Writ Petition No. 15383 of 2023 · The High Court · 2025

challenged to the notices vvhich were issued under Section 148.4 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

3. This writ petition is being taken up today only on one of the grounds, that the notices issued under Section 148,4 o1- the Act and the subsequent initiation of proceedings under Section 148 of the Act by the -lurisdictional Assessing Olficer, whereas in ter-rns of thc amendrnent that was brought to the Income Tax Act by way \ 2 l of Finance Act, 2021 w.e. L, 0l .04.202 I onwards, proceedings under Section l48A of the Act as also under Section 148 of the Act ought to have also been issued and proceeded in a faceless manner

4. Ther contention ol the petitioner is that the issue of proceedings being in violation of the Finance Act, Z02l i.e., the irnpugned notices under Section l48A and Section 148 of the Act not being issued in a faceless manner, have already been dealt with and decided by this Courr in the case of KANKANALA II.AVINDRA REDDY vs. TNCOME-TAX OFFICER' decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiatcd under Section 148A as also under Section 148 of the Act were held to be bad with consequential reliefs on the ground of it being in violation ol the provisions of Section l5lA of the Act read rvith Notification 1812022 dated,29.03.2022. The said judgment passed by this Coun has also been subsequently followed in a large number of writ petitions which were allowed on similar terms. ' (2023) 156 taxmann.corn I 78 (1'elangana)l J

5. Down the line, we find that the same issue has also been decided against the Revenue by varlous High Courts i.e., by the Bombay High Court in the case of HEXAWARI, TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIAT, 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 COMMISSIONBR OF INCOME TAX5 where the issue was iu respect of international taxation, Bombay High Courl in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICBR, INTERNATIONAL TAXATION6 which 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 'lzoz+1464 ITR 430 (nom) '[(2024) 156 taxmann.com 478 (Gauhati)] ^ [(2021) 165 taxmann.com I 15 (Punjab & Haryana)] ' [2024) [ 67 taxmann.corn 41 I (Telangana)] '12024) 166 taxmann.corn 679 (Bombay)l ' 12024) 165 lqxmann.com I 13 (I{imachal Pradesh)l \ 4 '- .J DAHYAIIHAI RADADIYA vs. INCOME TAX OFFICER, WARD 3(3X5)8, Jharkand High Court in the case of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case ol SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch ol rvrit petitionsro which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High C'ourt in the case of GIRDHAR GOPAL DALMIA vs. UNTON OF INDIA & ORS (M.A.T 1690 of 2023), decided on 25.09.2024.

6. Eve,n though the same issue having been decided by a large number of High Courts, we are still conlronted with large filing of identical matters on daily basis ranging between 5 to l0 writ petitions. 'Ihat upon the instructions being sought from the Department, they have been taking a solitary ground that the decision of the Bombay High Coum in the case of Heraware Technologies Lld., (2 supra) as also the one which has been decided by this Court in the case ol Kanakola Ruvindra Reddy 8202+ SC]C Online Guj 40 l2 '2025 S(lC' Onl ine Jhar 287 12023, RJ- JD : 49 84- DB l t o 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 filed arising out olthe same issue being decided by various High Courts.

7. To a query being put to the learned counsel for the Revenue, they have categorically accepted the fact that there is no interim order granted by the [{on'ble Supreme Court in any of these matters pending before it. Meanwhile, fresh writ petitions of identical nature arc 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 Court itself.

8. On the one lrand, even though the order of this Court that was passe<J as early as on 14.09.2023 and more 16 months have lapsed, till date, we do not flnd any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance of notice under Section 148A and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions 6 '.j by all the major High Courts in India are continuously still initiating proceedings under Section l48A of the Act and also initiating proceedings under Section 148 ol the Act in contravention to the amendments brought into thc lncome 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 rvrit petition be disposed of in the teeth of the decision rendercd by this Court in the case of Kanakala Rsvindra Retldy (l srrpra), Ieamed Standing Counsel for the Income Tax Department contends that those would r.rnnecessarily burden the Income Tax Depaftment where they rvould be required to file equal number ol SLPs befbre the Hon'ble Supreme Court and it would be turther bLlrdening the exchequer of the Union of India. lt was also the contcntion of the learned Standing Counsel that no preiudice would be caused to the interest of the petitioners in case if this w'rit petition is kept pending till the finalization of the SLPs pending beforc the Hon'ble Supreme'Court and the fact that the petitioner is already enjoying the benefit of interim protection. Nonetheless, on the earlier query of this Court as to why the Income Tax Depafiment have not come out with a mechanism to issue appropriate instructions or to take appropriate steps in ensuring that proceedings under Section l48A of the Act as also the assessment orders under Section t48 of the Act are kept in a hold in the light of the decisions dedcided by the various High Courls, 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 of these jurisdictional High Courts.

10. As a result of which, w-hat we are facing is steep increase of 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 Income -fax authorities conccrned are still even now in 2025 also initiating proceedings in contravention to the provisions of Section 15lA of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this Iligh Courl on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Ktnakala Ravindra Reddy (l supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kunakala Rsvindra Reddy (l supra), the Division Bench while reserwing the right of the Revenue, has also protected the interest of the petitioners E &dr*! 8 insofar as the liberty which was granted to the Revenue for initiating lresh 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 Reventre initiates fresh proccedings. The Department has made no endeavour in availing the said liberty that was reseryed for the Revenue On the contrary, they have been still sticking on to the stand' which this I{igh Courl as well as many other High Courts already held to be It appears that because of the aforesaid tiberty that this Iligh I l. Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a faceless t.nanner' the Income Tax Department wants to take advantage of the same b1' protracting these proceedings which would enable thcrn to mect the limitation that would otherwise come in the way l-ikewise' if the rvrit petition is kept pending for a considerable long period ol time and finally at a later stage if the Hon'ble Supreme Court confirnrs the decision taken by this High Couft as also by the other High (lourts in which the SLPs are still pending' the lncome -I 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 olthese 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 Departmentgetsanextendedperiodoftimeforinitiationoftreslr proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanakah Ravindra Retfuly \l supra)' is a matter of grave concem. The Income Tax Department's persistent initiationoffreshproceedings,disregardingtheestablishedjudicial pronouncements, has led 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 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 ,/ gleixt 10 1 position. Such conduct raises serious questions about the administrative efficiency and the respect lor .judiciat pronouncernents, particularly when this Court has alreadv provided a balanced approach by preserwing both the Revenue,s rights and assesses lnterests. I3. Another aspect which needs to be considered is that in lact it should havc been realized by the Income Tax 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 f'acetess manner, at least till the Hon,bte Supreme Court decide the twelve hundred (1200) odd SLps which it is already seized olor, at least the I ncome Tax Department should have for-rnd out solne rernediai steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and l4g. other than in a f'aceless manner, the proceedings should have been dcf-erred rvithout 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. T'his again, the lncome Tax Department, has not been able to give a cou'incing reply, except for the fact that such a decision if at ail 77 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 learned Standing Counsel for the Income Tax Department contonded that the Delhi High Court dismissed a writ petition of similar narure, on the one hand when the High Court is struggling to reduce its pendency, such notices which are under challenge in this w,rit petition are forcing the assessee to knock the doors of this High Court resulting in frling 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 hear.ing these matters again and again on daily basis. Admittedty, in spitc of the matter before the Hon'ble Supreme Couft having been tal:en on many occasions, the Hon'ble Supreme Court which is scized olthe matter has been reluctant in granting any interim protection to the Income Tax Department. Yet, the authorities concerned at the State level are not ready to accept the verdict passed by a majority of High Courts of different States on the same issue; and to make things furlher worse, the Income Tax Department is showing audacity by issuing notices continuously under Sections 148-A and 12 .- \ .-- ! 1 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner

14. In 1ne case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXrr, on an issue whether it was justifiable on the part of 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 Bench of the Iligh Courr of Bombay held at paragraph No.25 as under, viz., : "25. Mr. Paridwalla has rightly drawn out attention to the decisior of thas Court rn Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Court in Samp Furniture (P) Ltd. v. lTO13 of which 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 same is set aside in a manner known to law, it would loose its binding force. Referring to the decision oi the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.1o, the Court observed that the approach of the officials of Revenue of treating decisrons being "not acceptable" was criticized by the Supreme Court. ln such decision, following are the relevanl observations made by the Supreme Court. " 11zOZ;1 [ 70 taxrnann.com 422 (Bombay)l '' 119281 113 I'tR 589 (Bombay) '-'1202+1 165 taxmann.com 581/3001'axman 452 (Bombay) " 1;,OeZl hxmann.com 16155 EL't 433 (SC) _/ 73 "6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks 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 quasljudicial 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 tipon 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 14 i.l rule is not followed, the result will only be undue harassment to assesses and chaos in administration oi tax laws 12 We have dealt with this aspect at some length' the learned because it has been suggested bY 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 proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adiudicating authorlties and the appellate authorities to the requirements of ludicial discipline and the need for giving effect to the orders authorities which are binding oi the higher appellate on them." I 5. What ts worrylng this Bench more is tl.re fact that an endeavour is being made whole heartedly to ensure not to generate fur-ther litigation on issues which have been laid to rest by a large number ol High Courts all of whom have taken a consistent stand that the action of the Income Tax Department being violative of the 15 Finance Act,2020 and Finance Act,202l- 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 observation/direction that the disposal of the instant writ pctition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (l supra) shall however be subject to the outcome of the SLPs which were filed by the Income Tax Department and which is pending consideration before the I-Ion'ble Supreme Court.

16. In the given facts and circumstances, this Bench is of thc considered opinion that unless and until we do not timely disposc 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 Higtr 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 considere(and protected, as has been observed in paragraphs P $l 16 .- \1. .., 36,37 and Jg of the order which, for ready reference, ls reproduced hereunder: 36 For all the aforesaid rr ssued and *,e p,oceeoinia:Tj? TJi":il:::: Department is neither tun'o'", nor sustainabre. The notices so issued ,no the Procedure adopted being per se iflegar, deserves ,o be and are accordingly set aside/quashed. As a cons all the impugned orders getting quashed, ,nu,"o'un"u' by the responde", r"rr;;::[1t:r# :,.T: :il::: issued under Section 14j and 148 would also get quashed and it is ordered a "on."quuntl]i:,,.oo::ll JTJr:;il: are quashrng th" that when the initiation of the proceedings itsetf was procedurally wrong, the sub sequent orders also gets nullified automaticary.

37. The preliminary obJection raised by the petitioner is sustained and all these writ thisvery.iurisdictionarissue.petitionsstandsallowedon and orders are se.ins ,:::""l"il1rJ"il::":; jurr56;61;6n, we are not inclir to proceed further and decide the other issues .",.1"0 by the petitioner which stands reserved to o" ,.rr",9 sd and contended in an appropriate proceedrngs. Since the Hon,ble Supreme Court had, in the case as a one{ime measure Article 142 of the the Revenue to proceed 1U. of Ashish Agarwal, supra, exercising the powers ur c)onstitution of rndia, permittnder under the substituted proria,o the Pettons ",, "" *" l]:l]}lilJ, iriT;: ,l / 17 conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashisl] Agarwal, suPra.

18. We would only further like to make observations that since we are inclined to dispose of the instant writ petition' conscious of thefactthattheearlierorderofthisHighCourtinthecaseof Kanakala Rrpindra Reddy (l supra) is subjected to challenge belore the Hon'ble Supreme Court in SLP No'3574 of 2024' prel-erred by the Income Tax Department' we make it clear that altowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision of this HighCourlinthecaseofKanakalaRavindraReddy(|supra'1. 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 tight of the decision of the Hon'ble Supreme Courl in the pcnding SLP on the very same issue' I 9. Accordingly, the instant writ petition stands allowed irr favour of the assessee so far as the issue of jurisdiction is concemed. As a consequence, the impugned notice under chaltenge under Sections 148-,{ and 148 stands set aside/quasl-red' I t { t 18 The consequential orders, if any, also stand set aside/quashed in similar temrs as have been passeri by this High Court in the case of Kankanala Ravindra Redtty (l supra). There shall be no order as to costs. Consequently, rriscellaneous petitions pending, if any, shall .l stand closed To, SD/. //TRUE COPY// MED ABDULLA KHAN tSTANT REGISTRAR SECTION OFFICER

1. The Secretary, Union of lndia, Department of Rev New Delhi. e, It4inistry of Finance,

2. The Assistant Commissioner of lncome Tax, DC/ACIT Circle- 5(1), Room No. 224, B Block,2nd Floor, lT Towers, AC Guards, Nlasab Tank, Hyderabad - 500004. t I

3. One CC to SRI T.PRADYOTH, Advocate. [OPUC] 4. One CC to IVs.B.SAPNA REDDY, SC for lncome Tax Department. IOPUC] 5. Two CD Copies. BSK TKS 1p HIGH COURT DATED:1il01t2025 , -\- ; ,l r-.! -a- .'/-rr*' \-v I i- 11 SEP 2025 i \,' :.. ,l ORDER WP.No.20t10 of 2O2S ALLOWING THE WRIT PETITION WITHOUT COSTS q a5 \0