High Court · 2025

Counsel for the petitioner: SRt. DUNDU MANMOHAN Counsel for the Respondents: SRI K SUDHAKAR REDDY SC FOR lT The Court made the following: ORDER t , THE TTONOT]RABLE SRIJUSTICE P'SAM KOSHY rrrE HoNouurr-,nsffiisrrcE NAR.TNG RAo PE TITI ONN o.20593 of2025 ORDER, (per Hon'ble Sri Justice Narsing Rao Nandikanda) for the Heard Mr.Dundu Manmoharu learned counsel petitioner and Mr'K'sudhkar Reddy' Iearned Senior Standing Counsel for the Income Tax Department appearing for the respondents. Perused the record' 2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 148A and 148 of the Income Tax Act' 1961 (for short'the Act') or the assessment orders those have been passed under Section 147 of the Act which have been assailed' This writ petition is being taken up today only on one of the l. grounds, that the notices issued under Section t48A ol'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 brought to the lncome Tax Act by way .qf Finance Act, 2021 w'e'f'' 01'04'2021 onwards' 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.

4. The contention of the petitioner is that the issue of proceedings being in violation of the Financ e Act, 2021i.e., the impugned notices under Section l4gA and Section r4g ofthe Act not being issued in a faceless mamer, have already been dealt with and decided b1, this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME_TAX OFFICERT decided on 14.09.2()23 whereby a batch of writ petitions were allowed and the proceedings initiated under section l4gA as arso under Section I48 of the Acr r.vere held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section 15lA of the Act read wirrr Notification tg/2022 dated29.03.2o22. The said judgment passed by this Court has also been subsequently followed in a large number ol u,rit petitions which were allowed on similar terms. '[(202]) Li6 taxrnann.conr lTll (Telangana)l @y: i ,;-tn ,P ) 2..2-| ' I' :r,ia,.}. . ,:; .,/ 3

5. Down the line, we find that the same issue has. also beeu decided against the Revenue by various High Courts i'e'' by the Bombay High Court in the case of IIEXAWARE TECHNOLOGIES LTD" vs' ASSISTAIT{T COMMISSIONER OF INCOME TAX & OTHERS2' Gauhati High Court in the case of RAM NARAYAN SAII vs' UI{ION OF INDIA3' Punjab and Haryana High Court in the case of JATINDER SINGII BANGU vs. UNION oF INDIA4, and Telangana High court in the case of SRI VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of internationar taxation, Bombay High court in the case of ABHIN ANILKUMAR SIIAH vs' INCOME TAX OFFICER' INTERNATIONAL TAXATIOIf which is again on intemational taxation and central circle' High Court of Himachal Pradesh in the case of GOVIND SINGII vs' INCOME TAX OFFICER" Gujarat High Court in the case of MANSUKHBHAT t lzoz+1 464 ITR43o (Bom) 'tizoz+t 156 taxmann.com 478 (Gauhati)l ' t(2024) [65 taxmann'com 115 @unjab & Haryana)] ' [2024) 167 taxmann.com 411 (Telangana)] " 12014) I66 taxmann.com 679 (Bombay)l 'i:o:+i ins ta\mann.com I l3 (Himachal Pradesh)l 4 \ DAHYABIIAI RADADTYA vs. INCoME TAx OFF.ICER, WARD 3(3Xr8, Jharkand High Court in the case of SIIyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsro 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 rNDIA & 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. we are still confronted with large filing of identical matters on daily basis ranging between 5 to l0 writ petitions. That upon the instructions being sought from the Department, they have been taking a solitary ground that the decision o1- the Bombay High Court in the case of Hexaware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in rhe case of Kanakala Ravindra Reddy 82024 SCC ont.inc Cu.i 40 t2 '2025 SCC Onl.ine Jhar 2B:- 12023 : RI-J l):.l9ti4- DI) l 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 Court and the Hon'ble Supreme Court is seized of the matter' In addition, there are about 1200 SLPs also irled arising out ofthe 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' Meanurhile' 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 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 t4'09'2023 and more 16 months have tapsed, titl date, we do not find any rernedial steps having been taken by the lncome Tax Department to take appropriate steps to either hold back issuance of notice under Section 148,4. and under Section 148 of the Act by the jurisdictionat Assessing Officer' rather the authorities concerned in the teeth of series of decisions 6 { by all the major High Courts in India are continuously still initiating proceedings under Section I4gA of the Act and also initiating proceedings under Section l4g of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the 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), leamed Standing counsel for the Income Tax Departmenr contends that those would unnecessarily burden the Income Tax Department 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 Ieamed Standing Counsel that no prejudice would be caused to the interest of the petitioners in case it this writ petition is kept pending till the finalization of the St_ps pending before the Hon,ble Supreme Court and the fact rhar rhe petitioner is already enjoying the benefit of interirn protection. Nonetheless, on the earlier query of this Court as to why the [ncome Tax Department have not come out with a mechanism to issrrc appropriate instructions or l.o take 7 appropriate steps in ensuring that proceedings under Section 148A of the Act as also the assessment orders under Section 148 ofthe Act are kept in a hold in the light of the 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 o[these jurisdictional High Courts' l0.Asaresultofwhich,whatwearefacingissteepincreaseof litigation day in and day out even though various orders have been passed by this High Court atlowing writ petitions on the very sa rc issue. The Income l'ax authorities concemed are still even now in 2025 alsoinitiating proceedings in contravention to the provisions of Section t5lA of the Act and as a result by now' more than 600 to 700 petitions have been already got piled up before *ris High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakala Ravindra Reddy (l supra). What is also surprising is the fact that though while allowing the rvrit petitions in the case of Kanakala Ravindra Reddy (l supra), the Division Bench white 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 fresh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Finance 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, which this High Court as well as many other High Courts already held to be

11. It appears that because of rhe aforesaid liberty that this High Court had granted permitting the Revenue fbr initiating fresh proceedings as a one-time measure in a faceless manner, the Income Tax Department wants to take advantage of the same by protracting these proceedings which would enable them to meet the limitation that would otherwise come in the way. Likewise, if the rvrit petition is kept pending for a considerable long period of time and finally at a later stage if the Hon,ble Suprenre Court confims the decision taken by this High Couft as also by ttre other High Clourts in which the SLps are still pending, the Income Tax ' f.'-.:s// aaaQV.'. pi;*?}X'' iirli.Y' -t/ 9 Department would get the advantage of the libeny that is. otherwise protected in favour of the Revenue for initiation of fresh 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 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 setin Kanakala Ravindra Reddy (l supra)' is a matter of grave conceffI' The tncome Tax Department's persistent initiation of fresh proceedings' disregarding the established judicial pronounc€ments, has led to an unprecedented surge in litigation with over 600-700 petitions piting 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 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 legal 10 position. Such conduct raises serious questions administrative efficiency and the respect for judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revenue,s rights and . about the assesses interests l3' 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 14g_A and l4g should not have been issued in a faceless maruler, at least till the Hon,ble Supreme Court decide the twelve hundred (1200) odd SLps which it is already seized ofor, at least the Income Tax Department should have fbund out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections l4g_A and 148. other rhan in a fbceless manner, the proceedings should have been deferred rvithout precipitating the matter further intinrating the assessee that they shall initiate appropriate proceedings onry after rhe SLp,s are decided by the Hon,ble Supreme Courr on the very same issue. This again, the Income Tax Department, has not been able to give a convincing reply, except for the fact that such a decision ilat all I 11 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 Taxes' Though the leamed 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 struggting 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 frling of hundreds of neu' writ petitions which in the long run not only affects the disposat of the writ petitions but also consumes substantial time oi 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 been taken on many occasions, the Hon'ble Supreme Court which is seized of the matterhasbeenreluctantingrantinganyinterimprotectiontothe Income Tax Department' Yet' the authorities concemed at the State level are not ready to accept the verdict passed by a maj ority of High Courts of different States on the same issuel and to make things further worse, the lncome Tax Department is showing audacity by issuing notices continuously under Sections 148-4 and 12 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXrr, on an issue whether ir was justifiable on the part of the Income Tax Department in not fbllowing an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division tsench of the High Court of Rombay held at paragraph No.25 as under, viz., : "25. Mr. paridwalla has righfly drawn out attention to the decision of this Court in Gommissioner 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. tTO,3 of which one of us (Justice G.s. Kurkami) was a member, wherein the court categoricafly observed that the Revenue having not "accepted" the judgment of the High Court would not mean that till the sante is set aside in a manner known to law, it would loose (s brnding force. Referring to the decision of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.,o, the court observed that the approach of the officiars of Revenue of treating decisions being "not acceptable" was criticized by the Supreme Court. ln such decision, following are the retevant observations made by the Supreme Court. ,,I ', I ,, I ,, I (2025) t7 0 raxmann.com 422 (Bombay)) I9781 lll It'R -589 (Bombay) 20241 165 raxmann.com 5gl/300 Taxman 452 (llornbay) l9eli1;1r1'l3pn.rorn l6l55 ELT433 (SC) h .] \V 13 "6. Sri ReddY is perhaPs right in saYing that the not actuated bY any mala fides in officers were impugned orders. TheY PerhaPs passing the 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 concEmed here with the correctrEss 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 conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these ofiicers 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 Cotlectors working within his iurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collec{ors who function under the jurisdiction of the Tribunal The principtes of judicial discipline require that lhe orders of the higher appellate authorities should be foHowed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not 'acceptable" to the depadment - in itself an obiectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspend€d by a competent court. lf this healthy 74 a\ rule is not followed, the result will only.be undue harassment to assesses and chaos in adminiskation of tax laws. 12 We have dealt with this aspec{ at some length, because it has been suggested by the leamed Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. It 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 mafters 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 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 drscipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them."

15. What is wotrying this Bench more is the fact thar an endeavoul- is being made whole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of t{igh Courts all of whom have taken a consistent stand that the action olthe lncome Tax Department being violative olthe ; 15 Finance Lct,2020and Finance Act'2O21' Now' in order to protect the interest of the Reventre 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 disposat of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanals Ravindra Retldy (l supra) shall however be subject to the outcome of the SLPs which were frled 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 fortifred 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 far as the interest of the Revenue is concerned' we are ol the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs t6 36, 37 and 3 8 of the order which, for ready refeience, 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 14g 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 subseguent orders also gets nullified automatically.

37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on th,s very lurisdiclional issue. Since the impugned notices and orders are gefting 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 onetime 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 procedural flaw, the right 17 confened on ttte 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 onty further 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 KanakalaRavindraReddy(lsupra)issubjectedtochallenge before the Hon'ble Supreme 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 outcome of the aforesaid SLP preferred by the Revenue against the decision ofthis High Court in the case of Kanakala Ravindra 'Reddy (t supra)' This. in other words, would mean that either of the parties' if thev 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. Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction is impugned notice under concemed. As a consequence' challenge under Sections 148-4 and 148 stands set aside/quashed' 18 I The consequential orders, if any, also stand set aside/quashed in similar telms as have been passed by this High Court in the case of Kankanala Ravindra Reddy (l supra). There shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed. //TRUE COPYII s AS D/.K.BH AVANI SWAMY T REGISTRAR To,

1. The DC/ACIT Circte rrio*ui,'xid.lili;.il?;Sri3l,L??,.;#?ji}"t"13f SECTION OFFICER i,B#r;65t,2ndFroor,

2. The Additional Com G,;;.i;,i\,il;;1"jili'i?3::jgJ:f#rr"1*iffi%?;:,rrrower,AC \

3. One CC to SRt DUNDU MANMOHAN Advocate tOpUCl 4. One CC to SRt. K SUDHAKAR REDDY SC FOR tT [OPUC] T*. CD Copies KKS GJP HIGH COURT 'DATED:1 ilOttzo4s I ,.,.. .4 -' ,,,.a\. 'i -1, 2O SEP M I i ORDER WP.No.20593 of 2OZs ALLOWTNG THE WRIT PETITION WITHOUT COSTS v /-r J/ 9,4 2