The High Court · 2025

Counsel for the petitioner: SRI p. SRIKANTH RAO counsel for the Respondent Nos.1 To 3: MS. BoKARo sApNA REDDY (sENtOR SC TNCOME rAx) Counsel for the Respondent No.4: SRI GADI PRAVEEN KUMAR, Dy. SOLICITOR GENERAL OF INDIA The C6urt made the following: ORDER a. TTIE HONOURABLE SRI JUSTTCE P.SAM KOSHY AND THE HONOURABLE SRTJUSTICE NARSING RAO NANDIKONDA WRIT PETTTI ON No.20 182 of2025 ORDER, (per Ilon'ble Sri Juslice Narsing Rtto Nandifunda) Heard Mr. P.Srikanth Rao, lcarned counsel lor the petitioner and Ms. I).Sapna Reddy, leamed Senior Standing Counsel for the Income Tax Department appearing for the respondents. Perused the record'

2. This is a writ petition rvhere the ptoceedings are either challenged to the notices which were issued under Section l48A andi48oftheIncomeTaxAct,lg6l(forshort'theAct')orthe assessment orders those have been passed under Section 147 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 l48A ol the Act and the subsequent initiation ofproceedings under Section 148 of 1 tne e.c\ by the jurisdictional Assessing Officer' whereas in terms oftheamendrnentthatwasbroughttothelncomeTaxActbyway ofFinanceAct,202lw.e'f',01'04'2021onwards'proceedings 2 under Section l48A of the Act as also under Section l4g of the Act ought to have also been issued and proceeded in a faceless manner.

1. The contention of the petitioner is that the issue of proceedings being in violation of the Irinanc e Acq 2021 i.e., the impugned notices under Section l48A and Section l4g of the Act not being issued in a f-aceless rranner, have already been dealt with and decided by this Court in the case ol KANKANALA RAVINDRA REDDY vs. INCONIE-TA-X OFFICI]RT decided on 14.09.2023 whercby a batch of writ petitions were allowed and the proceedings initiated under Section r 4gA as also under Section 148 of the Act were held to be bad with consequential reliefs on the ground ol it being in violation of- tl.re provisions o(. Section I 5lA of the Act read rvith Notitlcation lBl2O22 dated 29.03.2022. The said judgment passed by this Court has also been subsequenrly fbllowed in a large number of writ petitions which were allowed on similar ' tQ023) l -56 raxmann.com l 7g (Telangana)l 3

5. Down the line, we find that the same issue has also been decided against the Revenue by various tligh 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 oiJATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the case of SRT VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMN{ISSIONER OF INCOIVIE TAX5 where the issue was in respect of intemational 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 l{imachal Pradesh in the case of GOVIND SINGH vs' INCOME TAX OFFICERT' Gujarat l{igh Court in the case of MANSUKHBHAI 'lzoz+1464 ITR 430 (Bom) ' l(2024) 156 taxmann.com 478 (Gauhati)l ^ [(2024) 165 taxmann.com 115 (Puniab & Flaryana)] ' [2024) 167 tdxmann.corn 411 (Telangana)] " 12024) 166 taxmann.com 679 (Bornbay)l 'iZOZ+|165 taxrnann.com I l3 (Ilimachal Pradesh)l 4 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, Rajasrhan l{igh Courr in the case ol SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsr0 which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Courr in the case of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 of 2023), decided on25.09.2024.

6. Even though the same issuc having been clecided by a large number of High Courts, we are still conflonted with large filing of identical matters on daily basis raneing between 5 to 10 writ. petit.ions. -lhat upon thc instmctions being sought from the Department, they have been taking a solitary ground that the decision of the Bombay High Courl in the case <>t Hexow,nre Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakola Ravindrtt Reddy 82024 SCC Onlinc Guj 4012 '2025 ScLqllline Jhar 287 'o 12023 : RI-JD :49 84-DB I 5 (1 supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 before the Hon'ble Supreme Coud and the Hon'ble Supreme Court is seized of the matter' In addition, there are about 1200 Sl'Ps also filed arising out of the same issue being decided by various High Coutts' 7 . To a query being put to the leamed counsel for the Revenue' they have categorically accepted the fact that there is no interim order granted by the Hon'ble Supreme Court in any ol these matters pending belore it- Meanwhile, fiesh writ petitions of identical nature are being pited 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 datc, 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 concemed in the tecth of series of decisions 6 by alt the ma-jor High Courts in India are continuouslv still initiating proceedings under Section l4gA of the Act and also initiating proceedings under Section l4g of the Act in contravention to the amendments brought into the Income .fax Act pursuant to thc 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 rendered by this Court in the case of Kanakala Ravindra Reddy (l supra), learned Standing Counsel for the Income Tax Deparlment contends that those would unnccessarily burden the Income Tax l)epartn-rent where they would be required to file equal number of SLps before the Hon'ble Supreme Court and it would be further bur.dening the exchequer of the Union of India. [t was also the contention of the leamed Standing Counsel that no prejudice would be caused to the interest ofthe petitioners in case if this rvrit petition is kept pending till the linalization of the SI_ps pending belore the Hon,ble Supreme Court and the fact that the petitioner is already enjoying the benefit of interim protection. Nonethcless, on the earlier query of this Court as to why the Income Tax Department have not conte out with a mechanism to issue appropriate instructiorrs or to take appropriate steps in ensuring that proceedings under Section 148A ofthe Act as also the assessment orders under Section 148 ofthe Act are kept in a hold in the light ofthe decisions dedcided by the various High Courts, it was submitted by the- leamed Standing Counsel that the said steps can only be taken at the level of CBDT as any such steps would have to be taken Pan India and cannot be limited to any of these julisdictional High Courts'

10. As a result of which, what we are t-acing is steep increase of litigation day in and day out even though various orders have been passed by this High Couft 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 the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakula Ravindra Reddy ( 1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners 8 insofar as the liberty which was granted to the Revenue for initiating fresli proceedi,gs strictly in accordance *,ith the amended provisions of the Act, as amended by the Finance Act, 2020 and the Finance Act,202l. 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. ()n the contrary, they have been still sticking on to the stand, rvl.rich this High Courl as vn.ell as many other High Courts alreacly held to be bad.

11. It appears that because of the aforesaid liberty that this High Courr had granted permitting the Revenue for. initiating fresh proceedings as a one-time measure in a faceless manner, the Income I'ax Department wants to take advantage of the same by protracting these proceedings which would enabrc thern to meet the limitation that would otherwise come in the way. Likewisc, if the w'rit petition is kept pending for a considerable long period of time and finally at a later stage if the Hon,ble Supreme Court confirms the decision taken by this High Court as also by ttre other High Courts in r.vhich the SLps are still pending, the Incomc Tax 9 Department would get the advantage of the liberty that is otherwise protected in favour of the Revenue tbr initiation of lresh proceedings from the disposal of these matters at a much later stage which would be advantageous and beneficial to the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concemed' As a consequence' the lncome Tax od of time 1br initiation ol fresh Department gets an extended Peri proceedings.

12. The alarming trend of docket explosion in this Court' despite the clear precedent set in Kanakalo Ravindra Redtlv ll supra)' is a matter of grave concem' The Income Tax Depaftment's persistent initiation of fresh proceedings, disregarding the established iudiciat pronouncements, has led to an unprecedentcd surge in litigation 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 unnecessarily' The Department's strategy of awaiting the Supreme Courl's decision on pending SLPs while continuing to initiate fresh proceedings appears to be a calculatcd move to buy time and circumvent limitation periods, rather than adhering to the established legal 10 posltlon. Such conduct raises serious questions about the administrative efficiency and the respecr fbr judicial prououltcemcnts, particularly when this Court has already provided a balanced approach by preserving both the Revenue,s rights and assesses tnterests. \

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 fbuncl out via media in ensuring that pr.oceedings under Sections 14g-A and I4g should not have been issucd in a faceless nlanncr, at least till the Hon,ble Supreme Clourt decide the trvelve hundred (1200) odd SLps which it is already seized ol.or, at least the Income Tax Department should have fbund out some remedial steps to ensure that wherever the authorities intend to initiatc p.occedings under Sections l4g-A and 14g. other than in a faceless manner, the proceedings should have been deferred without precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only after the SLp's are decided by thc lJon'ble Suprerne Couft on the very same issue. This again, thc Income Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all a. 11 has to be taken, has to be taken for the whole of India, and which other-wise has to be by way of a policy decision and that too at the level ol Central Board of Direct Taxes. Though the learned Standing Counsel for the Income Tax Depaftment contended that the Dethi High Court dismissed a writ petition o1 similar nature, on the one hand when the High Court is struggling to reduce its pcnder-rcy, such notices which are under challenge in this writ petition are forcing the assessee to knock the doors of this High Courl resulting in filing of hundreds of new writ petitions which in the long run not only affects the disposal of the writ petitions but also consumes substantial time of the Bench in hearing these matters again and again on daily basis. Admittedly, in spite of the matter before the Hon'ble Supreme Court having becn taken on many occasions, the Hon'ble Supreme Court which is seized o1'the matter has been reluctant in granting any interim protection to the Income Tax Department. Yet, the authorities concerned at the State level are not ready to accept the verdict passed by a majority of High Courls of different States on the same issue; and to make things further worse, the Income Tax Department is showing audacity by issuing notices continuously under Sections 148-A and 12 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner.

14. In thc casc o1- BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXIr, on an issue whether it was justifiable on the parl of the Income Tax Department in noL following an orcler passed by the adjudicating authority only on the ground that the appeals are pending, the Division Bench of the I{igh Court ol Bombay held at paragraph No.25 as under, viz., : "25. Mr. Paridwalla has righfly drawn out attention to the decision of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Court in Samp Furniture (p) Ltd. v. lTOi3 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 astde 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. 'l I{ZOZs I 170 taxrnann.com 422 (Bombay)l '' 1t9281 I t3 ITR 589 (Bombay) " 1Z0Z+1 I 6-5 taxrnann.com 5 8 l/300 Taxman 452 (Bombay) 'o ltgOZltaxmann.com 16/55 ELT433 (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 thei|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 conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy lt cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasijudicial issues before them, revenue officers are bound by the decisions of the appellate authorities' The order of the Appellte Collector is binding on the Assistant Collectors working within his jurisdiction and . the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities The mere fact that the order of the appellate authority is not "acceptable" to the department - in itself an objectionable phrase - and is the subiect matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. lf this healthy 14 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 apparenfly unpalatable to the Revenue, are only intended to curb a tendency in revenue rnatters whjch, 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 lo the requirements of ludicial discipline and the need for giving effect to the orders . of the higher appellate authorities which are binding on thern."

15. What is \vorrying this Bench more is the fact that an endeavour is being made whole irearledly to ensure rlot to generate further litigation on issues which have been laid to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the Income Tax Department being violative of the L5 FinanceAcL,2020andFinanceAct'2021'Now,inordertoprotect the interest of the Revenue aS also that of the aSSeSSee, it wouid be trite at this juncturc, if we dispose of the writ petition with an observation/directionthatthedisposaloftheinstantwritpetitionin tenns of the judgment rendered by this High Court in the case of Kunkanala Ravindrs Reddy (l supra) shall 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 Supremc Cour1.

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 fortified by the decisions of the various other High Courts on the very same issue,, the pendency of this High Court would furlher be burdened which otherwise can be decided and disposed of as a covered matter' ll . So far as the interest of the Revenue is concemed' we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs

1.6 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 proceedrngs 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 prelimrnary objection raised by the petrtioner is sustained and all these writ petitions stands allowed on this very jurisdtctional issue. Since the impugned notices and orders are getting quashed cn 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, ln the case of Ashish Agarwal, supra, as a one-time measure exercising the powers under Artrcle 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 t7 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 furlher like to make observations that since we are inclined to dispose of the instant writ petition, conscious of the fact that the earlier order of this High Court in the case of Kanakakt Ravintlra Redtly (l supra) is subjected to challenge before the Hon'ble Supreme Court in St,P No.3574 of 2024, preferred by the Income Tax Deparlment, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision ofthis High Court in the case of Konakala Ravindra Reddy (.1 supra)' This, in other words, wottld mean that either of the parties, if they so want, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Supreme Court in the pending SLP on the very same issue'

19. Accordingty, the instant writ petition stands allowed in t-avour of the assessee so lar as the issue of jurisdiction 1S concerne<l. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed' t I 18 The consequenlial orders, if any, also stand set aside/quashed in similar terms as have been passed by this High Coulr in the case of Kankontlo Ruvindra Reddy (l supra). 'I'here shall be no order as to costs Consequently, miscellaneous petitions pending, if any, shall stand closed. //TRUE COPY// SD/. M.NAGAMANI ASSISTANT REGI TRAR SECTI FICER '1 . lncome Tax Officer, Circle 3('1), Hyderabad Signature Towers, Kondapur, Kothaguda Opp. Botanical gardens, Serilingampally Ranga Reddy, Hyderabad, 500084 of Finance Govt. of lndia, New Delhi.

2. The Principal Commissioner of lncome Tax - ll, Hyderabad Signature Towers, Kondapur, Kothqguda Opp. Botanical gardens, Serilingampally Ranga Reddy, Hyderabad, 500084 3. The National Faceless Assessment Centre, lncome Tax Department Ministry 4. The Secretary, Union of lndia, Ministry of Finance 166-8 North Block, New 5. One CC to Sri P. Srikanth Rao, Advocate [OPUC] 6. One CC to Sri cADl PRAVEEN KUMAR, Dy SOLICITOR GENERAL OF rNDrA [OPUC] 7. One CC to Ms. Bokaro Sapna Reddy (Senior SC lncome Tax) [OPUC] 8. Two CD Copies Delhi - 1 10 001 . TJ PSK (A- I I I To, HIGH COURT DATED:1410712025 ORDER WP.No.2O182 ot 2025 It{E S r4 r(. Ga) \ 15 sEP 2U5 ) ALLOWING THE WRIT PETITION WITHOUT COSTS ( \cd r\