AVINDRA REDDY v. INCOME-TAX OFFI

r Hon'ble Sri Justicc Narsin Rao Nantlikonda) Heard Mr.T.Chaitanya Kum learned counsel fbr rhc petitioner, Mr.G.Venkateshvarlu, le ed counsel appcrring lbr respondent Nos. I & 3 and Ms. B.S pna Reddy, learned Senior Standing Counsel for the Income Ta Department appear ing lbr the respondent No.2. Perused the rec rd

2. This is a writ petition where the proceedings arc eithcr challenged to the notices u'hich we issued under Section l48A and 148 of the lncome Tax Act, 196 (for short 'the Act') or the asscssment orders those have been ssed under Section [,17 ol- the Act which have been assailed.

3. This writ petition is being take up today only on on!' ol lhe grounds, that the notices issued und Section l48A o1' tl.rc Act and the subsequent initiation ofpro edings under Section 148 of the Act by the jurisdictional Assessi g Officer, whereas in terms of the amendfrent that was brought t the Income Tax Act b1 lr.ay 2 of Finance Act, 202 I w.e.f., 0l .04.2021 onwards, proceedings I tunder Section I 48A of the Act as also under Section 148 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 ol proceedings being in violation ol the Finance Act, 2021 i.e., the impugned notices under Section l48A and Section 148 of the Act not being issued in a laceless manner, have already been dealt with and decide<l by this Court in the case ol KANKANALA I{AVINDRA REDDY vs. INCOME-TAX OFFI(-'ERI decided on 14.09.20113 whereby a batch of writ petitions werc allowed and the proceedii-rgs initiated under Se ction l48A as also r-rnder Section 148 o1'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 Notificatiorr l8l2\22 dated 29.03.2022. The said judgment passed by this Coufl has also been subseqtrcntly followed in a larte nlrmber of writ petitions which were allorved on similar tem1s. '[(2023) li6 tarmann.conr 178 ( felangana)] 3

5. Down the line, we find that t e same issue has also been decided against the Revenue by vanous High Courts i.e., by the Bombay High Court in e case of HEXAWARE TECHNOLOGIES LTD., vs. ASSI TANT COMMISSIONER OF INCOME TAX & OTHERS2, uhati High Court in the case of RAM NARAYAN SAH vs. UNI N OF INDIAT, Punjab and Haryana High Court in the case of J TINDER SINGH BANGU vs. UNION ()F INDIA{, and Telan a High Court in the case of SRI VENKATARAMANA REDD PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME AXs where the issuc was in respect ol international taxation, Born ay High Court in the casc of ABHIN ANILKUMAR SHAH vs. NCOME TAX OFFICER, INTERNATIONAL TAXATION6 hich is again on international taxation and central circle, High Cou of Himachal Pradesh in the case of GOVIND SINGH vs. I COME TAX OFF'ICER, Gujarat High Court in the c se of MANSUKHBI{AI 'Tzoz+1464 I'rR 430 (Bom) ' [(2024) 156 taxrnann.com 478 ((iauhat " U2024) 165 taxmann.com I l5 (Punjab ' 12024) 167 taxmann.com 4 I I (Telanga '[2024) 166 tryrnann.com 679 (Bombay '[2021\ 165 taxrnann.com I l3 (Flimach )l I Iaryana)l )l l I Pradesh)l l 4 DAHYAIIHAI RADADIYA vs. INCOME TAX OFFICER' WARD 3(3X5){3, Jharkand t{igh Court in the case of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHA.IER 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 Catcutta High Court in thc case of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.r\.1' lri90 of 2023), decided on25.09.2024.

6. Irve'n though the same issue l-raving been decided by a large nurrber ol F{igh Courts, we are still confionted with large filing of identical matters on daily basis ranging between 5 to l0 writ gretitions. That upon the instructions being sought fiom the Department, they have been taking a solitary ground that the decisiorr of the Bombay High Cotrft in the case of lleraware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy t202+ SC:c onl.ine (iui 4o t2 '2025 S(l('Cnl.ine Jhar 287 'o[2,]2i, ltJ+D:4984-DBl 5 (l supra) has been subjected to c allenge in a Special Leave Petition i.e., SLP No.3574 ot 2024 fore the Hon'ble Supreme Court and the Hon'ble Supreme C urt is seized of the matter In addition, there are about 1200 SL also filed arising out of the same issue being decided by various igh Courts.

7. To a query being put to the lea ed counsel for the Revenue, they have categorically accepted the fact that there is no interim order granted by the llon'ble Sup me Court in any of these matters pending belore it. Meanw ile, fresh writ petitions of identical nature are being piled up be re this Bench on daily basis and the pcndency is getting increase on matter which otherrvise has already been dealt and decided by is very High Court itselL

8. On the one hand, cven though the order of this Court that was passed as early as on 14.09.202 and more 16 months have lapsed, till date, we do not find any remedial steps having been taken by the Income Tax Departmen to take appropriate steps to either hold back issuance of notice u der Section 148^4 and under Section 148 of the Act by the juri ictional Assessing Officer, rather the authorities conccmed in th teeth of series of decisions 6 by all the major High Courts in India are continuously still initiating proceedings under Section l48A ol the Act and also initiatinll proceedings under Scction 148 of the Act in contravention to the amendments brought into the [ncome Tax Act pursuant to the Finance Act, 2020 as also the Finance Act 2021' Lipon a query being put as to why can't this rvrit petition be

9. disposecl of in the teeth of the decision rendered b1' this Court in the case of Kanakala Rttvi\dro Redtly (l supra)' learned Standing ClounseI for the Income. Tax Department contends that those would unnecessarily burden the Income Tax Department where they rvould be required to file equal number of Sl'l)s before the Flon'blt: liupreme Courl anil it would be llfther burdcning the exchequer of the Union ol India lt was also the contention o1'the learned Standing Counsel that no prejudice would be caused to the interest of the petitioners in case if this writ petition is kept pending tillthefinalizationoftheSLPspendingbeforetlreHon,ble Supreme Court and the lact that the petitioner is already enjoying the benefit of interim protection' Nonetheless' on the earlier query of tl'ris C'ourt as to why the Income Tax Department havc not corne out with a nrechanism to issue appropriate instructions or to take \€) 7 appropriate steps in ensuring that p dings under Section l48A of the Act as also the assessment ord rs under Section 148 of'the Act are kept in a hold in rhe light ol t e decisions dedcided by the various High Courts, it was submitt d by the learned Standing Counsel that the said steps can only b taken at the level of CBDT as any such steps would have to be ta en Pan lndia ancl cannot be limited to any of these jurisdictional gh Courts.

10. As a result ol which, what we a lacing is steep in(:rease of litigation day in and day out even tho gh various orders have been passed by this High Court allorving w t petitions on the very same issue. The Income Tax authorities co cemed are still even norv in 2025 also initiating proceedings in co travention to the provisions of Section l5l A of the Act and as a r sult by now, more than 600 to 700 petitions have been already g t piled up before this High Court on an issue which otherwise st ds squarely coverecl by the j udgment of this Court in rhe case o Kunakala Ravindra Reddv ( 1 supra). What is also surprising i the fact that though while allowing the writ petitions in the c se of Kanakah Ravindra Reddy (l supra), the Division Bench while reserving rhe right of the Revenue, has also protected th interest of the petitionels q 8 \-rrr\ \ insofar as the tiberty which was granted to the Revenue for initiating fiesh proceedings strictly in accordance with the amended provisions of the Act, as amended by the }rinance Act, 2020 and the F-inance Act, 202 l. The petitioner assessee u ould be entitled to challenge or raise the other legal objections il- the Revenue initiates fresh prot:eedings. The Department has madc no cndeavour in availing tlre said liberty that was reserved tbr thc Rcvenue. On the contrary. they have been still sticking on to thc stand. which this High Cour, as well as many other High Courts already held to be bad. I l. It appears that because ol- the aforesaid libcrty that this High Court had granted permitting the Revenue lirr initiating fresh proceedings as a one-time measurc in a laceless manner, the Income 'f ax Departlnent wants to take advantalie o I' the same by protractin;3 these proceedings which would enable thcm to meet the timitation that would otherwise come in the rvav. Likewise, if the writ petition is kept pending for a considerable long period of time and finally at a later stage if the Hon'ble Suprenle Court confirms the decision taken by this High Court as also b1' the other High Cor.rrts in which the SLPs are stitl pending. the Income 'I-ax 9 Department would get the advantage o the tiberty that is otherrvise protected in lavour of the Reven e for initiation of tiesh proceedings lrom the disposal ofthese atters at a much later stage which would be advantageous and be efrcial to the Reverrue and would be equally disadvantageous and etrimental so I'ar ar; inte lest of the assesses are concerned. As a c nsequence, the Income 'fax Department gets an extended period o time for initiation of fresh proceedings

12. The alarming trend of docket ex losion in this Cour1, despite the clear precedent set in Kanokala R vindra Reddy ( I supra). is a matter of grave concern. The lncorne ax Department's persistent initiation of fresh proceedings, disrega ing the establishcc judiciat pronouncements, has led to an unp edented surge in litigation with over 600-700 petitions piting p on the same is;sue. '['hts deliberate approach not only undenni es the principte of judicial precedent but also strains the judicial sources unnecessa:'ily. The Department's strategy of awaiting the upreme Court's dec:ision on pending SLPs while continuing to initiate fresh proceedings appears to be a calculated lnove t buy time and circumvent limitation periods, rather than adhe ng to the established legal ! 10 position. Such conduct raises serious questions about the administ.ralive efficiency and the respect lor .iudicial pronouncernents, particularly when this Court has already provided a balanced approach by preserving both the Reventte's rights and assesses interests.

13. Another aspect which needs to be considered is that in lact it should ha've been realized by the Income Tax Department itselt'and should have fbund out via media in ensuring that proceedings under S,:ct!c,ns 148-A and 148 should not have been issued in a firceless manner, at leasl till the Hon'ble Supreme Court decide the twelve hun,i'ed (1200) odd SLPs which it is already seizcd of or. at least thc Irrcome Tax I)epartment should have found out some renredial sleps to ensure that wherever the authorities intend to initiate proccedings under Sections 148-A and 148, other than in a f irce less rnanner, the proceedings should have breen del-erred rvitlrout precipitating the matter further intimating the asscssee that they shalt initiate appropriate proceedings only alier the SLP's are cler:ideci by the Hon'ble Supreme Court on the i.'crl sarne issue This again. the Income Tax Department, has not been able to give a cottvirtcinu reply, except fbr the fact that such a dccision ilat all 11 has to be taken, has to be taken for t e whole of India, and which otherwise has to be by way of a poli y decision and that too at the level of Central Board o I Direct axes. I'hough the learled Standing Counsel for the Income Ta Department contcnded that the Delhi High Court disrnissed a wri petition of similar nuturc, on the one hand when the High Cou IS struggling to reduce its pendency, such notices which are nder challenge in lhis writ petition are forcing the assessee to ock the doors of this l-Iigh Court resulting in filing of hundreds 1'new writ petitions which in the long run not only affects the dis osal of the writ petitions but also consumes substantial time of e Bench in hearing tltese matters again and again on daily basi Admittedly, in spite of'the matter before the Hon'ble Supreme ourt having been laken on many occasions, the Hon'ble Suprem Court which is scized ol'the matter has been reluctant in granting y interim protection to the Income Tax Department. Yet, the uthorities concemcd at the State level are not ready to accept the verdict passed b1, a majority of High Courts of different States on the same issue; and to make things further worse, the Income ax Department showing audacity by issuing notices continuou ly under Sections 148-A and I I 72 148 thrc,ugh the .jurisdictional Assessing Olficer whereas it ought to lrave been onlv in the faceless manner 1,1. In tre case of BANK OF INDIA vs. ASSISTANT COt\{MISSIONER, INCOME TAXIT, on an issue rvhether it was j usti liable on the part of the Income Tax Dcpartnrent Itl not lbllowing an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division Bcnch of the Iligh Court of Bombay held at paragraph No.25 as under, viz., : "25. tvlr. Paridwalla has rightly drawn out attention to the dec,sion of this Court rn Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co- orclinate Bench of this Court in Samp Furniture (P) Ltd. v. lTOl3 of $'h c.r one of us (Justice G.S. Kulkarni) was a member, wherein the Court categorically observed that the Revenue having not "accepled" the Judgment of the High Court would not mean that till the sanre is set aside in a manner known to law, it would loose its binclirg force Referring to the decrsion of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.14, the Court ()bserved that the approach of the officials of Revenue of treating decisions being "not acceptable" was criticized by the Supr€,r,re Court. ln such decision, following are the relevant observations made by the Supreme Court. ' ' ;{U 0ZS; l-/0 raxrnann.com 422 (Bombay)] Juz81 I n t l-R -s89 (tlombay) 't 1202+1 165 raxmann.com 581/300 Taxman 452 (Bornbay) '' 1l9oz; ra\nrann.com l6155 I:LT 433 (SC) 13 o.Sfl Reddy is perhaps rig officers were not actuated passing the impugned orde genuinely fett that the clarm of tenable and that, if it was a would suffer. But what Sri Redd are not concerned here with otherwtse of their conclusion malafides but with the fact that in their conclusion, by-passed regard to the same issue whic them, one of the Collector (Ap the Tribunal. The High Court h criticized this conduct of the As the harassment to the assessee of these officers to give effe authorities higher to them in the cannot be too vehemenuy emp utmost importance that, in quasijudicial issues before them, bound by the decisions of the The order of the Appellte Co e Assistant Collectors working withi the order of the Tribunal is bindi Collectors and the Appellate Col under the jurisdrction of the Tribu judicial discipline require that the appellate authorities should be f by the subordinate authoflties. T order of the appellate authority i the deparlment - in itself an obj and is the subject matter of an a ground for not following it unle been suspended by a competent rn saying that the any mala fides in They pe!.haps e assessee was not pted, the Revenue overlooks is that v! -- the correctness or or of any factual officers, in reaching appellate orders rn were placed before als) and the other of s, rn our view, righ y istant Collectors and used by the failure to the orders of ppellate hierarchy. tt asized that it is of disposing of the revenue officers are ppellate authorities or is binding on the his jurisdiction and upon the Assistant ectors who function al. The principles of orders of the higher llowed unreservedly mere fact that the not "acceptable" to ctionable phrase - peal can furnish no its operation has ourt. lf this healthy ! t4 rule is not followed. the result will only be undue harassment to assesses and chaos in administration of tax laws. 12 We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. lt is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters 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 p.oper 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 acpellate authorities to the requirements of judicial d,scrphne and the need for giving effect to the orders of the higher appellate authorities which are binding on thetn."

15. \\'hat is worrying this Bench more is the t'act that an cndeavour is being madc wholc heartedly to ensure not to generate Iirrthel litigation on issues wl.rich have been laid to rest by a large nurrbcr ol High Courts all ol- whom have taken a cousistent staud that the action olthc Income -lax Department being violative o1'tlrc 15 Finance Act,2020 and Finance Act,2

21. Now, in order to protect the interest of the Revenue as also tha of the assessee, it ,,vould be trite at this juncture, if we dispose f the writ petitirrn r.r ith an observation/d irection that the disposal f the instant writ petition irr terms ol' the judgment rendered by th s l{igh Cour-t in tl.re, case of Ktnkanala Ravindra Reddy (l supra shall however be subject to the outcome of the SLPs which we e filed by the Incorne Tax Department and which is pending con ideration before the l-lon'ble Supleme Court.

16. In the given facts and circum ces, this Bench is ol the considered opinion that unless and u il we do not timely dispose of matters which are squarely covered by the decision of this Court and which stands tbrtified by the d isions of the various othcr High Courts on the very same issue the pendency ol'this [{igh Court rvould lurther be burdened whi h otherwise can be decided and disposed of as a covered matter. 17 . So f-ar as the interest of the Re nue is concerned, we are <lf the considered opinion that the intere of the Revenue ha:r already been considered and protected, as has been observed_ in paragraphs Fi 76 36,3'1 arrl38 of the order which, fbr ready refererlce, is reproduced hercundcr

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 c,rders geltang quashed, the consequential orders passed by the respondent-Department pursuant to the notices issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles that when the rnitiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nulhfied automatrcally. 37 The preliminary objectron raised by the petitioner is sustained and all these writ pelittons stands allowed on this very lurisdictional issue. Since the impugned notices an,l orders are getting quashed on the point of lrrrsdiction, we are not inclined to proceed further and cecrde the other rssues raised by the petitioner which stands reserved to be raised and contended in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, rn the case of Ashish Aganval, supra, as a one{ime measure exercisrng the powers under Article 142 of the Constitution of lndia, permrned the Revenue to proceed under the substrtuted provisions, and this Court allowing the petitrons only on the procedural flaw, the right 17 I , I conferred on the Revenue wo proceed further il they so want order of the SuPreme Court ld remain reserved to from the stage of the n the case of Ashish Agarwal, suPra.

18. We would ontY further like to ake observations that since we are inclined to dispose of the inst t writ petition, conscious ol- the fact that the earlier order of thi Kanokola Ravindra RedtlY (l suP befbre the Hon'ble SuPreme Court High Court in the case of ) is subjected to challenge ln SLP No.357'1 of 2024, pref'crred by the Incomc Tax Depart ent, we make it clear that allowing ol- the instant writ petltlon s subject to outcome of the aforesaid SLP pref'erred by the Reven e against the decision of this Fligh Court in the case of Kunaka Rovindra Reddl' (l suPra) This. in other words, would mean th t either of the parties, if theY so want. tray nlove an appropriate p tition seeking revival of thrs writ petition in the light of the deci ion of the Hon'ble SuPreme Court in tlre pending SLP on the very same lssue

19. AccotdinglY, the instant wrt petition stands allowecl rn favour of the assessee so lar as the issue of jurisdictiort concemed. As a consequence, the impugned notice ullder challenge under Sections 148-A an 148 stands set aside/quashed- 18 I The consr:cluential orders, if'any, also stand set aside/quashed in similar terms as have been passed by this lJigh Couft in the case of Konkantla Ruvindro Redd.1, (l supra). There shall bc no order as to costs. ('onsequently, miscellaneous petitions pendin-e. if any, shail stand closed. /ITRUE COPY// SD/. A. SRINIVAS REDDY T REGISTRAR ASSIS IAN \ SECTION OFFTCER 506001 . 2nd Floor' E-Ramp'

1. The Assessment Unit, National Faceless Ass-e^s-sment\Uentre' lncome Tax " D;;;;-;;;i, Mini.t.v ot Finance, Room No 4o't ' Jawaharlal Nehru Siadium, Delhi - 110 003 2. The lncome Tax Officer'war-ol , warjngall lncome Tax Office, D.No 1-8-610, - iliffi, Mawii Comptex, opp rsnpoit Bhawan' Nakkalagutta' Telangana- a. ii!-5""rutury, Union of lndia, Ministry of Finance North Block' New Delhi-l '10 4. o;; cc to M/s THANNERU CHAITANYA KUMAR' Advocate IoPUcl 5. 5;; ca i; sRl c.VEuxaresxwARLU, Advocate IoPUCI 6. One CC to Ms. B.SAPNA ii-E-r;ov, il-nnr.rlg *r.rion couNSEL FOR THE " 7. Two CD CoPies ilrc-oure lnx DEPARTMENT, Advocate (oPUc) 00'1 . To SA KKS HIGH COURT DATED:1710712025 ORDER WP.No.20637 of 2025 ALLOWING THE W.P WITHOUT COSTS. 1 t cf, il 1t tttg z$25 I I I ,'. c. .-, . 1 ,J 'r--' ,l.i/ /