NKANALA RAVINDRA REDDY v. INCOME

PetitionunderArticle226ollheConstitutionoflndiaprayingthatinthe circumstances stated in the affidavit filed therewith' the High Court may be pleased to issue a Writ of Mandamus or any other appropriate writ' order or direction decraring the order'passed by 2nd Respondent under section 148-A(d) dated 8.4.2O22and notice under Section 148 of the lncome Tax Act' '1961' dated 12.4.2022, for the assessment year 2015-16 as being without jurisdiction and contrary to faceless assessment procedure laid down in Section 144-8 of the rncome Tax Act .1961 and consequenfly (b)to set-aside the consequentiar notice daledo2.ol.2023issuedbythelstRespondentunderSection142(1)oflhe lncomeTaxAct,lg6landtheconsequentialorderdatedlB.0l.2024issuedby the lst Respondent under Section 147 rcad with Sections 144 and 144_B of the lncome Tax Act' 1g61 for the assessment year 2015-16 as being without jurisdiction' arbitrary, iregar, bad in raw, void-ab-initio, apart from being viorative of Articres 1a, 19(1xg) and 265 0f the constitution of rndia and contrary to faceress assessment procedure raid down in section .144-B of the rncome Tax Act 'l 961. lA NO:'t oF 2025 petition under section 151 cpc praying that in the circumstances stated in the affidavit fired in support of the petition, the High court may be preased pleased to grant stay of a' further proceedings, incruding any recovery, pursuant to the impugned order dated rB.'r .2024 issued by the 1 st Respondent under section 147 read with Sections 144 & 144-B of the rncome Tax Act, 1961 for the assessment year 2015-16, pending disposar of the writ petition as othenrrise the Petitioner will be put to severe loss and hardship. Counsel for the petitioner : SRI S.VlJAy ADITHYA Counsel for the Respondents No.1to3 : Ms.J.SUNITHA, SC for lT DEPT Counsel for the Respondents No.4 : SRI G.NARESH, rep., SRt A.KRANTH| KUMAR The Court made the following; ORDER THE HONOURABLE SRI JUSTICE P'SAM KOSHY ' AND THE HONOURABLE SRT JUSTICE NARSING RAO NANDIKONDA WRIT P ETITION No. 20523 o F 2025 / gBDEB' @cr 1lon ble Sri 'lusrice Nursing Rao Nandikonda) Heard Mr' S 'Vijay Adithya' learned counsel for the petitioner, Ms. J.Sunitha, learned Senior Standing Counsel for the Income Tax Department appearing for respondent Nos' I to 3 and Mr.G.Naresh,leamedcounselrepresentingMr.A.KrantiKumar Reddy, leamed counsel for respondent No'4' Perused the record'

2. This is a writ petition where the proceedings are either chatlenged to the notices which were issued under Section 1484. andt48oftheIncome.I.axAct,lg6l(forshort.theAct')orthe assessmentordersthosehavebeenpassedunderSectionl4Tof 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 of the Act and the subsequent initiation of proceedings under Section 148 of the ,&t-pl the jurisdictional Assessing Officer' whereas in terms of the amendment that was brought to the Income Tax Act by way 2 of Finance Act, 2O2l w.e.f., 0l .04.2021 onwards, proceedings under Section l4gA of rhe 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, 2021 i.e., the impugned notices under Section l4gA and Section l4g of the Act not being issued in a faceless manner, have already been dealt with and decided by this Court in the case of IC{NKANALA RAVINDRA REDDY vs. INCOME_TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions werc ailowed and the proceedings initiated under Section l4gA as also under Section 148 of the Act were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section l5lA of the Act read with Notification lgl2022 clated, 29.03.2022. l_he said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were allowed on similar terms. '[(2023) 156 taxmann.com I 7g (Telangana)] 3 5 Down the line, we find that the same issue has also been decided against the Revenue bY various High Courts t'e'., the case of HEXAWARE by the BombaY High Cour tn TECHNOLOGIES LTD., VS. ASSISTANT COMMTSSIONER 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 INDIA4, and Telangana High court in the case of SRT VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME 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 intemational taxation and central circte' High Court of Himachal Pradesh in the INCOME TAX OFFTCER7, of GOVIND SINGH vs. Gujarat High Court in the case ol MANSUKHBHAI 't20241464 ITR 430 (Bom) 'ipOzU 156 taxmann.com 478 tCauhati) I "iQOZq 165 taxrnann.com 115 (Punjab & Haryana)l '12024) 167 taxrnanqcom 41 1 (Telangana)l " 12024) 166 taxmann.com 679 (Bornbay)l 'iZOZ+j 165 taxmann.com 113 (Himachal Pradcsh)l I 4 DAHYABITAI RADADIYA vs. INCoME TAx OFFICER, WARD 3(3X5)8, Jharkand High Courr in rhe case of SHyAM SUNDAR SAW vs. tjNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and barch of writ petirionsro 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 & 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 F[igh Courts, we are stilI confronted with large tiling of identical matters on daily basis ranging between -s to l0 writ petitions. That upon the instructions being sought fiom the Department, they have been taking a solitary ground rhar rhe decision of the Bombay High court in the case or- Herawore Technologies Ltd., (2 supra) as also the one which has been decided by this Courl in the case of Kanakala Ravindra Reddy .\ "2021 SCC OnLirre Gu.i 40t2 '202-5 SCC Onl_ine Jhar 2g7 'uJ2023, RJ-JD:4984-DBl 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 Court and the Hon'bte Supreme Courl is seized of the matter' In addition, there are about 1200 SLPs also fited arising out of the same issue being decided by various High Courts'

7. To a query being put to the learned counsel lor 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 betbre it' Meanwhite' liesh 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 Courl 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 [6 months have lapsed, till date, we do not f,rnd any remedial steps having been taken by the lncome Tax Department to take appropriate steps 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 5 by all the major High Courts in India are continuously still initiating proceedings under Section 148,.{ of the Act and also initiating proceedings under Section 148 of the Act in contravention to the amendments brought into the [ncome Tax Act pursuant to the F-inance Act,2020 as also the Finance Act2021.

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 Ktnakala Ravindra Reddy (l supra), learned Standing Counsel lbr the Income Tax Department contends that those would unnecessarily burden the Income Tax Department where they would be recluired to file equal number of SLps before the Hon'ble Supreme Court and it would be further burdening the exchequcr o1- the Union of India. It was also the cont.ention 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 pending till the f'rnalization of the SLPs pending before the Hon'ble Supreme Court and the fact that the petitioner is already enjoying the benellt ol'interim protection. Nonetheless, on the earlier query of this Court as to why the Income Tax Department have not come out with a lncchanism to issue appropriate instructions or to take f 7 ' ing that proceedings under Section 1484 appropriate steps ln ensur of the Act as also the assessment orders under Section 148 of the Act are kept in a hold in the light ofthe decisions dedcided by the various High 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 tirnited to any of these jurisdictional High Courts' l0.Asaresultofwhich,whatwearef.acingissteepincreaseof 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. The lncome Tax authorities concemed are sti[[ 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 Kanakala Ravindra Reddy (l supra). What is alsb surprising is the fact that though while allowing the writ petitions in the case of Kunakala Ruvindra Retldy (l supra), the Division Bench white reserving the right of the Revenue, has also protecte<I tlre interest of the petitioners 8 insofar as the liberty which was granted to the Revenue for initiating riesh proceedings strictly in accordance with the amended provisions of tl-re Act, as amended by the Finance Act, 2020 and the Finance Act, 202r. 'fhe petitioner assessee wourd bc entitled to challenge or raise the other legal objections if the Revenue i,itiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was reserved for the Revenue. On the contrar\,, thev have been still sticking on to the stand, which this High Courr as well as many other High Courts already held to be bad.

11. Ir appears that because of the aforesaid libety rhat this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a faceless rnanner, the Income J'ax Department wants to take eidvantage o1. the same by protracting these pr.ocecdings which would enable them to meel the limitation thar would orherwise come in the way. Likewise, il the writ petition is kept pending for a considerable long period of time and finally at a later stage if the Hon,ble Supreme Cotrrt confirms the decision taken by this High Courl as also by the other High Coufis in wh ich the SLps are still pending, the I ncome l.ax 9 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 matters at a much later stage which would be advantageous and beneficial to the Revenue and would be equatly disadvantageous and detrimental so far as interest oi the assesses are concemed' As a consequence' the Income Tax Dcpaftment gets an extended period of time fbr initiation of fresh proceedings.

12. The alarming trend of docket explosion in this Court' despite the clear precedent set in Kanakala Ravindra Reddy (t supra)' is a matter of grave concem' The Income Tax Department's persistent initiation of iresh proceedings' disregarding the established iudicial pronouncements, has ied to an unprecedented surge in litigation with over 600-700 petitions piling up on the same issue' This deliberate approach not only undermines the principle of judicial 'fhe precedent but also strains the judicial resources unnecessarily' 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 lirnitation periods, rather than adhering to the established legal 10 posltlon. Such conduct raises serious questions about the administratrve efficiency and the respect for judicial pronounceurents, particularly when this Court has already provided a balanced approach by preserving both the Revenue,s rights and assesses rnterests

13. Another aspect rvhich needs to be considered is that in fact it should havc been realized by the tncome Tax Department itself and should have fbund out via media in ensuring that proceedings under Sections l4g-A and l4g should not have been issued in a faceless rnanner. at least tilt the Hon,ble Supreme Court decide the twelve hundred ( I200) odd Sl_ps which it is already seized of or, at least the Inconte Tax Department should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections l4g_A and I4g, other than in a faceless manner, the proceedings should have been defened without precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only after the SLp,s are decided by the Hon,ble Supreme Court on the very same issue. This again, the [ncome Tax Department, has not been able to give a convincing reply. ercept for the lact that such a decision if at all f 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 lor 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 pcndency, such notices which are under challenge in this writ petition are forcing the assessee to knock the doors of this High Court resulting in hling 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 befbre the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the matter has been reluctant in granting any interim protection to the lncome Tax Department. Yet, the authorities concemed at the State level are not ready to accept the verdict passed by a majority of High Courts of diff'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 Officer whereas it ought to have been only in the faceless manner. l,4. In rhe case of BANK OF INDIA vs. ASSISTANT COMMISSfONER, INCOME TAXr, on an issue whether it was justifiable on the part ol the Income Tax Department 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 llombay held at paragraph No.25 as under, viz., : "25. Ivlr. paridwalla has righfly 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 Courl in Samp Furniture (p) Ltd. v. lTOr3 of which one of us (Justice G s. Kurkarni) was a member wherein the Court categorically observed that the Revenue having not "accepted" the judgment of the Hrgh Court 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.r4, the court observed that the apprcach of the officiars of Revenue of treating decisrons being ,,not acceptable,, was criticized by the Supreme Court. ln such decrsion, following are the relevant observations made by the Supreme Court. ',', t,-\ n o 1r.z^o_z1.l m a n n. c o r n 4 2 I ( B o m h a y ) I " il9781 lll It-t( 58e 1B666ar) '' 120241 165 raxrnann.corn 5gl/j00.I-axman 452 (Bombay) 'o ]l9921raxmann.corn l6l-55 ELl.433 (SC) f 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 genuinety 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 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 quasiiudicial 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 74 \ rule is not followed, the result will only be undue harassment to assesses and chaos in administration of tax laws. tl 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 mafters which, if allowed to become widespread, could result in considerable harassment to the assesses_pubIc wrthout 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 requiremenls of judicial discipline and the need for giving effect to the orders of the higher appe ate authorities which are brnding on them." I 5. What is worrying this Bcnch rnore is the lact that an endeavour is being made whore heartedty 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 rncome Tax Depaftment. being violative of the 9 ,/ 15 Finance Act,2020and Finance Act' 2O21' 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 observatiorvdirecrion that the disposal ofthe instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Retldy (1 supra) shalt however be subiect to the outcome of the SLPs which were filed by the Income Tax Department and which is pending consideration before the Hon'ble SuPreme Court'

16. [n 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 fortit-red by the decisions of the various other High Courts on the veU same issue' the' pendency of this High Court would further be burdened which otherwise can be decided and disPosed of as a covered matter So far as the interest of the Revenue ls concem ed, we are of t7. the considered opinion that the interest of the Revenue has already been considere<l and protected' as has been observed in paragraphs 16 36,37 and 38 of the order which, for ready ref.erence, 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 conse all the impugned orders getting quashed, ,n" by the responder,-r"r".r#,T^"r::1 ;";: ffi::: issued under Section 141 quashed and * is oro"r"o ,"ld,olffTl: ,:j::" 1: are quashing the consequential order is on the principles that when the initiation of the proceecjings itself was procedurally wrong, the subr sequent orders also gets nurified automaticafly. "o'un""'

37. The preliminary objection raised by the petitroner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are getting quashed on the point of jurisdiction, we are not inclined to proceed further and ddcide the other issues raised by the petitioner which stands reserved to be raised and contended in an appropriate proceedings. 38 of Ashish Since the Hon'ble Supreme Court had, in lhe case Aganval, supra, as a one_time measure the powers under Article 142 exercrsing 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 {: 77 conferred on the Revenue would remain reserved to Oro.""O f u rthe r if tn"" l'T "":::": ;:^::: order of the Supreme Cot Agarwal, suPra' -1,'n "^ t, t I

18. We would only fufther 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 Kanokals Ravindra Reddy (l supra) is subiected to challenge before the Hon'ble Supreme Court in SLP No'3574 of 2024' preferred by the lncome Tax Department' we rnake it clear that allowing of the instant writ petition is subject to outcome of the aforesaid s,-p preferred by the Revenue against the decision of this High Court in the case ol Kanakalu Ruvindrs Rerlr/y (1 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 dccision of the Hon'ble SuPreme Court in the pending SLP on the very same lssue 19, AccordinglY' the instant wrtt petition stands allowed in the issue of jurisdiction is favour of the assessee so lar as concemed. As a consequence' challenge under Sections 148-A and 148 stands set aside/quashed the imPugned notice under 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 Konkqnala Ravindra Reddy (l supra). There shalt be no order as [o costs. Consequently, miscellaneous petitions pending, if any, sl.rall stand closed. //TRUE COPYII SD/. L. LAKSHMI BABU DEPUry REGISTRAR , / secrrplr'brrrcen To, 1 a ) 4 ( 6 7 $!* $;F",tr "^il .H ? :'2,1t ?,T&, I:n, ffi: ::fr :[:,,]t["J?L siff ,xH : fr B# Ii&{Tl1fl ::r'Ri:ff',i?,!il:t'#:T6rla} circre r, AayakarBhavan, 6-2. The Principal Chief Comr laHmtli::nn:##i8t ",{"1 B!?In",n,f,:b I Bo gfl .?:?g"fj#[1 The Secretary, Ministrv of Finance, U.nion of lndia, Government of lndia. 3rd r- roor, Jeeva n Deep etiitoing, sansdo-na5ig,"N"# ijbrXir r o oo r One CC to SRt S.VtJAy AD|THYA, Advocate. tOpUCl one CC to Ms J.SUN|THA (SR SC FOR TNCOM TAX). topucl One CC to SRt A.KRANTHt KUMAR REDDy, Advocate. tOpUCl Two CD Copies BSK PVL I I I ) '1ill $ o ( t.. /-C i'q) , \.:, '\t /-; 0 sEP tg25 rJ t.i:rr, ;,-r.r-'_ 'l '.i. HIGH COURT DATED:1Ot07t2OZs ORDER WP.No.20523 of 2O2S ALLOWING THE WRIT PETITION WITHOUT COSTS d-