Kosoor Subba Ramarao v. 1. lncome Tax Officer

challenged to the notices which were issued under Section 148,4. and 148 of the Income Tax Act, 1961 (for short 'the Act') or the assessment orders those have been passed under Section 147 of the Act rvhich have been assailed.

3. This writ petition is being taken up today only on one of the grounds, that the notices issued under Section 148,,4. of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Officer, whereas in terms of the amen1Unent that was brought to the Income Tax Act by way of Finance Act,202l w.e.f., 01.04.2021 onwards, proceedings I I I I 2 under Scction 148A of the Act as also under Sec.rron 148 of the Act oug)rt to have also been issued and proceedel in a faceless manner.

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance Ac,202l i.e., the impugned notices under Section l48A and Section 148 of the Act not being issued in a faceless manner, have alreadv br:en dealt with and decided by this Court in the case ol I(,INKANALA RAVINDR\ REDDY vs. INCOME-TAX OFF)('ER1 decided on 14.09 2023 whereby a batch of writ petitions \!cr:i allorved and the proceedings initiated under Section t48A as alsr:, rrnder Section 148 of the Ac, were held to be bad with consequenti,rl reliefs on the ground of it being in violation of the provisions of Se:rtion 151A of the Act read with Notification 1812022 dated 29.03.1022. The said judgment passed by this Court has also becn subseqrre rtly lollowed in a large number of writ petitions which were allot,,:d on similar terms. ' [(2023) I 56 taxmann.com 178 (Telangana)] I 3

5. Down the line, we find that the same issue has also been decided against the Revenue by vanous High Courts i.e., by the Bombay High Court ln the case of HEXAWARE TECHNOLOGIES LTD., VS, ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIAs, 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 international taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH VS. INCOME TAX OFFICE& INTERNATIONAL TAXATION6 which is again on intemational 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 \ 'Tzoz+1464 ITR 430 (Bom) 'LQ024) 156 taxmann.com 478 (Gauhati)l ^ [(2024) 165 taxmann.com 1 l5 (Punjab & Haryana)] '[2024) 167 taxmann.com 4l I (Telangana)] " 12024) I d6tfi *un,.com 679 (Bombay)l '[2024) 165 taxmann.com I l3 (Himachal Pradesh)] ! I I I i I ? I I I I ,I i ,f * 'l I ! : ]l I I ,t ,l II I I 1t t { t I IT I 7 4 DAHYABILTI RADADIYA vs. INCOME 'I'1')r. OFFICER, WARD 3(3X5)8, Jharkand I-ligh Court in the casr: ol'SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case o1'SIIARDA DEVI CHHAJER vs. I\t191'48 '1'O, OFFICIIR & ANOTHER and batch of writ p,rtitionsro which stood decided on 19.03.2024. Similar views have rl:;o been taken by the I)ivision Bench of Calcutta High Court ir. the case of GIRDH,\R GOPAL DALMIA vs. UNION OF l\lDL,\ & ORS (M.A.T 1690 of 2023), decided on25.09.2024.

6. Even though the same issue having been dec;rled by a large number of Itigh Courts, we are sti[[ confronted u irlr large filing of identical matters on daily basis ranging betwee r :j to l0 writ petitions. That upon the instructions being srrrr!,ht liom the Departmr:nt, they have been taking a solitary g.c -rnd that the decision of the Bombay High Court in the casr- 'f llexawure Teclrnologies Ltd., (2 supra) as also the one wh ch has been decided by this Coufi-itr the case of Kanakala Rnvindra Reddy t2O2+SC<: Onl-ine Guj 4012 '2025 SC(l Online Jhar 287 'o 12023 : R J-JD ; 49 84-DBl 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 fited 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 fact that there is no interim order granted by the Hon'ble Supreme Couft in any of these matters pending before it. Meanwhile, fresh writ petitions of identical nature are being piled up before this Bench on daily basis and the pendency is getting increased on matter which otherwise has already been dealt and decided by this very High Court itself.

8. On the one hand, even though the order of this Court that was passed as early as on 14.09.2023 and more 16 months have lapsed, till date, we do not find any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance of notice under Section l48A and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions tS ': t J I { l! :t l! t, I I I t t I T J t i 6 by all the rnajor High Courts in India are cc ntinuously still initiating; proceedings under Section 148.4 of tl.r:: Act and also initiating, proceedings under Section 148 ol- the Act in contraventiorl to the amendments brought into the . n()ome Tax Act pursuant to the Pinance Act,2020 as also the Finanr:e Act2021

9. Upon a query being put as to why can't this rlrit petition be disposed of in the teeth of the decision rendered b1 this Court in the case of Kanakala Ravindra Reddy (1 supra), lr:a rred Standing Counsel for the [ncome Tax Department contends tlrt those rvould unnecessarilv burden the lncome Tax Departntq:nt w'here they would be required to file equal number of S LI)s before the Hon'ble Supreme Court and it would be further ,urdening the exchequcr of the Union of India. It was also the crlrtention of the iearned Standing Counsel that no prejudice would tre caused to the interest of the petitioners in case if this writ petition i:; kept pending till the finalization of the SLPs pending belore the Hon'ble Supreme Court and the fact that the petitioner is a r,''3dy enjoying the benelit of interim protection. Nonetheless, on t.u: earlier query of this Court as to why the Income Tax Department trave not come out with a mechanism to issue appropriate instruc'ir:ns or to take 7 appropriate steps in ensuring that proceedings under Section 1484. ofthe Act as also the assessment orders under Section 148 ofthe Act are kept in a hold in the light ofthe decisions dedcided by the various High Courts, it was submitted by the leamed Standing Counsel that the said steps can only be taken at the level ofCBDT as any such steps would have to be taken Pan India and cannot be limited to any of these jurisdictional High Courls.

10. As a result of which, what we are facing is steep increase of titigation day in and day out even though various orders have been passed by this High Court allowing writ petitions on the very same issue. The Income Tax authorities concerned are still even now in 2025 also 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 belore this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakala Ruvindra Reddy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravindta Redd.y (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners I 8 insofar as the liberty which was granted to thc Revenue for initiating ffesh proceedings strictly in accordance u rt r the amended provisiors of the Act, as amended by the Financr: .\ct, 2020 and the Finance Act, 2021. The petitioner assessee wor lr: be entitled to challenge or raise the other legal objections if the F.e u enue initiates fresh pr,rceedings. The Department has made r,t endeavour in availing the said liberty that was reserved for the Rc,'enue. On the contrary. they have been still sticking on to the sratLd, which this I'Iigh Court as well as many other High Courts ah,:.,dy hcld to be

11. It appears that because of the aforesaid liberry that this High Court had granted permitting the Revenue for ir itiating fresh proceedings as a one-time measure in a faceleis manner, the Income 'fax Department wants to take advantage rtl'the same by protracting these proceedings which would enable t rorl to meet the limitation that would otherwise come in the way. LLkewise, if the writ petilion rs kept pending for a considerable lon1r :reriod of time and hnally at a later stage if the Hon'b.le Supreme (tcurt confirms the decision taken by this High Court as also by.tl:e other High Courts in which the SLPs are still pending, thr: Income 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 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 fiesh proceedings

12. The alarming trend of docket explosion in this Couft, despite the clear precedent set in Kanakala Ravindra Reddy (l supra), is a matter of grave concern. The Income Tax Department's persistent initiation of fresh proceedings, disregarding the established judicial pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions piling up on the same issue. This deliberate approach not oniy 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 move to buy time and circumvent limitation periods, rather than adhering to the established legal 10 position. Such conduct raises serious questiors about the administratir.e efficiency and the respect for judicial pronounrernents, parlicularly when this Court has iLl;'eady provided a balanced approach by preserving both the Reven.ie's rights and assesses lntel'ests.

13. Another aspect which needs to be considerec ir; that in fact it should have been realized by the Income Tax Depat. nent itself and should have fbund out via media in ensuring t rirt proceedings under Sr:ctions 148-4 and 148 should not have te,,n issued in a faceless manner, at least till the Hon'ble Supreme ( l:urt decide the twelve hundred (1200) odd SLPs which it is alread,, r;eized of or, at least the Income Tax Department should have Ib.rnd out some remedial steps to ensure that wherever the authr,r lies intend to initiate proceedings under Sections 148-A and 148 , r:,ther than in a faceless lnanner, the proceedings should have l:,een deferred without precipitating the matter further intimating 1h,., assessee that they shall initiate appropriate proceedings only aftt:r the SLP's are decided by the Hon'ble Supreme Court on the v..r.l same issue This again, the Income Tax Department, has not ber:n able to give a convincing reply, except for the fact that such a de,:ision if at all ( 71 has to be taken, has to be taken for the whole of India, and which otherwise has to be by way of a policy decision and that too at the level of Central Board of Direct Taxes. Though the leamed Standing Counsel for the Income Tax Department contended that the Delhi High Courr dismissed a writ petition of similar nature, on the one hand when the High Court is struggting 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 onty affects 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'bte Supreme Court which is seized of the matter has been reluctant in granting any interim protection to the lncome 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 t2 148 through the jurisdictional Assessing Ofhcer v,1 :reas it ought to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs ASSISTANT COMMISSIONER, INCOME TAX|r, on an issrL,: ,vhether it was justifiable on the part of the Income Tax Dcprltment in not following an order passed by the adjudicating autlrr,r.:y only on the ground that thc appeals are pending, the Divisior Bench of the High Courl of Bombay held at paragraph No.25 as rrr 1er, viz., : "25. tulr. Paridwalla has rightly drawn out atte rt )n to the decision of this Court in Gommissioner of lncome Ia,. vs, Smt. Godavaridevi Sarafl2 as also the recent decision r:f the co- ordinate Bench of this Court in Samp Furniture (P) t-11. v. lTOi3 of which one of us (Justice G.S. Kulkarni) was a memrr:., wherein the Courl categorically observed that the Revenue lraving not "acc,lpted" the Judgment of the High Court would not rncan that till the same is set aside in a manner known to law, it wcu rJ loose its bindrng force. Referring to the decision of the Suprer,-. Court in Union of lndia vs. Kamlakshi Finance Corporatio r l-td.14, the Court observed lhat the approach of the officials of Rr-.venue of treating decisions being "not acceptable" was criticiz:)d by the Supreme Court. ln such decision, following are ,.1:, relevant observations made by the Supreme Court. '.lt{zOZS1 170 taxmann.com 422 (Bombay)l " 719781113 ITR 589 (Bombay) ') IZOZ+1 [65 raxmann.com 581/300 Taxman 452 (Born re y) 'o 1t9921 raxmarul.com 16155 ELT 433 (SC) I I I I I I I I I I I I I I I I I 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 offrcers to give effect to the orders of authorities higher to them in the appellate hierarchy. It 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 authorities. The order of the Appellte Collector is binding on the Assistanl 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 judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. lf this healthy 74 .\ rule is not followed, the result will only be L tdue harassment to assesses and chaos in adminitt rtion of tax laws.

12. We have dealt with this aspect at some e rgth, because it has been suggested by the learned Additional Solicitor General that the observ;,.ions made by the High Court, have been harsh cr. the oFficers. lt is clear that the observations of -r: High Court, seemingly vehement, and app;a :ntly unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allo rur:d to become widespread, could result in consirJerable harassment to the assesses-public without any tr,: nefit to the Revenue. We would like to say tt a. the department should take these observations rr the proper spirit. The observations of the High r)ourt should be kept in mind in future and the utmost .rrJard should be paid by the adjudicating authorities z n:t the appellate authorities to the requirements of u:licial discipline and the need for giving effect to the o.ders of the higher appellate authorities which are rirding oll them."

15. What is worrying this Bench more is tlrc fact that an endeavour is being made whole heartedly to ensur( not to generate further litigation on issues which have been laid lo s51 5, a large number of lligh Courts all of whom have taken a i(,nsistent stand that the action of the Income Tax Department being violative of the i l i ; I i i !r I ; i I i I I ! I i I 15 Finance Act,2020 and Finance Act, 2021 . Now, in order to protect the interest of the Revenue as also that of the assessee, it would be trite at this juncture, if we dispose of the writ petition with an observation/direction that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (1 supra) shall however be subject to the outcome of the SLPs which were filed by the Income Tax Deparlment and which is pending consideration before the Hon'ble Supreme Court.

16. In the given facts and circumstances, this Bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarely covered by the decision of this Court and which stands fortified by the decisions of the various other High Courts on the very same issue, the pendency of this High Court would furlher be burdened which otherwise can be decided and disposed of as 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 16 36,37 and 38 ofthe order which, for ready reference is reproduced hereunder:

36. For all the aforesaid reasons, the impugn( C rotices issued and the proceedings drawn by the rer;plndent Department is neither tenable, nor su rt;; inable. The notices so issued and the procedure adopte(j being per se illegal, deserves to be and are accorrlingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders tassed by the respondent-Department pursuant to th3 rotices issued under Section 147 and 1 48 would irls;: get quashed and it is ordered accordingly. The roa:on we are quashing the consequential order is on the :)r rciples that when the initiation of the proceedings i:s , lf was procedurally wrong, the subsequent orders irls;: gets nullified automatically.

37. The preliminary objection raised by the p-.tili:ner is sustained and all these writ petitions stands al c'rred on this very jurisdictional issue. Since the impugned rrotices and orders are getting quashed on the p:,int of jurisdiction, we are not inclined to proceed fu 1t :r and decide the other issues raised by the petitiore: which stands reserved to be raised and contend(,d in an appropriate proceedings-

38. Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one-time rr lasure exercising the powers under Article 142 : f the .oceed Constitution of lndia, permitted the Revenue to F under the substituted provisions, and this Courl a lowing the petitions only on the procedural flaw, :h:r rioht I i , I J t7 conferred on the Revenue would remain reserved to proceed further if they so wanl from the stage of the order of lhe 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 ol the fact that the earlier order of this High Court in the case of Kanakala Ruvindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, preferred by the Incomc Tax Depa(ment, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision ofthis I ( High Court in the case of Kanukala Ravindra Reddy (1 supra) This, in other words, would mean that either of the parties, if they so want, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Supreme Court in the pending SLP on the very same issue.

19. Accordingly, the instant writ petition stands allowed ln favour of the assessee so far as the issue of jurisdiction is concemed. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed. 18 The consequential orders, if any, also stand set asid,/quashed in similar terms as have been passed by this High Courr irr the case of Kankanqla Ravindra Reddy (l supra). There shal[ .rr: no order as to costs Consequently, miscellaneous petitions pendin6, rf any, shall stand closcd. ,TRUE COPY// l c AS$'i5 f B. T REKHA RANI REGISTRAR S ION OFFICER Tank HYderabad, 500004. of Financa Govt. of lndia, New Delhi' Guards, tviasab Tank Hyderabad, 500004' ',. an" lnconre Tax officer, Ward 4(1), Hyderabad lT Tou):r AC Guards' Masab 2. il; ijrii;,p;L Corrliion"rof lncome Tax - l, Hvderatra'l 2nd Floor' AC g ihe Naticnal Facetess Aiseisment Centre, lncome Ta'r t)epartment tvlinistry 4 ihe S;cretary, Union oiinOra, tr'4inistry of Finance' 16() E North Block' New S On" CC to SRI P SRIKANTH RAO, Advocate [OPUC] 6. o;; cc to H,tr. BoKARo sAPNA REDDY (sENloR s I NColvE z one'cc to snr b uurhERJEE' LEARNFD COUNSEI' ',iEPRESENTING 8. Two CD SoPies THE UNION OF lNDlA, Advocate (OPUC) TAX) Advocate IOPUCI Delhi - 1 10 001 . SA GJP o i t I i i t I I I i i I i i I I I t I ! I I I I I I ! I : ! I : HIGH COURT DATED:2010612025 ORDER WP.No.17143 of 2025 ALLOWING THE W.P WITHOUT COSTS. I \ 2 6 5gt, 1125 .t ',. ,:1 :' 'r^ :\r) \-!'',-' -,,-,. \--- " ._:1,."