The High Court · 2025

Order

(per Hon'ble Sri Justice Suddala Chalapathi Rao) Heard Sri Gajanand Chakavarthy, leamed oounsel

representing Sri Upadhyay Raghavender, leamed counsel for the petitioner and Ms.B.Sapna Reddy, learned 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 t48A and 148 of the Income Tax Act, 196l (tor short 'rhe 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 o[the grounds, that the notices issued under Section l48A of the Act and the subsequent initiation of proceedings under Section 148 o[ the Act by the jurisdictional Assessing Officer, whereas in terms of the amendment that was brought to the Income Tax Act by way 2 ol Finance Act, 2021 w.e.f., 01.04.2021 onward s. proceedings under Seclion l48A of the Act as also under Secr.ion 148 of the Act ought to have also been issued and proceederl in a faceless manner

4. T'he contention of the petitioner is that the issue of proceedings being in violation of the Finance Acr, 2021 i.e., the impugned notices under Section l48A and Sectiorr 148 of the Act not being issued in a faceless manner, have alreadl been dealt with and decided by this Court in the case of KANKANALA RAVINDITA REDDY vs. INCOME-TAX OFF'ICERI decided on 14.09.2023 whereby a batch of writ petitions \\ere allowed and the pro<;eedings initiated under Section l48A as al:;o under Section 148 of the Act were held to be bad with consequential rcliefs on the ground o[ it being in violation of the provisions ol'section l5lA of the Act read with Notification l8l2o22 dated 29.03 2022. The said judgment passed by this Court has also been subsetluently followed in a large number ol writ petitions which were allorved on similar terrns 't(2023) I56 taxmann.com 178 ('l-elangana)l 3

5. Down the line, we find that the same issue has also been decided against the Revenue by various High CourS i.e., by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTAITIT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UXIOU OF INDIAs, Punjab and Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF IIYDIA4, and Telangana High Court in the case of SRI VENKATARAMANA REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation, Bombay High Court in the case of ABHTN ANILKUMAR STIAII vs. INCOME TAX OFFICE& INTERNATIONAL TAXATIOIt' which is again on international taxation and central circle, High tourt of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI ' lzoz+1464 ITR 430 (Bom) 'U2024) 156 taxmann.com 478 (Gauhati)l " [(2024) [65 taxmann.com I 15 (Punjab & Haryana)] 5 [2024) [67 taxmann.com 4l I (Telangana)] 6 [2024) [66 taxmann.com 6D @ombay)] '12024) 165 taxmann.com I 13 (Himachat Pradesh)l 4 DAHYABHAI RADADIYA vs. INCOME T.Ax OFFTCER, WARD 3(3X5)8, Jharkand High Court in the case of SHyAM SUNDAR SAW vs. UNION OF lNDIAe, Rajastf an High Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER 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. UNION OF rNDIA & ORS (M.A.T' 1690 of 2023), decided on25.09.2024.

6. fiven though the same issue having been decided by a large number of High Courts, we are still confronted wirh targe filing of identicat lnatters on daily basis ranging between 5 to l0 writ petitions. That upon the instructions being sought from the Department, they have been taking a solitary t{round that the decision of the Bombay High Court in the casc of Hexaware Technologies Ltd., (2 supra) as also the one rvhich has been decided by this Court in the case of Kanakala Ravindra Reddy *202+ SCC Online Guj 4012 '2025 SCC OnLine Jhar 287 'o 7zo2f , RJ-J t):4984-DB l 5 (l supra) has been subjected to challenge in a Special lrave Petition i.e., SLP No.3574 of 2Q24 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 fited arising out ofthe same issue being decided by vari6us 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 betore 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 itsetf'

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 tapsed, till date, we do not find any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hotd back issuance o[ 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 oI decisions 6 by all the major High Courts in India are continuously still initiating proceedings under Section l48A of tre Act and also initiating proceedings under Section l4g of the Act in contra\iention to the amendments brought into the Income Tax Act pursuant to the Finance Act, 2020 as also the Finarrce Act202l.

9. IJpon a query being put as to why can,t thir writ petition be disposcd of in the teeth o[ the decision renderecl by this Court in the case of Kanakala Rovindra Reddy (l supra), Ieamed Standing Counsel for the Income Tax Department contends that those would urmecessarily burden the Income Tax Departrrrent where they would be required to file equal number of S,L,ps before the Hon'ble Supreme Court and it would be furthe r burdening the exchequer of the Union of India. [t was also thc r:onte,tion of the leamed Standing Counsel that no prejudice woukl be caused to the interest of the petitioners in case if this writ petitiorr is kept pending till the finalization of the SLps pending beti,n: the Hon,ble Supreme Cou( and the lact that the petitioner is rlready enjoying the benefit ol interim protection. Nonetheless, on rhe earlier query of this Court as to why the [ncome Tax Departmerrt have not come out with a mcchanism to issue appropriate instrLr,:tions 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 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 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 attowing 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 l5lA 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 Kanakalu Ravindra Reddy (l 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 reserving the right of the Revenue, has also protected the interest ol the petitioners 8 insofar as the liberty which was granted to the Itevenue for initiating fresh proceedings strictly in accordance q,ith the amended provisions of the Act, as amended by the Finanr: e Act, 2OZ0 and the Finance Act,202I. The petitioner assessee rvrrr-rld be entitled to challenge or raise the other legal objections if the Revenue initiates fresh proceedings. The Department has madc no endeavour in availing the said liberty that was reserved for the llevenue. On the contrary, they have been still sticking on to the stand, which this High Court as well as many other High Courts alrcady held to be bad. I l. lt appears that because of the aforesaid libcrry that this High Court had granted permitting thc Revenue lirr rnitiating fresh proceedings as a one-time measure in a face l..ss manner, the Income Tax Department wants to take advantage of.the same by protract'ing these proceedings which would enable rhem to meet the limitati,tn that would otherwise come in the way. I_ikewise, if the writ petition is kept pending for a considerable lorc period of time and finally at a later stage if the Hon,ble Supremc (.lourt confirms the decision taken by this High Court as also by rhe other High Courts in which the SLps are still pending, t rr: Ins6ms 12x (l 9 Department would get the advantage of the liberty that is otherwise protected in favour of the Revenue for initiation of fiesh proceedings from the disposal ofthese matters at a much later stage which would be advantageous ahd beneficial to the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concerned. As a consequence, the Income 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 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 titigation 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 calcutated move to buy time and circumvent limitation periods, rather than arlhering to the established legal 10 position. Such conduct raises serious quesiions about the administrative efficiency and the respecl. for judicial pronouncements, particularly when this Court has atready provided a balanced approach by preserving both the Revenue,s rights and assesses interests.

13. .Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Department itself and should have found out via media in ensuring th.at proceedings under Sections 148-,{ and 148 should not have been issued in a faceless manner, at least till the Hon,ble Supreme Court decide the twelve hundred (1200) odd SLps which it is alreadl, seized of or, at least the Income Tax Department should have ftrund out some remedial steps to ensure that wherever the auth rrities intend to initiate proceedings under Sections l4g-A and l4t, other than in a faceles..r manner, the proceedings should have been defened without precipitating the matter further intimating :he assessee that they shall initiate appropriate proceedings only aft:r the SLp,s are decided by the Hon'ble Supreme Court on the very same issue. This again, the Income Tax Department, has not be,:n able to give a convincing reply, except for the fact that such a crecision if at aU 11 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 petitlon of similar nature' on the one hand when the t{igh Court is struggting to reduce its pendency, such notices which are under chaUenge in this writ petition are forcing the assessee to knock the doors of this High Court resulting in hling of hundreds of new wrlt petitions which in the long run not only affects the disposat 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'bte Supreme Court having been laken on many occasions, the Hon'ble Supreme Court which is seized of the matter has been reluctant in granting any interim protection to the lncome 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 [ncome Tax Department is showing audacity by lssuing notices contirluously under Sections 148-A and 12 148 through the jurisdictional Assessing Officer u,hereas it ought to have been only in the faceless manner.

14. In the case of BANK OF INDIA rs. ASSISTANT COMMISSIONER, INCOME TAXIr, on an iss.rc wherher it was iustifiablc on the part of the Income Tax Dr.panment in not following an order passed by the i_djudicating aurhority only on the ground that the appeats are pending, the Divisi:rn Bench of the High Court of Bornbay helcl at paragraph No.25 as under, viz., : "25. Mr. Paridwalla has r(1hfly drawn out att lntron to the decision of this Court in Commissioner of Income Tax vs- Smt- Godavaridevi Sarafl2 as also the recent deosion of the co- ordinate Bench of this Court in Samp Furniture (p) Ltd. v. lTO13 of which one of us (Justice G_S. Kulkami) was a mentrer, wherein the Court categorically observed that the Revenu:r having not "accepted" the iudgment of the High Court would not rnean that till the same is set aside in a manner known lo law, it would loose its binding force_ Referring to the decision of the Supr.)rne Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.14, the Court observed that the approach of the officials o1 fievenue of treating decisions being .not acceptable, was criti:;ijzed by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. ',', 1,.10:,-t't '' ll978l I t3 ITR 589 (Bombay) I 7 0 raxmann.com 422 ( Bo mbay )l '.r. t' 1 t 65 taxmann.com 5 g I /300 Taxman 452 (Born b.:ry,) :ZOZ+ l}eZl raxmann,com l6155 ELT 433 (SC) 13 "6. Sri Reddy is perhaps right an saying that the officers \ rere not aduated by any mala ftdes in passing the impugned orders. They perhaps genuinely felt that the claisn 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 correciness or otherwise of their conclusion or of any factual matafides but with the fact that the officers, in reaching in their conclusion, by-Passed two appellate orders in regard to the same isstre which were daced before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly critacazed 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 brnding on the Assistant Collectors working within his jurisdiction and the order of the Tribunat 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 - ifl itself an objectionable phrase - and is the subject matter Qf an appeal can furnish no ground for not following it unless its operation has been suspended by a cornpetent court. lf this healthy t4 rule is not followed, the result will only be undue harassment to assesses and chaos in admilistration of tax laws_

12. We have dealt with this aspect at som,-, length, because it has been suggested by the learned Additional Solicitor General that the obsorvations made by the High Court, have been harst on the officers. lt is clear that the observations of :he High Court, seemingly vehdment, and ap,parenfly unpalatable to the Revenue, are only intende(l to curb a tendency in revenue matters which, if alllwed to become widespread, could result in cons tderable harassment to the assesses-public without any benefit to the Revenue. We would like to say :hat the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in ftrture and the utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of jr.rdicral discipline and the need for giving effect to tho orders of the higher appellate authorities which are binding on them."

15. What is worrying this Bench more is tl.rr, lact that an endeavour is being made whole heartedly to ensur3 nor to generate further litigation on issues which have been laid to rcst by a large number ol- High Courts all of whom have taken a consistent stand that the acrion of the lncome Tax Department beinl:, violative of the 15 Finance Ac! 2020 and Finance Act,202l . Now, in order to protect the interest of the Revenue as also that of the assessee, it would be trite at this j uncture, if we dispose of the writ petition with an observation/direction that the disposat of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kunkanala 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 before the Hon'ble Supreme Court.

16. ln 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 forti fied by the decisions of the various other High Courts on the very same issue, the pendency of this l{igh Court would further be burdened which otherwise can be decided and disposed of as a covered matter. 11 . So far as the interest of the Revenue is concerned, we are of the considered opinion that the iqterest of the Revenue has already been considered and protected, as has been observed in paragraphs 16 36, 31 and,38 of the order which, for ready reference, is reproduced hereunder:

36. For all the aforesaid reasons, the impugred nolices 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(rrdingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent-Departrirent pursuant to the notices issued under Section 147 and 14g would also get quashed and it rs ordered accordingly. The teason we are quashing the consequential order as on thr: 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 pr:titioner is sustained and all these writ petitions stands ;tllowed on this very .iurisdictional issue. Since the impugned notices and orders are getting quashed on the point of lurisdiction, we are not inclined to proceed f.lrther and decide the other issues raised by the petiticner which stands reserved to be rgised and conten(led in an appropriate proceedings. 38 Since the Hon,ble Supreme Court had. ir the case of Ashish Agarwal, supra, as a one_time nleasure exercising the powers under Article 142 of the Constitution of lndia, permifted the Revenue tl proceed under the substituted provisions, and this Cou .t allowing the petitions only on the procedural flaw the right t7 conferred on tfle Revenue would remain reservd to proceed further if they so. want from the slage of ttte order of the Stpreme Court in tte case of Ashish Aganrval, supra.

18. We would only further like to make observations that sirrce 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 l{on'ble Supreme Court in SLP No.3574 of 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 preGrred by the Revenue against the decision of this High Court in the case of Kanakala Ravindra Reddy (l supra) This, in other wonds, would mean that either of the parties, i[ 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 far as the issue of jurisdiction is concemed. As a consequence, the impugned notice under challcnge under Sections 148-4. and 148 stands set aside/quashed. I I 18 The consequential orders, if any, also stand set iLside/quashed in similar terms as have been passed by this High Court in the case of Kankanala Ravindra Reddy (l supra). There shai I be no order as to costs. ()onsequently, miscellaneous petitions pending, if any, shati stand closed //TRUE COPY// . SD/-V.KAVITHA t--t.__.--.-,..^,. -7 )pEPuTY REG|STRAR ..-. ', SECTION OFFICER ,i J "" '' . lncome Tax Offlcer. Ward 6(1), Hydergbq{. lncome l.ax Office, l.T. Towers, A.C. Guards, Masab Tank, Afo.rioio _ soo'oix. . Principal Commissioner Of lncome_ Tax 1, 3d Floor,,\ayakar Bhavan, Basheerbagh, Hyderabad - 500004. . One CC to Sri Upadhyay Raghavender, Advocate [OPUC] . One CC to Ms. Bokaro Sapna Reddy (Senior SC lncome Tax) tOpUCl . Two CD Copies W To, 1 2 3 4 5 TJ GJP HIGH COURT DATED:0410812025 ORDER WP.No.22793 of 2025 ) \ l SEP / r -;r,. .t:. ,. -'.', )/ ., ,, ,/ ,' ALLOWING THE WRIT PETITION WITHOUT COSTS 1 q 't{