Jains Four Seasons Association, Re v. contrary to the Principles of Natural Justice

Order

(per llon'hle Sri Justica P-Sam Koshy) Heard Mr.Manmohan Dundu, leamed iounsel for the pctitioner and Ms.J.Sunitha, learned Senior Standing Counsel for the Income Tax Department for the respondents. Perused the rccord ). This is a writ petition where the proceedings are either

challenged to the notices which were issued under Section l48A and 148 of the Income Tax Act, 196l (for short'the Act') or the assessment orders those have been passed under Section 147 ol the Act which have been assailed

3. This writ petition is being taken up today only on one of thc grounds, that the notices issued under 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 I of the amendment that was brought to the Income Tax Act by wa$, of Finance Act, 2O2l w.e.f., 01.04.2021 onwards, proceedings 2 FJ under Section 148,4 ol' the Act as also under Secti :rrr I 48 of the Act ought to liave also been issued and proceeded in a faceless manner'

4. The contention ol' the petitioner tS that rhe issue of proceedings being in violation ol the Finance Act 102 t i.e., the impugned notices under Section l48A and Section 1.18 of the Act not being issued in a l'accless ffranner, have alreadl hecn dealt r.vith and decided by this Court in the case of k I.NKANALA RAVINDRA REDDY vs. INCOME-TAX OFFI('URr decided on 14.09.2013 r," hcrcby a batch of writ pctitions \{c.e allowed and tl.re proceedings initiated under Section l48A as also Lrndel Section 148 olthc Act were held to be bad with consequentir I reliels on the ground of it being in violation of the provisions of S,rction l51A of tl.re Act read u'ith Notillcation l8l2\22 dated 29.03.1022. The said judgment passe-d by this Clourt has also been subsequcrrtly fbllorved in a large nuntbcr of writ petitions which were allorl,:d on similar terms. '[(2023) 156 taxrnann.corn 178 (Telangana)] / ,

5. Down the line, we find that the same issue has also been decided against the Revenue by various High Courts i.e., by the Bombay Fligh Court in the case of HEXAWARE TECHNOLOGIBS LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERSz, 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. DBPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of intemational taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH vs. TNCONIE TAX OFFICER, 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 'Tzoz+1464 ITR 430 (Bom) '[(2024) 156 taxmann.com 478 (Gauhati)] " [(2024) 165 taxmann.com 115 (Punjab & Haryana)] '[2024) 167 taxmann.com 411 (Telangana)] 612024) 166 taxmann.com 679 (Bombay)l ' 12024) 165 taxmann.com I l3 (Himachal Pradesh)l 4 E' DAHYABIIAI RADADIYA vs. INCOME TAx OFFICER, WARD 3(3)(5)n, Jhalkand High Court in the ca:;c o1'SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Cour.t in the case of SHARDA DBVI CHHAJER vs. I|{(_'OME, T'AX OFFICER & ANOTHER and batch of writ pctirionst0 which stood decidcd on 19.03.2024. Sirnilar views have i l:o been taken by the Division Bench ol Calcutta High Court n the casc of GIRDHAR GOPAL DALMIA vs. UNION OF I\DIA & ORS (M.A.T l69t) of 2023), decided on25.09.2024 6 Even though thc sante issue having been dec rl:d b1,a lrLrge number of High Courts, we arc still confronted wirh large tiling of identical lnattcrs on daily basis ranging between ]; to l0 writ petitions. 'l'hat upon the instructions being soug tt fiom the Department, tl-rcy havc bccn taking a solitary gro rnd that the decision of the Bombay Fligh Court in the casc t l' Ilex(wure Technologies Ltd., (2 supra) as also the one rvlri:h has been decided by this Courl in the case of Kanakala Ra,vindra Reddy '2O2qSCC Ont.ine Guj 4012 '2025 SCC On[.inc Jhar 287 o y2023, RJ-JD:.1984-DI) | ' .,,:iii*i 5 (1 supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 ot 2024 before the Hon'ble Supreme Cour.t and the llon'ble Supreme Court is seized of the matter ln addition, there are about I200 SLPs also filed arising out of the same issue being decided by various High Courts.

7. To a query being put to the leamed counsel for the Revenue, they have categorically accepted the fact that there is no interim order granted by the Hon'ble Supreme Courl in any of these mattcrs pending bclore it. Meanwhile, fresh writ petitions of identical nature are being piled up before this Bench on daily basis and the pendency is getting increased on matter which otherwise has already been dealt and decided by this very High Court itself.

8. On the one hand, even though the order of this Court that was passed as early as on 14.09.2023 and more 1 6 months have lapsed, till date, we do not find any remedial steps having been taken by the lncome 1-ax 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 by all the rnajor I-ligh Courls in India are cor trnuously still initiating proceedings under Section l48A ol thc \ct and irlso initiating proceedings trnder Section 148 ol' the Act in contravention to the arnendments,brought into thc Irrcorne 'l ax Act pursuant to thc Financc Act, 2020 as also the Financr: .\ct 2021.

9. Upon a qucry bcing put as to why can't this rr rit petition be disposed of in the teeth ol'the decision rendered b. rhis Court in the case of Konukala Ruvintlro Reddy (l supra), lcrrr.rcd Standing Counsel for the Incornc'l'ax I)cpaflment contends rlt:rt those rvould unnecessarilv burden the Income Tax Departrrrcr t whcre they would be required to file equal number o1' SI- r: before the Hon'ble Supreme Court and it rvould bc furthcr l, rrdening the exchequer o1'the Union ol India. It was also the contenLion of the leamed Standing Counsel that no prejudice would bi.causcd to the interest of the petitioners in casc il this writ pctition i . iepl pending till the finalization of' the SLPs pending befbr.c he Hon,ble Supreme Courl and the t'act that the petitioner is alr':rLdy enjoying the benel.rt of interim protection. Nonetheless, on thc :arl ier query of this Court as to why the Income 'lax Departmenl lltve not come out with a mechanism to issue appropriate instmcti,rrrs or to take \- 7 appropriate steps in ensuring that proceedings under Section l48A of the Act as also the assessment orders under Section 148 of the Act are kept in a hold in the light of the 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 limited to any of these jurisdictional l{igh Courts

10. As a result ol which, what 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 Tax authorities concerrred 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 I{igh Court on an issue which other-wise stands squarely covered by the judgment of this Court in the case of Kanakala Ravindra Reddy (l supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanskala Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners 8 insofar as the liberty which rvas granted to the Revenue for initiating fresh proceedings strictly in accordance r,l ith the amended provisions of the Act, as amended by thc Financc Act, ?020 ;rnd the Finance Act, 2021. The petitioner assessee woul,I be entitled to cl.rallenge or raise the other legal objections if the Re r :nur' initiates fresh proceedings. The Deparlment has made no r:ndeavour availing the said liberty that was reserved lor the Revr:nue. On the contrary, they have been still sticking on to the stan,l, u,hich this High Court as well as rrany other High Courts allerily held to be bad. 1i. It appears that because of the aforesaid libertl that this High Court had granted permitting the Revenue for initiating lresh proceedings as a one-time measure in a faceles,; rnanner', the lncome Tax Department wants to take advantage cf the same by protracting these proceedings ll,hich would enable th jrn to mect the limitation that would otherwise come in the way. Lil-ewise, if the writ petition is kept pending for a considerable long period of time and finally at a later stage if the Hon'ble Supreme (-lourt confu'ms the decision taken by this High Court as also by th,: other High Courts in u,hich the SLPs are still pending, tht Income '[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 disposat of these matters at a much later stage which would be advantageous and beneficiat to the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concemed. As a consequence, the Income Tax Department gets an extended period ol time for initiation of fresh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanakala Ravintlra Reddy (l supra), is a matter of grave concern. The Income Tax Department's persistent initiation of fresh proceedings, disregarding the established judicial 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 judiciat 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 l I I 10 position. Such conduct raises serious questiois about the administrative eff'rciency and the respect ol' judicial pronouncements, particularly when this Couft has al e ady provided a balanced approach by preserving botl.r the llevenl:'s rights md assesses r nterests

13. Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Deparrlent itself and should have fbund out via media in ensuling thrLr proceedings under Sections 148-.4 and 148 should not have bc:n issucd in a laceless manner, at Ieast till the Hon'ble Supleme Cot rt decide the twelve hundred (i200) odd SLPs which it is alreadl' ;eized olor, at least the Income T'ax Department should have fo.urd out some remedial steps to ensure that wherever the author ties intend to initiate proccedings under Sections 148-A and 148. oti'rer than in a l'aceless manner, the proceedings shoutd have be en def-er:ed without precipitating the matter further intimating th,: rssessee that they shatl initiate appropriate proceedings only after. the Sl-p's are decided by the l{on'ble Supreme Court on the verr: same lssue. This again, the Income Tax Department, has not been able to give a convincing reply, except for the fact that such a der:i:.;ion if at ail l,' 71 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 Tares. Though the leamed Standing Counsel fbr the [ncome Tax Department contended that the Delhi High Court dismissed 4.writ petition of similar nature, on the one hand when the High Court is struggting to reduce its pendency, such notices which are under challenge in this writ petition are folcing the assessee to knock the doors of this High Court resulting in filing of hundreds olnew 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 before the Hon'ble Supreme Cour.t having been taken on many occasions, the Hon'ble Supreme Courl which is seized of the matter has been reluctant in granting any interim protection to the Income 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 different States on the same issue; and to make things further worse, the Income Tax Department is showing audacity by issuing notices continuously under Sections 14g-A and 12 148 through the jurisdictional Assessing Officer u,lrtreas it ought to have been only in the f'aceless manner.

14. In the case of BANK OF INDIA vs. TSSISTANT COMMISSIONER, INCOME TAXIr, on an issue v.hether it was justifiable on the parl of the Income Tax Depar- ment rn not following an order passed by the adjudicating autholity ollly on the ground that the appeals are pending, the Division rlench of the High Courr of Bornbay held at paragraph No.25 as urrler, r,iz., : "25. Mr. Paridwalla has righfly drawn out atten:lc n to the decision of this Court in Commissioner of lncome T:rx vs. Smt. Godavaridevi Sarafl2 as also the recent decision o the co- ordinate Bench of this Court in Samp Furniture (P) L.:d v. lTO13 of which one of us (Justice G.S. Kulkarni) was a member wherein the Court categorically observed that the Revenue hilving not "accepted" the judgment of the High Court would not me,rn that trll the same is set aside in a manner known to law, it woLld loose its binding force. Referring to the decision of the Suprerre Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.14, the Court observed that the approach of the officials of Revenue of treating decisrons being "not acceptable" was critici::e1 by the Supreme Court. ln such decision, following are tfe relevant observations made by the Supreme Court. 'l [izOzSl 170 taxrnann.com 422 (Bombay)l '' 1tsz81 113 t'I'R 589 (Bombay) " 120241165 taxrnann.com 581/300 Taxman 452 (Bombrrr ) 'u 1 tOOZI taxmann.com 16155 ELT 433 (SC) 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 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 conciusion 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 quasijudicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellte 'Collector is binding on the Assistant Collectors working within his .lurisdiction 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 14 1 3 rule is not followed, the result will only be rrrdue harassment to assesses and chaos in adminislr; tion of tax laws. 12 We have dealt with this aspect at some l)nglh, because it has been suggested by. the. learned Additional Solicitor General that the observat ons made by the High Court, have been harsh cn the offrcers. lt is clear that the observations of the tligh Court, seemingly vehement, and appe r€.ntly unoalatable to the Revenue, are only intended to CUrb a tendency in revenue matters which, if alloweri to become widespread, could result in considoritble harassment to the assesses-public without any berrefit to the Revenue. We would like to say th:rt the department should take these observations ir the proper spirit. The observations of the High C:urt should be kept in mind in future and the utmost regrard should be paid by the adjudicating authorities and the appellate authorities to the requirements of jUd cial discipline and the need foi giving effect to the or({ers of the higher appellate authorities which are b nding on them."

15. What is worrying this Rench more is tl.u: tact that an endeavour is being rnade whole heartedly to ensure n()t to generate further litigation on issues which have been laid to rcst by a lar.ge number of 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,202O and Finance Act, 2021 . 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 petition in tems of the judgment rendered by this High Courl in the case of Kankansla Ravindrt Retldy (l supra) shall however be subject to the outcome o[ the SLPs which were filed by the lncome Tax Department and which is pending consideration before the Hon'ble Supreme Cour1.

16. In the given facts and circumstances, this Bench is of thc considered opinion that unless and until we do not timely dispose of uratters 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 turther be burdened which otherwise can be decided and disposed of as a covered matter. Il . So f'ar as the interest of the Revenue is concerned, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs t.,.J 16 36,37 and 38 of the order which, for ready referenc(). is reproduced hereunder: inable.

36. For all the aforesaid reasons, the impugneJ rotices issued and the proceedings drawn by the respondent- Department is nerther tenable, nor sus t€ The notices so issued and'the procedure adopte(l being per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the irnpugned orders getting quashed, the consequent,al order; :assed by the respondent-Department pursuant to tho lotices issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The rea!;on we are quashing the consequential order is on the t)rinciples that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically.

37. The preliminary objection raised by the pe' itioner is sustained and all these writ petitions stands allc\ved on this very lurisdictional issue. Since the impugneri rotices and orders are getting quashed on the point of jurisdiction, we are not inclined to proceed further and decide the other issues raised by the petitionrr which stands reserved to be raised and contended in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one{ime -neasure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to p.oceed under the substituted provisions, and this Court a lowing the petitions only on the procedural flaw, thr; right r-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 Ashish Agarwal, supra.

18. We rvould only further like to make observations that since we are inclined to dispose of the instant writ. petition, conscious of the lact that the earlier order of this High Court in the case of Ktnokala Ravindra Reddy (l supra) is subjected to challenge befbrc the Hon'ble Supleme Court in SLP No.3574 ol 2024, prcfcrred by thc Incorne Tax Depaftment, we n-rake it clear that a[[owing of the instant writ petition is subject to outcome of the alolesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravindra Reddy (l supra). -fhis, in other words, would mean that either of the parties, if they so want, ma) move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Supreme Court iu the pending S[-P on the very same issue.

19. Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction is conoeme d. As a consequcnce, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed. ) ) 18 .1 Thc consequential orders, if any, also stand set as irle/quaslted in similar terms as have been passed by this High Court in the casc of Kankansla Rat,indru Reddy- (I supra). I'here shall l-c no order as to costs. Consequcntlv. miscellancotrs petitions pendinlg. if any, shall stand closed To, //TRUE COPY' SD/-A. PRATHIMA )=PUTY REGISTRAR (? SECTION OFFICER 1. The lncome Tax Officer Ward B(.1 ) Hyderabad, Sign.rr_.e Towers. Sy.No.6(p) of Kondaour. sv 37rp) of koJhasuda, bpp. E"li"ii'"r c, i"n.,'E"irii6;;"iliyl Ranga Rbdcty. uyoerjoao, reljngaria_5600&i I\ilasab Tank, Hyderabad, Telangana- 5OO0-0,i - "' 3. One CC to SRI DUNDU IVIANIVOHAN, Advocate [OpUCl 4. One CC to t\4s. J.SUN|THA, Sr- SC FOR tT [OPUC] 5. Two CD Copies

2. The Additional Commissioner of lncome Tax, Range_g, T Tower, .AC Guards, *' \ t BSR cJPw HIGH COURT DATED:31 10712025 ORDER WP.No.22319 of 2025 t7crTiffi - ) ..' ALLOWING THE WRIT PETITION, WITHOUT COSTS <,{.1e4 W*