Smt Kavitla Lakkapatri v. '1. ssessment 9-nit

HONOURABLE SRI IUSTICE P.SAM KOSHY AND HON'BLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETrrIoN NO.199s2 0F 202s ORDER (per Hon'ble Sri lustice P.Sam Koshy) Heard Mr. A.V.Raghu Ram, Iearned counsel for the petitioner anct Ms.B.Sapna Reddy, learned Senior Standing Counsel for the Income Tax Department appearing for the respondent Nos.1 and 2 Perused the rccord.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 148,4 and 148 of the Income Tax Act, 1961 (for short'the Act') or the assessment orclers those have been passed under Section 1'47 of the Act which have been assailed

3. This writ petition is being taken up today only on one of the grounds, that the notices issued under Section 148A of the Act and the subsequent initiation of proceedings under Section 148 of the Act by tl-re jurisdictional Assessing Officer, whereas in terms of the amenclment that was brought to the Income Tax Act by way of Finance Act,2021 w.e.f .,01,.04.2021 onwards, proceedings under Section 148,{ of the Act as also under Section 148 of the Act ought to have also been issued and proceeded in a faceless manner. 6 HONOURABLE SRI JUSTICE P'SAM KOSHY AND HON,BLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITION NO.1 9952 oF 2025 oRDER (per Hon'btc Sri ltrsttce P'Snlrr Koshy) Heard Mr. A'V Raghu Ram' Iearned counsel for the petitioner and Ms.B.Sapna Recldy' learned Senior Standing Counsel for the Income Tax Department aprpearing for the respondent Nos'1 and 2' Perused the record where the Proceedings are either 2. This is a writ Petition challenged to the rroticc's whidr were issued under Section 148A and 148 of the Income Tax ;\ct, 1961 (for short'the Act') or the assessment orders those have been passecl under Section 147 of the Act which have been assailecl

3. This wrii 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 proceeciings under Section 148 of the Act by the jurisdictionat Assessing Officer' whereas in terms of the amendment that was brought to the Income Tax Act by way of Finance Act, 2027 w.e.f ., 01 04 2021 onwards' proceedings under Section 148A of the Act as also under Section 148 of the Act ought to have also been issued ancl proceec{ed in a faceless manner' 2 4' The contention of the petitioner is that the issue of proceedings \ being in violation of the Financ e Act, 2027 i.e., the impugned notices under section 1484 and section 14g of the Act not beir-rg issued in a facelcss mallner, have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDy vs. INCOME-TAX OFFICER1 decided on 74.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiate<i under section 1484 as also under section 14g of the Act were helcr to be bad with consequcntial reliefs on the ground of it being in violation of the provisions of section 1514 of the Act read with Notification 7g/2022 dated 29.03.20 22. Therurd -jrdr-"rlt passed by this Court has also been subsequently followed in a large number of writ petitions which were allowed on similar terms.

5. Down the line, we find that the same issue has also been decicled 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 the case of RAM NARAYAN SAH vs. UNION OF INDIA3, Punjab and Haryana High Court in the case of |ATINDER ' [(2023) 156 raxrnann.corn 178 (Telangana)] 'lzoz+1464 ITR 430 (Born) ' l(2024) 156 taxmann.corn 478 (Gauhati)l I I 3 SINGH BANGU vs. UNION OF INDIAI, 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, Bombay High Court in the case of ABHIN ANILKUMAR SHAH VS. INCOME TAX OFFICER, INTERNATIONAL TAXATION0 lvhich 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 DAHYABHAI RADADIYA vs. INCOME TAX OFFICER, WARD 3(3)(5)8, Jharkand High Court in the case of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAIER vs. INCOME TAX OFFICER & ANOTHER ancl batch of writ petitionslo which stood decided on 79.03.2024. Similar views have also been taken by the Division Bench of Calcutta l{igh Court in.the case of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T L690 of 2023), decided on 25.09.2024 " l(2024) 165 taxrnann.corn I l5 (Punjab & Haryana)l '12024) I 67 taxmann.corn 4l I (Telangana)l " 12024) 166 taxrnann.com 6T9 (Bornbay)l '12024) 165 taxmann.com I l3 (Himaclial Pradesh)l 82024 SCC Online Guj 4012 '2025 SCC Online Jhar287 72023 : RJ- JD : 49 84-DB l o '

6. Everr 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 tl-re 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 Hexau.tare Technologies Ltd., (2 supra) as also the one wlricl-r has been decided by this Court in the case of Kanakala Raaindra Reddy (l supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 before the Hon'ble Supreme Court ancl the Hon'ble Supreme Court is seized of the matter ln addition, there are about 1200 SLPs also filed arising out of the same issue being clecided 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 l{on'ble Supreme Court in any of these matters pending before it. Meanwhile, fresh writ petitions'of identical nature are being piled up before this Bench on daily basis and the penclency 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 74.09.2023 and more 16 months have lapsed, till i'1*{' r.'. .,: 5 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 1484 and under Section 148 of the Act by the jurisdictional Assessing Officcr, rather the authorities concerned in the teeth of series of clecisions by all the rnajor High Courts in lndia are continuously still initiatir-rg proceedings under Section 14BA 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 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 renc'lcred by this Court in the case of Kanakaln Raoindra Reddy (7 supra), Iearncd Standing Counsel for the Income Tax Department contencls that those would unnecessarily burden the Income Tax Department where they would be required to file equal number of SLPs bcfore 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 learned 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 of the SLps pending before the Hon'ble Supreme Court and the fact that the petitioner 1S already enjoying the benefit of interim protection. L 6 \c--1 -I Nonetheless, on the earlier query of this Court as to why the Income Tax Department have not come out with a mechanism to issue appropriate instructions or to take appropriate steps in ensuring that proceedings undcr Section 1484 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 decided by the various I{igh Courts, 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 limitecl to any of these jurisdictional High Courts.

10. As a result of which, what we are facing is steep increase of Iitigation 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 concerned are still even now in 2025 also initiating proceedings in contravention to the provisions of Section

151.4 of the Act arrd 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 stancls squarely covered by the judgment of this Court in the case of Kanakala Raoindra Reddy (7 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Raaindra Reddy (7 supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the I 7 petitioners insofar as the liberty which 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, 2021. The petitioner assessee would Lre 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 liberty that was reserved for the Revenue. On the contrary, they have been still sticking on to the stand, which this High Court as well as many other High Courts already held to be bad

17. It appears that becaus6 of the aforesaicl 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 aclvantage of the samc by protracting these proceedings which would enable tl-rem 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 anci finally at a later stage if the Hon'ble Supreme Court confirms the clecision taken by this High Court as also by the other High Courts in which the SLps are still pending, the Income Tax Department would get the advarrtage of the liberty that is otherwise protected in favour of the Revenue for initiation of fresh proceedings from the disposal of these matters at a much later 8 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 concerned. As a consequence, the Income Tax Department gets an extended period of time for initiation of fresh .proceedings. L2. The alarming trenci of clocket explosion in this Court' despite the clear precedent set in Kanakala Raaindra Retldy (7 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 unprececlented surge in litigation with over 600-700 petitions piting up on the same issue' This deliberate approach not only undermines the principle of iudicial precedent but also strains the iudicial 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 lcgal position' Such conduct raises serious questions about the administrative eff iciency and the respect for judicial pronouncements, particularly when this Court has already provided a both the Revenue's rights and balanced aPProach bY Preservtng assesses interests. 9

73. 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 procce,dings under Sections 148-,{ and 148 should not have been issuecl in a faceless manner/ at least till the Hon'ble Supreme Court decide the twelve hundrecl (1200) odd SLPs which it is already seizecl of or, at least the Income Tax Department should have found out some remec{ial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-4 and 148, other than in a faceless manner, the proceedings should have been deferred without precipitating the mattcr 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 same issue. This again, the Income'lax I)epartment, has not been able to give a convincing reply,.except for the fact that such a decision if at all has to be taken, has to be taken for thc ra,hole of India, and which otherwise has to be by way of a policy clecision and that too at the level of Central Board of Direct Taxes. 'fhough the learned standing Counsel for the Income Tax Department contenclcd 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 pender-rcy, such notices which are under challenge in this writ petition are forcing the assessee to knock the doors of this High Court resulting in fiiing of 10 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 ancl 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 Department Yet' the authorities concerned at tl-re 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 fur*rer worse, the [ncome l ax Department is showing audacity by issuing notices continuously under Sections 148-A and 148 through the jurisdictional Assessing Officer whereas it ought to have i I been onlY in the faceless manner' L4. In the case of BANK OF INDIA vs' ASSISTANT COMMISSIONER, INCOME TAXtl' on an issue whether it was justifiable 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 Court of Bombay held at paragraph No.25 as under, viz', : " 11ZOZs) 170 taxmann.corn 422 (Bornbay)l \ t1 "25- Mr. Paridwalla has rightly drawn out attention to the decision of this Court in Commissioner of Income Tax vs. Smt. Godavaridevi Saraft2 as also the recent decision o[ the co-ordinate Bench of this Court in Samp Furniture (P) Ltd. v. ITOtr of which one of us (Justice G.S. Kulkami) was a member, wherein the Court categorically observcd that thc Revenue having not "accepted" the judgment of thc High Court r,r,oulcl not mean that till the same is set aside in a manner known to [ar.v, it would loose its binding force. Referring to the decision of the Suprt,me Court in Union of India vs. Kamlakshi Finance Corporation Ltd.rr, the Court observed that the approach of the officials of Revenue of treating tlccisions bcing "not acceptable" was criticized by the Supreme Court. In such decision, following are the relevant observations made bv the Supreme Court. "6.Sri Recldy is perhqps right in saying that the officers wcre not achrated by any mala fides in passing the impuenecl orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was acceptcd. the Revenue would suffer. But what Sri Reddy overlooks is that wc are not concerned hcre with the correchtess or otherwisr, of their conclusion or of any factual malafides but with thc fact that the officers, in reaching in their conclusion, by- passed two appellate orders in regard to the same issue which werc placed before them, one of the Coll(:ctor (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 cffect to the orders of authorities higher to them in the appellate hierarchv. lt cannot be too vehemently emphasized that it is of utmost importance tl.rat, in disposing of the quasijudicial issues '' 1toz81 t l3 ITR 5ft9 (Bombay) " 120241 165 taxrnann.com 581/100 Taxrnan 452 (Bornbay) 'o 119921 tu*.ann.corr l6155 ELT 433 (SC) 12 ...j before them, revenue officers are bout-tcl by thc decisions of thc appellate authorities. Tl.re ordcr 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 Appcllate Collectors who function under the jurisdiction of thc Tribunal. The principles of judicial disciptine require that thc orclels o[ the higher appellate authorities should bc follon'ed unrcservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to thc department - in itself ah objectionable phrase - and is the subiect matter of an appeal can furnish no ground for not following it unless its operation has been suspeuded b1' a competent court. If this healthy rule is not followed, thc result will only be tndue harassment to assesses ancl cl.taos in administration of tax laws.

12. We have dealt with this aspect at some length, bccause it has been suggested by the learned Additional Solicitor General that the observations made bir thc Fligh Court, have been harsh on the officers. It is clcar tl.tat tlre otrscrvations of the High Court, seemingly vchement, and apparerrtly unpalatable to the Revenue, are or y intondcd to curb a tenc{ency in revenue matters whicl.t, if allowed to become widespread, could result in consic{erable harassmeut to the assesses-public without any benefit to the Reveuuc- Wc would like to say that the departmcnt shoulcl take these observaLions in the proper spirit. Thc observations of the High Court should be kept in nincl in futurc and the utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of iurlicial disciplinc and the need for giving effect to the orders of tl.re higher appellate authorities which are binding on them." 7 15. What is r.t orrying this Ber-rch more is the fact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been raid 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 Financ e Act,2020 and Financc 4ct,2027. I.,-ow, in order to protect the interest of the Revenue as also that of the assessee, it would be hite at this juncture, if we dispose of thc writ petition with an observation/ direction that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankatala Raoindra Reddy (7 supra) shall however be sub.iect to the outcomb of the slps which were filed by the Income Tax Department and which is pending consideration before the Hon'ble Supreme Court.

76. In the given facts and circumstances, this Bench is of the consiclerecl opiniorr that unless and until we clo not timely clispose of matters which are squarely covered by the decision of this Court ancl which stands fortified by the decisions of 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 and disposed of as a covered matter I

1.4 17 . So far as the interest of 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 36' 37 and 38 of the order which, for readv reference' is reproducecl hereunder: "36. Forall the aforesaid reasons, the impugned noticcs issrrcd and the proceedings drawn by the respondent-Deptrrtmcnt is neither tenable, nor sustainable The notices so issued and the procedure adopted being per sz illegal' deserves to bc and are accordingly set aside/quashed As a consequence' all the impugned orders getting quashed' the consequential orrlers passer-l by the respon<lent-DePartment pursuant to the noticcs issuerl untler seition 147 and 148 woulcl also get quashecl anrl it is ordered accordingly Thc reason wc are quashing the consequential order is on the principles that when the initration of the proceedings itself was procedurally wrong' tirc subsequent orders also gets nullified automatically'

37. The preliminary obiection raised by thc petihonet ts sustained and all these writ petitions stands allowed on this very jurisdictional issue' Since the impugned notices ancl ottlers are getting quashed on the point oI iurisdichon' we are t.rot inclined to proceed further and decidc the other issur:s raised by the petitioner which stands reserved to be raisecl and contended in an apProPriate Proceedings' Since the Hon'ble SuPreme Court had, in thc case 38. of Ashish Agarwal, suPra, as a one-time measure cxercising the of the Constitution of India' powers under Article 142 proceed under lhe substiiu tccl permitted the Revenue to provisions, and this Court allowing thc petitior-rs or-rln or tl-re I 15 proceclural flaw, the right conferret remain reservecr to proceed further stage of Lhe order of trre s,preme a,r, Agarwal, supra." on the Revenue wourcJ ,nu, so want from the rurt in the case of Ashish \

19. We woulcl onl1, further Iike to make observations that since we arc. inclinecl to dispose of the instant writ petition, conscious of the fact that the earlier orcler of this High Court in the case of Kanakala Raaindra Rertrty (1 supra) is subjected to charenge before the Hon,bre Supreme Court in SLp No 3574 of 2[24,preferred by the Income Tax Departmer-rt' we make it clear that a,owing of the instant writ petition is subject to outcome of the aforesaid SLp preferred by dre Revenue against the decision of this High Court in the case of Kanakala Raoindra Redrry (7 supra) This, in other worcrs, wourd mean that either of the parties, if they so want, may move an appropriate petition seeking revivar of this writ petition in dre right of the clecision of the Hon'ble Supreme Court in the pending SLp on the very same issue. 79. Accordingl_v, the instant Writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction is concerned. As a consequence' the irnpugned notice uncrer challenge under sections 14g_ A and 14g stancis set a.side/quashed. The consequential orders, if any, also stand set aside/quashecl in similar terms as - --. ,,rudr rerms as have been passed by '.-(:_:-:x..- - this High Court in the case of Kankanala Raoitdra Rcilily (7 supra) There shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall !!--<-l stand closed To, //TRUE COPYII SD/- A.H.S.GOWRI SHAN KAR ASSISTANJ REGISTRAR * _.. '- SECflON OFFICER .10 003. Hyderabad - 500004. l The Assessment- Unit, Nationar Faceress Assessment centre. rncome Tax ?up9,Ir."f !,fr4inistry of Finance, Room No. 401 . 2nd f ioor, e_ijmpl -" Jawaharlal Nehru Stadium, Delhi , 1 2. The.lncome Tax Officer, Ward-10(j), l.T. Towers, A.C. Guards, Masabtank, 3 One CC to SRl. A. V. RAGHU RAM, Advocate tOpUCl 4. One CC to SRt. BOKARO SAPNA REDDY (sENioR Sb rrucoue rnx; 5. Two CD Copies ?n- loPUcl BIM BSR ' !?!!!t!t rt! !!;'!! HIGH COURT DATED:1110712025 .-a: srA r6: o,,'. O3 SEP zffi '\. \. / \ ORDER WP.No.19952 of 2025 ALLOWING THE WRIT PETITION WITHOUT COSTS r &4