Gooal Reddv Sureddv v. Assessment Unit, National Faceless Assessment

Heard Ms. Ayyagari Jayashree, learned counsel lor the pctitioner and Mr.Ganesh Bandi leamed counsel representing Mr.K.Sudhakar Reddy, learned Senior Standing Counsel for the Income Tax Depaftment appearing for the respondents. Perused thc record

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section l48A and I 48 o I thc Income l-ax Act, I 96 I (for short 'the Act') or the assessrnent orders those have been passed under Section I47 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 the jurisdictional Assessing Officer, whereas in terms of the amendrnent that was brought to the Income'l'ax Act by way 2 of Financc Act. 202 1 w.e.f ., 0 1 04.2021 onward r' proceedings under Section 148A ofthe Act as also under Section 148 ofthe Act ought to have also been issued and proceede J in a faceless manner.

4. The contention of the petitioner is tha the issue of proceedings treing in violation of the Finance Act,2021 i'e'' the impugned nol.ices ur.rdcr Section 148A and Sectior I 48 of the Act not being isstred in a faceless mannet', have alread' been dealt ivith and decided by this Court in the case ol KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFI'ICERT decided on 14.09.2()2f whereby a batch of writ petitions v'ere aliowed and theproceedir,gsinitiatedunderSectionl48Aasal;ounderSection 148 of the .A.<;t rvere held to bc bad with conscquen:ial reliefs on tl.re ground of it l;eing in violation of the provisions of Section l5l A of the Act read with Notification l8l2}22 dated2g'0 i 2022' The said judgment pas;sed by this Courl has also been subseqrtently followed ir-r a largc number o1- writ pctitions which were al lorved on similar terms. ' l(2023) I -56 taxmann.com I 78 ( I-elangana)l r",.'(lt'. 3

5. Down the line, we frnd that the same issue has also been decided against the Revenue by various High Coults i'e', by ttre Bombay High Court in the case of HEXAWARE 'IECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER Ol. INCOME TAX & OTHERS2, Gauhati I{igtr Court in the case of RAM NAIIAYAN SAH vs. UNION OF INDIA3, Punjab and Ilaryana High Courl in the case of JATINDER SINGH BANGU vs. IJNION OF INDIA4, and'felangana High Court in the case ol' SRI VT]NKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONEIL OF INCOME TAX5 where the issue was in respcct of intemational taxation, Bombay l-ligh Court in the case ol ABIIIN ANILKUMAR SHAII vs. INCOME TAX OFFICER' INTERNA'I'IONAL TAXATION6 which is again on international taxation and central circte, High Couft of Hirnachal Pradesh in the case of GOVIND SINGH vs' INCOME TAX OFFICERT, Gr-rjarat Iligli Court in the case of MANSUKHBHAI ' lzoz+1464 I't'R 430 (Bom) ' [(2024) 156 taxmann.r:om 478 (Gauhati)] " I(2021) 165 taxmann.corn i l5 (Punjab & Ilaryana)l ' 12024) 167 taxtnann.corn 41 1 (Telangana)l " 12024) 166 taxrnann.corn 679 (Bombay)l '12024) 165 taxrnann.com I 13 (llimachal Pradesh)] 4 I)AHYABIIAI RADADIYA vs. INCOME 1.,\X OFFICER, WARD 3(3)(5)8, Jharkancl l{igtr Court in the t ase of SIIYAM S[INDAR SAW vs. trNlON C)F tNDIAe, Rajasrl ,irr IIigh Coun in the case ol'SHAIIDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHEII and batch of rvrit l'rctitionsro u4rich stood decidcd on 19.03.2024. Similar vicws hal,: also beerr taken by the Division Bcnch of Calcutta High Court in the casc ol GIRDHAR GOPAL DALMIA vs. UNION Or INDIA & ORS (M.A.T 169{) of 2023), dccidcd on25.09.2021. (r. Everr though the sarne issue having bcen cr ccided by a large number o1'I ligh Courls, wc arc still conlrotlted rr ith large filing of identical nrrtters on daill' basis rangir-rg betrvt cn 5 to l0 writ pctitions. -l hat upon tl-re ir-rstructions being ;ought frorn the I)epartrnent. they have been taking a solitary ground that the dccision ol- the Bombay I ligh Court in the ci sc ol- Hevtware Technologitts Ltd., (2 supra) as also the onc ,"vhich has been dccided br tlris Court in the case of Kunakala Ravindra Redcly tzoz+sc_q ( rnl inc Gui 40 t2 '2025 SC( ( )nLine .lhur 287 "' 12023, R.t -.r D :4984-DI) l r-rtt& 5 (1 supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 belore the Hon'ble Supreme Courl and the Hon'ble Suprcmc Courl is seized of the matter In addition, there are about 1200 SLPs also filed arising out ofthe same issue being decided 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 Hon'ble Supreme Court in any of these matters pcnding before it. Meanwhile, liesh writ petitions ol identical nature are being piled up before this Bench on daily basis and the pendency is getting increased on matter which otherwise lras already been dealt and decided by this very Fligh 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, titl date, we do not find any rernedial steps having been taken by the lncome Tax Deparlment to take appropriate steps to eithcr hold back issuance of notice under Section 148.4 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 Courts in India are co rtinuously still initiating proceedings under Section 1484. of tht' Act and also initiating prc,ceedings under Section 148 o1 the Act in contraventiotr to the amendments brought into t[-re ]ncome Tax Act pursuant to tht: Iinance Act,2020 as also thc Finant e Act 2021 ' g. Upon a query being put as to why can't this u'rit petition be disposed of in the teeth of the decision rendered ry this Courl in the case of Ktnakala Ravindra Redtlv (l supla), [:amed Standing counsel for the Incornc Tax Deparlrnent contcnds .l'rat those rvould unnecessarilv burden the Income Tax Deparlm:nt rvhere they would be required to file equal numbet' of S L,l)s before the it would be lurthe - burdcning the Hon'ble Supreme Couft and exchequer of the Union ol India. It u'as also the i ontention of the leamed Stancling Counsel that no prejudice would be caused to the interest ofthc petitioners in case if this writ pctitio r is kept pending till the finalization of the SLPs pending belt tc thc Hon'ble Supreme Coud and the fact that thc petitioncr is rlready enjoying the benefit o-l interim protection. Nonetheless, orr the earlier query of this Court as to why the Income Tax Departme rt have not comc out witlla*grechanism to issue appropriate instrr- ctious or to take 7 appropriate steps in ensuring that procecdings under Section l48A of the Act as also the assessment orders under Section 148 of the Act are kept in a hotd in the light of thc decisions dedcided by the various I Iigh 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 lirnited to any of these julisdictional High Courts.

10. As a result of wliich, what rve are facing is steep increase of titigation day in and day'out e"'en though various oldcrs have been passcd by this l{igh Court allorving writ petitions on the vcry same issue. Tl-re Incorne Tax authorities concerned are still even now in 2025 also initiating ploceedir.rgs in contravention to the provisions ol' Section 15 lA of thc Act and as a result by now, more than 600 to 700 petitions havc becn already got pited up before this High Courl on an issuc which othcrivisc stands squarely covered by the judgment of this Court in the casc ol- Kunokala Ravindra Reddy ( I supra). What is also surprising is the lact that though while allowing the writ petitions in the case of Kanskala Ravindra Redd1, (1 supra), the Division Bcnch while reserving the right of the I{evcnue, has also protected the intcrest of the petitioners 8 : insol'ar as rhe liberty which rvas granted to ltc [{er,'cnue lbr initiating fi'csh proceedings strictly in accordance .''ith the amendcd provisions ol the Act, as atnended by thc Ijinart, c Act. 2020 and the Financc \c1,2021. 'lhc petitionel asscssee rit Ltlcl be entitled to challenge or raise the othel legal objections if tlie [lcvenue initiatcs frcsh proceedings. The Department has madc tro cudeavour in availing thc 'raid liberty that was rescrved fol the (cvenr-tc. Ott Lhe contrary, they have been still sticking on to the ;tand, which this High Court ls well as many other High Coutts a rcadr'hcld to be bad. I 1 . It appcars that because of the aforesaid libc'tv that this High Court had g'anted permitting the Rcveuuc firr initiating licsh proceedings as a oue-timc ffIeasure in a Iaccl]ss rnanller. thc Income Tax Deparlment wants to take advantaqr ol the samc by protracting tlrese proceedings which rvould enable lhctn to ueet thc Iimitation tl-raLt would otherwise come in the way. Liker'visc. if the u.r'it petition is kept pending for a considcrablc lor g peliod of tirne and finally at a later stage i1' the I{on'ble Supretrt,, (lourt corlflrrns the decision taken by this I{igh Couft as also br the other IIigh Courts in rvhich the SLPs are still pending, t hc Income l'ax I I l 9 Department would get the advantage of the liberty that is otherwise protecied in tavour ol the Revenue lor initiation of t-resh proceedings from the disposal of these matters at a much later stage whicl.r would be advantageous and benetlcial to the Revenue and would be equally disadvantageous atld detrirnental so lar as intcrest of the assesses are concerned. As a consequence, the Income Tax Depa(ment gets an extended period of time for initiation of flesh proceedings.

12. 'Ihe alarming trend of docket explosion in this Cour1, despite the clear precedent set in Konukala Ravintlra Retldy (l supra), is a matter of grave concern. -fhe lncon're Tax Deparlment's persistent initiation of fresh proceedings, disrcgarding the established judiciat pronouncelnents, has led to an unpt'ecedented surge in litigation with over' 600-700 petitions piling up on the satne issue. 'fhis deliberate approach not only undertnines the principle of judiciat precedent but also strains the judicial resources unnecessarily. The Depaftment's strategy of awaiting the Suprctne Court's decision on pending SLPs white oontinuing to initiate fresh proceedings appears to be a calculated lnove to buy time and circumvent Iimitation periods, rathcr than adhering to the established legal I t I 10 position. Such conduct raises sclious quer:tions about thc administrat i',,e efficiency and the respc( t lor .iudicial llronouncer)rents. parlicularly when this Court ha: alreadv plovided a balanced lpproach by preserving both thc Rcr cnLIe's rights and assesscs tn t crests. li. Anothcr aspect which needs to be considcrr d is that in lact it should har, c been realized by the Income Tax Dcplrtment itsell'and sliould havc found out via rnedia in ensurina. that ploceerlings undcr Seclions 148-A and 148 should not havc bccn issued in a lacelcss manner, at least till the Hon'ble Suprenre f ourt clecidc tlie trvelve hundred (1200) odd SLPs which it is alrea< r,seizcrl ol-or. at lcast the Incor.r.rc Tax Depaftmcnt should have li,uncl ou1 solne rcmedial stc]ls to ensure that wherever the autl orities intend to initiate proceedings under Sections 148-A and l4l, other than in a lacelcss nruncr, tl-re proceedings should havr beerr defcrrecl u ithout prccipitating the matter turther intirnating thc asscssee thaL they shall irritiatc appropriate proceedings only al- cl the SLP's alc decidcd by tlre I lon'ble Supreme Court on the . cr'1' sarne issue I'his again. the Income Tax Deparlrnent, has not br cn able to give a convincing lc:ply, except for the fact that such a lecision if at all 7 4

71. has to be taken, has to be taken for the whole of India, and which otherwisc has to be by u'ay of a poticy decision and that too at the level of Central Board ol Direct 'l'axes. 'l'hough the learned Standing Counsel for the lncorne Tax Department contended that the Dethi High Courl dismissed a writ petition of similar nature, on thc one hand when the High Court is struggling to reduce its per-rdency, such notices which are under challenge in this writ petition are lbrcing the assessee to knock tl.re dools ol this High Court resulting in filing of hundreds of nerl rvrit petitions rvhich in tlre long run not only aff'ects the disposal ol the u'rit petitions but also consumes substantial tirne of the Bench in hearing these r.nattels again and again on daily basis. Admittedly, in spite of the lnatter before the Hon'bte Supleme Court having been takcn on many occasions, the Hon'ble Supleme Courl which is seized of the lnatter has been reluctant in granting any intcrim protcction to the lncome Tax Department. Yet, the autholities concemed at the State lcvel are not ready to accept the verdict passed by a majority of tligh Courls of different States on the satne issue; and to tnake things further worse, the Income Tax Deparlment is showing audacity by issuing notices continuously undcr Sections 148-A and t r i I I L2 l;-' \t-'-- \ 148 throuelr the jurisdictional Asscssing Olficer rvher.eas it ou-qht to hiive beclt onl1, in the faceless manner.

14. In thc case of BANK OF INDIA ,s. ASSISTANT COMMISSIONBI{, INCOME TAXr,. on u,., is:Lrc u,herher ir was justiliable cn the palt of the Income Tax D,:pafttrent in not lollowing an order passed by the adjudicating autlrorit) only on thc ground thar thc appcals are pending, thc Divisi rrr Llench of thc High Court <'l'Bombay held at paragraph No.25 a. under, viz., : "25. lMr. Paridwalla has righ y drawn out att )ntion to the decision ,rf this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decisioi of the co_ ordinate []ench of this Court in Samp Furniture (p) Ltd. v. lTO13 of which one of us (Justice G.S. Kulkarni) was a mer tber, wherejn the Coud categorically observed that the Revenu ) having not "accepted" the judgment of the High court would not mean that titl the same rs set aside in a manner known to law. it rv ruld loose its binding force. Referring to the deciston of the Supr,rme Coun in Union of lndia vs. Kamlakshi Finance Corporatic n Ltd.14 the Court obs-.rved that the approach of the officials of Revenue of treating dr-'cisions being ,,not acceptable,, was criti( rzed by the Supreme Court ln such decision, following are he relevant observatio -'ts made by the Supreme Court. l(1025) l7{) r.1y1nu,,,,..nnr 422 (Borrrbay)l '' | 19781 I Il I t lt 58q fllomba).) " IZOZ+1165 tarrnann.com 5gl/300 Taxrnan 452 (Bonrirr*,) t' 719r)2'l taxnrarrl.com l6155 Ill.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 ts that we are not concerned here with the correclness 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, rn our view, rightly criticized this conduct of the Assistant Colleclors 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 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 a It a ! a t I 14 rule is not followed, the result will only be undue harassment to assesses and chaos in admir istration of tax laws. 12 We have dealt with this aspect at some length ber;ause it has been suggested by the learned Additional Solicitor General that the obse rvations made by the High Court, have been harsh on the offioers. lt is clear that the observations of 1re High Co rrt, seemingly vehement, and ap Darently unpalatable to the Revenue, are only intende( to curb a tendency in revenue matters which, if all rwed to bec:ome widespread, could result in cons derable harassment to the assesses-public without an" benefit to the Revenue. We would like to say hat the department should take these observations in the proper spirit. The observations of the Hig r Court should be kept in mind in future and the utmos t 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 th,r orders of .he higher appellate authorities which are binding on them."

15. What is worrl,ing this Bench rnore is he fact that an endeavour is being made whole l-reartedly to ensur e not to generatc further litigation on issues which have been laid o rest by a largc number of High Courts all of whom have taken . consistent stalld that the action of the Income Tax Deparlment beinq violative of the I I I : i i I i ; 15 Financc Act.,2020 and Finance Act,2021. Now, in order to protect the interest of the Revenue as also that ol 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 Courl in the case of Kanktn a Ravindra Reddy (l supra) shall howevcr be subject to the outcome of the SLPs which were lilcd by the Income Tax Departmcnt and r'vhich is pending consideration before the Hon'ble Supleme Coult.

16. In the given facts and circumstances, this Bench is of the considered opinion that unless and until we do not timely dispose of rnatters 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 Courl ivould further be burdened which otherwise can be decided and disposed of as 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 L5 36,37 and 3ti of the order which, for ready referer:e, is reproduced hereunder:

36. For all the aforesaid reasons, the impugr ed notices issued and the proceedings drawn by the r(,spondent- Detlartment is neither tenable, nor s rstainable. Tho notices so rssued and the procedure ado:ted being pel se illegal, deserves lo be and are acco-dingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential ord,rrs passed by the respondent-Department pursuant to tre notices issued under Section 147 and 148 would also get quaLshed and it is ordered accordingly. The eason we are quashing the consequenttal order is on the principles tha: when the initiation of the proceedings itself was pro:edurally wrong, the subsequent orders also gets nullified automatically.

37. The preliminary objection raised by the pstitioner is sustained and all these writ petitions stands:rllowed on this very jurisdictional issue. Since the impugr3d notices anc orders are getting quashed on the point of jurisdiction, we are not inclined to proceed f trlher and decide the other issues raised by the petitic ner which stands reserved to be raised and contenr ed in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had. r'r lhe case of Lshish Agarwal, supra, as a one{rme measure exercising the powers under Artrcle 142 of the Constitution of lndia, permitted the Revenue I I proceed under the substituted provisions, and this Cou 1 allowing the petitions only on the procedural flaw the right !' 17 I 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 ofAshish Agawal, supra. , I

18. We would only further like to make obserwations that since u,c are inclined to disposc of the instant r.l'rit petition, conscious of the fact that the eallier order of this High Courl in the case of Kanaktln Ravindro Reddy (l supra) is subjected to challenge belore the Llon'ble Supreme Court in SLP No.3574 of 2024, preferred by the Income 'l'ax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aloresaid SLP preferred by tl.re Revenue against the decision of this Iligh Court in the case of Kanakah Ravindra Reddy (l supra). -l'his, in other rvords, would mean that either of the parties, if they so want, lnay move an appropriate petition seeking revival of this rvrit petition in the tight of the decision of the Hon'ble Supreme Courl in the pending SLP on the very same issue.

19. Accordingly, the instant wlit petition stands allowed in favour of the assessee so far as the issue of jurisdiction IS concemed. As a consequence, the impugned notice under challenge under Scctions 148-A and 148 stands set aside/quashed 18 The consequential orders, if any, also stand seL :rside/quashed in similar tenns as have been passed by this I{igh Cc tut in the case of Kankanah Rat,indra Reddy (1 supra). There shr ll be no order as to costs Consequcntly, miscellaneous petitions pend ng, if ar.ry, shall stand closed SD/. A.SRINIVASA REDDY AS];ISTANT REGISTRAR //TRUE COPY// SECTI FFICER To,

1. The Assessment Unit, National Faceless Assessmer,t Centre, lncome Tax Department, I\4inistry of Finance, Room No.401, 2nd floor, E-Ramp, Jawaharlal Nehru Stadium, Delhi - 1 10 003.

2. The lncome Tax Officer, Circle - 9(1), I T Tower, AC Guards, Masab Tank, Hyderabad - 500 004, Telangana State.

3. One CC to Ms. AfYAGARI JAYASHREE, Advocate [O'UC] 4. One CC to SRI K.SUDHAKAR REDDY, Sr SC FOR lT IOPUC] 5. Two CD Copies; ff- BSR PSK HIGH COURT DATED:1510712025 ORDER WP.No.20229 of 2025 ,,,, ,;..,\ ?OSEPM \ ALLOWING THE WRIT PETITION, WITHOUT COSTS (+- \