Gayoor Nasreen v. 1. Assessment Unit

Counsel for the Petitioner : SRI V.V.S.ANKITH Counsel for the Respondents : Ms. BOKARO SAPNA REDDY (SENIOR SC tNcoME TN() The Court made the following ORDER '6 HONOURABLE SRI JUSTICE P.SAM KOSHY AND HON'BLE SRIJUSTICE NARSING RAO NANDIKONDA WRIT PETITION NO.19984 OF 2025 ORDER: (per Hon'ble Sri lttstice P.SanL Koslty) Heard Mr. V.V.S.Ankith, Iearned counsel for the petitioner and Ms.B.Sapna Reddy, learned Senior Standing Counsel for the Incorne Tax Depaltment appearing for the respondent Nos.1 to 3. Perused the record

2. This is a writ petition where the procecdings are either challenged to the nctices which w'ere issued ur-rder Section 1484. and 148 of the Income Tax Act, 1961 (for short'the Act') or the assessment orders those have been passed unLler Section i47 oI the Act which have been assailed.

3. This writ petition is being taken up today only on one of the grounds, that the notices issuecl under Section 148A of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Officer, whereas in terms of the amendment that was brougirt to the Income Tax Act by way of Finance Act, 2021, w.e.f ., 01.04.2021 onwards, proceedings under Section 1484' of the Act as also under Section 148 of the Act ought to have also been issueC and proceeded 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 lmpugned notices under Section 148.{ 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. INCOME-TAX OFFICER1 decided on 14.09.2023 whcreby a batch of writ petitions were allowed and the proceedings initiated under Section 1484 as aiso under Section 148 of the Act were helcl to be bad with consequential reliefs on the ground of it being in rriolation of the provisions of Section 151,4 of the Act lead with Notification 78 / 2022 dated 29.03.2022. The said judgment 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 decided against the Revenue by various High Courts i.e., by thc Bombay High Court in the case of HEXAWARE TECHNC'LOGIES LTD., vs ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS" Gauhati High Court in the case of RAM NARAY;\N SAH vs. UNION OF INDIA3, Punjab and Haryana High Court in t1.e case of |ATINDER ' [(2023) 156 taxrnann.corn 178 (Telangana)] 'yzoz+1464 rR 430 (Born) 'l(2024) 156 taxrnann.corn 478 (Gauhati)l x (, f) ., SINGH BANGU vs. UNION OF IND[A4, and Telangana High Court in the case of SRI VENKATARAMANA REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAXs where the issue was in respect of international taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH VS. INCOME TAX OFFICER, INTERNATIONAL TAXATION6 which is again on international taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat Iligh Court in the case of MANSUKHBHAI DAHYABHAI RADADIYA vs. INCOME TAX OFFICE& WARD 3(3X5)8, Jl-rarkand 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 and batch of writ petitionsto which stood decided on 79.03.2024. 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), decided on 25.09.2024. ^ l(2024) 165 taxrnann.corn 115 (Punjab & Haryana)l '12024) 167 taxrnann.com 41 1 (Telangana)l " 12024) 166 taxrnann.com 679 (Bornbay)l ' 12024) 165 taxmann.com I 13 (Himachal Pradesh)l E2024 SCC online Guj 4012 "2025 SCC Online Jhac287 'o y2023 : RI-JD:4984-DBl -1 4

6. Even though the same issue having beer decided by a large number of I{igh CourLs, we are stili confronteci with large filing of identical matters on daily basis ranging between i to 10 writ petitions. That upon the inshuctions being sought from the Department, they have been taking a solitary ground that the decision of the Bombay High Court rn the case of Hexauare Technologies Ltd., (2 supra) as also thc one which has been decided by this Court in the case of Katakala Raztirrdra Reddy (1. supra) l-ras been subjected to <:hallenge in a Special Leave Petiti<xr i.e., SLP No.3574 oI 2024 before the Hon'ble Supreme Court and the Hon'ble Supreme Court is scized of the rnatter Lr acldition, there are about 1200 SLPs also filed ar ising out of the same issue being decided by various High Courts.

7. To a query being put to the iearned counsel [or the l{evenue, they have categorically accepted the fact that there is no interim order granted by the Hon ble Supreme Court in any oI urese rnatters pending before it. Meanwhile, fresh writ petitions of idenr.ical natur.e are being piled up before this Bench on daily basis and the pendency is getting increased on matter which otherwise has alreac{y been dealt and decided by this very High Court itself.

8. On the one hand, even though the order ot: this Court that was passed as eally ag on 14.09.2023 and more 16 mo:-rths have lapsed, till I n 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 Officer, rather the authorities concerned in the teeth of series of decisions by all the major l{igh Courts in India are continuously still initiating proceedings under Section 1484. 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 Act2021.

9. Upon a query being put as to why can't this writ petition be disposed of in the teeth of tl-re decision rendered by this Court in the case of Kanakala Raoindra Reddy (1 supra)/ learned Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Departmcnt 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 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. \ \ i I I "l 6 ,i .nr- 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 rn ensuring that proceedings under Section 148.4 of the Act as also the assessment orders undel Sectior.r 148 of the Act are kept in-a hold in the light of the decisions decided by the various High Courts, it ',vas submitted by the learned Stancling Counsel that the said steps carr only be taken at the level of CBDT as any such steps would have to bi, taken Pan India and carurot be linrited to any of these jurisdictional High Cour ts

10. As a rcsult of r,r4rich, what we are facing is steep increasc of litigation day in and day out even though varicus olders have been passed by this High Court allowing writ petitio,rs on the very same issue. The Income Tax authorities concerned are stili e\/en no\ / in 2025 also initiating proceedings in contravention to thc provisions of Section

151.4 of the Act and as a result by now, more tharr 600 to 700 petitions have been already got piled up before this High Court on an issue which othelrvise stands squarely covered by the judgment of this Court tn the case o( Ksnakala Raainilra Reddy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in thc case of Kanakala Raoindra Reddy (1 supra), the l)ivision Bench while reserving thc right of the Revenue, has also protec:ed the interest of the I I t'^l t' 7 petitioners insofar as the liberty r,r.hich was granted to the Revenue for initiating fresh proceedings shictly in accordance with the amended provisions of the Act, as amended by the Financ e Act,2020 and the Finance Act, 2021,. 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 liberty that was reserved for the Revenue. On the contrary, they have been still sticking on to the stand, u,hich this High Court as well as many other High Courts already held to be bad

11. It appears that because of the aforesaid liberty that tl-ris High Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a faceless manner, the lncome Tax Department wants to take advantage of the same by protracting these proceedings which would enable them to meet the limitation tl-rat 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 Court conJirms the decision taken by this High Court as also by the other High Courts in which the SLPs are still pending, the Income Tax Departrnent would get the advantage 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 I 8 a\ stage which would be advantageous and beneficia I to the Revenue and would be equaily disadvantageous and detrimenhrl so far as interest of the assesses are concerned. As a consequen:e, the Income Tax Department gets an extended period of time for initiation of fresh proceedings

12. The alarming trend of docket explosion in tl-ris Court, despite the clear precedent set in Kanakala Raoindra Reddy (1 supra), is a matter of grave concenl. The Income Tax Department's p,ersistent initiation of fresh pr oceeciings, disregardir.rg the established judicial prorlouncemen ts, has lcd to an unprecedented surge in iitigation with over 600-700 petitions piling up on the same issue. This deliberate approach not only undermines the principle of judicial precedent but also strains the judicial resources unlecessaril-r.. 'l'he Deparhnent's strategy of awaiting the Supreme Court's decisirn on pending SLPs while continuing to initiate fresh proceedings app('ars to be a calculated move to buv time and circumvent limitation periods, rather than adhering to the established iegai position. Such crnduct raises serious questions about the administrative efficiency and tre respect for judiciai pronoullcements, particularly when this Court has already provided a balanced approach by preserving both the R:ventre's rights and assesses intelests. t t 9

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 ar-rd 148 should not have been issued in a faceless manller, at lcast till the Hon'ble Supreme Court decide the twelve hundrcd (1200) odd SLPs which it is already seized of or, at least the lncome Tax Department should have found out some remedial stePs to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A ancl 148, other than in a faceless rnanner, thc proceedings shoulcl have been deferrecl witl-rout precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only after the SLP's are decided by the Hon'ble Supreme Court on thc very same issue. This again, the Income Tax Department, has not 1,"sn 6[]le to give a convincing reply, except for the fact that such a clecision if at all has to be taken, has to be taken for the wholc of India, and which otherwise has to be by way of a policy decision and that too at the level of Central Board of Direct Taxes. Though the learned Standing Counsel for the Income Tax Department contended that the Delhi Itigh 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 Court resulting in filing of I hundreds of new writ petitions which in the lonl; run not only affects 11 10 the disposal of the writ petitions but also consulnes substantial time of the Bench in l-rearing these matters again and ugain on daily basis Admittedly, in spite of the matter before the Hon'ble Supreme Court l-raving been takeu oll many occasions, the Horible Supreme Court which is seizecl of the matter has been reluctant itr granting any interim protection to the Income Tax Department. Yet, the authorities concernecl at the State 1evel are not ready to accept the verdict passed by a majoritv of High Courts of different States on the same issue; and to make things furthcr n orse, the Income Tax De,partment is shon ing audacity by issuing notices continuously under Sections 148-4 and 148 through the iurisdictiorral Assessing Officer wheleas it ought to have bcer-r only in tl-re facelcss mal-utet 1,4. In thc case of BANK OF INDIA vs. ASSISTANT COMMISSIONE& INCOME TAX11, on an is;ue whether it was justifiable or-r tire part of the Income Tax Departmerrt in not following an order passecl by the adjudicating authority only cin the ground that the appeals are pcnding, the Division Bench of the H:gh Court of Bombay held at paragraph No.25 as under, viz.,: 't 11Lozs1 170 taxrnann.com 422 (Bombay)l -. f , l) 7L "25. Mr. Paridwalla has rightly dra$,n out attention to the <iecision of this Court in Commissioner of Income Tax vs. Smt. Godavaridcvi Sarafi2 as also the recent decision of thc co-ordinate Bench of this Court irr Samp Furniture (P) Ltd. v. ITOI: of which one of us (iustice G.S. Kulkami) was a member, wherein the Court cate[Jorically observcd that thc Revenue having not "accepteC" tlle iudgment of the High Court would not mean that till the sarne is set asidc in a manne'i known to law, it u,ould loose its binding force. Refcrring to the decision of tl.re Supreme Court in Union of India vs. Kamlakshi Finance Corporation Ltd.1a, thc Court obsc.rved that the approacl.r o[ thc officials of Revenue of rrcating tlccisions treing "not acccptable" was criticizcd by the Supreme Court. ln such decision, follor,r,ing are the relcvant observations madc by the Suprcme Court. "6. Sri Rcdcly is perl-raps right ir.r saving that thc officers u.cre not achrated by any mala fidt-.s in passing the impugned orCcrs. They perhaps genuincly fclt that the claim of the assessee was not tcnable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that $,e are not conccrr..cd here r,vith thc corrcctness or otherrr,isc of their conclusion or of any factr-ral malafidcs but with th-e fact that the officcrs, in reaching in theil conclusion, by- passed two appeliate orclers in rcgard to the samc issue which u.cre placed before them, cne of the Ccllcctor (Appeals) ar-rd thc other oI the Tribunal. The High Court has, in our view, rightly criticized this conduct of the Assistant Collcctors and thc harassment to the assessee caused by the failure of these officers to give cffcct to the ordcrs of authorities higher to them in the appellate hierarchy. It cannot be too vehemently emphasizcd that it is of utmost importance that, in disposing of the quasi.judicial issues '' 1tozal t 13 ITR 589 (Bornbay) " 1202+1 I 65 taxrnann.corn 581/300 Taxrnan 452 (Bornbay) 't Jl9l21 taxrnanrl.com 16i55 ELT 433 (SC) -\ \ I L L I i I I I i I i I I ': l i I I I I i I I I n 12 before them, rcvcnue officers are bound by th: clecisions of the appcllate autholities. The order of the App:llte Collector is binding on the Assistant Collectors wolkirrg within his jurisdiction and the older of the Tribunal is bimling upon the Assistant Collectors and the Appellate Cc Ilectors who function undcr thc julisdictior-r of thc Tlibunal. The principlcs of judicial discipline require tl-rat the orders of the highcr appellate authoritics should be followed unreservedly b1, tl.Le subordtrate authorities. The mere fact .hat the order of the appellate authority is not "acceptirble" to the de1.,a116"rl6 - in itself an objectionable phrase - ancl is tl-re subiect matter of an appcal can furnish no ground for not follou,ing it urdess its o|clation has bccn susper-rdcd by a conrpclent court. If this healthy rule is not iollowed, the result will only bc unduc harassment to asscssei and chaos in adrlinistration o[ tax lau,s.

12. Wc have clcalt with tliis aspect at some lcn1,th, becausc it has bcerr suggestecl b), the learned Additional Solicilor Ccneral that thc obscrvations madc by tl.rc High Coult, havc been harsh on the officcrs. It is clcar that the obscrvafions of the High Court, seerningly vchement, aml apparently unpalatable to lhc Revenue, are only intend,rd to curb a tenclenc), in revenue matters which, iJ allowt c{ to become wiclespread, could result in considerablc harassrnent to the asscsses-public witl'rout any ber-refit to the R.:venue. We would like to say that tl-re department should take these obscrvations in the proper spirit. The obserlations of the High Court should be kept in rnind in fuiurc arLd the utmost reg;rrd should bo paid by the adjudicating authcrities and the appellate autllorities to the requircments of judi:ial discipline anc{ the neecl for giving effect to the orders ,rf the higher appellatc autl.rorities which are trinding on thcm " I 13

15. What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been iaid 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 Finance Act, i020 and Finance Ac[2027. Now, in order to protect the interest of the Revenue as also that of the assessee, it would be trite at th.is juncture, if we dispose of the 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 Kankanala Raoindra Reddy (7 supra) shali 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 Court.

16. In the given facts and circumstances, this Bench is of the considered opinion that unless and until we do not timely dispose of' matters which are squarely covered by the decision of this Court and which stancls 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 i I r t4

17. So far as the interest of the Revenue is con:erned, we are of the considered opinion that the interest of the Reverrue has already been considered and protected, as has been observed in paragraphs 36,37 and 38 of the order which, for ready refer,:nce, IS reproduced hereunder: "36. For all thc afolesaid rL,asons, the impugni,d noticcs issued ancl thc proceedings drawr-r by the respont{er t-Dcpartmcnt is neithcr tcnablt, nor sustain;rble. The notices sr, issued and thc proccdure adoptecl bcir-rg pcr sc illcgal, deserr',,s to be aml are accordingly set aside/quashed. As a conse;uenct:, all 1hc impugned ordcrs gctting quashcd, the conscquential orders passcd by the respondent-DepartDren[ pursuar]L [o Lhe noticcs issued under Sectior-r 147 anc{ 148 woulcl also get quashecl and it is ordered accoldingly. The reason we arr: quasl.dng the consequential ordcr is on the principlcs that u,Lcn tl.re rnitiation of the proccedings itself was procedurallv wlong, the subsequent ordcrs also gets rLullified automaticallv.

37. Tho preliminary objechon raised b1, Lhe peLitioner is sustainec{ and all these u,rit petiLions stands rllort ed on dris vely jurisdictional issue. Since the impugned nc tices and orders ate gctting ciuashed on tl-re point of jurisdict on, we arc not inclined to proccecl further and decide dre other issues raised by the petitioner which stands rcservcd to bc raiserl and contended ir-r ar.r appropriate ploceedings.

38. Since tire Hon'blc Supreme Court had, in the case of Ashish Agarwal, supra, as a one-time measule exercising the porvcrs under Article 142 of the Constih tion of India, permittcd the Revenue to procecci uucier the substituted provisions, and this Court allowing the petiti,)tls. oy on the ./' 15 procedural ' flaw, the right con{erred on the Revenue worrld remain reserved to proceed furtl-rer if they so want from the stage of the order of the Supreme Court in the case of Ashish Agarwai, supra."

18. We would only further like to make observations that since we are inclined to dispose of the instant writ Petition, con;cious of the fact that the earlier order of this Fligh Court in the case of Kanakala Raaindra Reddy (1. supra) is subiected to challenge before the Hon'ble Suprem.e Court in SLP No.3574 of 2024, Preferred by the Income Tax l)epartment, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaic{ SLP preferred by the Revenue agairrst the decision of this High Court in the case oi Kanakala Raoinilra i<eddy (1. supra). This, in other word-s, 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

79. Accordingly, the instant Writ Petition stands allowed in favour of the assessee so far as the issue oI jurisdiction is concerned' As a consequence, the impugned notice under challenge under Sections 148- A and 148 stands set aside/quashed. The consequential orders, if any, also stand set aside/quashed in sirnilar terms as have been passed by I L6 this High Court in the case ol Kankarala Raaindra Reddy (7 supra). Tftere shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed //TRUE COPY// SDi- K.BHAVANI SWAMY REGISTRAR TTTANT ECTION OFFICER Hyderabad, Telangana-500028.

1. The Assessment Unit, lncome Tax Department, NatioYral e-Assessment Centre, New Delhi, Room No. 4Oj, rd Floor, E-Ramp, Jawaharlal Nehru Stadium, New Delhi-1 10003. 2. The Income Tax Officer, Ward-10('1), I.T Towers, A.C. (luards, Masab Tank, 3. The Principal Commissioner of lncome Tax-1,, l.T Towr:rs, A.C Guards, 4. One CC to SRI V.V.S.ANK|TH, Advocate [OpUC] 5. One CC ro tVs. BoKARO SAPNA REDDY(SENIbR So tNCoME 6. Two CD Copies Masab Tank, Telangana-500028. TAX) Advocate [OPUC] /Y" To SA TJ HIGH COURT DATED:1 110712025 i .'-:- -_:=: -.:'. -r ?9 [lJE 2025 , /' ORDER WP.No.19984 of 2025 ALLOWING THE W.P WITHOUT COSTS. f\\ \