SRI A v. A. SIVA KARTIKEYA

Judgment

1. 2 3 Assessment Unit, lncome Tax Department, National e- Assessment Center' itii* o.ini, i".ni ttto. +ot, 2nd Flbor, E- Ramp. Jawaharlal Nehru Stadium' New Delhi - 110 003. The Assistant Commissioner of lncome Tax, Ward '16 ( 1), Hyde.rabtd.' l T' i;;;r., ib-, t AC Guaros, tt/lasab Tank, Hvderabad - 500 044' Telansana The Principal Chief Commissioner of lncome Tax, Andhra Pradesh and i.LnnrnJ. HuOerabad. Room No.922,gth Floor, B Block l T Towers' 10- 2-3. E. C.'Cu'ards. fi,4asab Tank, Hyderabad - 500 004, Telangana ..RESPONDENTS Petition under Article 226 of lhe constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High court may be pleased to issue a Writ of fi/landamus or any other appropriate Writ' Order or Direction, declaring that the order passed by the 1"t Respondent' uls 147 r/w Sec' 144 rlw Sec. 1448 of the lncome Tax Act, 1961, dated 15 03' 2025 ' bearing DIN No. ITBA/AST/s,t147t2O24- 25t1O74527286(1), for the AssessmentYear 2017 - 18 as arbitrary, illegal, bad in law, void- ab- initio, violative of the principles of natural justice, apart from being violative of Articles 14, 1 9(1 Xg) and 265 of the Constitution of lndia and Sec 148A of the lncome Tax Act, 1961' and to consequently set aside the same in the interests of justice' lA NO: 1 OF 2025 Petition under section 151 cPC praying that in the circumstances stated rn the affidavit filed in support of the petition, the High court may be pleased to stay all further proceedinr;s, including any recovery, pursuant to the notice issued by the 2nd Respondent, u1s 148 of the lncome Tax Act, 1961 , dated 29. 03. 2024, bearing DIN No. lrBA/AST/S/148 112023- 2411063596962(1), for the Assessment Year 2017 - 1B pendlng disposal of the aLrove Writ Petition, pending disposal of the above Writ Petition, pending disposal of the above Writ petition. Counsel for the Petitioner: SRI A. V. A. SIVA KARTIKEYA Counsel for the Respondents: SRI K. SUDHAKAR REDDy, SC FOR THE INCOME TAX DEPARTMENT The Court made the following: ORDER ,.t THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITION No.l74l3 of 2025 QBDEB, (per Hon'ble Sri Justice Narsing Rao Nandikttnda) Heard Mr.A.V.A.Siva Kartikeya, learned counsel for the

petitioner and Mr.K.Sudhakar Reddy, leamed Senior Standing Counsel for the Income Tax Department appearing for the respondents. Perused the record.

2. 'llhis is a writ pctition where the proceedings are either challenged to the notices which were issued under Section 148,4. and 148 of the lncome Tax Act, 1961 (for short 'the Act') or the assessment orders those have been passed under Section 147 of the Act which have been assailed.

3. This writ petition is being taken up today only on one of the grounds, that the notices issued under Section 148,4 of the Act and the subsequent initiation oi proceedings under Section 148 of the Act by the jurisdictional Assessing Officer, whereas in terms of 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 -- Wffi \--a-.r \:!' -7;7 \;'.::i \ under Section 148,4 of the Act as also under Section l4g of the Act ought to have also been issued and proceedecl in a faceless manner.

4. l'he contention of the petitioner is that the issue ol proceedings being in violation of the Finance Act. 202 I i.c,, the impugned notices under Section l4gA and Section l4g of the Act not being issrred in a faceless manner, have already bce. deart rvith and decided by this Courl in the case ol KANKANALA RAVINDRA REDDY vs. INCOME_TAX OFFICERT decided c:n 14.09.2023 whereby a batch of writ petitions wer.e aliowed and the proceedings initiated under Section 14gA as also under Section 148 of the Act u,ere held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section 15lA of the Act lead with Norificarion lgl2022 d,ated 29.03 .2()22 The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which wer.e a orved on simirar terms. ' [(2023) 156 taxmann.com l7g (Telangana)] .,.)

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 in the case of HEXAWARE TECHNOLOGIES LTD., VS. ASSTSTANT COMMTSSIONER OF INCOME TAX & OTHERS2, Gauhati High Courl in the case of RAM NARAYAN SAH vs. UNION OF INDIA3, Punjab and Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIAI, and Telangana lligh Court in the case of SRI VENKATARAMANA REDDY PA.TLOOLA 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 ' Tzoz+1464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauhati)l ^ l(2024) 165 taxmann.com 115 (Punjab & Haryana)l '[2024) 167 taxmann.com 4l I (Tetangana)] " 12024) 166 taxmann.com 679 (Bombay)l ' 12024) 165 taxmann.corn I 13 (Himachal Pradesh)l 4 DAHYABHAI RADADIYA vs. INCoME TAx OFFICER, WARD 3(3X5)8, Jharkand High Courr in rhe case of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High CoLrrt in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and barch of wrir peritionsr0 u,hich stood decided on 19.03.2024. Similar views have also been raken by the Division Bench of Calcutta High Court in the case of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 169(t of 2023), decided on25.09.2021.

6. Even rhough the same issue having been decided by a large number of High Courts, we are still confronted with large filing ol identical matters on daily basis ranging between 5 to l0 u,rit petitions. 'l-hat upon the instructions being sought from the Department, they have been taking a solitary ground that the decision of r-he Bombay High Courl in the case of Hexawure Technologies Ltd., (2 supra) as also the one which has been decided by tlris Courl in the case of Kanahala Ravindra Reddy 82024 sCC Online Guj 4012 '2025 SCC Online Jhar287 12023 : RJ- JD : 49 84-DB l o ' ., 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 In addition, there are about 1200 SLPs also hled arising out of the same issue being decided by various High Coutts.

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 Courl in any of these matters pending beforc it. Meanwhile, fi'esh 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 Courl that was passed as early as on 14.09.2023 and more 16 months have lapsed, till date, we do not lind any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hotd back issuance of notice under Section 148,4. and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions 6 by all the rnajor High Courts in lndia are continuously srill initiating proceedings under Section 14gA of the Act and arso initiating proceedings under Section l4g of the Act in contraventior to the amendments brought into the Income Tax Act pursuant to the Finance Act,2020 as also the Finance Act 2O2l .

9. Upon,r query being put as to why can,t this writ petition be disposed o1- in the teeth of the decision rendered b1, this courl in tlre case ol Kanakila Ravintlra Reddy (l supra), learned Standin-e Counsel lol tlre Incorne Tax Deparlrnent contends that those would unnecessarily burden the Income Tax Deparlment wher.e they rvould be required to file equal number of SLps before the llon'ble Supr.enre Court and it would be further bur.dening thc exchequer of the Union of India. It was also the contention of the learned Standrng Counsel that no prejudice would be caused to the interest olthe petitioners in case if this writ petition is kept pending till the finalization of the SLps pending before the IJon,ble Supreme Court 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 not come out with a nechanism to issue appropriate instructions or to take 7 appropriate steps in ensuring that proceedings under Section 1484. 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 submitted by the learned 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 timited to any of these jurisdictional I{igh Courts.

10. As a result of which, what we are facing is steep increase ol 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. The Income Tax authorities concemed are still even now in 2025 atso initiating proceedings in contravention to the provisions of Section 151A 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 oovered 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 atlowing the writ petitions in the case of Kanukala Ravindra Reddy (1 supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners 8 insofar as '-he liberly which was granted to the Revenue for initiating fresh proceedings strictly in accordance with the amended pror.isions of the Act, as amended by the Finance Act, 2020 and the Finance A,ct, 2021. The petitioner assessee would be entltled to challenge or. r.aise the other legal objections if the Revenue initiatcs fresh proceedings. The Department has made no endeavour in availing thc said lib,ty that was reserved for the Revenue. on the contrarv. they have been still sticking on to the stand. which this Higl.r Court as rvell as many other High Courts alread'held to he bad.

11. It appears that because of the aforesaid liberty that this High Court had gr-anted permitting the Revenue for initiating fresh proceedings rts a one-tirr-re measure in a faceless manner, thc Income Tax l)eparlment wants to take advantage of. the same by protracting these proceedings which would enable them to meet the lirnitation that rvould otherwise come in the way. Likewise, if the writ petition is; kept pending for a considerable long period of time and finally at a later stage if the Hon,ble Supreme Couft confirms the decision taken by this High Couft as also by the other High Courls in u,hich the SLps are still pending, the Incorne Tax W ) 9 Department would get the advantage of the liberty that is otherwise protected in lavour of the Revenue lor initiation of fresh proceedings from the disposal ofthese matters at a much later stage which would be advantageous and benehcial to the Revenue and rvould be equalty disadvantageous and detrimental so far as interest ol' the assesses are concemed. As a consequence, the Income Tax Depadment gets an extended period of time for initiation of lresh proceedings.

12. The alarming trend of docket explosion in this Courl, despite the clear precedent set in Kanakals Ravindra Reddy (l supra), is a matter ol 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 only undermines the principte 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 neriods, rather than adhering to the established legal 10 position. Such conduct raises serious questions about the adrninistraLive elficiency ancl the respect for judicial pronouncem(lnts, parlicularly when this Court has already provided a balanced approach by preserving both the Revenue,s rights and assesses intelests.

13. Another aspect which needs to be considered is that in fact it should have been realized by the Inco,'re Tax Deparlrnent itself and should have found out via rnedia in ensuring that proceedines undel Sections 148-A and l4g should not have becn issucd in a faceless ma,ller, at least till the Hon,ble Supreme Court decide the twelve hundred (1200) odd SLps which it is already seized ofor, ar Ieast l-he lucome Tax Department should have found out some rernedial steps to ensure that wherever the authorities intend to initiate plocecdings under Sections 14g-A and l4g. other than in a facelcss lrannel., 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 ver1, same issue. This again, the Incorne Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all ,/ W ,] 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 Ievel 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 sirnilar nature, on the one hand when the High Court is struggling to reduce rts pcndency, such notices which are under challenge in this writ petition are forcing the assessee to knock the doors of this High Court re sulting in filing of hundreds of new writ petitions which in the long run not only 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 r-nattel bcfore the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the mattcr has been reluctant in granting any interim protection to the Income Tax Deparlment. 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 furlher worse, the Income Tax Deparlment IS showing audacity by issuing notices continuously under Sections 148-A and L2 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner.

14. ln th: case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXIT, on an issue wherher it u,as justifiable on the paft of the Income Tax Department in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division Bench of the High Courl c1'Rombay held at paragraph No.25 as under, viz., : "25. \4r. Paridwalla has righfly drawn out attention to the decision lf 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 till the same is set 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.14, the Court observed that the approach of the officials of Revenue of treating oecisions being "not acceptable,, was criticized by the Supreme Court. In such decision, following are the relevant observations made by the Supreme Court. '] KZOZs) 170 raxrnann.com 422 (Bombay)l '2 1t91811 l3 I rR 589 (Bombay) t3 IZOZ+1 165 raxrnann.com 5gl/300 Taxman 452 (Bornbay) 'o TtggZltaxmann.com l6155 ELT433 (SC) w.,/: ' L3 "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 nol 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 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 authorities. 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 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 I., rule is not followed, the result will only be undue harassment to assesses and chaos in administration of tax laws.

12. We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh on the off cers. lt is clear that the observations of the High Court, seemingly vehement, and apparen y 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 Revenue. We would like to say that the department should take these observations jn the procer spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authoritres and the appeliate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are brnding oll lhern." 1 5. What ;s worrying this Bench more is the fact that an endeavour is iteing made whole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the Income Tax Department being violative of the w 15 Finance Act, 2020 and Fir.rance Act,2021 . Now, in oider 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 Kanksnala 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 per.rding consideration before the Hon'ble Supreme Courl

16. In the given facts and circumstances, this Bench is of the considered opinion that unless and until we do not timely dispose olmatters which ale squarely covered by the decision of this Court and which stands lbrtified by the decisions of the various other High Courts on the very same issue, the pendency of this High Court would furlher be br.rrdened 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 L6 {" 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. ThL' notices so issued and the procedure adopted betng pel 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 14g would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order ts on the principles thal 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 susrained 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 further and decide the other issues raised by the petitioner which stands reserved to be raised and contended in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one_time measure exercising the powers under Artlcle 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right W 17 conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of lhe Supreme Court in the case of Ashish Agarwal, supra. t8. We would only further like to make observations that since we are inclined to dispose ol 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) ls subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, preferred by the Income 'Iax Department, we make it clear that altowing of the instant writ petition is subject to outcome of the aloresaid SLP preferred by the Revenue against the decision of this I-ligh Court in the case of Ksnakala Ravindra Reddy (l supra). This, in other words, would mean that either of the parties, if they so want, miy 1nove an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Supreme Courl in the pending SLP on the vely same issue.

19. Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction 1S concerned. As a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed. 18 r-1 The consecluential orders,, if any, also stand set aside/quashed in similar te.,s 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 Conserluently, miscellaneous petitions pending, if any, shall stand closed. SD M ALLIKARJ UNA RAO ANT REGISTRAR //TRUE COPY' \b ECTION OFFICER

1. Assessment LJnit, lncome Tax Department, National New Delhi, Room No. 401,2nd Floor, E- Ramp. Jawah New Delhi - 1 10 003. Assessment Center, arlal Nehru Stadium,

2. The Assistant Commissioner of lncome Tax. Ward '16 (1 ), Hyderabad,l. T. Towers, 1A-2-3. AC Guards, fuiasab Tank, Hyderabad - 500 044 Telangana

3. The Principal Chief Commissioner of lncome Tax, Andhra pradesh and Telangana, H,Tderabad, Room No. 922,gth Floor, B Block. L T. Towers, .10- 2- 3, A. C. Guards. Masab Tank, Hyderabad - 500 004, Telangana.

4. One CC to Sri A. V. A. Siva Kartikeya, Advocate [OPUC] 5. One CC to Sri K. Sudhakar Reddy, Advocate [OPUC] 6. Two CD Copies o To, TJ GJ HIGH COURT DATED:2410612025 ORDER WP.No.17413 of 2025 ::- \. 2 E SEP 20ffi ' . |:.' .. , : .1/ ALLOWING THE WRIT PETITION WITHOUT COSTS