Bapi Reddy.Dagsubati v. 1. union of lndia

Petition under Section 151 cpc praying that in the circumstances stated in the affidavit fired in support of the petition, the High court may be preased to suspend all further proceedings pursuant to the lmpugned Order dated 25-03.2025bearing DrN and Notice No. |rBA/ASTrsr147r2o24-2sr1or4g7s145(1) for the Assessment year 2o2o-21, issued by the 3rdRespondent under Section 147 read with section 144 of the rncome Tax Act, 1g6r incruding aI consequenu subsequent notices/o rders/pena lties, in the interest of justice. lA NO: 3 OF 2025 Petition under section 151 cpc praying that in the circumstances stated in the affidavit fired in support of the petition, the High court may be preased to stay the operation of lmpugned order dated 2s.03.2o2s bearing DIN and Notice No. |rBA/ASTlsl147r2o24-2s/107497s14s(1) for the Assessment year 2020 _ 21, issued by the 3'd Respondent under Section 147 read with section 144 of lhe lncome Tax Act, 1961 including all notices/orders/pen a lties, in the interest of lustice. conseq uent/subseq uent Gounsel for the Petitioner: SRI SHEETAL SRIKANTH Counsel forthe Respondent No.1: SRI GADI PRAVEEN KUMAR, DEPUW SOLICITOR GENERAL OF INDIA Counsel for the Respondent No.2 to 4: Ms. P.SAPNA REDDY, Sr. SC FOR lT The Court made the following: ORDER THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITION No.t8702 of 2025 Ozu)ER (per Hon'ble Sri Justice l\'ctrsing Rao Nandikonda) Heard Mr.Sheetal Srikanth, leamed counsel for the petitioner and Ms.B.Sapna Reddy, learned Senior Standing Counsel for the Income Tax Department appearing for the respondents. Perused lhe record. 2 This is a writ petition q'here the proceedings are either challenged to the notices which were issued under. Section i48A and 148 of the Income Tax Acr, 196l (for shoft ,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 Sectior.r l48A of the Act and the subsequent initiation ofproceedings under Section l4g of the Act by the jurisdictional Assessing Olficer, u,hereas in terms of the amendment that was brought to the Income Tax Act by way \- of Finance Act, 2021 w.e.f., 0l .04.2021 onwards, proceedings 2 under Section 148A of the Act as also under Section 148 of the Act ought to have also been issued and proceeded in a faceless manner.

4. The contention of the petitioner is that the issue of proceedings being in violation ol the Finance Act,202l i.e., the impugned notices under Section l48A and Section 148 of the Act not being issued in a laceless manner, have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section l48A as also under Section 148 of the Act were hetd to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section 15lA of the Act read with Notiflcation 18/2022 dated 29.03.2022. The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were allowed on similar .terms.-*---- *- - .-' ' l(2023) 156 taxmann.corn 178 ('l'elangana)l .,

5. Dorvn the line, we find that the same issue has also been decided against the Revenue by various I{igh Courts i.e., by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High CoLrrt in rhe case of RAM NARAYAN SAH vs. UNION OF lNDIAr, punjab and Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Courl in the case of SRI VENKATARAMANA REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAX5 where rhe issue was in respect of international taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAx OFFICER, INTERNATIONAL TAXATION6 which is again on intemarional taxation and central circle, High Court of Himachai pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI ' lzoz+1464 n-R 430 (Bom) ' [(2024) 156 taxrnann.com 478 (Gauhati)] '1Q024) 165 taxmann.com l l5 (punjab & Haryana)l ' [2024) \.GltaxLnann.com 4 i I (Telangana)] " [2024) 166 taxmarLn.com 679 (Bombay)] '12024) 165 taxmann.com I l3 (Himachal pradesh)l 4 \.i DAHYABHAI RADADIYA VS. INCOME TAX OFFICER' WARD 3(3X5)E, Jharkand High Courl in the case of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs' INCOME TAX OFFICER & ANOTHER and batch of writ petitionsro which stood decided on 19.03.2024. Simitar views have also been taken by the Division Bench of Calcutta High Courl in the case of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 of 2023), decided on 25.0e'2024'

6. Even though the same issue having been decided by a large number of High Courts, we are still conlronted with large filing of identical matters on daity basis ranging between 5 to l0 writ petitions. That upon the instructions being sought from the Department, .they have been taking a solitary ground that the decision of the Bombay High Court in the case of Hexaware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in thc case ol Kanakalo Ravindra Reddy 82024 SCC Online Guj 4012 '2025 SCC Online Jhar 287 12023'. RI-JD : 49 84-DB l n ' 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 Courl and the Hon,ble Suprente Court is seized of. the matter. In addition, there are about 1200 SLps also filed arising our olthe same issue being decided by various High Courts.

7. To a query being put to the leamed 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, lresh writ petitions of rdentrcal nature are being piled up before this Bench on daily basis and the pendency is getting increased on matter which othenvisc has already been dealt and decidecl by this very High Court itsetf.

8. On the one hand, even though the order of this Court that was passed as early as on 14.09.2 023 and, more I 6 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 l4gA and under Section 148 of rhe Acr by the jurisdictiona[ Assessing Officer, rather the authorities concemed in the teeth of series ot.decisions 6 lndia are continuously still bY all the major High Courrs initiating proceedings under Section l48A of the Act and also initiating proceedings under Section l4g of the Act in contravention to the amendments brought into the Income 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 wr.it petition be disposed of in the teeth of the decision rendered by this Court in the case of Kanakala Ravindra Reddy (l supra), learned Standing Counsel for the Income Tax Departrnent contends that those would unnecessarily burden ihe Income Tax Deparlment where they would be required to file equal number of SLps belore the Hon'ble Supreme Couft and it would be further burdening the exchequer of the Union of India. It was also the contention of the learned Standing Counsel that no prejudice would be caused to the interest of the petitioners in case if this writ petition is kept pending till the finalization of the SLps pending before the Hon,ble Supreme 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 Depaftment have not come out with a mechanism to issue appropriate inslructions or to rakc appropriate steps in ensuring that proceedings under Section 14gA 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 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 High Courts.

10. As a result of which, what we are facing is steep increase o1- 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 151A of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakala Ravindra Retttly ( I supla). What is also surprising is the fact that though while allowirrg the writ petitions in the case of Kanukalo Ravindra Reddy (l supra), the Division Bench while reserving the right of thc Revenue, has also protectecl the interest of the petitioners n \ \ .\,t l \ 8 ! insofar as the liberty which was granted to the Re venue lor 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 entitlcd to challenge or raise the other legal objections if the Revenue initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was reserved for the Revenue' On the contrary, they have been still sticking on to the stand' r'i'hich this High Courl as well as many other High Courts already held to be

11. lt appears that because of the aforesaid liberty that this t{igh Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a faceless manner' the Income Tax Department wants to take advantage of the sarne by 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 finalty at a later stage if the Hon'ble Supreme Coutl con firms the decision taken by this High Coufi as also by the other High CourtsinwhichtheSLPsarestillpending,thelncomeTax i 9 Deparlmenr would get the advantage of the liberty that is other.wise protected in favour of the Revenue for initiation of fresh proceedings lrom 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 concerned. As a consequence, the Income Tax Department gets an extended period of time for initiation of fresh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanakala Ravindra Reddy (l supra), is a matter of grave concern. The Income Tax Department,s persistent initiation ol 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 slrategy of awaiting the Supreme court,s decision on pending SLps while continuing to initiate fresh appears to be a calculated move to buy time and lirnitation periods, rather than adhering to the established legal proceedings crrcumvent 10 .l'\i \ position. Such conduct raises serious questions about the administrative efficiency and the respect for judicial 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 lact it should have been realized by the Income Tax Department itsell and shouldhavefoundoutvia.mediainensuringthatproccedings under Sections 148-4 and 148 should not have been issued in a faceless manner, at least titl the Hon'ble Supreme Court decide the twelve hundred (1200) odd SLPs which it is already seized of or' at least the Income Tax Department should have found oui some rernedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 148' other than in a faceless manner, the proceedings should have been delened without precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only after the SLP's are decided by the Hon'ble Supreme Court on the very same issuc' This again, the Income Tax Department, has not been able to give a convincing reply, except for the fact that such a decision iI'at all 11 has to be taken, has to be taken lor the whole of India, and which otherwise has to be by way of a policy decision and that too at the level of Central Board of Direct Taxes. Though the leamed Standing Counsel for. the Income Tax Department contended that the Delhi High Court dismissed a writ petition of similar nature, on the one hand when the High Court is 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 hundre<is of new writ petitions which in the long run not only aflects the disposal of the writ petitions but also consumes substantial time of the Bench in hearing these rnatters again and again on daily basis. Admittedly, in spite of the matter before the Hon,bte 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 lncome Tax Department. yet, the authorities concerned 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 Deparlment is showing a{acity by issuing notices continuously under Sections l4g_A and 12 '1 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, TNCOME TAXIT, on an issue whether it was j ustifiable on the part 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 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 judgment of the High Court would not mean thal 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 decisions being "not acceptable" was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. " 11zOzs; 170 taxmann.com 422 (Bombay)l " 1t9;81 113 ITR 589 (Bornbav) '3 lzTz+1165 taxmann.com 581/300 Taxman 452 (Bornbay) r( 1t992|taxmaffi.com 16/55 ELT 433 (SC) 13 "6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any faclual malafides but with the fact lhat 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 officers to give effect to the orders of authorities higher to them in the appellate hierarchy. lt cannot be too vehementjy 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 Ccillectors 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,, 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 t4 t.,l 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 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 Revenu;. 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 adiudicating authorities and the appellate authorities to the requirements of iudicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." 1 5. What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of High Coufts all of whom have taken a consistent stand that tl-re action of tl-re Income Tax Department being violative of the 15 I Finance Acl.2020 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 High Court in the case of Kankanala Ravindra Redcly (l supra) shall however be subject to the outcome of the SLPs which were fi led by the Income Tax Department and which is pending consideration befbre 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 further be burdened which otherwise can be decided and disposed of as a covered matter. l7 . So far as the interest of the Revenue is concemed, we are of the considered opinion that the interest of the Revenue has already been considerff and protected, as has been observed in paragraphs \ 1,6 t 36,37 and38 of the order which, for ready reference, is reproduced hereunder rlre (:(ttrst'!(rtrelrlr/r tll(rFl rs rrlr

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 rs 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 iurisdiction, 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 Article 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the right the petitions only on the procedural flaw' 17 conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashish Agarwal, supra.

18. We rvould only further like to make observations that since rve are inclined to dispose of the instant writ petition, conscious of the fact that the earlier order of this High Courl in the case of Kanakala Ravindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme courl in SLp No.i574 of 2024, preferred by the Income Tax Deparlment, we make it clear that allowing of the instant writ petition is subjecl to ourcome of.the afbresaid SLp preferred by the Revenue against the decision of this Fligh Court in the case of Ksnakalo Rttvindrn Reddy (I supra). This, in other words, would mean that either of the parties, if they so want, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon,bte Supreme Court in the pending SLp on the ver1, same issue. I 9' Accordingly, the instant writ petition stands alrowed in I'avour of the assessee so far as the issue of jurisdiction IS concerned. As a consequence, the irnpugned notice under challenge under Sections l4g_A and I48 stands set aside/quashed. r ( 18 The consequential orders, if any' also stand set aside/quashed in similar terms as have been passeC by this High Court in the case of Kankanaltr Ravindra Reddy (l supra)' There shall be no order as to costs. Consequently, miscellaneous petitions pending' if any' shall stand closed. To, //TRUE COPY// SD/- N.SRIHARI DEPUry REGISTRAR SECTION OFFICER ew Delhi, Union of lndia -

1. The Ministry of Finance, lncome Tax Departmen 2 J 4 100 01 1 The Office of Commissioner, lncome Tax Department, Ministry of Finance, Government of lndia, New Delhi - '100 011 TheOfficeofthelncomeTaxOfficer,Ward4('l),HyderabadlTTowers,AC Guards, Masab Tank, Hyderabad - 500 004- The National Faceless Assessment center, lncome Tax Department, Ministry of Finance, Government of lndia, New Delhi '100 01 1 One CC to SRI SHEETAL SRIKANTH, Advocate [OPUC] 6. One CC to Ms. P.SAPNA REDDY, Sr. SC FOR lT [OPUC] 7. One CC to SRI GADI PRAVEEN KUMAR, DEPUTY SOLICITOR GENERAL OFlf.f Orn, Uigh Court for the State of Telangana at Hyderabad [OPUC] B. TWo CD Copies e BS TKS HIGH COURT DATED:02107 t2025 t ORDER WP.No.18702 of 2O2S B 1Hr: ( o s14 t .J '-1 t 2 5 nlJ8 2025 /),. -.1 ALLOWING THE WRIT PETITION, WITHOUT COSTS @ a