 4d;,"i;. 'Fi#,.E: . Bu.p, Jawahadat Nehru dtaoium,bJrii_iiijo6b.'*"'' 4 one cc ro sRt. DUNDU rrlAltncin-ar.r.'aciv"#'ie IOpUcl 5, one cc roSRt BoKARo snpr.ra-iEotVlji,"sc"Fon tNCo[rE TAX) 6 Two CD Copies TJ 1?r, loPUCl BM HIGH COURT DATED:01 10512025 ORDER WP.No.13829 of 2025 .,. iiirJi.: //. : T 1O JUL * c, t/ i ALLOWING THE WRIT PETITION WITHOUT GOSTS (,laK \ +\