veoesna suseela v. also contrary to the circular issued by cBDT and provisions

Heard Mr.T.Chaitanya Kumar, leamed counsel for the petitioner and Ms.B.Sapna Reddy, Iearned Senior Standing Counsel for the lncome Tax Department, for the respondents' Perused the record.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 148A and 148 of the lncome 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 of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Ofhcer, whereas in terms of the amendment that was brought to the Income Tax Act by way of Finance Act, 2O2l w.e.f., 01.04.2021 onwards,.froceedings 2 under Section 148,4 of the Act as also under Section 14g of the Act ought ttt 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 Finance Acr, 2O2l i.e., the impugned notices under Section 148,{ and Section l4g of the Act not being issued in a faceless manner, have already been dealt with and decided by this Courl in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.09 -2023 whereby a batch of writ petitions were allowcd and the proceedings initiated under Section l48A 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 ofSection l5lA of the Act read with Notification lBl2O22 dated 29.0i.2022. The said judgment passed by this Court has also been subsequently followed in a large nurnber of writ petitions which were allor.r,ed on similar terms. 'l\zvL-, -_ ann.com 17g (Telangana)] J

5. Down the line, we find that the same issue has also been decided against the Revenue i'by various High Courts i'e', by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD., VS. ASSTSTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAII vs. UNION OF lNDlA3, 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 RE,DDY PATLOOLA VS. DEPUTY COMN{ISSIONER OF INCOME TAf where the issue was in respect of intemational taxation, Bombay High Court in the casg of ABHIN ANILKUMAR SHAH VS. INCOME TAX OFFTCER' INTERNATIONAL TAXATION6 which is again on intemational taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. TNCOME TAX OFFICBRT, Gujarat High Court in the case of MANSTIKHBHAI ' lzoz+1464 ITR 430 (Bom) '[(2024) 156 taxmann.com 478 (Gauhati)] " l(2024) 165 taxmann.com 1 l5 (Puijab & Haryana)l '[2024) 167 taxmann.com 41 1 (Telangana)] " 12024) 166 taxmann.com 679 (Bombay)l .com 113 (Himachal Pradesh)l l I 4 DAIIYABHAT RADADIYA vs. INCOME TAx OFFICER, WARD 3(3)(5)8, Jharkand High Court in the case of SHyAM SUNDAR SAW vs. UNION OF lNDIAe, Rajasthan High Courr in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsr0 which stood decided ort 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court in the casc of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 of- 2023),decided on 25.09.2024.

6. Even though the same issue having been decided by a large number of High Courts, we are still confronted with large iiling of identical marters on daily basis ranging between 5 to l0 writ petitions. That upon the instructions being sought from the Departrnent, they have been taking a solitary ground that the decision of the Bombay High Court in the case of Hemware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Rsvindra Reddy '202+ SCc Online Guj 4012 '2025 SCC ()nLinc Jhar 287 'o 12023, RI-JD :4984-DBl 5 (l 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 of the same issue being decided by various High Coutts.

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 Hon'ble Supreme Court in any of these matters pending before it. Meanwhile, fresh writ petitions of identical nature are being piled uti 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 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 Section 148,.4. 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 major High Courts in India are continuously still lnrtlatrng proceedings under Section l4gA of the Act and also initiating proceedings under Section l4g of the Act in contravention to the amendments brought into the lncome Tax Act pursuant to the F-inance Act, 2020as also the Finance Act 2021.

9. llpon a query being put as to why can't this u,rit petition be disposed o1- in the teeth of the decision rendered by this Court in the case of Ranskala Ravindra Reddy (l supra), leamed Standing Counsel for the Income 1'ax Department contends that those would unnecessarily burden the Income Tax Departmenl_ where they would be required to hle equal number of SLps before the Hon'ble Supr.eme Court and it would be further burdening the exchequer of the Union of India. It was also the contention 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 finalization of the SLps pending before the Hon,ble Supreme Court and the fact that the petitioner is already enjoying the benelit of interim protection. Nonetheless, on the earlier query of this Court as to why the Income Tax Department have not come out with a mechanism to issue appropriate instructions oato take 7 appropriate steps in ensuring that proceedings under Section 148,4. of the Act as also the assessment orders under Section 148 of the Act are kept in a hotd 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 limited to any of these jurisdictional High Courts'

10. As a result of 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 concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section 1 5 I A 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 (1 supra). What is also surprising is the fact that though while allowing the writ petitions in ihe case of Kanakula 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 was granted to the Revenue for initiating fiesh proceedings strictiy in accordance with the arnended provisions of the Act, as amended by the Financ e Act,2020 and, the Finance AcL, 202r - The petitioner assessee would be entitled to challenge or rajse the other legal objections if the Revenue initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was reserved for the Revenue. On the oontrary, they have been still stieking on to the stand, which this High Courl as well as many other High Courts already held to be

11. It appears that because of the aforesaid liberty that this High Court had granted permitting rhe Revenue for initiating fresh proceedings as a one-time measure in a faceless manner, the lncome Tax Deparlment wants to take advantage ol- the same by protracting these proceedings which would enable them to meet the limitation that would otherwise come in the way. 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 Supreme Court confirms the decision raken by this High Court as also by the other High Courls in which the SLps are still pending, the Income Tax 9 Depaftment 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 equally disadvantageous and detrimental so far as interest ofthe assesses are concemed. As a consequence, the Income Tax Depaftment gets an extended period of time for initiation of fresh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanakula Ravindra 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 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 10 position. Such conduct. raises serious questions about the administrative efficiency and the respect for judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revenue,s rights and assesses lnterests 13- A,rother aspect which needs to be considered is that in fact it should have been realized by the Income Tax Department itself and should have fbund out via media in ensuring that proceedings under Sections 148-,4 and 14g should not have been issued in a faceless rnanner. at least till the Hon,ble Supreme Courl decide the twelve hundred (1200) odd SLps which it is already seized ofor, at least the lncomc 'fax Department should have fbund out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections r4g-A and r4g, olher than in a faceless rnanner, the proceedings should have treen deferred without precipitating the matter further intimating the assessee that they shalI initiate appropriate proceedings only after the SLp,s are decided by thc tlon,ble Supreme Court on the very same issue. This again, the Income Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all 1l 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 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, such notices which are under challenge in this writ petition are forcing the assessee to knock the doors of this High Court resulting in filing of hundreds of new writ petitions which in the long run not only affects the disposal of the writ petitions but also consumes subsLantial 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 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 Income Tax Department, Yet, the authorities concemed at the State level are not ready to accept the verdict passed by a maj ority of High Coutts 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 148-4 and 12 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs. ASSISTANT COMN{ISSIONER, INCOME TAX1r, 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 High Court of Bombay held at paragraph No.25 as under, viz., : "25. lvlr. Paridwalla has righfly drawn out attention to the decision of this Court in 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 Coud categorically observed that the Revenue having not "accepted" 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 of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.14, the Court observed that the approach of the officials of Revenue of treating decisions being "not acceptable" was criticized by the Supreme Court. In such decision, following are the relevant observations made by the Supreme Court. ',ll{zOzs1 170 raxmann.com 422 (Bombay)l r'1t9781 113 ITR 589 (Bombay) " 1202+1165 taxmann.com 581/300 Taxrnan 452 (Bombay) 'o l}eZltaxmann.com l6/55 ELT 433 (SC) 13 "6- Sri Reddy is perhapi'i 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 corlectness 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 tssue 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 thrs 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 iurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the lurisdiction 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

1.4 i. 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 apparenfly 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 observattons 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 requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them."

15. What is worrying this Bench more is the 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 Courts all of whom have taken a consistent stand that the action of the lncome Tax Department being violative of the 15 Finance Act, 2020 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 terms of the judgment rendered by this High Court in the case of Kankanals 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 Hon'ble Supreme Court.

16. ln the given facts and circumstances, this Bench is of the considefed 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 fortihed by the decisions of the various other High Courts on the very same issue, the pendency of this High 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 concemed, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs 15 36,37 and.3 8 of the order which, for ready reference, is reproduced hereunder:

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent- Deoartment 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 orders getting 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 aocordingly. The reason we are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullif ied automatically.

37. The preliminary objection raised by the petitioner 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 decide the other issues raised by the petitioner which stands reserved to be raised and contended rn an appropriate proceedings.

38. Since the Hon'ble Sqpreme Court had, in the case of Ashish Agarwal, supra, as a one-time measure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provrsions, and this Court allowing the petitions only on the procedural flaw, the right 77 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 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 Kanakala Ravindra 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 atlowing.of the instant urit petition is subject to outcome of the aforesaid SLP prefened by the Revenue against the decision of this High Court in the case of Kanakala Ravindra Reddy (l supta)' 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 decision of the Hon'ble Supreme Court in the pending SLP on the very same issue'

19. Accordingly, the instant writ petition stands allowed in favour of the assessee so iar as the issue of jurisdiction IS concemed. As a consequence, the impugned notice under cha1l enge under Sections 148-4 and 148 stands set aside/quashed f { 18 a The consequential orders, if anyl also stand set aside/quashed in similar terms as have been passed by this High Court in the case of Kankanala Ravindra Reddy (l supra). There shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed. //TRUE COPY// SD/. L.VIJAYA LAXMI ISTANT REGISTRAR OFFICER 1. The Assessment Unit, National Faceless nsseSsinent Centre, lncome Tax Depadment. [Vtinistrv of F_inance, Room flo.\4oi 2;; Fi;o;.""d_iir;; Jawaharlat Nehru Stidium, Dethi -1'10 CiOS. S - \ 1, To,

2. The Income Tax Officer, !V910 .t Z(] ). Hyderabad/ Aaykar Bhawan, Opposite Lb Stadium, Basheer Bagh Hyderdbbo, ityoeririo, r6r"nginr. 5oooo[1"""" -s^e-cretary, Ministry of Finance, North Brock, New Derhi, union of rndia- 3 The '1 10 001

4. One CC to SRt THANNERU CHA|TANYA KUMAR, Advocate tOpUCl 5. One CC to IVs. B.SAPNA REDDY, Sr. SC FOR tT tOpUCl 6 olg cc to ADDL. solrcrroR GENERAL oF TNDIA, High court for the State of Telangana at Hyderabad tOpUCl

7. Two CD Copies BSR TKS ., HIGH COURT DATED:31 10712025 ORDER WP.No.22439 of 2025 .l' trl : l (-'J \ -,.]\ .^ i'., ( ' 2 4 IiEP 202' l i+ !r..;-, ALLOWING THE WRIT PETITION, WITHOUT COSTS ,{