The High Court · 2024

Counsel for the Petitioner: SRI GAJANAND CHAKRAVARTHY, REp. FOR SRI UPADHYAY RAGHAVENDER Counsel for the Respondents: SRI T.P.S.HARSHA, Jr- S,l REp. FOR Ms. J.SUNITHA, Sr. SC TNCOME TAX The Court made the following: ORDER THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE SUDDALA CHALAPATHI RAO WRIT PETITIO N No.22E09 oF 2025 QBDEB, @er Hon'ble Sri Justice Suddala Chalapathi Rao) Heard Sri Gajanand Chakravarthy, Ieamed counsel representing Sri Upadhyay Raghavender, learned counsel for the petitioner and Sri T.P.S.tIarsha, learned Junior Standing Counsel representing Ms,J.Sunitha, lcarned Senior Standing Counsel for Income Tax, for the respondents. Perused the record'

2. This is a writ petition where the proceedings are either challenged to the notices q'[i6[ rvere issued under Section 148A and 148 of the [ncome Tax Act, 196t (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 l48A ol the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Officer' whereas in terms oftheamendmentthatwasbroughttothelncomeTaxActbyway 2 of Finance Act, 2O2l w.e.f., 01.04.2021 onwarrls. proceedings under Section l48A of the Act as also under Secrion 148 of the Act ought to have also been issued and proceedcd in a fuceless manner.

4. The contention of the petitioner is tha the issue o[ proceedings being in violation of the Finance A,: . 201 I i.e., the impugned notices under Section l4gA and Sectiorr l4g of the Act not being issued in a faceless manner, have alreadv hcen deal[ with and decrded by this Court in the case of IiANKANALA RAVINDRT\ REDDY vs. INCOME_TAX OFFI(,ER| decided on I4.09.201i whereby a batch of writ petitions wjr.(.allow.cd an<l the proceedings initiated under Section l4gA as alsr. rrnder Section I48 of the Acr were held to be bad with consequentii I r.eliels on the ground of it being in violation of the provisions of St.crion I .5 I A of thc Act read rvirh Notification lg/2}z|dated 29.03..1()12. judgment passed by this Court has also been subseqtr,,ntly follou,ed in a large number of writ petitions which were a ou cd o, simirar .ilre ' [(2023) 156 tavlann.cn- I I-I P )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. 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 ol SRI VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of intemational taxation, Bombay lJigh Court in the case of ABHIN ANILKUMAR SHAH VS. INCOME TAX OFFICER' INTERNATIONAL TAXATION6 which is again on intemational taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. INCOIVIE TAX OFFICERT' Gujarat High Court in the case of MANSUKHBHAI ' lzoz+1464 rrR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauhati)l " [(2024) 165 taxmann.com I l5 (Punjab & Haryana)l 512024) 167 taxmann.com 41 1 (Telangana)l " 12024) 166 taxmann.com 679 (Bombay)l ' 12024) 165 taxmann.com I l3 (Himachal Pradesh)l 4 DAHYABHAI RADADIYA vs. INCOME T,,\X OFFICER, WARD 3(3)(5)8, Jharkand High Court in the cas,e of SHyAM STJNDAR SAW vs. UNION OF INDIAe, Rajasthal High Court in the case of SHARDA DEVI CHHAJER vs. IIiiCOME TAX OFFICER & ANOTHER and batch oT writ periti,onsr0 which stood decided on 19.03.2024. Similar views have also been taker-r by the Division Bench of Calcutta High Court in the case of GIRDHAR (;OPAL DALMIA vs. UNION OF II{DIA & ORS (M A.T Iti90 ot'2023), decided on25.09.2024.

6. liven though the same issue having been decidcd by a largc nurrbcr ol'Iligh Courrs, we are still confronted with large filing of identical rnartcrs on daily basis ranging between 5 to l0 u,rit petitions. I-hat upon rhe instructions being sou:ht ftom the Depaftment, thcy have been taking a solitary gr,)uncl that the decision ol'thc l]ombay High Court in the case of Hexaware Technologie.s Lttt., (2 supra) as also the one wh ich has been decidcd b1' this Court in the case of Kanakala Rtvintlra Reddy *:02,t ScC ont.inc Gu.i 40 l2 " 2O2r :,iC(' ( )rrl .irrc Jhar 187 "t12023, I{.t-.tD 49s4-DBI 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 ol. the matter. In addition, there are about l20QSLPs also filed arising our of the same issue being decided by various High Courts 7 To a query being put to the learned counsel lor 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 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 itsetL

8. On the one hand, even though the order ol this Clourt that was passed as early as on 14.09.2023 and more 16 rnonths have lapsed, till date, we do not hnd any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance of notice under Section l48A 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 conr inuously still initiating proceedings under Section 148,4. of the Act and also initiating proceedings under Section 148 of the Act in contravention to the amcndments brought into the Lr.:ome 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 u rit petition be disposed of in thc tceth of the decision rendered by this Court in the case ol Kanakah Ravindru Reddy (1 supra), learled Standing Counsel l'or the Income Tax l)epartment contends thirt those would unnecessarily burden thc lncome Tax Department where they would be required to lile equal number of SLI's before the Hon'ble Supreme Court and it would be further hurdening the exchequer of the Union of India. it was also the corLtcntion ol the leamed Standing Counscl that no prcjudice would be caused to the lnterest of the pctitioners in case if this writ petition r, kept pending tilt the tinalization of' the SLPs pending before the Hon'ble Supreme (lourt and thc lirct that the petitioner is alr,:ady enjoying the beneht of interirn protection. Nonetheless, on tht. earlier query ol this CoLrrt as to why the lncorne Tax Department [rave not come out ...,,ith a mechanism to issue appropriate instruct ()ns 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 ofthe 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 lndia and cannot be lirnited 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 atlowing writ petitions on the very same issue. 'fhe [ncome Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provrstons of Scction l5lA of the Act and as a result by now' more than 600 to 700 pctitions have been already got pired 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 allowing the writ petitions in the case of Kanakala Ravindra Reddy (l supra), the Division Bench while reserwing the right of interest of the Petitioners the Revenue, has also Protected the 8 insofar as the liberty which was granted to rhe Revenue for initiating fresh proceedings strictly in accordance rvith the amended provisions of the Act, as amended by the Financ : Act, 2020 and the Financc Act, 2O2l. The petitioner assessee worrld be entitled to challengc or raise the other legal objections if rhe I.:evenue initiates fresh pr,rceedings. The Department has made no endeavour in availing thc said liberty thar was rescrved for the R:venue. On the contrary, thcy have been still sticking on to the sr rnd, which this High Corrrt as well as nrany other Fligh Courts ah.t,ady held to be

11. ll. appcars rhar because ol the aforesaid liberty that this High Court hacl granted permitting thc' Revenue for iritiating fresh proceedings as a onc-tirne treasure in a faceless rnanner, the Income Tax l)epanment wants to take advantage (r. the same by protracting thcse proceed ings which rvorrld enable them to meet the limitation that rvould otherwise come in the way. Liiewise, if the writ petition is kc.pt pending for a considerable long oeriod of time and finally at a later stagc if the Ilon 'ble Supreme Cr,urt confirms the decision taken by rhis High Courr as also by tht other High in which the SLps are still pending, the , nc6mg 1sy Courts e 9 Department would get the advantage of the liberty that is otherwise protected in favour of the Revenue for initiation of fresh proceedings lrom the disposal ofihese matters at a much later stage which woutd 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 lncome 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 set in Kanakala Ravindra Reddy \l supra)' is a malter ol grave concern' The Income Tax Department's persistent initiation of iresh proceedings' disregarding the established judiciat pronouncelnents, 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 white continuing to initiate fresh proceedings appears to be a calculated move to buy time and circumvent lirnitation periods, rather than adhering to the established legal 10 position. Such conduct raises serious quesrions about the administrative efficiency and the respe(r lbr judicial pronouncements, particularly when this Court has aiready provided a balanced approach by preserving both the Re,u:rrue's rights and assesses interests. scizcd of or, at

13. Another aspect which needs to be considere<l is that in fact it should have been realized b1., the Incorne Ta_x Dep. trnent itself and should havc lbund out via rnedia in ensuring rlrar proceedings under Sections l4g_A and l4g should not have b,,en issued in a faceless manner, at least till the FIon,ble Suprerne (l ourt decide the twelve hundred (1200) odd SLps which it is alreadr least the Income Tax Depanrncnt should hai,e remedial steps to ensure that whercver the auth on t re s intend to initiate proceedings under Sections r4g-A and l4u, r rirer trran in a faceless manner, the proceedings should havg i1,r:6 deferred without precipitating the nratter fufther intimating tht: assessee that they shall initiate appropriate procecdings only after lrrc SLp,s are decided by the Hon,ble Supreme Court on the ven, sarnc issue. This again, the Income fax Depanment, has not been ahle to give a convincing reply, except lor the fbct [hat such a decision ilat all li) rnd out some -.-..-- 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 [ncome Tax Department contended that the Delhi t{igh Court dismissed a writ petition of similar nature, on the one hand when the [{igh Court is struggling to reduce its pendency, such notices which are under chailenge in this writ petition arc lorcing the assessec to knock the doors of this High Courl. resulling in filing ol- hundreds of new writ petitions which in the long run not only aflects 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 be{bre the Hon'ble Suprerne Court having been taken on many occasions, the Hon'ble Supreme court which is seized of the matter has bcen reluctant in granting any interim protection to the Income -fax Department. yet, the authorities concemed at the State level are not ready to accept the verdict passed by a majority of High Courts of dillerent States on the same issue; and to make things lurther worse, the Income Tax Department is showing audacity by issuing notices continuously under Sections l4g_A and 72 t 48 through the jurisdictional Assessing Officer wh t reas it ought to have been only in the f'aceless manner.

14. In the case of BANK OF INDIA vs. \SSISTANT COMMISSIONER' INCOME TAXrr, oq an issue r'hether it was justifiable on the part of the lncome Tax Depar'rlent in not fotlowing an order passed by the adjudicatirlg authori \ onlv orr the ground that the appeals are pending, the Division Bcnch of the High Court ol'Bombay held at paraglaph No.25 as utr:ler. r'iz', : '25. Mr. Paridwalla has rightly drawn out attentr)n to the decision of this Court in Commissioner of lncome Ta:l vs' Smt' Godavaridevi Sarafl2 as also the recent decision ('f the co- ordinale Bench of this Court in Samp Furniture (P) Lnl. v' lTOrr of which one of us (Justice G.S. Kulkarni) was a membt r wherein the Court categorically observed that the Revenue l'aving not "accepted" the judgment of the High Court would not mr'an that till the same ts set aside in a manner known to law, it wou d loose its binding force. Referring to the decislon of the Suprerr e Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd''4. the Court observed that the approadh of the officials of Fevenue of treating decisions being "not acceptable" was critic'zed by the Supreme Court. ln such decision, following are tl-e relevant observations made by the Supreme Court. " 11ZOZS; 170 ta,xmann.com 422 (Bombal')l '' 1t9281 I l3 ITR 589 (Bombay) t' 'o ltggzltaxrnann.com l6155 lll-l'4ll (SC) TZOZ+1 165 taxmann.com 58 1/300 Taxman 452 (Bornr.rl ) l- 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 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 (Appeats) 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 effecl to the orders of authorities higher to them in the appellate hrerarchy. lt cannot be too vehemenfly emphasized that it is of utmost importance that, in disposing of the quasrudicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appe te Coltector is binding on the Assistant Collectors working within his lurisdiction and the order of the Tribunat is binding upon the Assistant Collectors and the Appellate Collectors who function under the .iurisdiction of the Tribunal. The principles of judicial drsciptine require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authonties. The mere fact that the order of the appellate auttJority is not .,acceptable,' the department - in rtself an objectionable phrase _ and is the subject matter of an appeal can furnish no groun d for not following it unless its operation has been suspended by a competent court. lf this healthy 14 rule is not followed, the result will only be urlue 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 observat ons made by the High Court, have been harsh on the officers. lt is clear that the observations of the lligh Court, seemingly vehement, and appart:ntly unpalatable to the Revenue, are only intended to rurb a tendency in revenue matters which, if allowe I to become widespread, couid result in conslderable harassment to the assesses-public without any benefit to the Revenue. We would like to say that the department should take these observations rn the proper spirit. The observations of the High ! ourt should be kept in mind in future and the utmost relard should be paid by the ad,udicating aulhorities arr! the appellate authorities to the requirements of iu(lrcral discipline and the need for giving effect to the orders of the higher appellate authorities which are bir drng on them." I 5. What is worrying this Bench more is tht: I'act that an endeavour is being made whole heartedly to ensure lrot to generate further titigation on issues which have been [aid to lcst by a large number ol'High Courts all of whom have taken a cottsistent stand that the actioll of the Income Tax Department being r iolative of tl're 15 Finance Act, 2020 and Finance Att, 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 Kankanala Ravindra Reddy (l supra) shall however be subject to the outcome of the SLPs which were filed by the lncome Tax Department and which is pending consideration bcfbre the llon'ble Supreme Court.

16. In the given facts and circumstances, rhis 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 ol the various other High Courts on the very same issue, the pendency of this High Court would further be burdened which othent,ise 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 t6 36, 37 and 38 of the order which, for ready referencc. is reproduced hereunder

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent- Department is neither tenable, nor sust ainable. 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 alr;o get quashed and it is ordered accordingly- The reason we are quashing the consequential order is on the plnciples that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders al ro gets nullified automatically.

37. The preliminary objection raised by the peti ioner is sustained and all these writ petitions stands allcwed on this very jurisdictional issue. Since the impugned notices and orders are gettin! quashed on the pornt of jurisdiction, we are not inclrned to proceed furtrer and decide the other issues raised by the petitioner which stands reserved to be raised and contendec rn an appropriate proceedings. .f

38. Since the Hon'ble Supreme Court had, in t,re case of Ashish Agarwal, supra, as a one{ime nreasure exercising the powers under Article 142 of the Constitulion of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court rrllowing the petitions only on the procedural flaw, tt e right 17 confened on the Revenue would remain reserved to proced further if ttey so want from the stage of the order of the Supreme, Court in the case of Ashish Agarwal, supra-

18. We would only further like to make observations that since we are inclined to dispose of thc instant writ pctition, conscious of the fact that the earlier order o f this High Courr in thc case of Kanakala Ravindra Reddy (l supra) is subjected to ohallenge belore the Hon'ble Supreme Court in SLp No.l574 of 2024, preferred by the Income Tax Departrnent, we makc i[ clear that allowing of the instant writ. petition is subject to outcome oF the aforesaid SLP preferred by the Revenue against the dccision of this I{igh Court in the case of Kanakala Ravindra Redd-y (l supra). This, in other words, would mean that cirher of rhe partics, il thcy so want, may move an appropriate pctition secking revival of this writ petition in the light ol the decision o[ the Hon'ble Supreme Court in the pending SLP on the very same issue.

19. Accordingly, the instant. rvrit pctition stands a[lowed in favour of the assessee so far as the issue o[ .jurisdiction IS concemed. As a consequence, the irnpugncd notice under challenge undeLs€QlLtgns 148-4 and 148 stands sct aside/quashcd 18 a. The consequential orders, it any, also stand set :rrride/quashed in similar terms as have been passed by this High Cor,r rt in the case of Kankanqla Ravindra Red$, {L supra). There shaU be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closcd APw \o" \i\ The lncome lex Officer, Ward-1 , Sy No.425, l sttF6or Reddy Colony. Ivlancherial SO42OB.' - ' -",r*- //TRUE COPY// , -M. OSMAN ALI BAIG SISTANT REGISTRAR SECTION OFFICER Ranga Raja Complex, To,

2. The Principal Commissioner of A-C.Guards, Hyderabad -500004. 3 One CC to SRt UpADHyAy RAGHAVENDER, Advoca:e IOPUC] 4 One CC to tvls J SUN|THA, Sr. SC TNCOME TAX [OpUC] 5. Two CD Copies Income Tax-2, ncome Tax Towers, BSR TKS \dd HIGH COURT DATED:0410812025 I ORDER WP.No.22809 of 2025 Ij 3 ltl 296 \ \\ )_) l.C\ rrl \:; \.. -'_. \). i ALLOWING THE WRIT PETITION, WITHOUT COSTS .rtRb + w )?:a5 \-+ "