SRI A v. A. SIVA KART KEYA

Petition under Article 226 of the 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 Mandamus or any other appropriate Writ' Order or Direction, dectaring tnat *,e order passed by the 1st *"t0"t1"^T^lf t-\',-:: t"" 144 rlwsec l44B of the lncome Tax Act' '1961' dated 01'03'2025' bearing DIN for the Assessment Yex 2020 - 21 as arbitrary, iffegaf ' Uad in law' void-ab-initio' violative of the principles of natural iustice, apart t'orn U"ing violative of Articles 14' 19(1Xg) and 265 of the 14BA of the lncome Tax Act' 1961' and to Constitution of lndia l"i '"t consequently set aside the same in the interests of iustice' No.. ITBA/AST t[t1472n24-?5/1073897613(1)' i 3** ,. rta lA NO: 1 OF 2025 Petition under section i51 cpc praying that in the circumstances stated rn the affidavit filed in support of the petition, the High court may be pleased to stay all further proceedings, including any recovery, pursuant to the order passed by the 'lst Respondent, u/s 147 rlw sec. 144 r/w Sec. 1448 of the lncome Tax Act, 196'1, dated 01 .03.202s, bearing DIN No.. ITBA/AST/S/14712024- 2511073897613(1), for the Assessment year 2o2o -21 pending disposar of the above Writ Petition pending disposal of the above Writ petition. Counsel for the Petitioner: SRI A. V. A. SIVA KART|KEYA Counsel for the Respondents: MS. BOKARO SAPNA REDDY (sENtOR SC TNCOME TAX) The Court made the following: ORDER I I I I I I THE HONOURABLE SRI JU5}'IICE P'SAM KOSITY AND THE IIONOURABLE SRI JI.]S UCE NARSING RAO NANDIKONDA wRlr PETIL!-oN.-YrJo 803 of 2025 ORDER, (per Hon'bLe Sri Justice Nat'sin!' Pdo Nundikanda) Heard Mr"A'V'A'Siva Kariii-':ya' Iearned counsel for the petitioner and Ms' B'Sapna Retia-r'' learned Senior Standing Counsel for the lncome Tax I)ep:ri trnenr appearitrg for the respondents. Pertlsed tbe lecotd'

2. This is a '"vrit petition whetc rtlt- pic'i:t'eC ings are either challenged to the notices which r'vere issuerl utrcler Section 148A andl48oftheIncomeTaxAct,t.)tl'(iorshott.theAct')orthe assessment orders those have beerl i 'assecl r:nclel Scctio' t 47 of the Act which have been assailed. This writ petition is being tal''r-rt trp totla;'oniy on one of the 3. grounds, that the notices issue'l uncllri Se'':tioti 148,{ of the Act and the subsequent initiation of proc':c'lrrtgs utlrlet Section 148 of the Act by the jurisdictiona'l Assessioq Otiic.:r' *'ircreas in terms of the amendment that rvas brought to the lrrconre'i'ax Act by way of Finance AcE *121 w'e'f'' 0i't)4 2-021 onwards' proceedings 2 under Section 148,4 of the Acr as also under Section l4g of the Act ought to have also been issued and proceeded in a faceless manner.

4. The ccntention of the petitioner is that the issue of proceedings being in violation of' the Financ e Act, 2021 i.e., the impugned notices undcr Section I4gA and Section l4g of the Act not being issrred in a f'aceless tnanner, have already been dealt with and decided b; this Coult in the case of IC{NKANALA RAVINDRA REDDY vs. INCOME_TAX OFFICERT decided on 14.09.2023 .r4iereby a barc,h ol writ petitions were allowed and the proceedings initiated uncier Section 1.4gA as also under Section 148 of the Act r.r,.ere held to be bad with consequcntial reliefi on the ground of it being in violation of the provisions of Section 15 1A of the Act read with Notification 1gl2o22 dated 29.03.2022. The said judgment passed by this courl has also been subsequentty fo[owed in a large nurnber of writ petitions rvhich rvere aflowed on similar terms. ' [(2023) 156 raxmann.corn I 7g (l.elangana)] 3

5. Down the line, we find ti-rat 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' ASSISTAN'I COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs' UNION OF INDIAT' Punjab and Haryana High Court in the case o1'JATINDER SINGH BANGU vs. UNION OF INDIA4, and l.elangana Fligh Court in the case of SRI VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMTSSIONER OF INCOME TAX5 wherc the issue was in respect of intemational taxation, Bornbay High Court in the case of ABHIN ANILKUMAR SHAH vs' INCOMETAX OFFICER' INTERNATIONAL TAXATION6 w'hich is again on intemational taxation and central circle, High Court ol'Ilirnachal Pradesh in the case of GOVIND SINGH vs' INCONIE TAX OFFICERT' Gujarat High Court in the case of MANSTIKHBHAI 'lzoz+1464 ITR 430 (Bom) ' llzoZil 1 56 taxmann.com 478 (Gauhati)l '11ZOZ+1165 taxmann.com 115 (Punjab & Ilaryana)l '[2024) 167 taxmann.com 411 (Telangana)l '12024\ 166 taxmann.oQtrI679 (Bomhal tl 'l2)24i 165 taxmann.uim I l3 (Hinrachal I'radesh)l 'r 4 DAHYABHAI RADADIYA vs. INCOME TAx OFFICER, WARD 3(3)(5)8, .tharkand High Courr in the case of SHyAM SUNDAR SAW vs. UNION OF. INDIAe, Rajasthan High Court in the case of SHARDA DEVI CIIHAJER 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 Caicutta High Court in the case of GIRDIIAR GOPAL DALMIA vs. UNION oF INDIA & oRS (M.A.T 1690 of 2}23\.clecided on25.09.2024.

6. Even tliough ihe same issue having been decided by a large number of High Courts, rve are still conironted with large filing ol identical matters on daily basis ranging betrveen 5 to I0 writ petltlons. That upon the instructions being sought from the Department, the_rz have been taking a solitary ground that the decision of the Bo*rbay High court in the case of Heraware Technologies Lt(t., (2 supr.a) as also the one which has been decided by this Courl in the case of Kanakala Ravindra Retldy 82024 SCC Onl-ine Guj 4012 '2025 SCC Online .Iliar 2g7 72023 : RI-JD :49 84-DBl 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' h addition, there are about 1200 SLPs also fiied arising outofthe same issue being decided by various High Coufis' 7. To a query being put to the learned counsel for the Revenue' they have categorically accepted the iact that there is no interim order granted by the Hon'ble Suprcme Couft in any of these matters pending before it' Meanwhile' tiesh writ petitions of identical nature are being piled up bcfore this Bench on daily basis and the pendency is getting increased on matter which otherwise has arready been deart and decided by this very Higtr 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 tapsed, till date' we do not find an,v rerreclial steps having been taken by the lncome 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 Officer' rather the authorities concemed in the teeth of selies of decisions 6 .{ by atl the major High (_-ourrs in India are continuously still initiating proceedings under Section l4gA of the Act and also initiating pr.oceedings uncler. Section l4g of the Act in contravention to the arnendments brought into the Income Tax Act pursuant to the Finance Act,2020 as also the Finance Act 202L - 9' upon a query being put as to why can't this writ petition be disposed of in the teeth of the clecision rendered by this Court in the case of Ktnokoln Ravindra Retldy (l supra), leamed Standing counsel fo. tho Incorrre Tax Departmenl contends that those would umecessarily burden tl-ie Income Tax Department where they would be required to fi [e equal nuriber of SLps before the l lon'ble Suprerne Court and iL would be fufther burdening the exchequer of the tinion of India. It was also the contention of the leamed Standing Corrnsel that no prejudice rvould 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 Cour-1 and the facl tbat the petitioner is already enjoying the benefit of interim protection. Nonetheless, on the earlier query of this Court as tb why the Income Tax Deparlment have not come out with a nrechrnisrn lo issuc rppropriate instructions or to take 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 hold in the light ofthe decisions dedcided by the various High Courts, it was submitte<l by the leamed Standing Counsel that the said steps can only be taken at the level of CBDT as any such steps would have to be taken Pan India and cannot be limited to any of these jurisdictional tligh Courts'

10. As a result of which, what rve ale t-acing is steep increase of litigation day in and day out even though various orders have been passed by this High Court allowing rvrit petitions on the very same issue. The Income Tax authorities concemtd are still even now in 2025 also initiating proceedings in contravention io the provisions ofSectionl5lAoftheActandasaresultbynow,morethan600 to 700 petitions have been alread-v got piled up before this High courl on an issue which otherwise stands squarelv covered by the judgment of this Court in the case of Kunakala Rovindra Reddy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kunakala Ravindra Reddy (l supra), the Division Bench rvhile reser-v'ing the right of the Revenue, has also protected the interest of tl,e petitioners I insofar as tl:e liber.r-y rvjrich ,"r,as granted to the Revenue for initiating lresh proceedings st.ictly in accorda,ce with the amended provisions ol the Act, as amended by the F.inanc e Act, 2020 and the Finance .\ct, 20),1 . The pcrLitioner assessee would be entitled to challenge or raise the other iegal objections if the Revenue initiates fresh proceedings. 1'he Depar.tment has made no endeavour in availing thc saicl iiberty that was resen ed for the Revenue. On the contrary, they have been sliil sticki,g on to the stand, which this High Courr as well as rnany other High Courts already held to be bad.

11. It appears that because of the afortsaid liberly that this High Court had gr.anred pern,ritlinsi the Revenue for initiating fresh proceedings as a one-ttme lrcasure in a faceleSs manner, the Income Tax l)epartrnent \,\ants to take advantage of the sarne by protracti,g thcse p*rceedings v,,hich rvould enable them to meet the limitation thar \\ould olher$/ise come in the way. Likewise, ilthe writ petition is kept pending tbr a considerable long period of time and finally a1 a later stage if thc Hon,ble Supreme Court confirms the decision taken by this l.ligh Court as also by the other High Courts in whiclL the SI.,ps are still pending, the Income Tax 9 Department would get the advantage of the liberty that is otherwise protected in favour of the Reverrue for initiation of ftesh proceedings from the disposal of these matters at a much later stage which would be advantageous and beneficial to the Revenue and and derimintal so tar as interest the Income Tax would be equally disadvantageous ofthe assesses are concemed' As a consequence' Depadment gets an extended period ol tirne for initiation of fresh this court' desPite Proceedings' 12. The alarming trend of docket explosion tn the clear precedent sel\l Kanakdla Rtrvintlra Reddy ll supra)' is a mattet of grave concem' The Income Tpx Departmends initiation of fresh proceedings' disregarding the established judicial persistent surge in litigation has led to an unprecedent'ed pronouncements' with over 600-700 petitions piling up ott the same issue' This deliberate approach not only undermines the principle of judicial precedent but also strains the judicial resources unnecessarily' Departmenf s strategy of awaiting the Supreme Courf s decision on pending SLPs while continuing to initiate fresh proceedings appears to be- a calculated move to buy time and circumvent periods, rather than adhering to the established legal The 'mitation r. S! {* .* l 1-Cl posrtlon. Such conducl laises serious questions about administrative pronouncements. ellicioncy and the respect for judicial parlicular.ly when this Court has already provided a balanced approach b.,, prese.ving both the Revenue,s rights and assesses interesls.

13. Another aslrect which needs to be considered is that in fact it should have beern realize<J irv tfus 1n.o_" Tax Department itself and should have lbuncl oui .;!a rnedia in ensuring that proceedings under Sections 148_,{ arrd I:lg should not have been issued in a faceress manrlerj.t leasl iiii rhe Ilon'ble supreme court decide the twelve hundred (1200) oc*l SLps ,r.hich it is already seized of or, at Ieast the Incotlc l_ax l)cjrarintent should have Ibund out some remedial step_rs 1.l ensrrre titar rvherever the authorities intend to initiate proceeclings undel sections r4g-A and r4g, other than in a faceless manner. the proc:crdings should have been deferred without precipitaring the l',atref lunher intimating the assessee that they shall initiate appropriarc procee<lings only after the SLp,s are decided by the lJon,ble Suprerne Court on the very same issue. This again, the Incorie .I.ax i)epartrnent, has not been able to give a convincing reply, except fbi t,e fact that such a decision if at all ) ,,, I I I 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 decisiorr arld that too at the level of Central Board of Direct Taxes' Though the learned Standing Counsel lor the Income Tar Department contended that the Delhi High Court dismissed a rvrit petition of similar nature' on the one hand when the High Couil 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 Courl resulting in frling of hundreds of nerv writ petitions which in the long run not only affects the disposal of the rvlit petitions but also consumes substantial time of the Bench in hearing these mattersagainandagainondailybasis.Admittedly,inspiteofthe matterbeforetheHon,blesupremeCotrrthavingbeentakenon 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 L)epaftment' Yet' tire authorities concemed at the State levei are not ready to accept the verdict passed by a majority of High Courts of difl'erent States on the same issue; and to make things furrher worse, the lncome Tax Deparfinent is showing audacity by issuing notices continuously under Sections 148-4 and 'tz 148 through the .f urisdictiorrai Assessing Officer whereas it ought to have been oniy in the faceiess manner.

14. In rhc case ot IIANK OF INDIA vs ASSISTANT COMMTSSIONER, INC]ONfE TAXn, on an issue whether.it was justifiable on the part ol the Income Tax Department in not following an ordcr passed by the adjudicating authority only on the ground that the appears ar:e pending, the Division Bench of the High court orBornb.y herd at paragraph No.25 as under, viz.. : "25 Mr' paridwaira llas righry drawn out attention to the decision of this Couft in Conrnrissioner of lncome Tax vs. Smt. Godavaridevi Saraf,z as also the recent decision of the co_ ordinate Bench of this C( orwhich one or us (.,,,,i":: s iil:.ffi:tJ:jiiil, Llll, the Court categoiically cbserved that the Revenue having not 'accepted,,the judgment of the High Court would not mean that till the same is set aside in a bindins rorce Rererrins,J,'r:T:::::::,i'"-;lJ::: :ffi : Union of lnrtia vs. Kamlakshi Finance Corporation Ltd.,4, the Court observed that the approach of the officials of Revenue of treattng decisions being ,,nct acceptable,, was criticiz6d by the Supreme Cour-t. ln such decision, following are the relevant observations made by the Supreme Court. ',)lr.1o:tr l70 lrxnrann.cor)) .lf I { B(,nrbay)J ',:ll978l I il I I tr i89 rBorntr:r).i " [2024] 165 taxmarrn.corr 55l/300,faxman 452 (Bombay) 'o llgg2lt xmanr:,cor lrt si I i i.ljj (SC) * 13 "6. Sri Reddy is perhaPs right in saYing that the not actuated bY anY mala fides in officers were impugned orders. TheY PerhaPS passing the genuinely felt that the claim of ti.le assessee was not tenable and that, if it was accepted' the Revenue would suffer. But what Sri Reddy cverlooks is that we are not concerned here with the correctness or otheMise of their conclusion or of any factual malafides but with the fact that the or-ficers in reaching in their conclusion, by-passed twc appellate orders in regard to the same issue which were placed befo!-e them, one of the Collector (Apoeals) and the other of the Tribunal. The High Coud has' in our vrew' rightly criticized this conduct of the Assistant Collectors anci 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 quasuudicial 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 iurisdiction and the order of the Tribunal is binCing upon the Assistant Collectors and the Appellate Coliectors urho function under the iurisdiction of the Trlt'unal 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 subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court' lf this healthy I 14 ! rule is nct followed the resutt will only be undue harassrnent to assesses and chaos in edministration of tax iaws. 12 tdJe 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 the High Court, seemingiy r'ehement, and apparenfly unpalatsble to the Revenr-re, are only intended to curb a tendgncy in revenue i.natters which, if aliowed to become widespreal, could resuit in considerable harassment to the assesses-public without any benefit to the Revenue. $Je uiould like to say that the department shouid taKe these observations in the proper spirit. The observations 6f the High Court should be kept in rnincl in future and the utmost regard shouic be paid by the adjuoicating authorities and the appeliate authoritres 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 \\'crrying trris Bench more is the tact that an endeavour is being made ivhole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of High u-ourts all ol ra,hom have taken a consistent stand that the action olthe Income Tax Department being violative of the T 15 Finance Act,2020and Finance Act'2021' Now' in order to protect the interest of the Revenue as also thai ofthe assessee' it would be trite at this juncture, if we dispose ol 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 Retldy (l supra) shall however be subject to the outcome of the SLPs whicir uere filed by the lncome Tax Department and which is pending consideration before the llon'ble Supreme Court'

16. In the given tacts and circumstances' this Bench is of the considered opinion that unless and ttntil rve do not timely dispose of matters which are squarely covered b-v the decision of this Court and which stands fortified by the r'lecisions of the various other High Cour-ts on the very same issue' the pendency of this High Court would further be burdened ivnich othetwise can be decided and disposed of as a covered matter'

17. So far as the interest of the Rel enue 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 38 of rl.re order which, for reacly reference, is reproduced hereunder

36. For all the afoiesaid reasons, the impugned notices issued and the proceedings drawn by the respondent_ Department is netther tenable, nor sustarnable. The notices so lssued 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 respondenlDeDadment pursuant to the notices issued unde,- Section .i4Z and 14g wculd also get quashed and it rs orderecl accordingiy. The reason we are quashing the consequential order is on the principles that when the initiaticn of the proceedings itself was procedurally wrong, the subsequent orders also gets nuiiified automaticaiiy.

37. The preliminary objection raised by the petitioner is sustained and all these rvrit petitions slands allowed on this very jurisdictional issue. Since the impugned notices and orders are getting quashed on the point of jurisdiction, we are not inciined to proceed further and decide the other rssues raised by the petitioner which stands reserved to be raised and contended in an approDriate proceeCi j.tgs. 20 of Ashish Since the Hon'ble Srroreme Court had, in the case Agarwal, supra, as a one-time measure the powers under Article 142 exercising of the Constitution of lndia, per.mitted the Revenue to proceed under the substituteC provisions, and this Court allowing the petitions only cn the procedural flaw, the right ) t7 conferred on the Revenue r''/ould remain reseNed 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 furlher like to inake obsewations that since we are incrined to dispose of the i.srant rvrit petition, conscious of the fact that the earlier order of tiris High Court in the case of Kantrkala Ravindra ReddY (l supla) is subjected to challenge before the Flon'bie Supreme Couri in StP No'3574 of 2024' preferred by the Income Tax Departn''L'rlt' q'e rnake it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakatu Rtvindra -Rerldy (1 supra)' This, in other words' would mean that either of the parties' if they so want, may move an approptiate petition seeking revival of this writ petition in the tight of the decision ol thc Hon'ble Supreme Court in the pending SLP on thc vct v sanrc issue'

19. Accordingty, the instant wrir petttton star.rds allowed rn favour of the assessee so far as tirc issuc of jurisdiction 1S the iniPugned notice under concemed. As a consequence' challenge under Sections 148--A n anrl 148 stands set aside/quashed' ( t 18 The consequential orders, if an1.,, also stand set aside/quashed in similar terms as have Lreen p;s:e<.i by this Higli Courl in the case of Kankonsla Rcviurlru Redli, {.1 supr.a). There shalI be no or.der as to costs. Consequentl-y, rniscr:llaneous petitions pending. if any, shall stand closed //TRUE COPY/' DEPSuD#lRJAISi[^'5 W' SECTTON OFFICER

1. Assessment Unit, Income Tax, Department, National e-Assessment Center, New Delhi, Room No.. 4O1 ,2nd Floor, E-Ramp, Jawaharlal Nehru Stadium, New Delhi - 1 10 003.

2. The Assistant Commissioner of Income Tax, Circle 6(1), Hyderabad, l.T. Towers, 10-2-3, AC Guards, lvlasab Tank, Hyderabad - 500 044, Telangana. 3- The Principal Commissioner of lncome Tax-I, LT. Towers, 10-2-3, A.C. Guards, l/asab Tank, Hyderabad - 500 004, Telangana. 4. One CC to Sri A. V. A. Siva Ka(ikeya, Advocate [OPUC] 5. One CC to Ms. Bokaro Sapna Reddy (Senior SC lncome Tax) [OPUC] 6. Two CD Copies a \ To, TJ BS HIGH COURT DATED:19t0612O25 ORDER WP.No.16803 of 2025 '-=:='"- :: \ 7/|{st t;n- -', o ,-' -r. 'r'r ' .. /, -.- i'-l i ,. 10 SEP 205 j''i.. ".. ) .i; ,Ji ALLOWING THE WRIT PETITION WITHOUT COSTS \\ ,{ t, r' I i