Writ Petition No. 18600 of 2025 · The High Court · 2025

Order

(per Hon'ble Sri Justice Narsing Rao Nandikctndal Heard Mr.A.V.A.Siva Karlikeya, learned counsel for the petitioner and Mr.K.Sudhakar Reddy, learned Senior Standing Counsel for the Income Tax Department appearing for 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 148A and 148 of the Income Tax Act, 1961 (for short'the Act') orthe 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 1484. 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 amendment that was brought to the Income Tax Act by way of Finance Act, 2027 w.e.f., 01.04.2021 onwards, proceedings 1 2 under Section 148A of the Act as also under Section 14g of the Act ought to have also been issued and proceeded in a faceless tranner

4. Thc contention of the petitioner is that the issue of proceedings being in violation ol the Finance Act,202l i.e., the irnpugned notices under Section 148,4. and Section l4g of the Act not being isstLcd iu a faccless manner, have already been dealt with ar.rd decided by this Courl in the case of KANKANALA RAVINDRA I{EDDY vs. INCOME-TAX OFFICERT decided on 14.09.2023 rvhereby a batch of writ petitions were allowed and the proceedinqs initiated under Section l48A as also under Section 148 of the Act werc held to be bad with consequential reliefs on the ground of it being in r.iolation of the provisions of Section 15lA of the Act reacl rvith Notification l8l2o22 dated29.03.2022. The said judgment passed by this Court has also been subsequently follou,,ed in a large nuntber of writ petitions which were allowed on similar '[(2023) ] 56 taxmann.com 178 (Tetangana)l J

5. Down the line, we find that the same issue has also been decided against the Revenue by varlous High Courls i.e., by the Bombay I{igh Court in the case of HEXAWARE I'ECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIAT, Punjab and I{aryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana I-ligh Court in the case ol SRI VENKATARAMANA REDDY PATLOOLA vS. DEPUTY CONIMISSIONER OF INCOME TAX5 where the issue was in rcspect of international taxation, Bombay High Court in the case of ABIIIN ANTLKUMAR SHAH vS. INCOME TAX OFFICER, 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 OFFICERT, Gujarat High Court in the case of MANSUKHBHAI ' 1z.oz+1464 ITR 430 (Bom) 'l(2024) 156 taxmann.corn 478 (Gauhati)l ^l(2024) 165 taxmann.com 115 (Punjab &Haryana)l '12024) 167 taxmann.com 411 (Telangana)l ' l20H) +66 taxmann.com 679 (Bombay)l ' [2024) 165 taxmann.com 1 13 (I limachal Pradesh)] I i 4 DAHYABHAI RADADIYA vs. INCOME TAX OFFICER, WARD 3(3X5)8. .lharkand High Court in the case of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan IIigh Court in the casc of SHARDA DEVI CHHAJBR vs. .INCOME TAX OFFICER & ANOTHER and batch of writ petitionslo which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court in the case of GIRDHAR COPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 crl2023), deoidcd 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 hling of identical matters on daily basis langing between 5 to l0 writ petitions. Thal upon the instructions being sought from the Departmerlt, thev have been taking a solitary ground that the dccision of the Bornbay High Courl in the case ol' Hexan,are Technologies Lld., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy \ tzoz+hcc onl,ine Guj 4012 '2025 SCC Onl,ine Jhar 287 72023, Rl - J D : 49 8 4-DB l o ' 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 Courl 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 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 Courl in any of thcse rnattcrs pending belore 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 14.09.2023 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 148,{ and under Section i 48 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions 6 by all the ntajor High Courts in India are continuously still initiating proceedir.rgs under Section I 48A of the Act and also initiating proceedings under Section 148 of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act, 2020 as also thc Finance Act 2021.

9. Upon a query being put as to why can't this u,r.it petition be disposed of in thc teeth of the decision rendered b1, this Court in the case of Kunakala Ravindra Reddy (l supra), leamed Standing Counsel for the Incornc Tax Deparlmcnt contends that those r,vould unnecessaril;, burden the Income Tax Department where they would be recluired to file equal number of SLPs before the Hon'ble Supreme Court and it ivould be further burdening the exchequel of the Union ol India. It rvas also the contention of tl-re leamed Standing Counscl 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 per.rding before the Hon'ble Supreme Courl 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 Deparlment have not come out with a mechanism to issue appropriate instructions or to tal<e 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 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 Iin.rited to any of these jurisdictional High Courts.

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 concemed are still even now in 2025 also initiating proceedings in contravention to the provisions ol Section l51A ol the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Couft on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakola Ravindra Reddy (1 supra). What is also surprising is the fact that though white allowing the writ petitions in the case of Kunakulu Ravindrs Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners I 8 insofar as i-he liberty which was granted to the Revenue for initiating fresh proceedings strictly in accordance with the amended provisions of the Act, as arnended by the Finance Act, 2020 and the Finanoe Act, 2021. The petitioner assessee rvor,rld be er-rtitled to challenge or raise the other legal objections if the Revcnue initiates lresh proceerdings. The Deparlment has made no endeavour in availing the said liberly that was reserved for the Revenue. On the contrary, they have been still sticking on to thc stand, which this High Court rs r,,'ell as rranl other High Courts already. hcld to be bad. I I. It appears that because of the aloresaid liberty that this High Courl had granted perrnitting the Revenue for initiating liesh proceedings as a one-time measure in a faceless rnarurer, the Income Tax Deparlment wants to take advantage of the same by protlacting these proceedings which would enable thent to rneet tlte lirnitation that would otherwise come in the way. Likewise, if the writ petition is kept pending for a considerable long pcriod of tinre 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 Courts in r.r'hich the SLPs are still pending, the Income Tax 9 Deparlment 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 fresh proceedings

12. The alarming tlcnd ol docket explosion in this Court, despite the clear precedent set in Ktnakala Ravindrs Reddy (1 supra), is a matter of grave concern. The Income Tax Deparlment's persistent initiation of lresh proceedings, disregarding the established judiciat 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 Departrnent'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 adheling to the established legal i t 10 position. Such conduct raises serious questions about the administlative efficiency and the respect lbr judicial pronouncemcnts, particularly when this Court has already providccl a balanced approach by preserving both the Revenue's rights and assesses rnterests

13. Another aspect which needs to be considered is that in lact it should have been realized by the lncome Tax Department itsclf and should have lbund out via media in ensuring tl-rat proceedings under Sections 148-4 and 148 should nol have bcen issued in a laceless manner, at least till the Hon'ble Supreme Couft decide the twelve hurdred (1200) odd SLPs which it is already seized ofor, ar least the Income Tax Deparlment should have found out some rernedial steps to ensure that wherever the authoritics intend to initiate ploccedings under Sections 148-A and 148, othel than in a faceless rranner. the proceedings should have been def'crrcd without precrpitating the matter further intimating the assessee Lhat 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 il at all LL 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 learned Standing Counsel fbr 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 struggling to reduce its pendency, such notices which are under challenge in this w t petition are forcing the assessee to knock the doors of this High Courl 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 substantiai time of the Bench in hearing these malters again and again on daily basis. Admittedly, in spite of the matter before the Hon'ble Supleme 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 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 1'ax Department IS showing audacity by issuing notices continuously under Sections 148-A and 'tz 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. ,\SSISTANT COMMISSIONEK'INCOME TAXTT ;oii afi -issiie-v\.herherir \\,as justifiable on the part of the Income Tax Department in not lollowing an order passed by the adjudicating authority only on rhe ground that the appeals are pending, the Division Ilench of thc High Court of Bombay held at paragraph No.25 as under. viz., : "25. I\/r. Paridwalla has righfly 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 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 Cou( 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 criticizect by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. '.'- t{ZOzSl 1 70 taxmann.com 422 (Bombay)l " 7t9l}1113 1TR 589 (Bornbay) " 72OZ+1 165 laxmann.com 581/300 Taxman 452 (Bomba_v r . r{ 1 10921 taxlnarn.corn l6155 EL t 4J3 (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 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 thrs 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. 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 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 jurisdtction of the Tribunal. The principles of judicial discipline requrre 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 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 observatrons of the High Court, seemingly vehement, and apparenfly unpalatable to the Revenue, are oniy 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 deoartment 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 shouid be paid by the adjudicating authorities and the appellate authorities to the requrrements of judicial 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 lact 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 lar.ge uutnber of IJigh Courts all of whorn have taken a consistent stand that the action of the Income Tax Deparlment being violative of the *-, 15 Finance Ac|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 obserwation/direction that the disposal olthe instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (l supra) shall however be subject to the outcorne of the SLPs which were flled by the Income Tax Department and which is pending consideration before the Ilon'ble Supleme Courl

16. In the given facts and circumstances, this Bench is of the considered opinion that unless and until we do not timely dispose ol 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 sarne issue, the pendency of this High Court would lurther be burdened which otherwise can be decided and disposed ofas a covered matter

17. So far as the interest of the Revenue is concemed, we are of the considered opinion that the interest ofthe Revenue has already been considered and protected, as has been observed in paragraphs L5 36,37 and 38 ofthe 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 as de/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to the notices rssued 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 nu lrfied automatically.

37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are getling 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 17 l l l 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 fufther like to make observations that since we ale inclined to dispose of the instant writ petition, conscious of the lact that the earlier order of this High Court in the case ol Kantkala Ravindra Reddy (l supra) is subjected to challenge belore the Hon'ble Supreme Courl tn SLP No.3574 ol 2024, prelerred by the Income Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the t aforesaid SLP preferred by the Revenue against the decision of this High Courl in the case of Kanakala Rnvindrs 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 S[,P on the very same issue 19 " Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction IS concemed. As a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed. 18 The conseqrLential orders, if any, also stand set aside/quashed in similar terms as have been passed by this High Courl in the case of Kankanalo Ravindra Reddy (.1 supra). There shall bc no order as to costs. Consequontly, miscellancous petitions pending, if any, shall stand closed I I To, //TRUE COPY// SD/. M. NAGAMA TANT REGISTRAR i ,lSECTION OFFICER

1. The Assessment Unit, lncome Center, New Delhi, Room No.. Stadium, New Delhi - 110 003 Tax Department, N 4O1 , 2nd Floor, E-RamP, Jawaharla lNehru nal e-Assessment

2. The lncome Tax Officer, Ward 1, iv'lahabubnagar, Income Tax Office, Deo Office Roacl, Nilahabubnagar, Telangana - 524 001 , Andhra Pradesh.

3. The Principal Commissioner of lncome Tax - 4, Tirupati, lncome Tax Office, KT Road, Tirupati- 517 501, Andhra Pradesh

4. One CC to SRI A.V.A.SIVA KARTIKEYA, Advocate. [OPUC] 5. One CC to SRI K.SUDHAKAR REDDY, (SENIOR SC INCOIVE TAX) [OPUC] 6 Two CD Copies +. BSK GJP I I I I i i l i HIGH COURT DATED:0210712025 f ORDER WP.No.18600 of 2025 g7 BCT il[5 \ .i.i. ,. \--l:.-:- -r.j."'' .la r a '':: ,,/ ALLOWING THE WRIT PETITION WITHOUT COSTS a