Punjab and Haryana High Court in the case of JATINDER SINGH BANGU v. UNION OF INDIA

Heartl Mr. Sarang Afzulpurkar, learned counsel for the petitioner and Mr. K.Sudhakar Reddy, learned Senior Standing Counsel for the Irrcome Tax Dcpartment appearing for the respondent Nos.l and 2, and Mr. G.Venkateswarlu, learnecl counsel representing Mr. Gadi Praveen Kurnar, learnecl Deputy Solicitor General of India, appcaring fol respondent No.3. Perused the record.

2. This is a writ petition w-here the proceedings are either challenged to the notices which wer.e issued under Section 14gA and 148 of the Incor-ne 'fax Act, 1961 (for short'the Act') or the assessment orclers tlrose have been passecl under Section 747 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 issueci uncler Section 148.4 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 amendment that was brought to the Iucome Tax Act by way of Finance Act,2027 w.e.f., 01.04.2021 onwards, proceedings under. Section 14gA 2 of the Act as also und.er section 148 of the Act ought to have aiso 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, 202f i'e ' the irnpugned notices under section 148A and Scction 148 of the Act noi being issued in a faceless lnanner, have ah'eady been dealt with arrd clecided by this Court in the case of KANKANALA RAVINDI{A REDDY vs' INCOME-TAX OFFICERI d'ecicied on 7409'2023 wheleby a batch of writ petitions wcre allor'r'ed and the procecdings initiatccl under Section 148,{ as also utrcler Section 148 of the Act were treltl to be bad with consequet-rtial reliefs on the glound of it bcing in violation of the provisions of Section 1514, of the Act reacl with Notification 1'8 /2022 dated 29.03.2022. 'fl'rcsaicl judgrnent passed by this Court has also been subsequently followed in a large number o[ writ petitions which were allowed otr s itn ila r terlns.

5. Down t-he line, we find that the same issue has also been decided against the Revenue by various High Courts i'e'' by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD'' vs' ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS" Gauhati High Court in the case of RAM NARAYAN SAH vs' UNION '[(2023) 156 taxrnanu.corn 178 (Telangana)] ' yzoz+1464 ITR 430 (Borrr) ') 3 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 SRI VENKATARAMANA REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAXs where the issue was in respect of international taxatiorr, Bornbay High Court in the case of ABHIN ANILKUMAR SHAH VS. INCOME TAX OFFICER, INTERNATIONAL TAXATION6 wl.rich is again on international taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI DAHYABHAI RADADIYA vs. INCOME TAX OFFICER, WARD 3(3X5)E, Jhalkand High Court in the case of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Raiasthan 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 l{igh Court in the case of GIRDHAR 'l(2024) 156 taxmann.corn 478 (Gauhati)l " [(2024) 165 taxrnann.corn I I 5 (Punjab & Haryana)] ' [2024) 167 taxmann.corn 4 I I (Telangana)] " 12024) 166 taxrnann.corn 679 (Bornbay)l ' [2024) 165 taxmann.corn 113 (Hirnachal Pradesh)] '2ozq SCC online Guj 4o I 2 '2025 SCC Online Jhar 287 12023'. RJ-JD :49 84-DB l o ' 4 { 1'- -, GOPAL DALMIA vs. UNION OF INDIA & ORS (M.AT 1690 of 2023), decided on 25.09.2024.

6. Even though the sarne rssue having been deciclecl by a large nurnber of Fligh Courts, we are still confronted n,ith large filing of identical rnatters on daily basis ranging between 5 to I0 writ petitior-rs. That upon the instructions being sought frorn thc l)cpartment, they have beeu takir-rg a solitary ground that the decision of thc llombay I{iglr Court in the t--ase of Hcxautare Tecfutologics Ltd., (2 supra) as also the onc wlricl-r has been clecidetl by tiris Court in thc casc. of Kanakala Raaitrlrn Reddy (l supra) has bccn subjectecl to challcrrgt irr a Spccial l-cavc Petition i.c., SLP No.3574 of 2024 bcfore thr: I lon'blc Supreme Court and the Hon'ble Supreme Court is seizecl of thc matter. Lr addition, there arc about 1200 SLPs also filed arisinll out of the sarne issue bcing decidr:r{ by various Lligh Courts.

7. To a query being put to the learned courrsel for thc Revenue, they Itave categoricallv acceptecl the fact that thele is no interirn order granted by the I{on'ble Supreme Court in any of thesc l)rattcrs pending bcfore it. Meanwhilc, fresh writ pctitions of identical rrature arc being piled up before this llench on daily basis ancl the pcnclt,'ncy is getting increased on m.rtter which otl-rerwise has alreacly lrt'en dcalt and decided by this vcry Fligh Court itself. 5

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, till date, we do not find any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance of notice under Scction 148.4 and under Sectior-r 148 of the Act by the jurisdictional Assessing Of ficer, rather the au thorities concerned in tl-re teeth of series of dccisions by all the major High Courts in lndia are continuously still initiating proceedings unclcr Section 148,4. of the Act ar-rd also initiating proceedings under Section 148 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 2027

9. Upon a query being Put as to \^,hy can't this writ petition be disposed of in the teeth of the clccision rcnclcred by this Court in the case of Kanakala Raahulra Reddy (l supra), learnccl Standing Counsel for the Income Tax Department 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. tt was also the contention of 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 till thq finalization of the SLPs 6 pending beforc the I Ion'ble Supreme Court ar-rcl the fact that the petitioner IS already enjoying the berrefit of interir.n protection Nonetheless, on the earlier query of this Court as to u/h) the Income Tax Departmcnt have not come out with a ntechanism to issuc appropriate iustructions or to take applopriate sl(,ps in cnsuring that proceedings ur-rc1er Section 148A of the Act as .tlso thc assessment orders under Scction 148 of the Act are kcpt in a holtl ir-r the light of the decisions dccidcci by the various Higl-r Courts, it ,,vas submitted by thc Iearnecl Star-rrling, Counsel that the saicl steps carr only be taken at the level of CBL)T as any such steps woulcl have to bc takcn Pan hrclia ancl cannot be linriLecl to any of these jurisdictional IIielr Courts

10. As a result of which, what we are facinlg is steep increase of iitigation da1. ir-r and da1, oLrl even though various crclers have becn passed by this IIigh Court allowing writ petitiorrs on thc very same issuc. The Incornc Tax authorities concerned aro still even no\ / irt 2025 also irritiatine proceeciings in contravention to thc provisiorrs of Section

151.4 of the Act anc-l as a result by now, rnore than 600 to 700 petitions have been aheacly got pilc'd up before this High Court or-r an issue which otheln ise stands squarely covered by thc jurlgment of this Court in the case of Kanokala Raaindra Reddy (7 supra). What is also sulprising is thc fact tirat though while allowing thc rvrit petitions in the 1 7 case of Knnakala Raainilra Reddy (7 supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners insofar as the liberty which was grantecl to the Revenue for initiating fresh proceedings strictly in accordance with the amenclecl provisiolls of the Act, as amencletl by the Financc Act,2020 anc'l the Finance Act, 2021,. The petitioner assessee would be entitled to challenge or raisc the othel legal objections if the Revcnue initiates fresh procectlings. '['he Department has mac]e no endeavour in availing tl-re said liberty that was reserved for the Revenue. On the contrary, they have bccn still sticking on to the stand, wl-rich this High Court as well as many other High Courts already held to be bacl 1,7. It appears that because of the aforesaid libcrty that this High Court had granted pelmitting the Reveuue for initiating freslr l'rroceeclings as a one-time measure in a faceless trlannel', the Income Tax Dcpartment wants to take advantagc of the same trv Protracting these proceedings which would enable them to meet the limitation that would otlrerwise come in the way. Likewise, if the writ petition is kept pending for a considerable long period of time ancl finally at a later stage if the Hon'ble Supreme Court confirms the decision taken by this Fligh Court as also by the other High Courts in which the S[.Ps are still pending, the Income Tax Department would get the advantage of the 8 liberty that is otherwise protectecl in favour of the Rcvcnue for initiation of fresh proccedings from the clisposal of thesc matters at a much later stage n,hich rvould be advantagcous ancl benef icial to the Rcvenue and would be equally disadvantageous and cletrimcntal so far as intere,st of the assesses are concerncd. As a consequence, the Income Iax Deparhnent llcts an extended period of tirne for irritiatiorr of fresh procecd ings '12. 'l'he ala.rr-ring trenc{ of c{ocket explosion irr this C_ourt, rlespite the clear prececle.t sct irl Kannkala Raaindro Reddy ('1 supra), is a ln.ltter of gravc conccnr. The lrrcomc Tax Department's pcr.siste,t ir-ritiation of fresh proceeclings, clisregarding the establishecl judicial pronouncemerrts, has lcd to an unprecedented sulgc in litigation with over 600-700 petitiorrs piling up on the same issue. This deliberate approach not orly unclermines the principle of juclicial prc'ceclent but also strains thc juclicial resout.ces unnecessarilv. 'I-he Departrnerrt's strategv of arvaiting the Supreme Court,s decisjon or1 pending Sl_ps while conti,u i.g to initiate fresh proceedings appear.s to be a calculated move to buy ti.-re a.d circurnvent lirnitation Perio<is, rather than adhering to the establishec'l legal position. such concltrct raises serious questions about the adrninistrative efficiency and the respect for judicial pronouncements, particularly when this court has ah.cadl, proviclcd a I' 9 balanced approach by preserving both the Revenue's rights and assesses interests

13. Another aspect wl'rich needs to be considered is ti-ra t in fact it should have been realizecl by the Income lax Department itself and should have found out via media in ensuring that proceedings under Sections 148-4 and 148 should not have been issued in a faceless manner, at least till the Hon'ble Supreme Court clecicle the tr.r,elve hundrccl (1200) odd SLPs which it is already scized of or, at least the Incomc'fax Departrnent should have founcl out some rcrnctlial steps to ensure that wherever tl-re authorities intend to initiate proceedings under Sections 148-4 and 148, other than in a faceless manner, the proceedings should havc been deferred without precipitating the mattc'r further intimating the assessee that they shall initiate appropriate proceedings only after the SLP's are decided by the Hon'ble Suprerne Court on the very same issue. This again, the Incomc Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all has to be taken, has to be taken for the wholc of India, and which otherwise has to be by way of a policy decision ancl that too at the level of Central Board of Direct Taxes. Though the learned 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 struggling to reduce its pendency, ( 10 such notices u,hich are under challenge in this writ petition arc forcing the assessee to knock the doors of this High Cottrt rcsulting in filing of hundrcds of new writ petitions which in the long run not only affects the disposal of tl-re writ petitions but also cotrcumes substantial tirne of the Bench in hearing these matters again and again on daily basis. Admittedly, in spite of the matter before the FIon'ble Supleme Court having been taken on rnany occasions, thc Hon'ble Supreme Court which is seized of the matter has been reluctant in granting any intetim protection to the Incorne Tax Departmcnt. Yei, the authorities concerned at the State level are not ready to accept the rrerdict Passed by a majority of High Courts of different States on the same issue; and to rnake thilgs further worse, thc Income Tax Department is showing auclacity by issuing notices continuously under Sections 148-4 ar-rd 148 through thc jurisdictional Assessing Officer whercas it ought to have been only in the faceless manner

1.4. In thc case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXI1, on an issue whether it was justifiabte on the part of the Income Tax Department in not following an ordel passecl by the adjudicating authority only on the grouncl that the t I 11ZOZS1 170 taxrnann.corn 422 (Bornbay)l >\. 11 appeals are pending, the Division Bench of the High Court of Bombay held at paragraph No.25 as under, viz., : "25. Mr. Paridn,alla has right\, drawn out attention to the decision of tl.ris Ccurt in Commissioner of Income Tax vs. Smt. Godavaridevi Sarafr2 as also the reccnt tlccision of Lhe co-ordinate Bcnch of this Court ir-r Samp Furniture (P) Ltcl. v. ITOrr of which onc of us (Justice G.S. Kulkarni) was a membcr, r,r,herein the Court categorically observed that thc Rcvcnue having not "acccptcd" the ludgment of tl-re High Court woulcl not mcan that till thc same is set aside in a manner known to law, it ra,,oulc{ loost'its binding [orce. Rcferring to thc decision of the Supreme Court in Union of India vs. Kamlakshi Finance Corporation Ltd.'r, the Court observccl tl.rat the apploach of the officials of Revenue of treating c{ecisions Ltirrg "r.rot acccptable" rn,as criticizecl by the Suprerne Cor.rrt. Ir.r snch clccisior.r, following are the re.levant observations made by thc Suprcrnc Court. "5.Sri Rcddy is perhaps right in saying that the officers u'ere not actuittcd by any mala fitlcs in passing the impugnecl olclers. Thcy perhaps gcr.tuir-tel1, 1"1, ,r',ua the claim of thtr assessee h,as not tenablc arrcl that, if it was accepted, thc Revenuc would suffer. But wl.rat Sri Rcddy overlooks is that wc arc not conccrned here vvith the correchress or otheru'ise of thcir conclusiorr or of any facLual malafides but u.ith the fact that the officers, in reaching in their conclusion, by- passcd trvo appellate orders in regard to the same issue which wcre placed bcfore them, one of tl.re Collector (Appeals) and the other of thc Tribunal. The High Court has, in our vicw, rightly criticizec{ this conduct of the Assistant Collectors and the harassmcnt to the assessee caused by the '' J19781 I l3 ITR 589 (Bombay) " 1202+1[65 taxmann.com 581/300 Taxman 452 (Bombay) " TtgeZltaxmann.com l6155 ELT 433 (SC) t,i 72 failurt: of thcsc o[[i,:ers to give effect to tlrt, orclers of authoriLit's lrigher to them in the appellate hir'.rarchy. It cannrit [rr: too velrcmcntly crnpl-rasizecl that it is of utmost impor'litnct' that, in disposing of the quasijrrrlit ial issrrcs befole Llrenr, r'evenuc oflicors are bound by tht: rlt:cisions of r-hc apppll;119 authorities. Thr: ordcl of d-rc AppellLc Collcctor is hintlinl5 on the AssisLart Ccllectors r,,.crkintl rvithin hir julisrliction arrcl the orc{cr of the TritrunaI rs bineirril; upon ihc Assisl.rrtt Collcitors and the Appellate Collcctors r. ho [unctirrn rrnc]er tlre iuriscliction oI the 'l ribtrnal. I'ht plincil.rlos of jurlicial disciplir-re requile that thr: oldcrs of the highcl a ppellak' ;ru thoriric-s shoulci bc followell u nlcserve,-lly ['ry tlrc s u lrorci ir.ra t{, auth.rihes. Thc rnere faat that thc ordcr of 1h,.. appcllatc autholiL) is not "acc(-'l)ttrlrlc" to lho dcplltrn(rr)t - in itself trn objectionable phrasc - ancl is thc subjccr lrattcr o[ arn appeal can iumrsh iro ground for rrol follouirrll rt unkrs:; its opcration ha.s bcen suspr.ncled by a aonrl)('t('n[ court. lf this hcaltl-,y rule is not iollorved, the rosult will or.rly be uncluc harassment to assesscs and chaos in acl nr inistr'.rtion <,I tax laws.

12. \\'e havc clealt rt,ith this aspect at some lenl;th, becatrst: it has [,ct'n suggcsted by thc learnecl Acldition;rl Solicitor' Gen('ral tlrat thc ohservations macle lrv the High Coult, have '.rcen halsh on the officers. it is clear that the olrservations of thc tligh Corrr t, seemingl), vehement, antl apparently unpalatable to the Revenue, are onit' intenclerl to curb a tcnrlt,rrcv irr revt,nue rnatters rvhich, if a-llorarerl Lo trecornc wiclt:spretrc{, could rcsult in considerabic harassn-rcnt to thc asscsst:s-public without any benefit to Lhe Revenue- IVe would likc to say that the department sl-roulc{ take tl.ri:se obscrvations ir1 the proper spirit. The observations of thc I{i1,,h Corrrt sl.roul,l be kept in mind jn futurc anrl ihc utmost 13 regard shoulcl be paid by the adiudicating authorities and the appellate authorities to the requirements of iudicial disciplino and the necd for giving effect to the orders of the higher appcllate authoritics which are binding on them." 15 What is worrying this Bench more is thc fact that an endeavour 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 High Coults all of whom have taken a consistent stand that the action of the Incomc Tax Departrnent being violative of the Finance Act, 2020 and Finance Act,2027. Now, in order to protect the interest of tl-re Revenuc as also that of the assessee. it woulcl be trite at this iuncture, 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 I{igh Court in the case of Kankanala Raoindra Reddy (1, supla) shall however be subject to tl-re outcome of the SLPs which were filed by the Income Tax Department and whicl-r 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 fortified by the decisions of the various other High Courts on the very same issue, the pendency of this High Court would further' 74 be burdenecl which otherwise can be decided and disposed of as a covered mattL.r

17. So far as the ir-rtelest of the Revenuc is concr:mecl, rve are of the consideled opinion that t!-rc intel'est of the Revclrro hns alreacly been consiclered and plotcctccl, as has been obselvecl in paragraphs 36, 37 ancl 38 of the order .,vhich, for rcacll, refercr.rce, IS reproduced hereunder: "3(). For all the af,rlcsaicl ic.ls()rls, thc. irnpugrrcrl rroLiccs jssucd anrl the proceerlings cirau'n b1. thc lesponclcp1 l)q.pirllnrcnt is ncitlrcr tenable, nor sustainlbl,.'. .Iiu: tioticcs st, issuccl iintl ihc pro<'cclule ar{ookd hcing pcr sc ilicgal, rlcscrvt's to bc arrrd are accordirtgll' sct asicleT quashotl. As a conserlucrlce, all tlle impugrrecl orders gt'tting quashed, Lhc constlucntial ortlers passL.tl by thc resporl.tent-Dcpartment pursuanL iO thc nolices issuc,-l undcr Scction 147 anr.1 148 woultl also gci tltrasherl and it is orclcrctl accorclingll.- Thc reason !1,e atr, {Juashing tlte coltsr:rlucrrtial olciel is on [hc priuciplcs that rvhln thc. initialion of the proceedings itself r,r'as ploccduialh' rr.ronll, the subsuluerrt ordr.rs trlso gets nui li{ictl au tonratical lr,.

37. The preliminary objection raised bv thr, peLitiorrcl is sustaiued anil all thosc writ pctitions stancls allou'ed,rir t[-ris vcn, julisdictional issue. Sir.rcc ttrc imPug;1g.{ nrrlir. i.s antl orclels arc llctting tluashcd on the point of ju:isdictiorr, rt,c alc nol ilclined to ploceed ltrrther aircl decidc rl..e other issues raiserl bv the petitioncr which r;tands rescrvccl to lrc r'ai-sc.l a ncl contcnclecl in art a pproplia te pr()coedii'rEs. I 15

38. Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a otre-time nteasure exercising the powers under Article 142 of the ConstiLution of India, permitted thc Revenuc to proceed under thc substituted provisions, ald this Court allowing the pcLitions only on the procedural flaw, the right conferred on the Revenuo worrlcl remain rcserved to procccd furthcr if tlrcy so want from the stage o[ the ordcr of the Suprerne Court in the casc of Aslrish Agarwal, supra." t...

18. We would only further like to make observations that since we are inclined to dispose of the instant writ petition, conscious of the fact tlrat the earlier order of this I{igh Court in the case of Kauakala Raaindra Reddy (1 supra) is subjected to challenge 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 irlstant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Raoinilra Redily (7 supra). This, in other words, rvould mean that either of the parties, if they so want, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Supreme Court in the pending SLP or-r the very same issue L9. Accordingly, the instant Writ Petition stands allowed in favour of the assessee so far as the issue of jurisdiction is concerned. As a consequence, the impugned notice under challenge under Sections 148- I I 16 ',c!.'r\ii A and 148 stands set aside/quashed. The consequential orclers, if any, also star-rd sct aside/quashed in similar tenns as harre been passecl by this High Court in the case of Kankanala Rnoindrn Rcddy (1 atpra) There shall bc' no ordcr as to costs Consccluently, miscellaneous petitions penrline, if any, sha[[ stancl closed SD/-P. PONNA KRISHNA NT REGISTRAR T AS //TRUE COPY// SECTION OFFICER To, \

1. Assessment Unit, National Faceless Assessment Centre, lncome Tax Department, tr,4inistry of Finance, Room No. 4O1 ,2nC Flcor', E-Ramp, Jawahadal Nehru Stadium, Delhi - 1 10 003.

2. The lncome Tax Officer, Ward 5(1), Hyderabad I T TOWER, AC Guards, Masab Tank, Hyderabad-500004 Telangana

3. Union of India, Represent by Secretary tvlinistry of Finance North Block, New Delhi-110 001

4. One CC to SRl. SARANG AFZULPURKAR Advocate [OPUC] 5 One CC to SRl. K SUDHAKAR REDDY (Sr SC FOR INCOI\iIE TAX) [OPUC] 6- One CC to Sri Gadi Praveen Kumar, Deputy Solicitor General of lndia [OPUC] Two CD Copies 7 KKS GJP \ t. ).'I ('(.I M -\ -t' .7' ,, 't .;/" ./,/ HIGH COURT DATED:1810712025 EHi ( s, ,- '(i ORDER WP.No.20870 of 2025 ?- J -f '1 i 3 0 J LlJ ALLOWING THE WRIT PETITION WITHOUT COSTS ?( L\