Sri Vodala Rajender v. THE HONOURABLE SRI JUSTICE NARSING RAO

and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICER| decided on 14.09.2023 whereby a batch of rvrit petitions were allowed and the proceedings initiated undcr Section l48A as also under Section 148 ofthe Act werc held to bc bad ivith consequential reliefs on the ground of it being in violation of the pror,'isions of Section 151A of the Act read with Notification l8l2o22 dated 29.03.2022. The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions ra-lrich were allowed on sirnilar terms. 'l(2023) 156 ta.xmann.com I 78 t l elan-qana)l .,

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 Court in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSTSTANT 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 JATINDER 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 rhe issue was in respect of intemational taxation, Bombay High Court in the case of ABHIN ANILKUNIAR SHAH vs. INCOME TAX OFFICER. INTERNATIONAL TAXATION6 which is again on intemarional taxation and central circlc, High Courl of Himachal pradesh in the case ol GOVIND SINGII vs. INCOME TAX OFFICBRT, Gujarat High Court in the casc of MANSUKHBHAI 'zlzoz+1464 ITR 430 (Born) 'K2024) 156 taxmann.com 178 (Cauhati)l 't@024) 165 taxmann.com I l5 (l,unlab & Haryana)l '[2024) [67 taxmann.com 4l I ('l-elangana)] " [2024) 166 taxmann.com 679 (I]ombay)l '[2024) [65 taxmanu.corn I l3 (l{imachal Pradesh)] 4 DAHYABTIAI RADADIYA vs. INCOME TAx OFFICER, WARD 3(3)(5)8, Jharkand High Court in rhe case of SHyAM SUNDAR SAW vs. UNION OF INDIA9, Rajasrhan Ftigh Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of wr.ir petirionsr0 which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Coun in the case of GIRDHAR GOPAL DALMIA vs. UNTON OF INDIA & ORS (M.A.T 1690 of 2023),decided on25.09.2024.

6. Even though the same issue having been decided by a large number of High Courts, u,e arc still conlltrnted n,ith large filing of identical matters on daily basis ranging berrveen 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 ol- Hexaware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Ktnukala Ravindra Reddy 8Z0Z+ SCC Online Gui 4012 '2025 Scc+)ffinc Jhar 287 72023 : RJ-JD :4984-DB I I o I n 5 (l supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 ol 2024 before the Hon'ble Supreme Court and the l{on'ble Suprcme Coufl is seized of the matter. In addition, there are about 1200 SLPs also filed arising out of the same issue being decided by various l{igh Courts.

7. To a query being put to the learned counsel for the Revenue, they have categorically accepted the lact that there is no interim order granted by the t{on'blc Supreme Court in any of these matters pending belore it. Meanwhile, fresh writ petitions of identical nature are being piled up belbre 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, titt date, wc do not frnd any remedial steps having been taken by the lncomc Tax Deparlment to take appropriate steps to either hold back issuancc of notice under Section 1484. and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions 6 \ by all the major High Courls in India are conrinuously still initiating proceedings under Section l48A of rhc Act and also initiating proceedings under Section I 48 o I the Act in contravention to the amendments brought into thc lncome Tax Act pursuant to the Finance Act,2020 as also thc [;inence Act 2021.

9. Upon a query being put as to why can't this q.rit petition be disposed of in the teeth of the decision rendered by this Court in the case of Kanokila Ravindro Reddy (l supra). learned Standing Counsel for the Income Tax Departmcnt contcnds that those would unnecessarily burden the Income T'ax Departilerrt rvhere they would be required to file equal number o1' Sl_frs before the Hon'ble Supreme Court and it would be fur.ther hurdening the exchequer of the Union of India. It was also thc contcntion of the leamed Standing Counsel that no pre.judice w,oulcl he causcd to the interest of the petitioners in case ilthis writ petirion is kept pending till the flnalization of the SLPs pending befbre 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 Cout as to why the Income Tax Department have not colne out with a mechanism to issue appropriate instructior.rs or to take 7 appropriate steps in ensuring that proceedings under Section l48A of the Act as also the assessment orders under Section 148 of the Act are kept in a hold in thc light ol'the decisions dedcided by the various High Courts, it was subrnitted by the leamed Standing Counsel that the said steps can only be taken at thc 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 titigation day in and day out even though various orders have been passed by this High Court allowing writ petitions on the very same issue. The Income Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section 151A of thc Act and as a result by now, more 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 casc ol Kanakola Ravindra Reddy (l supra). What is also surprising is the tact that though while allowing the writ petitions in the case ol Kanakala Ravindra Reddy (l supra), the l)ivision Bench while reserving the right of the Revenue, has also protected tl-rc interest of the petitiqlrers \ 8 \ insof'ar as thc liberty which was gr.anted to the Revenue tbr initiating fresh proceedings strictly in accordance *,.ith the arnendecr provisions of the Act, as amended by the Finance ,\ct, 2020 and the Finance Act, 2021. The petitioner assessee woulcl be enritled 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 Revenuc. 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 hcld to be I I. It appears that because of the aforesaid libertl, that rhis High Court had granted permitting the Revenue lbr initiating ticsh proceedings as a one-time measure in a faceless rnanner, the Income Tax Department wants to take advantage of the same b-v protracting these proceedings which would enable thern to rrleet the limitation that would otherwise corne in the w.ay. Likewise, if the writ petition is kept pending for a considerable long period of rime and finally at a later stage if the Hon,ble Suprerne Court conflrms the decision taken by this High Court as also by rhe other Lligh Courts in rvhich the SLps are still pending, the [ncourc Tax ,i^ 9 I Department 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 mattcrs at a much [ater stage which would be advantageous and beneficial to the Revenue and would be equally disadvantageous and detrimental so f-ar as interest of the assesses are concemed. As a conscquence, the Income Tax Department gets an extended period of tirne fbr initiation of fresh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanskalu Ravindro Retttty (l supra), is a matter of grave concern. The Income Tax Department's persistent initiation of fresh proceedings, disregarding thc established judicial pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions piling up on rhe same issue. -lhis deliberate approach not only undermines the principle of judicial precedent but also strains the judicial resourccs unnecessarily. The Department's strategy of awaiting thc Suprernc Court,s dccision on pending SLPs while continuing to initiate licsh proceedings appears to be a calculated move to buy tirne 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 lor judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revenue's rights and assesses rnterests

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 fbund out via media in ensuring that proceedings under Sections 148-.4 and 148 should not have been issued in a laceless 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 lncome Tax Deparlment should have f,ound out some rernedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A.and 148, other than in a laceless manner, the proceedings should have been def'erred without precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only after the SLp,s are decided by the llon'ble Supreme Couft on the very same issue. This again, the Income Tax Department, has not been able to givc a convincing reply, cxcept for the fact that such a decision il at all / ,/ ? 11 t'l 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 J'axes. Though the [carned 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 Fligh Court 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 daity basis. Admittedty, in spite ol the matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of thc rnatter has been reluctant in granting any interim protection to the I ncorne Tax Department. Yet, the authorities conccmed 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 t thing$ fufther worse, the Income Tax Deparlment is showing audacity by issuing notices continuously under Sections t48-A and 72 148 through the .iurisdictional Assessing Officer whereas it ought to have been only in the faceless manner.

14. In the case ol BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXrr, on an issue whether it was justifiable on the part of the lncome Tax Deparlment 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 olBombay held at paragraph No.25 as under, viz., : "25. lvlr. Paridwalla has righ y drawn out attention to the decision of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafr2 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. 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 woulcl loose its binding force Referring to the decision of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.i4, the Court observed that the approach of the officials of Revenue of treating decisrons being ',not acceptable,, was criticized by the Supreme Court ln such decision, following are the relevant observations made by the Supreme Court. 'l ttzOZSt 170 raxmann.corn 422 (Bombay)l 12 Jtez81 I l3 I'fR 589 (Bombay) " IZOZ+1 165 raxrnann.com 5g l/300 Taxman 452 (Bombay) 7S921ra\mann.com l615-5 EI_T 433 (SC) ,/ 13 "6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer- But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual malafides but with the fact that the officers, in reaching in their conclusion, by-passed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticized this conducl 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 Assrstant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the hrgher 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 1_4 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 thrs 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 apparen y 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 departmenl 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 worrying this Bench more is the tact that an endeavour is being rnade 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 Depaftment being virtlative of the 6; 15 Finance Act,2O20 and Finance Act,2021. Now, in order to protecr 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 obserwation/direction that the disposat of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (1 supra) shall however be subject to the outcome of the SLPs which were hled by the lncome 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 stands tbrtified 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

17. So tar 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 38 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 the procedure adopted being per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to the notices issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically.

37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very jurisdrctional issue. Since the impugned notices and orders are getting 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. 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 proceduraj flaw, the right 1 t 77 confered 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 onry fufther like to make observations that since we are inclined to disposc of the instant writ petition, conscious of the fact that rhe earlier orcler of this High Court in the case of Kanakula Ravindra Reddy (l supra) is subjected to challenge befbre the Hon'ble Supreme Court in SLp No.3574 of 2024, preferred by the l.come Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP prelerred by the Revenue against the decision of this IJigh Court in the case ol Kanakalo Ravindra Reddy (l supra). This, in other rvords, rvould 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 thc very same issue.

19. Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the lssue of jurisdiction IS concemed. As a consequence, the impugned notice under cl'rallenge under Sections 148-A and l4g stands set aside/quashed I 18 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 Konkanols Ravindra Redt{, (t supra). 1.here shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed. //TRUE COPYII r sD/- SISTAN M.NAGAMANI T REGISTRAR \ sECTtoN OFFTCER 3:?#;3,1""lS:,?t ",Tb y3;." One CC to SRt. A V RAGHU RAM Advocate tOpUCI One CC to Ms J SUNTTHA (SR SC FOR TNCOM TAX) topucl ; ? ! J,oBbnX,,,," rs, Opp. Botanical Two CD Copiesw To 1 2 3 4 KKS PSK 2E AUE 2ffi '+ f..( a) --=_--r \ I I I l l HIGH COURT DATED:1410il2025 ORDER WP.No.201t6 ot 2O2S ALLOWING THE WRIT PETITION WITHOUT COSTS 8 \8