High Court · 2025

Petition under section 15'1 cPC praying that in the circumstances stated in the affidavit fired in support of the writ petition, the High court may be preased to stay arr further proceedings inciuding coirection of tax pursuant to the Reassessment order 25-12-2024 bearing DrN ,rBA/AST/S/14 7/2024- 25l1071s56308(1) Counsel for the petitioner : SRI M.NAGA DEEPAK fiilt"' for the Respondents : sRt K.suDHAKAR REDDY (sr sc FOR tNcoME The Court made the foltowing ORDER THE HONOURABLE SRIJUSTICE P'SAM KOSHY AND THE HONOURABLE SRTJUSTICE NARSING RAO NANDIKONDA WRIT PETITION No.188 53 of2025 ORDER, (per Hon'ble Sri 'lustice Narsing Rao Nundikonda) Heard Mr.M'Naga Deepak' leamed counsel for the petitioner and Mr'K'sudhakar Reddy' learned Senior Standing Counsel for the lncome 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 andl48oftheIncome,faxAct,lg6l(forshort.theAct,)orthe assessmentordersthosehavebeenpassedunderSectionl4Tof 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 148A of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Ofhcer' whereas in terms of the amendment that was brought to the Income Tax Act by way of Financeldt, 2021 w.e.f., 01.04.2021 onwards, proceedings 2 under Section l4gA of the Act as also under Section l4g of the Act ought to have also been issued and proceeded in a facelcss. manIler.

4. The contention of the petitioner is that the issue ol proceedings being in violation of the Financ e Act, 2021 i.e., the impugned notices under Section l4gA and Section 14g of the Act not being issued in a faceless 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 l4gA as also under Section 148 of the Act wer.e 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 Notification lBlZO22 dated 29.03.2022. The said judgment passed by this court has arso bee, subsequentry foilowed in a large number of writ petitions which were allowed on simirar '[(2023) 156 raxmann.com l7g (Telangana)] ) 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 Coufi in the case of HEXAWARE 'IECHNOLOGIES LTD', vs' ASSISTANT COMMISSIONER oF INCOME TAx & OTHERS2, Gauhati High Coutt in the case of RAM NARAYAN SAH vs' UNION OF INDIAT' Punjab and lJaryana 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 OI'' INCOME TAX5 where the issue was in respect of international taxation, Bombay High Court in the case of ABHTN ANILKUMAR SHAII vs' INCOME TAX OFFICER' INTERNATI0NAL TAXATION6 which is again on intemational taxation and central circte, High Court of Himachal Pradesh in the of GOVIND SINGH vs' INCOME TAX OFFICERT, MANSUKHBHAI Guj arat High Court in the case of 'lzoz+1464 ITR 430 (Bom) 'iQOzq 156 taxmann.com 478 (Gauhati)l 'l(2024) l651aimrinri.'i6m 115 (Ptiniab & Haiya-rid)l '12024) 167 [axmann.com 4i 1 (Telangana)] " L2024) 166 taxmann.com 6T9 (Bombay)l '12024) 165 taxmann.com 113 (Flimachal Pradesh)l ' - 4 DAIIYABHAI RADADIYA vs. tNCoME TAx OFFICER, WARD 3(3Xr8, Jharkand High Courr in the case of SIIyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasrhan High Courr in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petirionsr0 which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court in rhe case of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 ot2023), 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 of identical matters on daily basis ranging between 5 to 10 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 Courl in the case of Kanakala Ravindra Recldy 82024 SCC Online Gg 4012 " 2025 Scq.-Otl{-inc Jhar 287 'u 720 23 : RI-JD:49g4_DB I 7 5 (1 supra) has been subjected to ohallenge in a Special Leave Petition i.e., SLP No.3574 of 2024 before the Hon'ble Supreme Courl and the Hon'ble Supreme Court is seized of the matter' In addition, there are about 1200 SLPs also frled 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 Court in any of these matters pending before it' Meanwhile' fresh writ petitions of identicat nature are being piled up belore 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 find any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hotd 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 3 Act by all the major High Courts in India are continuously still initiating proceedings under Section 14gA of the Act and also initiating pr.oceedings under Section l4g of tl.re Act in contravention to the amenclnents brought into the Income .fax pursuant to the Finance Act,2020 as arso the Finance Acr 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 of Kanakala Ravindra Reddy (I supra), Ieamed Standing Counsel for the Income Tax Depaftment contends that those would unnecessarily burden the Income Tax Deparlment where they would be required to file equal number of s]-ps before rhe 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 rvrit 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 olthis Court as to why the Income Tax Department have not come out with a mecl-ranispr to issue appropriate instructions or to take f 'il appropriate steps in ensuring that proceedings under Section 148,{ 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 ofCBDT 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 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 'l'ax 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 Kanokolu Ravindra Reddy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners 8 insofar as the liberty which was granted to the Revenue for initiating fi.esh proceedings strictly in accordance u,ith the amended provisions of the Act, as amended by the Finance Act, 2020 and the Finance Act,202r. The petitioner assessee would be entitled to challenge or raise the other legal objections if the Reven,e initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was reseled for thc Revenue. On thc contrary, they have been still sticking on to the stand, which fhis High Court as well as rnany other Higlt Courts already held to bc bad.

11. It appears that because of the aforesaid liberty rhat this I{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.thc same by protracting these proceedings which would enable them to meet the limitation that would otherwise come in the way. Likervise, 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 Court confirrrs -;-'-.-'; -- decision taken by ttiii niltr-doiit ds ilso br-tti; oirrii Histl still pending, the Income Tax Courts in which the SLps are I ('

1.1 Department would get the advantage of the libefiy that is otherwise protected in favour of the Revenue for initiation of fresh proceedings from the disposat ofthese 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 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 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 undetmines the principle of judicial precedent but also strains the judicial resources unnecessarily' The Departmenf 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 position. Such conduct raises serious questions about the administrative efficiency and the respect for judicial pronouncements, parlicularly 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 media in ensuring thal proccedings under Sections l4g_A and l4g should not have been issued in a faceless manner, at least till the Hon,ble Supreme Court decide the twelve hundred (1200) odd SLps which it is arready seized ofor, at least the Income Tax Deparlment 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 faceless manner, the proceedings should have been deferred without precipitating the matter fuither intimating the assessee that they shail initiate appropriate proceedings only after the SLp,s are decided by the Hon,ble Supreme Court on the very same issue. This again, the lncome Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all n i') t\ 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 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 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 Coud 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' Admittedty' in spite of the rnatterbeforetheHon'bleSupremeCourlhavingbeentakenon 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 148-4 and -t2 (' 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner.

14. [n thc case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXu, on un ir.r" whether ir was .justifiable on the part of the Incorne Tax Department in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division tsench of the High Court of Bombay held at paragraph No.25 as under, viz., : '25. Mr. 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. Kurkarni) was a member, wherein the court categoricary 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 tts binding force. Refening 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 officiars of Revenue of treating decisions being ,,not acceptable,, was criticized by the Supreme Court. ln such decision, following are the relevant observatrons made by the Supreme Court. ]l gql:, r.T0. raxmann.corn 422 (Bornbay)l '' ilq781 | l3 ITR 58a 1g6,r6ur, 1,3,7zO241165 taxmann.com 5gI/300 Taxman 452 (Bornba1.) / r' 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 thls 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 14 ( r.' rule is not followed, the result will only be undue harassment to assesses and chaos in administration of tax laws. officers

12. We have dealt with this because it has been ,rrr:;::t;tTl"":::l Additional Solicitor General that the observations made by the High Court, have been harsh on the It is clear that the observations of the High seemingly vehement, and Court, apparenfly unpalatable to the Revenue, are only int ended 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 futu shourd be paid by the r.jr.,;,iliff;:[T::Til: 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." I 5 ' what is won)i ing 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 Courts all of whom have taken a consistent stand that the action of the Income Tax Department being violative of the f: 15 F'inance Act,2O20 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/direction that the disposal ofthe instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Retldy (l supra) shall however be subject to the outcome of the SLPs which were filed by the Income Tax Deparlment and which is pending consideration before the l{on'ble Supreme Court.

16. In the given iacts 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 Cou( and which stands fortihed by the decisions ol 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 ancl disposed of as a covered matter' 11 . 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 16 36,37 and 3g 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 per se iresar, deserves ," ;:H":,.:".:"tffiil1: aside/quashed. As a conse all the impugned orders getting quashed, ,n" o. o" nr.li "r"Jo..ii,ltl? :T: ff ::: by th e re s po n de issued under Section 147 quashed and it is o,o","o,"1llal;1;T[ ,:j::, l: 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 "o'un""' ".

37. The preliminary objection raised by the petitioner is sustained and all thi-.se writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are gefting 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 of Ashish Since the Hon,ble Supreme Court had, in the case Agarwal, supra, as a one-time measure the powers under A(icle 142 exercising 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 r/ L7 conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the Court in the case of Ashish order of the SuPreme Agarwal, suPra.

18. We would only further like to make obserwations that since we are inclined to dispose of the instant writ petition' conscious of thefactthattheearlierorderofthisHighCourtinthecaseof Kontrkala Ravindra Reddy (l supra) is subjected to challenge belore 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 HighCourtinthecaseofKanakalaRavindraRedtly(|slpra). I'his, 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 in lavouroftheassesseesofarastheissueofjurisdictionis concemed. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed' , , 18 f.:t 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 Kankanala Rtvintlra Redtly (l supra). There shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed. //TRUE COPY// SD/- L.VIJAYA LAXMI ASSISTANT REGISTRAR it:. SECTION OFFICER Delhi, lndia.

1. The National Faceless Assessment Centre, Income-tax Department, New ", IP ,l^":g:J:Lgli:"1, Ward 1, rVlahabubnasar, Tetansana. J. tne ASSessment Unit, lncome.Tax Department It/inistry"of Finance, 4. One CC to SRI IV.NAGA DEEPAK, Advocate IOPUCI 5. ONE CC tO SRI. K SUDHAKAR REDDiiS;..d;O"N IICOVE TAX) AdVOCAIC 6. Two CD Copies Government of lndia, New Delhi. toPUCl o \ I To SA T )d t;f- L) i ,10 sEP &6 l. { I'ArLttii- -::=2 HIGH COURT DATED:03 tOTt2OZs ORDER WP.No.18853 of 2O2S ALLOWING THE W.P WITHOUT COSTS.