HEXAWARE TECHNOLOGIES LTD v. ASSISTANT COMMISSIONER OF INCOME TAX OTHERS

Counsel for the Petitioner: SRI B. KRISHNA REDDY Counsel for the Respondents: SRI K. SUDHAKAR REDDY, SENIOR STANDING couNSEL FOR MS. BOKARO 9APNA REDDy (SEN|OR SC TNCOME TAX) The Court made the following: ORDER THE HONOURABLE SRI JT]S-I-ICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTTCE NARSING RAO NANDIKONDA WRIT PETITION No.20l8l of 2025 ORDER, @e r Hon ble Sri .lustice ,\'za rirrg Ruo Nundikonda) Heard Mr. B.Krishan Rcdd,r'. learned counsel lor the petitioner and Mr.K.Sudhakar Reddy, learned Senior Standing Counsel for the lncome Tax Department appearing for the respondents. Perused the record

2. This is a writ petition rvherc thc proceedings are either challenged to the notices which u'ere issued under Section l48A and 148 of the Income Tax Act, 196l (for short 'the Act') or the assessment orders those have bccn passed under Section 147 of the Act which have been assailed

3. This writ petition is being takcn up today only on one of the grounds, that the notices issued under Section l4ttA of the Act and the subsequent initiation ol'procccdings under Section 148 of the Act by the jurisdictional Assessing Ofticer, whereas in terms of the anrs,ndment that was brought to the Income Tax Act by way \ of F'inance Act, 2021 w.e.f-', 0l .04.2021 onwards, proceedings 2 under Section l48A of the Act as also under Section l4tt of the Act ought to have also been issued and proceeded in a f-aceless manner 'fhe contention ol' the petitioner is that the issue of 4. proceedings being in violation of the Finance Act' 202 I i e'' the impugned notices under Section 148,{ and Section 148 of the Act not being issued in a t'aceless manner' have already beer-r dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs' INCOME-TAX OFFICERT decidcd on 14.09.2023 whereby a batch of writ petitions were allo"vcd aud the procecdings initiated under Section l48A as also LtLrdc'r Section ol'the Act wcre held to be bad with consequential relict-s on thc ground of it being in violation of the provisions of Section l5l A ol the Act read with Notification l8l2}22 dated 29'03 2011' 'the said judgment passed by this Court has also been subsequentl;- toliorved in a large number of writ petitions which were allowed on similar ,l48 terms. '[(2023) I56 taxrnann.com 178 (Telangana)l 3

5. Down the [ine, we find that the same issue has also been decided against the Revenue by various l{igh Courts i.e., by the Bombay High Court in the case o{' HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIAT, punjab and Haryana High Court in the case of JATINDE,R SINGH BANGU vs. UNION OF INDIAI, and Telangana High Court in the case of SRI VENKATARAMANA R.NOOY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 uhcre lhe issuc was in respect of intemational taxation, Bombay t{igh Court in the case of ABHIN ANTLKUMAR SHAH vs. INCOME TAX OFFTCER, INTERNATIONAL TAXATION6 which is again on inremational taxation and central circle, High Court ol Ilirnachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case ol- MANSUKHBHAI 'lzoz+1464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauhati)l 't(2024N65 taxmann.com 115 (Punjab & Haryana)l ' [2024) l6] taxmann.com 4l I (Telangana)l " [2024) 166 taxmann.com 679 (Bombay)l '[2024) [65 taxmann.com I l3 (Himachal pradesh)] 4 DAHYABHAI RADADIYA VS. INCOME TAX OFFICER' WARD 3(3X5)8, Jharkand High Court in the case ol SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CIIHAJER 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 Court in the case of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & OIIS (M.A.T 1690 of 2023), decided on25.09.2024.

6. Even though the sarne issue having been decidecl by a large number of High Courts, we are still confronted with lalge filing ol identical mattcrs on daily basis ranging between 5 to l0 writ petitions. That upon thc instructions being sought fiom the Department, they have been taking a solitary ground that the decision of the Bombay High Court in the case ol' He-wwtre Technologies Lttl., (2 supra) as also the one which has becn decided by this Court in the case of Kunakalo Rovindru Reddy *zoza Sbqont-ine Guj 4012 " 2025 SCC OnLine Jhar 287 12023, RJ-J t) :4984-DI) l o ' 5 (l supra) has been subjected to challenge tn a Spccial Leave Petition i.e., SLP No.3574 of 2024 before the Hon,ble Supreme Court and the Hon'ble Supreme Court is seized of the matter. In addition, there are about 1200 SLPs also fited arising our ol the same issue being decided by various High Courts.

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 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 pendency is getting increased on matter which otherwlse has already been dealt and decided by this very High Court itself-.

8. On the one hand, even though the order ol 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 sreps to either hold back issuance of notice under Section l48A 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 rnajor High Courts in India are continuously still initiating procecdings under Section 148,4 of the Act and also initiating proccedings under Section 148 of the Act in contravention to the amendments brought into the lncotne Tax Act pursuant to the Finance Act, 2020 as also the F-inance Act 202 l' g. 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 Kanakola Ravindra Reddy (l supra)' leamed Standing Counsel for the Incorne Tax Depaftment contends that those would unnecessarily burden the Income Tax Department where they would be recluirecl to lile equal number of SLPs before the Hon'ble Suprcme Clourt and it would be further burdening the exchequer of the tlnion of lndia' lt was also the contention of the leamed Standing Counsel that no prejudice would be caused to the interest of the petitioners in case if this writ petition is kept per-rding tillthefinalizationoftheSLPSpendingbeloretheHon'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 Tax Department llave not come out with a mcchanism to issue appropriate instructions or to take 7 appropriate steps in ensuring that proceedings under Section l4gA of the Act as also the assessment orders under Section l4g of the Act are kepr in a hold in the tight of the decisions dedcided bv 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 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 High Court allowing writ petitions on the very same issue.'lhe Income Tax authorities concerned are still even now in 2025 also initiating proceedings in contravention to the provisions of Section l51A of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Coum on an issue which otherwise stands squarely covered by the .judgrnent of this Court in the case of Kanakala Ravindra Reddy ( I supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanskala Ravintlro 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 liberly which was granted to the Rcvenue 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, 202 I . Thc petitioner assessee would be entitled to challenge or raise the other legal objections if the Re'" enue initiates fresh proceedings. 'l'he Department has made no endeavour in availing the said tiberty that was reserved for the Revenue. On the contrary, they havc been still sticking on to the stand, which this High Court as well as many other High Courts already held to be 1 l. It appears that because olthe aforesaid liberty that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-time rTreasure in a faceless manner, the Income Tax Department wanls to take advantage ol the same by protracting these proceedings which would enable them to meet the limitation that u,ould otherwise corne in the way. Likewise, if the writ petition is kept pending lbr a considerable long period of time and finally at a later stage if the I{on'ble Supreme Court confirms the decision taken by this High Court as also by the other High Courts in which the SLPs are still pending, the Income 'lax 9 Department would get the advantage of the liberty that is otherwise protected in lavour of the Revenue for initiation of fresh proceedings lrom 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 Income Tax Department gets an extended period of time for initiation of fresh proceedings

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanokulo Rovindra Reddy (l supra), is a matter of grave concem. The Income Tax Department's persistent initiation of fresh proceedings, disregarding the established judicial pronouncemcnts, has led to an unprecedented surge in litigation with over 600-700 petitions piling up on the same issue. This deiiberate approach not only undermines the principle of judicial precedent but also strains the judicial 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 legat 10 position. Such conducl raises serious questions about the administrative efficiencl and the respect lor judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revenuc's rights and assesses lnterests

13. Another aspect which needs to be considered is that in fact it should have been realized by the lncome Tax Department itself and should have found out via ntedia in ensuring thal proceedings under Sections 148-.4 and 148 should not have been issued in a faceless manner, at least till thc Hon'ble Supreme Court decide the twelve hundred (1200) odd SLPs which it is already seized of or, at least the Incorne 1-ax Deparlrnent should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 148, other than in a faceless manner, the proceedings should have been det'erred without precipitating the matter further intirnating the assessee that they shalt initiate appropriate proceedings only after the SLP's are decided by the Hon'ble Supreme Cour.t on the very same rssue. This again, the Income'fax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all 11 has to be taken, has to be taken for the whole of tndia, and which otherwise has to be by way of a policy decision and that too at the level of Central Boald of Dircct -I-axes. Though the leamed Standing Counsel fbr the lncome 1'ax Department contended that the Delhi High Cout dismissed a writ petition of similar nature, on the one hand when the l{ igh Court is struggling to reduce its pendency, such notices which are under challenge in this writ petition are fbrcing the assessee to knock the doors of this High Court resulting in tiling olhundreds 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 befbre the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the rnatter has been reluctant in granting any interim protection to the Income Tax Depaftment. Yet, the authorities concemed at the State level are not ready to accept the verdict passed by a majority of High Cqrts of dift'erent 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 72 148 through the jurisdictional Assessing Olficer wher.eas it ought to have been only in the faceless manner

14. In the case ol BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXr', on an issue whether ir was j ustiliabte on the part of the Income Tax Departrnent in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division tsench of the High Court of Bombay held at paragraph No.25 as under, viz.. : "25. Mr. paridwalla has righ y drawn out attention to the decision of this Court rn Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of thts 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 havtng not "accepted" the judgment of the High Courl 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 of{icials of Revenue of treating decisions bejng ,,not acceptable,, was criticrzed by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. I70 taxmann.com 422 rBornhal.)J t,',1.20251 '[I978] il3 tTR 589 (tsombay) " 1ZOZI1l65 taxmann.com 581/300 ]-axman TtOS2l raxmann.com l6155 EI_ 1433 (SC) 452 (Bombal ) ,', 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 genurnely 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 wjth 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 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 hrgher to them in the appellate hierarchy. lt cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasryudicial 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 Tnbunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the iurisdiction of the Tribunat. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authoritres. The mere fact that the order of the appellate authority is not "acceptable', to the department - rn 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 - 1l

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 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 Hrgh Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespreaq, could result in constderable harassment to the assesses-public without any benefrt to the Revenqe. 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."

15. What is worrying this Bench more is the fhct that an endeavour is being made whole heartedly to ensure not to generate lurther 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 Departrnent being violative of the 15 Finance Act,2020 and Finance Act,202l. Now, in order to protect 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 observation/direction that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kunkunala Ravindra Reddy (l supra) shall however be subject to the outcome of the SLPs which were hled by the Income Tax Department and which is pending consideration befbre the Hon'ble Supreme Courl

16. In the given f'acts 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 dccisions 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 ofas a covered matter. 17 . 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 76 36,37 and 38 of the order which, for ready ref_erence, is reproduced hereunder:

36. For all the aforesaid reasons, the tmpugned notices tssued and the proceedings drawn by the respondent- Department is neither tenable, nor sustainable. The notices so issued and per se iresar, deserves,"':: T;":,J"":::ffiil":: asideiquashed. As a cons o rders setti ns q uashed,,r" ;;.1:i: I:":l :::::; by the respondenGDepartment pursuant to the notices issued under Section 14i quashed and it is ,:j::" lJ are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the sut )sequent orders also gets nurified automaticary. j;:;fi;?[ ",.0"'."0

37. The preliminary objection raised by the petrtioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are gefting quashed on the point of jurisdiction, we are not jnclined to proceed further and decide the other issues raised by the petitioler which stands reserved to be !.aised and contended in an appropriate proceedings. 38 exercis of Ashi Since the Hon,ble Supreme Court had, in the case sh Aganayal, supra, as a one-time measure ing the powers under Article 142 of the ution of lndia, permitted t he Revenue to proceed he substituted provisions, and this Court allowing the petitions .only on the procedural flaw, the right under t Constit 17 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 like to make observations that since we are inclined to dispose of the instant writ petition, conscious of the fact that the earlicr order of this High Cour-t in the case of Kanakala Ravindra Reddy (I supra) is subjected to challenge before the Hon'ble Suprerne Court in SLp No.3574 of 2024, preferred by the Income Tax Department, we make it clear that allowing of the instant.writ petition is subject to ourcome of the aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravindro Reddy (l supra). This, in other words, 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 rhe Hon,ble Supreme Court in the pending SLp on the very same issue.

19. Accordingly, the instant writ petition stands allowed favour of the assessee so f'ar as the issue of jurisdiction concemed. As a consequence, the impugned noticc under IS challenge under Sections 148-,{ and f4g stands set aside/quashed. The consequentiai orders, if any. also stand set aside/quashed in similar tenns as have becn passed by this High Court in the case ol Kankanala Ravindra Redtly (l supra). There shall bc no order.as \ to costs Consequently, miscellaneous petitions pending, i I.any, shail stand closed. To, //TRUE COPY// SD/- AHMED ABDULLAH KH AN A SISTANT REGISTRAR SECTION OFFICER 1 2 J lncome Tax Officer, Ward 1, Khammam , Telang The Principal Chief Commissioner of lncome Tax The National Faceless Assessment Centre lncome of Finance, G overnment of .lndia, New Delhi 4. The Secretary, Union of lndia, Ministry of Finance, 'l 5. One CC to Sri B. Kristfna Reddy, Advocate [OpUC] 6. One CC to Ms. Bokaro Sapna R-eddy (SC foitncom6 Tax) [OpUC] 7. Two CD Copies Delhi 1 10 00 1 yderabad, Telangana. Tax Department, Ministry 66 B North Block, New TJ BSR w ':,}. :;- --- - -: 4 . "ffi.{r;}: .jn#*-ll HIGH COURT DATED:1410712025 ORDER WP.No.20181 of 2025 1HE S14 )c (, I L) \i L) 2 s JiJL 2025 '\, r \ tlr ..ii)..jIa1, (r( (\ .// ALLOWING THE WRIT PETITION WITHOUT COSTS I ^d4 fu"