The High Court · 2025

challenged to thc notices which were issued under Section l4gA and 148 olthc Income Tax Acr, 196l (for shorl .the Act,) or the assessruent orders those have been passed under Section 147 of the Act whicl-r have been assailed. i. 'l'his writ pet.ition is being taken up today only on one of the glounds, that the notices issued under Section l4gA of the Act and the subsequent initiation ofproceedings under Section 14g of the Act by the jurisdictional Assessing Officer, whereas in rerms of the arnendment that was brought to the Income.fax Act by way o1' Finance Act, 202 I w.e.f., 01.04.202 I onwards, proceedings \ 2 under Section l48A of the Act as also under Scction 148 ol the Act ought to have also been issued and proccecled in a fbceless manner.

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act, 2021 i.e., the impugned notices under Section l48A and Section 148 ol the Act not being issued in a laceless manner, have already been dealt with and decided by this Court in the case ol' Kz\NKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICIERT decided on 14.09.2023 whereby a batch of rvrit petitions \vere allowed and the proceedings initiated under Section 148A as also under Section 148 of the Act were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section 151A of the Act read with Notiflcation 18/2022 dated 29.01.2022. The said j udgment passed by this Court has also been subsequer.rtly followed in a large number of writ petitions which were allorved on similar terms. 'IQ023) 156 taxmann.corn 178 (Telangana)l LE- 3

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 of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in rhe case of RAM NARAYAN SAH vs. UNION OF INDIAT, punjab and Haryana Fligh Courr in rhc case of JATINDER SINGH BANGU vs. UNION OF INDIA{, and Telangana High Court in the case of SRI VENKATARAMANA REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF'INCOME TAX5 where the issue was in respect of international taxation, Bornbay High Court in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAx OFFICER, INTERNATIONAL 1'AXATION6 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 ') lzoz+1464 I'rR 430 (Born) -[(2024) 156 taxmann.com 478 (Gauhal.i)] " [(2024) 165 taxmann.com I I 5 (Punjab & Haryana)] '12024) 167 taxmann.corn 4I I (1'elangana)l " [2024) 166 taxmann.com 6Tg (Bombay)l ' [2024) 165 taxmann.corn I I 3 (Hirnachal Pradesh)] 4 ) l I ...,l DAHYABHAI RADADIYA vs. INCOME l'AX OFFICER. WARD 3(3X5)8, Jharkand High Court in the casc of SHYAM SUNDAR SAW vs. [INION OE INDIA'), Rajastharr l{igh Court in the case of SHARDA DBVI CHHA.IER vs. INCOME TAX OFFICER & ANOTHER and batch ol'writ pctitionsr0 rthich stood decided on 19.03.2024. Similar vie*,s havc also been taken by the Division Bench of Calcutta Higli Coult in the case of GIRDHAIT GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 of 2023), decided on25.09.2024

6. Even though the same issue having been dccicled by a large number of High Courts, we are still conlronted rvith large fiting of identical rnatters on daily basis ranging betrvcon 5 to I0 writ petitions. 'fhat upon the instructions being sor-rght from the Department, they have been taking a solitary ground that the decision ol' the Bombay High Court in the case of Hexaware Technologies Lld., (2 supra) as also the one which has been decided by this Court in the case of Kanokolo Ruvindra Reddy 8202+ SCC onl-ine Guj 40 l2 '2025 SCC Online Jhar287 12023 : RJ- J D :4 9 g 4- D B l n ' 5 (l supra) has been sublected to challenge in a Special Leave Petition i.e., SLP No.3574 ol 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 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 acceptcd the fact that there is no interim order granted by the tlon'ble Supreme Court in any of these matters pending before it. Meanwhile, fresh writ petitions of identical nature are being piled up befbre this Bench on daily basis and the pendency is getting increased on matter which otherwise has already been dealt and decided by this very High Court itself.

8. On the one hand, even though the order of this Court that was passed as early as on 14.09.2023 and more 16 months have lapsed, till date, we do not frnd any remedial steps having been taken by the lncome Tax Department to take appropriate steps to either hold back issuance of notice under Section l48A and under Section 148 of the Act by the jurisdictional Assessing Ofhcer, rather the authorities concemed in the teeth of series of decisions 6 by alt the nrajor High Courts in India are continuouslv still initiating proceedings under Section l48A of thc Act and also initiating proceedings under Section 148 o1' the Act in contravention to the amendments brought into thc Incon.rc Tax Act pursuant to the Finance Act,2020 as also the Finance Act 102 I

9. Upon a query being put as to why can't this urit pctition be disposed ol'in the teeth of the decision rendcred bi this Court in the case of Kanakalu Ravindra Reddy (l supra), Iearned Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Departmcnt \4 hcre they would be required to file equal number of Sl.l)s bclore the Hon'ble Suprcme Court and it would be fufther burdening the exchequer ol the Union of India. It was also the content ion of'the learned Standing Counsel that no prejudice would be causcd to the interest of the petitioners in case if this writ petition is kept pending titl the finalization of the SLPs pending befble thc Hon'ble Supreme Coun and the fact that the petitioner is already cnjoying the benefit ol interim protection. Nonetheless, on thc earlicr query of this Court as to why the Income Tax Deparlrnenl lrave no! corne out with a mechanism to issue appropriate instrucrions or to take ilo. ? 7 appropriate steps in ensuring that proceedings under Section l48A of the Act as also the assessment orders under Section 148 of the Act are kept in a hold in the light olthe 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 timited to any of these jurisdictional High Courts.

10. As a result of which, what we arc 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 conrravention to the provisions of Section l51A of the Act and as a rcsult 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 judgrnent of this Court in the case ol' Kanakola Ravindra Reddy ( I supra). What is also surprising is the lact that though while allowing the writ petitions in the case of Kunokalu Ravindra Reddy (l supra), the Division Bench whilc 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 lor initiating fresh proceedings strictly in accordance u'ith the amended provisions of the Act, as amended by the Financc Act, 2020 and tlre Finance Act,202l . The petitioner assessee would be entitlcd to challenge or raise the other legal objections if the Revu'nuc initiutes fresh proceedings. The Department has made no endear"our in availing the said liberty that was reserved lor the l{evenue. On the contrary, they have been still sticking on to the stancl, rvhich this High Courl as well as many other High Courts aheady held to be bad. 1 l. It appears that because of the aforesaid liberty that this tligti Court had granted permitting the Revenue for init iating fiesh proceedings as a one-time measure in a faceless lnanner. the Income Tax Department wants to take advantage of t.he sarne by protracting these proceedings which would enable thern to meet the limitation that would otherwise come in the way. I-ikewise, if the writ petition is kept pending for a considcrable long pe liod of tirne and finally at a later stage if the Hon'ble Supreme Court confirrns the decision taken by this High Court as also by the other Fligh Courts in u hich the SLPs are still pending, the Income -l-ax ^/ ,,. 9 Department would get the advantage of the liberty that is otherwise protected tn favour of the Revenuc for initiation of fresh proceedings from the disposal olthese matters at a much later stage which would be advantageous and benet-rcial to the Revenue and would be equally disadvantageous and dctrimental so far as interest of the assesses are concerned. As a consequcnce, the Income Tax Department gets an extended period of time for initiation of fresh proceedings.

12. The alarming trend of docket explosion in this Cour1, despite the clear precedent set in Kanakula Ravindra Reddy (l supra), is a matter of grave concern. The Income Tax Department's persistent initiation of fresh proceedings, disregarding the established j udicial pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions piting up on the same issue. l'his deliberate approach not only underrnines the principle of judicial precedent but also strains the judicial resources unnecessarily. The Department's strategy of awaiting the Suprerne Courl'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 thc established legal 10 t'...l position. Such conduct raises serious questions about thc administrative efficiency and the respect for judicial pronounccments, particularly when this Court has already provided a balar-rced apploach by preserving both the Revenue's rights and assesses lnterests

13. Another aspect which needs to be considered is that in lact it should have been realized by the Income Tax Depa(ment itself and should have lound out via media in ensuring that proceedings under Sections 148-4 and 148 should not have been issued in a l-aceless manner, at least till the Hon'ble Supreme Court decidc the twelve hundred (1200) odd SLPs which itis already seized ofor, at least the Income Tax Department should havc fbund out so tlle remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 148, other than in a laceless manner, the proceedings should have been deferred rvithout 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 sarne issue This again, the lncome Tax Department, has not been able to givc a convincing reply, except for the fact that such a decision if at all 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 level 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 similar nature, on the one hand when the High Court is struggling to reduce its pendency, such notices which are under challenge in this rvrit petition are forcing the assessee to knock the doors of this High Court resulting in flling of huhdreds of new writ petitions which in the long run not only afftcts the disposal of the writ petitions but also consumes substantial time of the Bench in hearing these matters again and again on daily basis. Admittedty, in spite ol the matter before the Hon'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 majority of High Courts of different States on the same issue; and to make things further worse, the Income Tax Department IS showing audacity by issuing notices continuously under Sections 148-A and 1 ..1 12 148 through the jurisdictional Assessing Olficer whereas it ought to have been only in the faceless manner

14. [n the case of BANK OF INDIA vs. ,{SSISTANT COMMISSIONER, INCOME TAXrr, on an issue u'hether it was justifiabte 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 llench of the Fligh Courr ol Bornbay he.ld at paragraph No.25 as under, viz., : "25. It/r. Paridwalla has rightly drawn out attention to the decision of thls 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. lTOr3 of which one of us (Justice G.S. Kulkarni) was a member, wherein the Coun 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 decisions being "not acceptable' was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. 11ZOZS1 l7() raxmann.com 422 (Bombay)l 1' '2 Jt9z81 I ti It'R 589 (Bornbay) '3 IZOZ+1 165 taxmann.com 58 l/300 Taxman 452 (Bombay.r 'o ltsozl raxrnarp.corn l6155 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 genurnely felt that the claim of the assessee was not tenable and that, rf 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 rn 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 authorrties 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 furnrsh no ground for not following it unless its operation has been suspended by a competent court. lf this healthy 14 rule is not followed, the result will only be undue harassment to assesses and chaos in administratton of tax laws.

12. We have deait with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observatrons made by the High Court, have been harsh on the officers. lt is clear that the observations of the High Court, seemingly vehement, and apparenfly unpalatable to the Revenue, are only rntended 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 adjudicating authorities and the appellate authorities to the requirements of ludicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them."

15. 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 lJigh Coufts all of wl-rom have taken a consistent stand that the action of the Income Tax Deparlment being violative of the 7 15 liinance Acr,2020 and Finance Act,2021. Now, in order to protect the interest of the.Revenue as also that of the assessee, it would be trite at this juncture, if we dispose of the writ petition with an observation/d irection that the disposal of the instant writ petition in terms of the judgment rendered by this I{igh Court in the case of Konkonsla Rtvindra Reddy (l supra) shall however be subject to the outcorne of the SLPs which were filed by the Income Tax Departn.rent and rvhich is pending consideration before the Hon'ble Supreme Court

16. ln 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 lurther be burdened which otherwise can be decided and disposed of as a covered matter. 17 . So far as the interest of the Revenue is concemed, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs

1.6 36,37 and 38 olthe order-which, for ready reference,.is reproduced hereunder: 'l \

36. For all the aforesaid reasons, the impugned notices rssued and the proceedings drawn by the respondent- Department is nerther tenable, nor sustarnable. The notlces 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 Seqtron 147 and 148 would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the prrnciples that when the initiation of the proceedings rtself was procedurally wrong, the subsequent orders also gets nullified 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 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, permifted the Revenue to proceed under the substituted provisions, and this Court allowing the petrtioJrs only on the procedural flaw, the right ,/ 17 I 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 ofAshish Agarwal, supra.

18. We would only furlher like to make observations that since we 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 Ravindru Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, preferred by the lncome Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision of this I{igh Courl in the case of Ktnakala Ravindra 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 Courl in the pending SLP 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 1S concemed. As a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed. \ /r 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 ol Kankanalu Ravindra Reddy (l supra). There shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed. To, //TRUE COPY// A SD/. M.NAGAMANI REGISTRAR '\?I3!', '.) sEcI ON OFFICER '1 . The Principal Commissioner of lncome Tax, Hyderabad-4, l.T. Towers, [\rlasab Tank, Hyderabad - 500004.

2. The lncome Tax Officer, Ward 15('l ), Hyderabad/ I T Tower, AC Guards, Masab Tank, Hyderabad Telangana-500004

3. Union of lndia, Represent by Secretary Ministry of Finance North Block, New Delhi-1 10 001

4. One CC to SRI THANNERU CHAITANYA KUMAR, Advocate. [OPUC] 5. One CC to SRI K. SUDHAKAR REDDY, (Sr SC FOR INCOIVE TAX) [OPUC] 6. Two CD Copies. o esx KS I I ::-====:... 1HE S r.1 '1 o\1 2 B A|JE 2025 i 9 HIGH COURT DATED:0310712025 ORDER WP.No.18885 of 2025 ALLOWING THE WRIT PETITION WITHOUT COSTS &q o