Sri Srisailam Pagidala v. THE HONOUR

ORDER, (per Hon'ble Sri Justice Suddala Chclapathi Rao) I Ieard Mr.A. V.Raghu Ram, learned counsel for the petitioner and Ms.J.Sunitha, learned Senior Standing Counsel for the Income Tax Depaltment, for respondents. Perused the record.

2. This is a r,vr-it petition u,here the proceedings are cither challenged to the notices vrhich were issued under St:ction l48A and l4B of the Income Tax Act, 1961 (for short 'the Act') or the assessrrellt orclers those have been passed under Section 147 of the Act rvliich have been assailed i. This writ petition is being taken up today or.r[1, on one of the grounds, that the notices issued under Section 1484. of the Act and the subsequent initiation ofproceedings under Section 148 of the Act b), the jurisdictional Assessing Officer, whereas in terms of the amendment that was brougl.rt to the lncome Tax Act by way of Finance Act,202l w.e.f., 01.04.2021 onwards, proceedings undel section l48A of the Act as also under Section 148 of the 2 Act ought to have also been issued and proceede,l in a faceless lnanner

4. The contention of the petitioner is thar thc issue of proceedings being in violation of the Finance Act,2021 i.e., the impugned ncrtices undel Section l48A and Section 148 of the Act not being issued in a laceless manner, have alreadl.been dealt with and decided by this Courl in the case of IiGNKANALA RAVINDRA REDDY vs. INCOME-TAX OFI,'l(lERr dccided on 14.09.2023 wheleby a batch ol- writ petitions \v,ire allorved and the proceedings initiated under Section 148A as also under Section 148 of the Act rvere held to be bad with consequential reliefs on the glound of it being in violation olthe provisions o1'liection L51A of the Act read rvil-l.r Notitlcation 1812022 dated 29.0i.2022. The said judgrncnt passed by this Court has also been subseq uently lbllowed in a lalge numbcr ol rvrit pctitions which u,ele alk,wed on similar tertrs. 'l(2023) I56 taxnrann.com 178 ('felangana)] 3

5. Down the line, we find that the same issue has also been decided against the Revenue by various High Courls i.e., by the Bombay High Court in the case of HEXAWARE TECHNOLOGTES LTD., vs, ASSISTANT COMMISSIONBR OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIAs, Punjab and Haryana High Courl in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the case of SRI VENKA.TARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation, Bombay High Court in the case of ABIITN ANILKUMAR SHAH VS. INCOME 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. TNCOME TAX OFFICERT, Gujarat High Courl in the case of MANSUKHBHAI 'Tzoz+1464 ITR 430 (Bom) 'l(2024) I 56 taxmann.com 478 (Gauhati)l " l(?.024) 165 taxrnann.corn 115 (Punjab & Haryana)l ' 12024) 167 taxrnann.com 4 I I (Telangana)l " 12024) 166 taxmann.com 679 (Bombay)l ' 17024) 165 taxmann.com I l3 (Himachal Pradesh)l 4 DAHYABHAI RADADIYA vs. INCOME TAX OFFICER, WARD 3(3X5)E, Jharkand lligh Court in thc case of SIIYAM SUNDAR SAW vs. UNION OF lNDIAe, Rajasthan High Court in the case ol SHARDA DEVI CHHAJER vs. TNCOME TAX OFFICER & ANOTHER and batch of wlit petitionsr0 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. UNION Ol. INDIA & ORS (M.A.T 1690 of 2023), decided on25.09.2024.

6. Evcn though the same issue having been clecided by a large number of High Courts, we are still confronted r,rith large filing of identical matters on daily basis ranging betrvr:en 5 to 10 writ petitions. That upon the instructions being sought liom the Deparlmcnt, tliey have been taking a solitary ground that the decision of the Bornbay High Courl in the case ol Hexaware Teclrttologies Ltd., (2 supra) as also the onr: rvhich has been decided by this Court in the case of Kanakrkt Rat,indra Retldy 82024 SCC Online Guj 40 l2 '2025 SCC Online Jhar 287 " 12023 : R.I- JD :498 4- D B I Z. / 5 (l supra) has been subjected to challenge in a Special I eave Petition i.e., SLP No.3574 of 2024 before the Hon'ble Supreme Court and the Hon'ble Supleme Court is seized of the matter In addition, there are about 1200 SLPs also filed arising out ofthe same issue being decided by various High Courts

1. 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 I{on'ble Supreme Court in any of these matters pending betbre it. Meanwhile, fr-esh 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 thc 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 Incomc 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 autl-rorities concerned in the teeth of series of decisions 6 by all the major High Courls in lndia are continuously still initiating proceedings under Section l48A o1' the Act and also initiating proceedings under Section 148 o f the Act in contravention to thc amendn'rents brought into tlLc Income 'fax Act pursuant to the Finance Act,2020 as also the Finance Act 2021.

9. Upon a quety being put as to why can't tlris writ petition be disposed ol in the teeth of the decision rendcred by this Court in the case of Kanakala Ravindru Reddy (l supla). learned Standing Counsel lbr the lncon-re 1-ax Depaftment conten( s that those would unnecessarily burden the Incorne Tax Depaltmenl- u,here they would be required to file equal number ol- SLPs before the Hon'ble Supreme Court and it would be fi-r:tlrcr burdening the exchequer of the Union ol lndia. [t was also tht: contention of the leamed Standing Counsel that no prejudice woLrld be caused to the interest of the petitionels in casc if this writ petition is kept pending till the trnalization of the SLPs pending betbre the Hon'ble Supreme Court and the fact that the pctitioner ir; alrcadv enjoying the benellt of interim protection. Nonetheless, on the earlier query of this Courl as to why the income Tax Departntcnt havc not come out u.ith a mcchanisnr to issue appropriate inslructions or to take JP 7 appropriate stcps in cnsuring that procccdings under Section 148A ofthe Act as also the assessment orders under Section 148 ofthe Act are kept in a hold in the Iight of thc decisions dedcided by the various High Courts, 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 ol rvhich, u,hat rvc are lacing is steep increase of litigation day in and day out even though various orders have been passed by this Higtr Court allou,ing writ petitions on the very same issue. The lncome Tax authorities concerned are still even now in 2025 also initiating proceedirtgs in contravention to the provisions of Section 15l A ol the Act and as a result by norv, rnore than 600 to 700 petitions have been already got piled up before this High Court on an issue which otherwise stands squalely covered by the judgment of this Court in the case ol Kanakala Ravindra Reddy ( 1 supra). Wrat is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravindru Reddy (1 supra), the Division Bench whilc rcscrving the right of the Revenue, has also protectcd the interest of the petitioners 8 insolar as the liberty which was grantcd t,-r thc l(cvcnuc lor initiating li'esh ploceedings strictly in accordance rvith the arnended provisions o1- the Act, as arrcnded by the Fin.rrrce Act, 2020 and the Finance Act, 2021. 1'he petitioncr asscssec rr oLrld bc entitled to challenge or raise the other legal objections i1'tlr..r ltcvcnue initiates fiesh proceedings. -fhe Departrnent has matlc no enrleavour in availing the said libcfty that was reselvcd firr tlrc l{evenue. On the contrary, thcy havc bcen still sticking or.r to tlr.' stand, r,hich this lligh Courr as rvcll as lrrtn)/ othcr I ligh Courts .rllcatll, held to be ll. It appears that because of the aloresaid lihcr.ly that this High Courl had grantcd pcrmitting the Rc'u'enue lirr initiating liesh proceedings as a onc-time ureasure in a fae,rlcss r.nanner, tl.rc Income 'l'ax Deparlrncut wants to takc advanta;lc ol'(hc same by protracting these proceedings which would enabl -' them to rneet the limitation that would othcrwise comc in the *,trr. Likcrvise, if thc writ pctition is kept pending tbr a consideftiblc r)ng poriod of tirne and finalli, at a later stagc if thc Hon'ble Suprcr:.rc Court confirnls the decision taken by this Itigh Court as also by thc other Iligh Courts in which thc SLPs arc still pending. tlre lncorne Tax '/, 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 ol 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 of the assesses are concemed. As a consequence, the Income Tax Deparlment gets an extended period ol time for initiation of fresh proceedings.

12. The alanning trend of docket explosion in this Courl, despitc the clear precedent set in Kanukula Ruvindra Redtly (l supla), is a matter of grave concern. The lncome 1'ax Deparlment's persistent initiation of fresh proceedings, disrcgarding the established judicial pronouncements, has ted to an ullprecedcnted surge in litigation with over 600-700 petitions piting up on the same issue. This deliberate approach not only undctmines 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 qur'.tions about the administrative efficiency and the respect for judicial pronouncelnents, parlicularly when this Court has already provided a balanced approach by preserving both the F.evenue's rights and assesses lnterests

13. Another aspect which needs to be considercd is that in fact it should have been realized by the Income Tax De:raftmcnt itselland should havc tbund out via rnedia in ensurinq that pLoceedings under Sections I48-A and 148 should not harc been issucd in a facclcss manner, at least till the Hon'ble Supreme Court decide the twelve hundred (1200) odd SLPs which it is already seized ofor, at least the lncome Tax Departmcnt should har' i' lbund out sonle reLredial steps to ensure that wherever the au.lrorities intend to initiate proceedings under Sections 148-A and I18, oLher tl.ran in a laceless mannel', the proceedings should ha,,,e bccn det-cned without plecipitating the matter further ir.rtimatinc thc asscssee that they shall initiate appropriate proceedings only i ltcr thc SI-P's arc decided by the Hon'ble Supreme Courl on the very srrLne issue This again, the Income Tax Department, has not bcen able to give a convincing reply, except for the fact that such a clecision if at atl l. 1L has to be taken, has to be taken lbr the whole of India, and which otherwise has to be by ivay of a policy decision and that too at the level of Central Board of Direct Taxcs. Though the learned Standing Counsel for the Income Tax Departrnent conterrded that the Delhi High Court disrnissed a 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 forcing the assessee to knock the doors of this I{igh Court resulting in filing of hundreds of uew writ petitions which in the long mn not only affects the disposal of the writ petitions but also consumes substantial time of the Ilencli in hearing these matters again and again on daily basis. Admittcdly, in spite of the matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supleme 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 reaciy to accept the verdict passed by a majority of High Courts of different States on thc same issue; and to make things further worse, the Income Tax Depaftment IS showing audacity by issuing notices continuously under Sections 148-A and L2 148 through the jurisdictional Assessing Officel rvheteas it ought to have been only in the faceless fflanner.

14. [n the case of BANK OF INDIA rs. ASSTSTANT COMMISSIONER, INCOME TAXrr, on an isriue u,hether it was j ustifiabtc on the parl of the lncome Tax Department in not fbllowing an order passed by the adjudicating aulhority only on the ground that the appeals are pending, thc Division Bcnch of the High Court ol Bombay held at paragraph No.25 as under, r,iz., "25. 1,4r. Parrdwalla has rightly drawn out a:tention lo the declsion of this Court in Commissioner of Incomr., Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decison of the co- ordinate Bench of this Court in Samp Furniture (t') Ltd. v. lTOl3 of which one of us (Justice G.S. Kulkarni) was a mr;mber, wherein the Court 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 lvould loose its binding force. Referring to the decision of the Supreme Court in Union of India vs. Kamlakshi Finance Corporalion Ltd.'4, the Court observed that the approach of the officials of Revenue of treating decisions being "not acceptable" was criticized by the Supreme Court. ln such decision, following ar: the relevant observations made by the Supreme Court. 11u Ozs; 170 raxrnann.corn 422 (Bombay)l I I '' Jl9z81 I li trR 5tt9 (Bornbay) " lZclZ+1 I (r5 taxmann.com 53 t/300 Taxman 452 (tlcrnbay) 'o 1t9OZ1 taxrnann.corn 16/55 ELT 433 (SC) w; .1, ,!!{DA. 'e 'L3 "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 wilh lhe 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 lhe 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 ulmost 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 jurisdiction anC 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 ol 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 rt unless its operation has been suspended by a competent court- lf this healthy t4 \ r lrESPrS,lqqS '{:ii'.i,,,,,ffi rr*tt4$*it*t l-:::ry& rule is not followed, the result will only [;e undue harassment to assesses and chaos in admrnrstration - of tax laws.

12. We have dealt with this aspect at so-re length because it has been suggested by thc iearned Additional Solicitor General that the o5s ervations rnade by the High Court, have been harsh on the offrcers. lt is clear that the observations ,ri the High Court, seemingly vehement, and al)Lrarently unpalatable to the Revenue, are only intendi,d to curb a tendency in revenue matters which, if a o.ved to become widespread, could result in cor si(jerable harassment to the assesses-public without any benefit to the Revenue. We would like to say that the department should take these observatirrr s in the proper spirit. The observations cf the Hrgh Court should be kept in mind in future and the utn.rr,st regard should be pard by the adJudicating authorite: and the appellate authorities to the requiremg6[s ;rl ludicial discipline and the need for giving effect to tlre orders of the higher appellate authorities which ar. l>indrng on tllem."

15. What is u,onying this Bcnch more i. tlrc fhct that an cndeavour is bcing ntade whole heartedly to eusur('not to gencrate further litigation on issues which have been laid to rcst by a largc number ol tl igh Courts all of wllol11 have takcn l oor)sistcnt stand that thc action of tlic Incornc Tax Depaltrnent beirrg violative of thc w , $,.. 15 Finance Act,2020 and Finance Act, 2021. Now, in order to protect the interest olthe Revenue as also that ofthe assessee, it would be trite at this junchrre, if we dispose of the writ petition with an observation/dilection that the disposal of the instant writ petition in terrns of the judgment rendered by this High Court in the case of Kankanala Rovindra Reddy (l supra) shall however be subject to the outcome of the SLPs which were filed by the lncome 'fax Department and which is pending consideration before the Hon'ble Supleme Court

16. In the given facts and circumstances, this Bench is of tl.re considered opinion that unless and until rve do not timely dispose of matters which are squarely covered by the decision of this Cou( and rvhich stands fortifled by the decisions of the various other High Courls on the very same issue, the pendency ol this Iligh Court would further be burdened which otherwise can be decided and disposed of as a covered matter. l7 . 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 76 36,37 and 38 ofthe order which, for ready reference, is reproduced hereunder:

36. For all the aforesaid reasons, the impu(tned notices issued and the proceedrngs drawn by the respondent- Department is neither tenable, nor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are ar;cordingly set aside/quashed. As a consequence, all tho impugned orders getting quashed, the consequential oniers passed by the respondent-Department pursuant to the notices issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on tl e principles that when the initiation of the proceedingr; itself was procedurally wrong, the subsequent order:; also gets nullified automatically.

37. The preliminary objection raised by the pelitioner is sustained and ali these writ petitions stands allowed on this very jurisdictional issue. Since the impugned nottces and orders are getting quashed on th? point of jurisdictron, we are not inclined to proceed further and decide the other issues raised by the petit oner 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-tim,: measure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provtsions, and this Court allowing the petilions 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 Agan(al, supra.

18. We woulci only fufther like to make observations that since we are inclined to dispose of the instant writ petition, conscio'.ts of the fact that the earlier order ol this High Courl in the case of Kqnskul$ Ravindra Retlny Q supra) is subjected to challcnge before the Ilon'ble Supremc Court in SLP No.3574 ol 2024, plefer-red by tlie lncome Tax Depatttnent, \.'e make it clear that allowing of the instant rvrit petition is subject to outcome of the aforesaici SI P prefered by the Revenue against the decision of this High Courl in the case of Kanakala Ravindra Reddy (l supra). This, in other r'vords, rvould tneau that either of the parties, il tliey so want, rnay rnovc an appropriate petition seeking revival of this writ petition in the ligLrt 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 aliorved in favour ol the assessee so far as the issue of jurisdiction 1S concerned. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed 18 The consequential orders, if any, also star.rd sci asidc/quashed in similar tenns as have been passed by this lligh CoLul in the case of Kankanalu Ravindra Reddy (l supra). There sl,all be no order as to costs Consequently, misce[[aneous petitions penrling, if any, shall stand closed J .II.6RINIVASA REDDY $ISTANT REGISTRAR //TRUE COPY// I TION OFFICER To,

1. Assessment Unit, National Faceless Assessment C re. lncome Tax Dep artment, tvlinistry of Finance, Room No. 401 '2nd Floor, E-Ramp, Jawa harlal Nehru Sta dium, Delhi - 110 003

2. The Income Tax Officer, Ward - 1, lncome Tax Office' (i-2-156/3' Subhash Nagar, Nizamabad - 503002.

3. One CC to SRl. A V RAGHU RAlvl Advocate [OPUC] 4 One CC to tr/s J SUNITHA (SR SC FOR INCONn TAX) IOPUC] Two CD Copies 5 KKS LS w HIGH COURT DATED:0610812025 ORDER WP.No.23151 of 2025 .,:f /-. (' ?: I 5EP 2ffi ..i..;. * ../' t? ALLOWING THE WRIT PETITION WITHOUT COSTS - ..-R"L Yt- qfqfi'