Bachpaile, K v. Ranoare.ddy, pignVo

Judgment

2. a J. Thg Assessing Officer, Ward-.1 .l(1 Assessment Unit, Department, New Delhi. The Principal Chief Commissioner of lncome Tax, Hyderabad- 500 004 ), Hyderabad. 'vrandamus ...RESPONDENTS Petition under Articre 226 0f rhe constitution of rndia praying that in the circumstances stated in the affidavit fired therewith, the High court may be pleased to issue a Writ, Order or orders, direction or more particularly one in nature of writ of decraring that the order passed uts 147 r/w sec. 144, 1448 of the rncome Tax Act 1961 0n 24-2-2025 by the 2nd respondent with DrN No. |rBA/AST rsr 1 4T r2o24-25r 1 or 361 7 s2s(1) for the Assessment y eat 2o2o_21 and notice issued u/s i48 dt. 30-03-2024 with DrN No. rrBA/AST/s/148-112023_ 2411063669403(1) as iilegar, bad in Law, void abinitio, unfair arbitrary, apart from being violative of provisions of sec. 14g and sec. 149 of the Act and arso contrary to the notification no. 1Br2o22rF.No.370142r16t2o22-Tpl(part-r) issued by the .BDT dt 29-03-2022 the scheme namery E-assessment of rncome Escaping Assessment Scheme 2022 and provisions of sec. 151 of the Act and vioration of Article 14 of the Constitution of lndia and consequently set - a-side the pondent daled - 24-02-2025 and all Assessment Order passed by the 2nd res consequential proceedings pursuant there to' IA NO: 1 oF 2025

- Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition' the High Court may be pleased to stay all further proceedings subsequent to the Assessment order passed by the 2nd respondent uts. 147 r/w sec' 144' 1448 of the lncome Tax Act 1961 on 24-2-2025 for the Assessment Year with DIN No. ITBA/AST tst147t2O24-2511O73617525(1) 2o2o-2landnoticeissuedu/s148dt.30-03.2024withDlNNo.ITBA/AST/S/148. 1r2o23_24tj063669403(1 ) incruding any recovery pending disposat of the writ Petition Counsel for the Petitioner: SRI SRINIVAS GANGISHETTI Counsel for the Respondents: MS' J SUNITHA (SR SC FOR INCOM TAX) The Court made the following: ORDER THB HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE IIONOURABLE SRIJUSTICE NARSINC RAO NANDIKONDA WRIT PETITION No.l7949 of2O25 ORDER, (per Hon'ble Sri Ju.stice Nctrsing Rao .\.undikondut Heard Mr.Srinivas Gangshetti, [eamed counsel fbr the petitioner and Ms.J.Sunitha, learned Senior Standing Counsel for 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 l4gA and 148 of the Income Tax Act, 196 I (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 I4gA of the Act and the subsequent initiation olproceedings under Scction l4g of the Act by the jurisdictionar 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., 0l .04.202t onwards, proceedings 1 l .l 2 under Section l48A of the Act as also under Section 148 ol the Act ought to have also been issued and proceeded in a l-aceless manner

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act' 2021 i'e ' thc impugned notices under Section 148,4. and Section 148 of the Act not being issued in a faceless manner, have already been dealt rvith and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs' INCOME-TAX OFFICERT dccided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section 148A as also under Scction I 48 of the Act were held to be bad with consequential reliels on the ground of it being in violation of the provisions of Scction l5 lA of the Act read with Notifrcation 1812022 dated 29 0i'2022 The said judgment passed by this Court has also been subsequently tbllowed in a large number of writ petitions which were allowed on similar 'tQO23) 156 taxrnann.com 178 (Telangana)l J

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 ol HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSTONER OF INCOME TAX & OTHERS2, Gauhari t{igh Court in the case of RAM NARAYAN SAH vs. UNION OF INDIAT, 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 rhe 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 inrcrnarional 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 2 yzoz+1464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauhati)l " [(2024) 165 taxmann.com ll5 (punjab & tlaryana)l ' [2024) 167 taxmann.com 4 I I (.Ielangana)] " [2024) 166 taxmann.com 679 (Bombay)l ' 12024) I 65 taxmann.com I l 3 (Himachal pradcsh) l 4 I DAHYABHAI RADADTYA VS. INCOME TAX OFFICER' WARD 3(3X5)8, Jharkand High Court in the case of SHYAM SUNDARSAWvs.UNIoNoFINDIAg,Rajasthanl{ighCourtin the case of SHARDA DEVI CHHAJER vs' INCONIE TAX OFFICER&ANOTHERandbatchofwritpetitions|owhich stood decided on 19.03 '2024' Similar views have also been taken by the Division Bench of Calcutta High Courl in the case of GIRDHAR GOPAL DALMIA vs' IJNION 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 ol identical matters on daily basis ranging between 5 to I 0 writ petitions. 1'hat upon the instructions being sought lrom the Depaftment, they have been taking a solitary ground that the decision of the Bombay High Court in the case of Hexan'tre Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy 82024 sCC online Guj 4012 " 2025 SCC Online Jhar 287 "'i202J, R.t-JD:4984-DBl '. 5 (I supra) has been subjected to challenge in a Special Leave Petition i.e., SLp No.3574 of 2024 before the Hon,ble Supreme Courl and the I{on,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 Couns.

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 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 by this very High Court itselL

8. On the one hand, even though the order of this Court that was passed as early as on 14.09.202J and more 16 months have lapsed, till date, we do not hnd any remedial steps having been taken by the Income Tax Department to take appropriate sreps to either hold'back issuance of notice under Section l4gA and under Section 148 of the Act by the jurisdictional Assessing Officer, 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 148.4 of the Act and also initiating proceedings under Section 148 of the Act in contravention to the amendments brought into the lncome Tax Act pursuant to the Finance Act, 2020 as also the Finance Act 2021'

9. Upon a query being put as to why can't this writ petition be disposed of in the teeth of the decision rendered by this Courl in the case ol Kanakala Ravindra Retldy (| supra), Iearned Standing Counsel for the lncome Tax Depaftment contends that those would unnecessarily burden the Income Tax Department where they would be required to file equal number of SLPs before the Hon'ble Supreme Court and it would be further burdening the exchequer oi the Union of India' lt 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 ol the SLPs pending before the l{on,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 lncome Tax Department have not come out with a rnechanism to issue appropriate instructions or to take 7 approprrate steps in ensuring that proceedings under Section I4gA of the Act as also the assessment orders under Section l4g of the Act are kept in a hold in the light of the decisions dedcided by the various High courts, it was submitted by the rearned Stand ing 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 High Courts.

10. As a result of which, what we are facing is steep increase of litigation day in and day out even though various orders have been passed by this High Court allowing writ petitions on the very same issue. The Income Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section l5lA of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up befbre this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kunakala Ravindra Reddy (l supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakara Ravindro Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners 8 ..i insofar as the liberty which was granted to the Revenue for initiating fresh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Finance Act' 2020 and the Finance Act,2021' The petitioner assessee would be entitled to challenge or raise the other tegat objections if the Revenue initiates fresh proceedings. The Department has made no endeavour in availing the said tiberty that was reserved for the Revenue' On the contrary, they have been stitl sticking on to the stand' which this High Court as well as many other High Coufts already held to be bad. I 1. It appears that because of the afbresaid liberlv that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-lime measure in a laceless manner' the -fax Department $'ants to take advantage of the same by lncome protracting these proceedings which would enable them to meet the limitation that would otherwise come in the way' Likewise' if the writ petition is kept pending for a considerable long period of time and finatty at a later stage if the Hon'bte Supreme Court confirms the decision taken by this High Court as also by the other High CourtsinwhichtheSLPsarestitlpending,thelncomeTax '/ ,/ 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 lncome Tax Deparlment 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 Kanokala Rovindra Reddy (l supra), is a matter of grave concem. 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 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 \. l ..1 position. Such conduct raises serious questions about the administrativeefficiencyandtherespectlorjudicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revenue's rights and assesses interests.

13. Another aspect which needs to be considered is that in fact it should have been realized by the Income 'fax Departrnent itself and shouldhavcfoundoutviamediainensuringthalproceedings under Sections 148-4 and 148 should not have been issued in a faceless manner, at least tiltthe Hon'ble Supreme Court decide the twelve hundred (i200) odd SI-Ps which it is already seized of or' at least the Income 'Iax Department should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and t48' other than in a faceless manner! the proceedings should have been deferred without precipitating the matter lurther 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 same 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 all 17 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 ol Direct Taxes. Though the learned Standing Counsel for the Income Tax Depaftment 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 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 [{on'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 concerned at the State level are not ready to accept the verdict passed by a maj ority of High Courts of different States on the same issue; and to make things further worse, the lncome Tax Department is showing audacity by issuing notices continuously under Sections l4g-A and I 12 "F- -- .1 \ 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner'

14. [n the case of BANK OF INDIA vs' ASSISTANT COMMISSIONER, TNCOME TAXIr' on an issue whether it was -fax Department in not j ustihable on the part of the Income following an order passed by the adjudicating authority 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. Paridwalla 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 iudgment 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''4' the Court observed that the approach of the officials of Revenue of treating decisions being "not acceptable" was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court' " 11zozs; [70 taxmann.com 422 (Bombay)] '' 119281 113 ITR 589 (Bombav) " 1zo2+1165 taxmann.com 581/300 Taxman 452 (Bombay) 'o ltsszltaxmann.com 16/55 EL'f 413 (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 lhe 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 otheruise 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, righfly criticized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officets to give effect to the orders of authorities higher to them in the appellate hierarchy. lt cannot be too vehemen y 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 disciptine 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,, 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. If this healthy L4 l .J 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 observattons made by the High Court, have been harsh on the officers. lt is clear that the 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 Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the ad.iudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for givtng effect to the orders of the higher appellate authorities which are binding on them." I 5. What is worrying this Bench more is the tact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been taid to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the lncome Tax Department being violative of the 15 Finance Act,202O and Finance Act,202l. Now, in order to protect the interest of the Revenue as also that of the assessee, it would be trite at this juncture, if we dispose of the writ petition with an observation/direction that the disposal of the instant writ petition in terms of the judgment rendered by this t{igh Courl in the case of Konkanala Ravintlra Reddy (l supra) shall however be subject to the outcome of the SLps which were filed by the Income Tax Department and which is pending consideration before the Hon,ble Supreme Court.

16. In the given facts and circumstances, this Bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarely covered by the decision of this Court and which stands fbrtified 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 o f 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 \ t6 C\ 1 .l 36,37 and38 of the order which, for ready reference' is reproduced hereunder:

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent- Department is neither tenable, nor sustainable' The notices so issued and the procedure adopted being 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 obiection raised by the petitioner is sustained and all these writ petitions stands allowed on this very iurisdictional 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{ime measure exercising the powers under Article 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 \7 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 further 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 l{igh Courl in the case of Kanakala Ravindra Reddy (1 supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No'3574 of 2024' preferred by the Income Tax Deparlment,, we make it clear that \ atlowing 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 Kanakula Ravirulra Reddy (l 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 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' I I I I I t 18 The consequential orders, if any, also stand set aside/quashed in similar terms as have been passed by this High Court in the case of Kankunala Ravindra Reddy (1 supra). There shall be no order as to costs Consequently, miscellaneous petitions pending. if any, shall stand closed //TRUE COPY// SD/-V.KAVITHA PUry REGISTRAR SECTION OFFICER '1 . The Assessing Officer, Ward-11(1), Hyderabad. 2. Assessment Unit. Department, New D-elhi. 3. The Principal Chief Commissioner of lncome Tax, 4. One CC to Sri Srinivas Gangishetti, Advocate [d 5. One CC to [t/s. J. Sunitha (SR SC for lnc,ome Tax 6. Tryo CD Copies To, I TJ GJP Hyderabad- 500 004 PUC] loPUCl \ HIGH COURT DATED:2610612025 ORDER WP.No.17949 ot 2025 1 S \:.. a o 0 * 11 sEP 2025 ,l t D ALLOWING THE WRIT PETITION WITHOUT COSTS *