The High Court · 2025

Petition under Section 151 cpc praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the operation of rmpugned order dated 26.12.2023bearing DrN and Notice No. lrBA/AST/s/ 147 t2023-24t losgo4r 47 4(1) for the Assessment year 2019 - 20, issued under Section 147 read with section 144 and section 144Bof the lncome Tax Act, 1961including all consequent/ subsequent notices/ orders/penalties, 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 26.12.2o23bearing DIN and Notice No. lrBtuAST/s/ 14712023-241 1059047 47 4(1)tor the Assessment year 2o1g - 20, issued under section 142 read with section 144 and section 144Bof the lncome Tax Act, 1961incruding afl consequenv subsequent notices/orders/penarties, in the interest of justice Counsel for the Petitioner: SRl. SHEETAL SRIKANTH , Counsel for the Respondent Nos.1,2&4: Ms. B. KAVITA YADAV SENIOR COUNSEL REP SRI GADI PRAVEEN KUMAR, DY.SOLICITOR GENERAL OF INDIA Counsel for the Respondent No.3 : Ms. B. SApNA REDDY, SENIOR COUNSEL FOR THE INCOME TAX DEPARTMENT The Court made the following: ORDER THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITION No.19639 of2025 ORDER, (per Hon'hte Sri Justice Narsing Rao Nandikonda) Heard Mr. Sheetat Srikanth, leamed counsel for the petitioner, Ms. B. Kavita Yadav, leamed counsel appearing lor respondent No. I and Ms. B. Sapna Reddy, leamed Senior Standing Counsel for thc Income Tax Department appearing for the respondents. Perused the record.

2. This is a writ petition rvhere thc proceedings are either challenged to the notices rvhich were issued under Section 148A and 148 of the Income Tax Act, 196l (fbr short'the Act') or the assessment orders those have been passed under Section 147 of the Act which har e hecn 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 of proceedings under Section 148 of the lAct by the iurisctictional Assessing Officer, whereas in terms \- of the amendment that was brought to the Income Tax Act by way 2 l of Finance Act, 2021 w.e.f., 0l .04.2021 onwards, proceedings under Section 1484. ofthe Act as also under Section 148 ofthe 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 of the Finance Act,2O2l i'e', the impugned notices under Section l48A and Section 148 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. INCOIVIE-TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions were 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 ofthe provisions ofsection 15lA of the Act read with Notification l8l2\22 dated2g'03'2022' The said judgment passed by this Court has also been subsequently fbllowed in a large number of writ petitions rvhich were allowed on similar tenns. '[(2023) 156 taxmann.corn 178 ( fclangana)] 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 Bornbay High Coutt in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT CON'IMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF lNDIAs, Punjab and Haryana High Court in the case ol JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana Higtr Courl in the case of SRI VENKATARAMANA RtsDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation, Bombay tligh Court in the case of ABHIN ANILKUMAR SHAH VS. TNCOME TAX OFFICER, INTERNATIONAL TAXATION6 which is again on international taxation and central circle, High Couft of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI 'lzoz+1464 r'r'R 430 (Born) 'l(2024) 156 taxmann.com 478 (Gauhati)l ' l(20)$) 165 taxmann.corn I l5 1l'uniah & Har-vanall '|2O2d 167 raxmann.com -ll I { Ielangana)l " 12024) 166 taxmann.com 679 (Bornbay)l 'L2024) 165 taxmann.com I l3 (I{imachal Pradesh)l 4 DAHYABHAI RADADIYA vs' INCOME TAX OFFICER' WARD 3(3X5)8, Jharkand High Coun in the case of SHYAM SUNDARSAWvs.UNIONOFINDIA9,RajasthanHighCourtin the case of SHARDA DEVI CHHAJER vs' INCOME TAX OFFICER & 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 o12023), decided on25'09'2024'

6.Eventhoughthesameissuehavingbeendecidedbyalarge number of }{igh Courts, we are still confronted with large lrling 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 Courl in the case of Hexaware Technologies Ltd', (2 supra) as also the one which has been decided by this Court in the case of Kanakula Ravindra Reddy *2024 SCC Online Guj 4012 "2025 SCC Onlinc Jhar 287 o y2023 : RI-J D :49 84- Dtl l ' 5 I (l supra) has been subjected to challenge in a Special Leave Petition i.e., SLp No.3574 of 2024 before the Hon,bje Supreme Court and the Hon,ble Supreme Court is seized oi the mafter. In addition, there are about I200 SLps also filed arising out of the same issue being decided by various High Couns. 7. To a query being put to the learned counsel fbr 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, fi"esh 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 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 I4gA and under Section I4g of the Acr by the jurisdictional Assessing Officer, rather the authorities concerned in the teeth of series of decisions 6 IIY1 \ by all the major I Iigh Courts in India are continuously still initiating proceedings under Scction 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,2O20 as also the 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 Kanakala Rtvindra Reddy (l supra), leamed Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Department where they would be required to tile 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 rvould be caused to the interest ofthe 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 1'ax Department have not come out with a mechanism to issue appropriate instructions or to take l I I 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 of the decisions dedcided by the various High Courls, it was submitted by the learned 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 of litigation day in and day out even though various orders have been passed by this Fligh Court allowing writ petitions on the very same issue. The Income Tax authorities concemed are still even now in 2025 atso initiating proceedings in contravention to tlte provisions of Section i51A of the Act and as a result by norv, rnore than 600 to 700 petitions have been already got piled up belore this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kunakala Rovindrt Reddy (t supra). What is also surprising [s the fact that though while altowing the writ petitions in the case of Ktnakoh Ravindra Reddy (1 supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners 8 \i \ insofar as the liberty wh ich was granted to the Revenue for initiating fresh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Finance Act, 2020 and the Finance Act,2O2l. The petitioner assessee would be entitled to challenge or raise the other legal objections if the Revenue initiates fresh proceedings. The Department has made no endeavour in availing the said tiberty that was reserued for the Revenue. On the contrary, they have been still sticking on to the stand, which this High Court as well as many other lligh Coufts already held to be

11. It appears that because of the afbresaid tiberty that this High Court had granted permitting the Revenue lor 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 t{on'ble Supreme Couft confirms the decision taken by this High Courr as also by the other High Courts in which the SLPs are still pending, the Income Tax 7 9 Deparlment would get the advantage of the liberty that is otherwise protected in favour of the Revenue for initiation of fresh proceedings frorn the disposal of these matters at a much later stage which ivould 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 Deparlment gets an extended period of time for initiation of fiesh proceedings

12. 1'he alarming trend of docket explosion in this Court, despite the clear precedent set in Kanakala Ravindra Reddy (l supra), is a matter of grave concem. The Income Tax Department's persistent initiation ol lresh proceedings, disregarding the established.iudicial 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 ol' judicial precedent but also strains the judiciat resources unnecessarily. The Deparlment's strategy of awaiting the Supreme Court's decision on pending SLPs while continuing to initiate lresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than adhering to the established legal 10 \-*l\i\r.J - 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 fact it should have been realized by the Income Tax Department itself and should have found out via media in ensuring that proceedings under Sections 148-4 and 148 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 already seized of or, at least the Income Tax Department should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections l48-A and 148, other than in a faceless manner, the proceedings should have been def'ened without precipitating the matter turther 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 issue' This again, the Income Tax Department, has not been able to give a convincing reply, except fbr the fact that such a decision if at all k 11, i has to be taken. has to be taken for the whole of India, and which otherrvise 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 fbr the Income Tax Department contended that the Delhi High Courl dismissed a writ petition of similar nature, on the one hand when the High Court is struggling to reduce its pendcncy. such notices which are under challenge in this writ petition are lbrcing the assessee to knock the doors of this High Courl resulting in fiting of hundreds of new writ petitions which in the long run not only atlects 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 rnatter bcfbre the I lon'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 Incorne '['ax Deparlment. Yet, the authorities concemed at the State level are not ready to accept the verdict passed by a majority of I ligh Courls o[- different States on the same issue; and to make things further worse, the lncome Tax Department TS showing audacity by issuing notices continuously under Sections 148-A and 72 148 through the jurisdictional Assessing Oftrcer whereas it ought to have been only in the faceless manrter'

14. [n the case of BANK OF INDIA vs' ASSISTANT t' on an issue whether it was COMMISSIONER, INCOME TAXI justiflabte on the part of the lncome Tax Department in not foltowing 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' lTOl3 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 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' " [(zozs) 170 taxmann.com 422 (Bombay)] '' iis;sl 113 ITR 589 (BombaY) " 720241 165 taxrnann.com 581/300 'o itOezl taxmann.com l6155 ELT 433 (SC) A -- 'f axman 452 (Ilombay) n 13 "6. Sri Reddy is perhaps right in saying that the offrcers 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 sufler. 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, righfly cntrcized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of lhese officeFs to give effect to the orders of authoritres higher to them in the appellate hierarchy. It cannot be too vehemenfly emphasized that it is of utmost importance that, in disposing of the quasijudrcial 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 Cottectors 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,, 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. If this healthy t4 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 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 wonying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate furthcr litigation on issues which have been laid to rest by a large number of l{igh Courts all of whorn have taken a consistent stand that the action of the lncome Tax Department being violative oi the 15 Finance Act,2020 and Finance Lct, 2O2l . Now, in order to protect the interest of the Revenue as also that of the assessee, it would be trite at this .|uncture, if rve dispose ol the writ petition with an obser-vation/direction that the disposaI of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Rertdy (l supra) shall however be subject to the outcome of the SI-Ps which were filed by the lncome Tax Department and which is pending consideration before the Hon'ble Supreme Court.

16. tn the given facts and circutnstances, 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 tbftified 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 ol the Revenue is concerned, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs 76 36,3Tand38oftheorderwhich,forreadyreference,isreproduced 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 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 proceedlngs itself was procedurally wrong, the subsequent orders also gets nullif ied automaticallY.

37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very jurisdrctional 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. 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 I 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 of Ashish Agarwal. supra.

18. we would only further rike to rnake observations that since we are inclined to dispose of the instant rvrit petition, conscious of the fact that the earlier order ol this High Cotrrt in the case of Konukala Ravindrs Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Courr in SLp No.3574 of 2024, preferred by the Income Tax Departrnent, we make it clear that allowing ol the instant. writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanukula Ravindra Reddy (I supra). This, in other words, would mean that cither ol the parties, if they so want, may move an appropriatc pctition seeking revival of this writ petition in the light of the decision ol the Hon,ble Supreme Court in the pending SLp on the very sarne issuc.

19. Accordingly. the instanr writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction concemed. As a consequence, the impugned notice under challe-nge under Sections I4g_A and l4g stands set aside/quashed IS I 18 I \..] The consequential orders, il any, also stand set aside/quashed in similar terms as havc been passed by this High Courl in the case of Kankonala Ravindru Reddv (l supra). 'l'here shall be no order as to costs Consequently, miscellaneous petitions pending, if any, shall stand closed. To, //TRUE COPY// SD/. M. OSMAN ALI BAIG ANT REGISTRAR ASSIST t. SECTION OFFICER

1. The Union of lndia, Ministry of Finance, lncome Tax Department, New Delhi - 100 011

2. The Office of Commissioner, lncome Tax Department, Ministry of Finance, Government of lndia, New Delhi - -100 01 1 .

3. The Office of the lncome Tax Officer, Ward 7(1), Hyderabad lT Towers, AC Guards, Masab Tank, Hyderabad - 500 004 Also at. Signature Towers, Sy No. 6(P) of Kondapur, Sy No. 37P Kothaguda, Opp. Botanical Garden, Serilingampally (M) RR District, Hyderabad, Telangana, 500084 lD Hyderabad.itoT. 1 @incometax.gov. in 4. The National Faceless Assessment Center, Income Tax Department, Ministry of Finance, Government of lndia, New Delhi - 100 01 1 . 5. One CC to SRl. SHEETAL SRIKANTH, Advocate [OPUC] 6. One CC to Ms. B. SAPNA REDDY, SENIOR COUNSEL FOR THE INCOME TAX DEPARMENT [OPUC]

7. One CC to SRl. GADI PRAVEEN KUMAR, DY.SOLICITOR GENERAL OF rNDrA [OPUC] 8. Two CD Copies BM lA- HIGH COURT DATED:0910712025 ..\ \ 0 2 sEP 2025 1 ORDER WP.No.19639 of 2025 ALLOWING THE WRIT PETITION WITHOUT COSTS (A- J,q" 1)