The High Court · 2025

ORDER, (per Hon'ble Sri Justice Narsing Rao Nandikonda) Heard Mr.T.Chaitanya Kumar, learned counsel for the petitioner and Mr.K.Sudhakar Reddy, learned Senior Standing Counsel for the Income Tax Department appearing tbr 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 l48A and 148 of the Income Tax Act, 1961 (for short 'the Act') or the assessment orders those have been passed under Section 147 ol thc 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 l48A of the Act and the subsequent initiation ofproceedings 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 ol' Finance Act, 2021 w.e.f., 01.04.2021 onwards, proceedings 2 under Section 14gA of the Act as also under Section 14g of the Act ought to have also been issued and proceeded in a laceless I manner

4. The contention of the petitioner is that the issue of proceedings being in violation of the Financ e Act, 2021 i.e., the impugned notices under Section l4gA and Section t4g of the Act not being issued in a faceless manner, have already been dealt with and decided by this Courr in the case of ICANKANALA 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 r4gA 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 Notificarion tg/2022 d,ated29.03.2022. The said judgment passed by this court has arso been subsequently foilowed in a large nurnber of writ petitions which were allowed on similar terms. ' [(2023) 156 raxmann.com l Tg (Telangana)] 3

5. Down the line, we find that the same issue has also been decided against the Revenue by vanous High Courts i.e., by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Courl in the case of RAM NARAYAN SAH vs. UNION OF INDIA3, Punjab and Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the case ol SRI VENKATARAMANA REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAX'where the issue was in respect of international taxation, Bombay High Court in the case ol ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICBR, INTERNATIONAL TAXATION6 which is again on intemational taxation and central circle, High Court of Himachal Pradesh in the case ol GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKIIBHAI ' lzoz+1464 ITR 430 (Born) '1Q024) 156 taxmann.com 478 (Gauhati)l " [(2024) 165 taxmann.com 115 (Punjab & Haryana)1 ' L2024) 167 taxmann.com 4l 1 (Tctangana)l " L2024) I 66 taxmann.corn 679 (Bornbay)l ' [202.4) 165 taxmann.com I l3 (Himachal Pradesh)] \ \ l 4 DAHYABHAI RADADIYA vs. INCoME TAx OFFICER, WARD 3(3X5)8, Jharkand High Courl in rhe case of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasrhan High Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICBR & ANOTHER and batch of writ petitionsro 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 GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 of 2023), dccided on 25.09.2024.

6. Even though the same issue having been decided by a large number of High Courts, we are still confronted with large filing of identical matters on daily 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 ol the Bombay High court in the case of Hexaware Technologies Ltd., (2 supra) as arso the one wr.rich has been decided by this Court in the case of Kanttkala Ravindra Reddy 8:02+ SCC ont_ine Gui 40 t2 "1025 SCC OnLine Jhar2BT 72023 : RI -.tD :4984_DB l -.-1. 1 o 5 (1 supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 before the Hon'ble Supreme Court and the Hon'ble Supreme Court is seized of the matter' In addition, there are about 1200 SLPs also filed arising out of the same issuc being decided by various High Courls'

7. To a query being put to the learned counsel for the Revenue' they have categorically accepted the fact that there is no interim order granted by the Hon'ble Supreme Courl in any of these matters pending befbre 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 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 Iapsed, 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 l48A and under Section 148 of the Act by the jurisdictional Assessing Officer' rather the authorities concemed in the teeth of series of decisions \ \ 6 .-\ by all the major High Courts in India are continuously still initiating proceedings under Section l48A 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 writ petition be disposed of in the teeth of the decision rendered by this Court in the case of Kanakula Ravindra Reddy (l supra), leamed Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Deparlment 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 of the Union of India. It 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 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 Department have not come out with a rnechanism to issue appropriate instructions or to take '/, ./' 7 appropriate steps in ensuring that proceedings under Section 148A 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, i1 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 lirnited to any of these jurisdictional High Coutls' t 0. 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 lncome Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions ofsectionl5lAoftheActandasaresultbynow,morethan600 to 700 petitions have been already got piled up before this High Coufionar-risrr"whichotherwisestandssquarelycoveredbythe judgment of this Court in the case of Kunakals Ravindra Reddy ( I supra). What is also surprising is the fact that though while altowing the writ petitions in the case of Kanakala Ravindra Recldy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners \ 'l l 8 insofar as the liberty which was granted to the Revenue lor initiating fresh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Financ e Act, 2020 anrl the Finance Act,202r. The petitioner assessee would be entitred to challenge or raise the other legal objections if the Revenue initiates fresh proceedings. The Department has made no endeavour in availing the said Iiberty that was reserved for the Revenue. On the contrary, they have been stilt sticking on to the stand, which this High Court as well as many other High Coufts already held to be I L It appears that because of the aforesaid liberty that this High 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 same 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 finally at a later stage if the Hon,ble Supreme Coufi confirms the decision taken by this High Court as also by the orher High Coufts in which the SLps are still pending, the Income .Iax 9 Depafiment would get thc advantage of the liberty that is otherwise protected in favour of the Revenue for initiation of fresh proceedings lrom the disposal olthese 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 Departmentgetsanextendedperiodoftimeforinitiationoffresh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Ksnakala Rtvindra Reddy (l supra)' is a matter of grave concem. The Income Tax Department's persistent initiation ol lresh 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 judiciat 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 \ 1 \ IU posltion. Such conduct raises serious questions about the administrative efficiency and the respect lor j ud ic ial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revenue,s rights and assesses lnterests.

13. Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Department itself and should have found out via rnedia in ensuring that proceedings tunder Sections l4g_A and l4g should not have been issued in a laceless mamer, at least till the Hon,ble Supreme Court decide the twelve hundred (r200) odd SLps which it is already seized ofor, ar least the Income Tax Department should have ibund out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections l4g_A and l4g, other than in a laceless manner, the proceedings shourd have been deferred precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only after the SLp,s are decided by the Honrble Supreme Couft on the very sarne issue. 'l-his 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 "vithout . . _,.{.. ..r ,, r*ri.rtax 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 fbr the Income Tax Department contended that the Dethi High Court dismissed a writ petition of similar nature, on the one hand when the High Courl 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 aflects 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 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 Deparlment. 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 L2 I48 through the jurisdictional Assessing Olficer whereas it ought to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXrr, on an issue wherher 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 Bench of the High Cout of Bombay held at paragraph No.25 as under, viz., : "25. Mr. Paridwalla has righfly drawn out attenlion 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. lTOi3 of which one of us (Justice G.S. Kulkarni) was a member, wherein the Courl 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, followrng are the relevant observations made by the Supreme Court. 'l [rZOzSr l7u raxmann.com 422 (Bombay)l '' [978] I l3 ITR 589 (Bombay) " 120247 I 65 raxrnann.com 58 1/300 Taxman 452 (Ilombay) ' ' ' J t,ro21 trxmann.cont 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 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 this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. lt cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasijudicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellte Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. lf this healthy t+ rule is not followed, the result will only be undue harassment to assesses and chaos in administration of tax laws. 1 2. 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 apparenfly 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 adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." I 5. What is worr),ing this Bench moie is the fact that an endeavour is being made whole heartedly to ensure not to generate furrher litigation on issues which have been laid to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the Income Tax Department being violative of the 15 Finance Lct,2020and 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/direction that the disposal of the instant writ petition in tcrms of the judgment rendered by this High Court in the case of Kankunalu Ravindra Reddy (l supra) shall however be subject to the outcome of the SLPs which were filed by the Income Tax Department and which is pending consideration before the Hon'ble Supreme Coutt.

16. ln the giveri facts and circumstances' this Bench is of the consiclcred opinion that unless and until we do not timely dispose of tnatlers which are squarely covered by the decision of this Coutt and which stands fortified by the decisions of the various other l{igh Courts on the very same issue' the pendency of this High Coufl rvould further 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 ol the Revenue has already bcen considered and protected, as has been observed in paragraphs 't-6 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 notrces 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 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 decrde the other issues raised by the petitioner which stands reserved to be raised and contended in an appropriate proceedings.

38. Srnce 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 Constilution 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 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 l

18. We would only further like to make observations that since we are inclined to dispose of the instant writ petition' conscious of the t'act that the earlier order ol this High Court in the case of Kunakala Ruvin(lra Refuly (1 supra) is subjected to challenge betbrc the Hon'ble Supreme Court in SLP No'3574 of 2024' ple f'er.red by the Income Ta.x Department, we make it clear that \ \ allowing of the instant writ petition is subject to outcome of the I I aforesaid SLP preferred by the Revenue against the decision of this FtighCourtinthecaseofKanakalaRavindraReddy(lsupra). in other words, would mean that either of the parties, if they .l.his. so want, may tnove an appropriate petition seeking revival of this rvrit pctition in the light of the decision of the Hon'ble Supreme Court in the pending SLP on the very same issue' I9. Accordingly, the instant writ petition stands allowed in f'avour of the assessee so far as the issue of jurisdiction t concerned. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed' \ 18 t The consequential orders, if any, also stand set aside/quashed in similar terms as have been passed by this High Courl in the case of Kankunala Rovindra Reddy (t supra). There shall be no order as to costs. Consequently, miscellaneous petitions pending. if any, shall stand closed. ,TRUE COPY// SD/. M. OSMAN ALI BAIG NT REGISTRAR AS { ECTION OFFICER

1. The lncome Tax Officer, Hyderabad-4, l.T. Towers, Masab Tank, Hyderabad -

500004. The lncome Tax Officer, Ward 15(1), Hyderabad/ lT Tower, AC Guards, Masab Tank, Hyderabad Telangana-500004 The Secretary Ir/inistry of Finance North Block, Union of lndia, New Delhi-110 001 One CC to SRI THANNERU CHAITANYA KUIVAR, Advocate [OPUC] One CC to SRI K.SUDHAKAR REDDY, Sr SC FOR INCOME TAX [OPUC] One CC to SRI GADI PRAVEEN KUIUAR, Dy. SOLICITOR GENERAL OF rNDrA [OPUC] Two CD Copies To 2 3 4 5 b 7 PSK. GJP HIGH COURT DATED:03 t07t2025 I ORDER WP.No.1BB58 of 2O2S 'Q;: li c- /,j I1 SEP 825 + .i.'.- \l'|/ --r;:2' t I I ,/ -a ALLOWING THE WRIT PETITTON WITHOUT COSTS I q\ )A o