The High Court · 2024

petitioner and Ms.B.Sapna Reddy, learned Senior Standing Counsel lor the Income Tax Department appearing lor 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 and 148 of the Income Tax Act, 1961 (for short'the Act') or the assessment orders those have been passed under Section 147 ol' 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 l48A of the Act and the subsequent initiation of proceedings under Section 148 ol- the Act by the jurisdictional Assessing Officer, whereas in terms of the amendmtft.that was brought to the lncome 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 148 of the Act ought to have also been issued and proceeded in a facelcss - manner

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance Acq2(121 i.e., the impugned notices under Sectiori 148A and Section I 48 of the Act not being issued in a faceless manner, have already been dealt with and decided by this Courl in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.09.202 1 whereby a batch of writ petitions wcre allowed and the proceedings initiated under Section l48A as also under Section 148 olthe Act were held to be bad with consequential reliels on the ground of it being in violation of the provisions of Section 15lA of the Act read with Notification 1812022 dated 29.03.2022. The said judgment passcd by this Court has also been subsequently followed in a large nunrber of writ petitions which were allorved on similar 'l(2023) 156 taxmann.com 178 (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. ASSISTAT{T COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in rhe case of RAM NARAYAN SAH vs. UNION OF INDIAT, punjab and llaryana High Court in the case of JATINDER SINGH BANGU vs. IINION OF INDIA4, and Telangana High Court in the case of SRI VENKATARANIANA REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICER, INTERNATIONAL TAXATION6 which is again on intemarional taxation and central circle, High Court of Himachal pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICER?, Gujarat High Court in the case of MANSUKHBHAI 'lzoz+1464 ITR 430 (Bom) '[(2024) 156 taxmann.com 478 (Gauhati)] '[(2024) 165 taxmann.com I I5 (Punjab & Ilaryana)] '[2024) 167 taxrqann.com 4l I (1-etangana)] " [2024) 166 taxrnaii.com 679 (Bombay)] 'L2024) 165 taxmann.com I l3 (Himachal Pradesh)l .A 4 'v'- ,1 \ -l \ - I DAHYABHAI RADADIYA vs. INCOME TAX OFFICER. WARD 3(-jX5)8, Jharkand High Court in the case of SHYAM SUNDAR SAW vs. UNION OF INDlAe, Rajasthan High Court in the case ol SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsro 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 High Courts, we are still confronted with large filing of identical matters on daily basis ranging between 5 to 10 writ petitions. Tlrat upon the instructions being sought from the Department, they have been taking a solitary ground that the decision of the Bornbay High Courl in the case of Hexaware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Rtvindro Reddy E20z+ sCC 0nt.inc Guj 4o t2 '2025 SCC Onl-ine Jhar 287 12023 : RJ- J D : 49 84-D B l I o 7 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 f-act 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 bythis 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 l48A and under Section 148 of the Act by the jurisdictional Assessing Olficer, rather the authorities concerned in the teeth of series of decisions 6 by all the major High Courts in India are continuously still initiating proceedings under Section l48A ol the Act and also initiating proce edings under Section 148 ol- the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act, 2020 as also the Finance Act 202 | .

9. Upon a query being put es to why can't this writ petition be disposed of in the teeth of the decision rendered by this Court in the case of Kanaksla Ravindra Reddy (l supra), learned Standing Counsel for the Income Tax Department contends that those would unnecessarill' burden the [ncome Tax Department where they would be required to file equal nurnber of SLPs before the Hon'ble Supreme Court and it would be further burdening the exchequer of the Union of [ndia. It was also the contention of the leamed Standing Counsel that no prejudice would be caused to the interest of the petitioners in case if this writ petition is kept pending 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 have rtot come out with a mechanism to issue appropriate instructions or to take 1 7 appropriate steps in ensuring that proceedings under Section 148A of the Act as also the assessment orders under Section 148 of the Act are kept in a hotd in the tight of the 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 lndia and cannot be limited to any ol 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 ord'ers 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 atso initiating proceedings in contravention to the provisions of Section l51A of the Act and as a result by now, more 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 Kanakala Ravindra Reddy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners 8 1 I { insofar as rhe tiberry which was granted to the llevenue for initiating frcsh proceedings strictly in accordance with thc amended provisions of the Act, as amended by the Finance Act, 2020 and the Finance Act, 202 l. 'fhe petitioner assessee would 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 lor the Revenue. On the contrary, they have been still sticking on to the stand, which this High Court as well as many other High Courts alreadl'held to be

11. It appears that because of the aforesaid libertl' that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a i'aceless manner, the Income Tax Department wants to take advantage ol the same by protracting these proceedings which would enable them to meet the limitation that would otherwise come in the wav. Likewise. if the writ petition is kept pending for a considerable long period of time and finally at a later stage if thc Hon'ble Supreme C'ourt confirms the decision taken by this High Court as also by the other High Courts in which the SLPs are still pending, the lncome Tax , 9 Department would get the advantage olthe 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 equally disadvantageous and detrimental so far as interest of the assesses are concemed. 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 Kanakala Ravindra Reddy (l supra), is a matter of grave concem. The lncome 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 piting up on the same issue. This deliberate approach not only undermines the principle ofjudicial 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 move to buy time and circumvent limitation periods, rather than adhering to the established legal l0 'l position. Such condttct raises serious questions about the administrative efficiency and the respect for judicial pronouncements; particularly when this Court has alreadl'provided a balanced approach by preserving both the Revenuc's rights and assesses interests.

13. Another aspect which n""d. to be considered is that in fact it should have been realized by the Income Tax l)epartment itself and should have found out via media in ensuring that ;lroceedings under Sections 148-4 and 148 should not have been issued in a faceless manner, at least till the Hon'ble Supreme (lourt decide the twelve hundred (1200) odd SLPs which it is alreadl" seized of or, at least the Income Tax Department should have fbuncl out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 148' other than in a faceless manner, the proceedings should have been deferred without precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only after the SLP's are decided by the Hon'ble Supreme Court on the very satne 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 atl 11 has to be taken, has to be taken lor 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 learned Standing Counsel for the Income Tax Department 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 of new writ petitions which in the long run not only aflects the disposal of the writ petitions but also consumes substantial time of the Bench in hearing these matters again and again on daily basis. Admittedly, in spite of the matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the matter has been reluctant in granting any interim protection to the Income Tax Department. Yet, the authorities concemed at the State level are not ready to accept the verdict passed by a majority of High Courts of different States on the same issue; and to make things further worse, the Income Tax Department IS showing audacity by issuing notices continuously under Sections 148-A and --\ .-.---'1

1.2 148 through the jurisdictional Assessing Officer rvhereas it ought to have been only in the faceless manner.

14. ln the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXrr, on an issue rvhethcr it was j ustifiable on the part of the Income Tax Departmenl in tlot following an order passed by the adjudicating authoriry only on the ground that the appeals are pending, the Division Bench of the High Court of Bombay held at paragraph No.25 as under, viz., "25 Mr. Paridwglla 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) 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 tilt the same is sel aside in a manner known to law, it would loose its binding force. Referring to the decision of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.1", the Court observed that the approach of the officials of Revenue of treating decisions berng "not acceptable" was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. ilttzozsr t70 raxmann.com 422 {Bombay)l " l le78l I l3 I lR 5ll9 (Bomba1.) '1 12OZ+1 165 taxmann.com 581/300 Taxnan 452 (Bombay t 't 119921 laxmann.com l6155 EI-T 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 othenaise 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 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 authorilies. 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 ludicial 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 subjecl 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 L4 ^-- l rule is not followed, the result will only be undue harassment to assesses and chaos in administration of tax iaws. 12 We have dealt with this aspect at some length, because it has been suggested by the learned Addrtional Solicitor General that ihe observations made by the High Court, have been harsh on the officers. lt is clear that fhe 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 to the assesses-public without any benefit to the Revenub. We would like to say that the department should take these observations in the proper spirit. The observatrons of the High Court should be kept in mind in fulure 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 grving effect to the orders of the higher appellate authorities which are binding on them."

15. What is worrying this Bench more is the tact that an endcavour is being made whole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of Hiqh Courts all of whom have taken a consistent stand that the action of the Income Tax Department being violative ol'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 ol the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala 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 llon'ble Supreme Court

16. ln 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. l7 . 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 -16 36,37 and ltl olthe order which, for ready reference, is reproduced .l hereunder

36. For all the aforesaid reasons, the impugned notices rssued 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 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 rnclined to proceed further and decide the other issues raised by the petitioner which stands reserved to be raised and contended in an appropraate proceedings.

38. Since the Hon'ble Supreme Court had, in the case of Ashrsh Agarwal, supra, as a one-time measure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue lo proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right 17 conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashish Agarwal, supra.

18. We would only fufther like to make observations that since we are inclined to dispose of the instant writ petition, conscious of the lact that the earlier order of this High Court in the case of Kanakala Ravindra Reddy (l supra) is subjected to challenge \ belore the Hon'ble Supreme Courl in SLP No.3574 of 2024, I prelerred by the lncome Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aloresaid SLP preferred by the Revenue against the decision of this High Court in the case of Kunakala Ravindru Reddy (I supra) This, in other words, would mean that either of the parties, if they so want, may move an appropriate petition seeking revival ol this writ petition in the light of the decision of the Hon'ble Supreme Courl in the pending SLP on the very same issue.

19. Accordingly, the instant writ petition stands allowed in lavour of the assessee so far as the issue of jurisdiction IS concerned. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set asideiquashed. A 18 The consequential orders, if any, also stand set aside/quashed in similar tenns as havc been passed by this High Court in the case of Kankanalu Ravindra Reddy (l supra). There shall be no order as to costs. Consequently, miscellaneous petitions pending, il any, shall stand closed. To, //TRUE COPY// sD/- A.H.S.GOWRT SHANKAR 7 AQlsreur REGISTRART i \J sEcTror.rbFrrcen _\ '1 . The lncome Tax Officer, W ard - 7, Nalgonda. lncome Tax Office, Aaykar Bhavan, Near Rail Under.Bridge, Nalgonda - 508001.

2. The Principal Commissioner Of lncome Tax - 3, Signature Towers, Opp. Botanical Garden, Serlingampally(M), R. R. District, Hyderabad - 500084. 3. The Secretary, Department of Revenue, Ministry of Finance, Union of lndia, North Block, New Delhi -'1 10001

4. One CC to SRI UPADHYAY RAGHAVENDER, Advocate. [OPUC] 5. One CC to IVs.B.SAPNA REDDY, SC for lncome Tax Department. [OPUC] 6. One CC to SRI GADI PRAVEEN KUIVAR, (Deputy Solicitor General of lndia), High Court for the State of Telangana at Hyderabad. IOPUC] 7- Two CD Copies. 7Q o356 WX.txs4 t lkE r4 r{ ( )3 o,. 2BAUEM a(' a ljrrl.t a nL -::=- a-2 HIGH COURT DATED:2610612025 ORDER WP.No.17970 of 2025 ALLOWING THE WRIT PETITTON WITHOUT COSTS pr.t