Gaddam Suvama Reddy v. THE IIONOURABLE SRI JUSTICE

challenged to the notices which were issued undcr Section l48A and 148 of the Income Tax Act' 196l llbr short 'the Act') or the assessment orders those have been pas:'t:cl under Section 147 of the Act which have been assailed.

3. This writ petition is being taken up todal'onl1" on one of the grounds, that the notices issued under Scction l48A ot' the Act and the subsequent initiation of proceedings undcr Section [48 of the Act by the jurisdictional Assessing Ol1icer, rvhereas in terms of the amendment that was brought to the Incomc'[ax Act by way of Finance Ac', 2021 w.e.f., 0t.04.201 1 onwards, proceedings l : ! I I I I ! I 2 under Section l48A of the Act as also under Se<:tion 148 oi'the Act ought to have also been issued and proceedr:d in a faceless manner

4. fhe contention of the petitioner is th:rt the issue of proceedings being in violation of the Finance Act, 202.1 i.e., the impugned notices under Section l48A and Secticn 148 of the Act not being issued in a faceless manner, have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions rvere allowed and the proceedings initiated under Section l48A as also under Section 148 of the Act were held to be bad with consequerrtial reliefs on the ground of it being in violation of the provisions ol secrion l5 lA ol the Act rcad with NotificationlS/2022 dated 29.03.2022. The said .yudgment passed by this Court has also been subse,quently foltowcd in a large number of writ petitions which were allowed on similar terms. '[(202-]) 156 taxnrann.com 178 (Telangana)l 3

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 High Court in the case of HEXAWARE TECHNOLOGIES LTD.' vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. LxfON 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 ol SRI VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation, Bombay High Court in thc case of ABHIN ANILKT,MAR SIIAH VS. INCOME TAX OFFICER' INTERNATIONAL TAXATIOIt' which is again on international taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICER-, Gujarat HiCh Court in the case of MANSUKIIBHAI ' lzoz+1464 ITR 430 (Bom) '[(2024) 156 taxmann.com 47E (Gauhati)] '[(2024\ 165 taxmann.com 115 (Punjab & Haryana)l ' 12024) 167 taxrnaffI.com 41 t (Telangana)l " 12024) 166 taxmann.com 679 (Bombay)l ' 12021) 165 taxmann.co4,llllflimachal Pradesh)l 4 DAHYABHAI RADADIYA vs. INCOME TAx OFFICER, WARD 3(3XtE, Jharkand High Court in rhe, case of SIIyAM SUNDAR SAW vs. UNION OF INDIAe, Rajas;than High Courr in the case of SHARDA DEVI CHIIAJER vs, INCOME TAX OFFICER & ANOTHT)R and batch of writ petitionsro which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court in the case of GIRDHAR GOPAL DALMIA vs. UMON OI,INDIA & ORS (M.A. f 1690 of 2023),decided on25.09.2024. 6. I:.v.en though the numbcr. ol l{igh Courts, identica I matters on da petrtlons. J.hat upon the Depanment, they have been decision ol' the Bombay Hig Tec'hnologies Ld., (2 supra) decided l:ly this Court in same issue having been decided by a large we are still confronted wirh large filing of ily basis ranging betwee.rr 5 to l0 writ instructions being sor:ght liom the taking a solitary ground that the h Court in the case of Hqtware as also the one which has been the case of Kanakala Ravindra Reddy l1;;i;;; "'f l{)3J: R.r_JI):J9g4_l)B itll ffI;t lii I I I I I : I I I t : I i I l i I I I i I II Y 5 (l supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 before tlre Hon'ble Supreme Court and the Hon'ble Suprerne Court is seized of the matter' Inaddition,thereareabout1200sLPsalsofiledarisingoutofthe same issue being decided by variorrs 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 Court in any of these matters pending before it. Meanwhile, fresh writ petitions of identicat 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 thdugh the order of this Court that was passed as early as on 14'09'2023 and more 16 months havc lapsed, ti{t date, we do not find any remediat steps having becn taken by the lncome Tax Department to tak€ appropriate steps to either hold back issuance of notice under Section l48A and under Section 148 of the Act by the jurisdictional Assessing Otllcer' rather the authorities con@med in the teeth of series of decisions i i I I I I I I I I I I I 6 by. all the ma;or High Courts in India are continuously still initiating proceedings under Section l48A of the Act and also initiating proceedings under Section l4il 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 2021. 9. Upon a query being put as to why can,t this wr.it petition be disposed of in the teeth of the decision rendered by this Court in the case of Kanakala Rovindra Reddy (lsupra.), Ieamed Standing Counsel for the lncome Tax Department conten<Js that those wou.ld unnecessarily burden the Income Tax Depan.ment where they woull be required to file equal number of SLps before the Hon'ble Suprcme Coun and it would be further burdening the exchequer of the tlnion ollndia. It was also the contention of the leamed Standing (.ounsel that no prejudice woulcl be caused to the rnterest olthe petitioners in case ifth rs writ petition is kept pending till rhe. finalization of thc SLps Supreme Court and the fact that rhe petitioner is a.lread the benc"fit of intcrim protection. Nonetheless, on lhe ea of this ('oun as ro why the Income Tax Departmenr. ha out with a nrechanism to tssue appropriate instruct ions or to take pending befc,re the Hon'ble ve not come y enjoying rlier query 7 appropriate steps in ensuring that proceedings under Section 148A ofthe Act as also the assessment orders under Section l4E of the Act are kept in a hold in the light ofthe decisions dedcided by the various High Courts, it was submitted by the learned Standing Counsel that the said steps can ogrly 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' l0.Asaresultotwhich,whatwearefacmgissteepincreaseof 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 lncome Tax authorities concemed arc still even now in 2025 also initiating proceedings in contravention to the provisions ol'sectionl5lAottheActand6saresultbynow,morethan600 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 ( I supra). What is also surprising is the fact that though while altowing the writ petitions in the case of Kanakala Ravindra Reddy (l supra), the Division Bench while reserving the right of theRevenue,hasalsoprotectedtheirrterestofthepetitioners 8 insofar as the liberty which was granted to thr: Revenue for initiating fresh proceedings strictly in accordance wLth the amended provisions of the Act, as amended by the Finance Act, 2.020 and the Finance Act,202l. The petitioner assessee wouLd be entitled to challenge or raise the other legal objections if the R::venue initiates fresh proceedings. The Department has made n<:, endeavour in availing the said liberty that was reserved for the Rt:.venue. On the contrary, they have been still sricking on to the stand, which this High Court as well as many orher High Courts alrt:ady held to be I l. It appears that because of the aforesaid libert;, that this High Court had granted permitting the Revenue for rnitiating fresh proceedings as a one-time measure in a facelesr; manner, the Income 'fax Department wants to lake advantage <:l the r;ame by protracting these proceedings which would enable th3m to rneet the limitation that would otherwise comc in the way. L.ikewise, if the writ petilion is kept pending lor a considerabte long period of time and finally at a later stage il the Hon'ble Supreme (lourt confirms the decision taken by this High Courr as also by the other High Courts in which the SLPs are still pending, ther Insgms 1a1( I I ! I v 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 of these matters at a much later stage which would be advantageous and beneficial to the Revenue and would be equally disadvantageow and detrimental so far as interest of the assesses are concemed. As a consequence, the Incorne Tax Department 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 ser in Kanakala Ravindra Reddy (l supra), is a matter of grave concem. The Income Tax Department's persistent initiation of lresh proceedings, disregarding the established judicial pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions piting up on the same issue. This deliberate approach not only undermines the principle of judicial precedent but also strains the judicial resources ruulecessarily. The Department's strategy ol awaiting the Supreme Court's decision on pending SLt's while continuing to initiate fresh proceedings appears to be a calculated rnove to buy time and circumvent limitation periods- .ather than adhering to the established legal I 10 position. Such conduct raises serious questions about the administrative efficiency and the respect lor judicial pronouncements, particularly when this Court tas already provided a balanced approach by preserving both the R,rvenue,s rights and assesses interests.

13. Another aspect which needs to be conside-ed is that irr fact it should have been realized by the Income Tax f)esartment itselfand should have found out via media in ensuring that proceedings under Sections I4g_A and l4g should not have been issued in a faceless m rner, at least till the Hon,ble Supremr.Court decide the twelve hundred (1200) odd SLps which it is alrearJy seized ol.or, at least the Income Tax Department should have lbund out some remedial steps to ensure that wherever thc autlrorities intend to initiate proceedings under Scctions I4g-A and l4g. othcr than in a faceless manner, the proceedings should havt been deferred without precipitating the matter f.urther intimating r.he assessee that they shall initiate appropriare proceedings only aftirr the SLp,s are decided by the Hon,ble Suprcme Court on the v,,,ry sarne issue. This again, the Income Tax Dcpartmenr, has not becn able to give a convincing reply, except for the f-act that such a dr:cision if at all I I I I I t I I I I I i I I L 11 7 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 lor the lncome Tax Department contended that the Delhi High Court dismissed a writ petition of similar naturc, on the one hand when the High Court is struggling to reduce its pendenry, 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 ol hundreds of new writ petitions which in the long run not only affects the disposal of the writ petitions but also consumes substantial time o[ the Bench in hearing these matters again and again on daity 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 ttre 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 difTerent States on the same issue; and to make things further worse, the lncome Tax Department is showing 2rrdacity by issuing notices continuously under Sections 148-A and 72 I48 through the jurisdictional Assessing Oflicer whereas it ought COMMISSIONER, to have been on.ly in the faceless manner. 14. In the case of BANK OF INDJ,rr vs. ASSJSTANT INCOME TAXrr, on an issue rvhether it was the income Tax I)spartrngnt in not by the adjudicating a.rthority only on the pending' the Division Bench of the justifiable on the part < folrowing an order passedrf ground that the appeals a HighcourtofBombayher,e I at paragraph No.25 as under, viz., : "jl-:':'* ;"]-'ssionet "25. Mr. paridwalla I drawn out attention lo the ae"ision ort'is lo'rrt'" of lncome Tax vs. smt. codayaridevi ;;j recent decis'on of the co- ordinate Bench "t;o ";jl:"-the ': Samp Furniture (F'l Ltd. v. rro.3 or which one "r; ;r";1 was a me'nber, wherein the courr *,*;;;;""^-t^1'l*" "accepted'thejl;;;,;,;"-* that the Reven{e havins nor ,'::-lin'n "*n wourd nor mean rhat tirl the same '" "";;;;;, known to raw ,t *ourd roose ,ts bindins rorce -:;;;;;J;*er o'",''on or the supleme court in union or corporati(rn Ltd'rr' the court observed .n;,';":']}-1 :inance "ff I,#"'ffi; r,::J*i::rl: il: ::T;il' observations,;.";;;"dff,::"::jl"-,* are rhe rerevant ;:.-;;,"-ll '"to ,;,I,?ll#i,ffi4i2(B.nrbr, I j I , I t I ! i i : k,la+l V 13 "6. Sri Recldy is perhaps raght in saying that the officers vvere not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that ttle claim of th€ assess@ was not tenable and that, if lt was accepted, the Revenue would suffer. But what Sri'Reddy overlooks is that we are not coricefired here with the corectness or othenrvise of their conclusion or bf any factual malafides but with the fact that the of{lcers, in reactlirE 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 v€w, rightly criticized this conduct of the Assistant Colleclors 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 utrnost importance that' in dispos'ng of the quasrludicial issues before them, revenue officers are bound by the decisions of the appellate authorities' The order of the Appellte Collector is blnding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the iurisdiction of the Tribunal The principles of judicial disctpline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of fhe appellate authorlty is not "acceptable" to the department - in itself an obFctionable phrase - and is the subiect matter of an appeal can furnish no ground for not following it unless its operation has ' been suspended by a conpetent court lf th's healthy I i I ! i I I I ! I I l t 14 rule is not followed, the resufi will only be undue harassment to assesses and chaos in adrninistration of tax laws.

12. We have dealt w because n n". *"r"n Additionar soticitor o] this aspecl at sorle length' suggested by th€) learned made by the Hish ""il::,:"Lf ^:ff:]il: officers. lt is clear thal I the observations of the High court, seemingry and aoparently unpalatable to the Reve n'"' are only intende(l to curb a tendency ,n ,r"nru become widesp,"ro, "Iil"I].fl'::' :"::,ff:.: harassment to the assesl tu"-"b"c without any beneflt to the Revenue. *" departmenr .n",,0 ,,*"1lll1 'h:ljil. r:i ,.l: proper spirit. The obsr ''""ont of the Hig r court shourd be kept in mind ,n shourd be paid bythe rr::,:il:ff"#?,1: appellate authorities to the requirements of luorctai discipline and the need fo . . n'''nn effect to the orders of the higher appelate lthorities which are )inding on them.,, "r'' I -s. \{rhat is worrying this Bench more is the fact thar an endeavour is being made whole heartedly to ensure nor to generatc further litigation on issues which have been laid ro rest brr a large trumber of High Courts all of whom have taken a c,)nsistenr stand that the action of the Income Tax Department being ,,.iolative of rhe I 15 Finance Act,2020 and Finance Act,202l. Now, in onder to protect the interest of the Revenue as also that of the assessee, it would be trite at this juncture, if we dispose ol 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 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 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 ol 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 ol the Revenue has already been considered and plotgctqd, as has been observed in paragraphs ,. ' t J i I '. I I 76 36,37 and,38 of the order which, for ready reference, is reproduced hereunder

36. For all the aforesaid reasons, the impugrred notices issued and the proceedings drawn by the respondent_ Department is neither tenable, nor s ustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are acc()rdingly set aside/quashed. As a conaequence, all the tmpugned orders gefting quashed, the consequential orders passed by the respondent-Department pursuant to the notices issued under Section 147 and 149 would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on thr:r principles 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 petitioner is sustained and all these writ petitions stands tllowed on thrs very jurisdiclional issue. Since the impugned notices and orders are gefting quashed on the point of Juflsdiction, we are not inclined to proceed f rrther and decide the other issues raised by the petitioner which stands reserved to be raised and conten(ied in an appropriate proceedings. 38 Since the Hon'ble Supreme Court had, 11 the case of Ashish Agarwal, supra, as a one-lime measure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Cou.t allowing the petitions only on the procedural flaw, the right i I I t I 17 confefied on the Revenue would rernain reserved to proceed further if ttEy so want from the stage of the order of the Supreme 6ourt in the case of Ashish 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 the fact that the earlier order of this High Court in the case of Kanakala Ravindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 ol 2024, preferred by the Income Tax Department, we make it clear that \ allowing of the instant 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 Rtvindra Reddy (l supra) This, in other words, would mean that either of the parties, if they so want, may move an appropriate petition seeking revival ol 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 al lowed in favour of the assessee so far as the issuc ol jurisdiction IS concemed. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed. I I I I 18 The consequcntial orders, if any, also stand set aside/quashed in similar terms as have been passed by this High Cour.t in the case of Kankanala Ruvindra Reddy (l supra). There shall be no order as [o costs. Consequently, miscellaneous petitions pendinlg, if any, shall stand closed. t-i-Y''#tjffi ,,TRUE COPY,, SECTTON OFFICER J The National Faceless Assessment Center' lncome-ta *'diT'*ffi ["#11#d'flii#ii':#i' iwo CD CoPies x DePartment' New me Tax) [OPUCI To, I

2. 3 4 5 TJ GJP HIGH COURT DATED:01 10812025 ORDER WP.No.22633 of 2025 ,)t \ -" 'if..r-\ Lr 17 SEP 206 .l . i! . ,l\-/ ^i '2i,:)-l ,/ ! I \ , : : i ALLOWING THE WRIT PETITION WITHOUT COSTS 7/r ,"e ./Zf *