PURUSHOTHAM CHIPPA v. TNCOME TAX OFFICER

petitioner and Ms.B.Sapna Reddy, leamed Senior Standing Counsel fbr the Income Tax Department, lor the respondents' Perused the record.

2. This is a writ petition where the proceedings are either chaltenged to the notices which were issued under Section 148,4. and 148 of the lncome Tax Act,,l961 (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 Officer, whereas in terms of the amendment that was brought to the Income Tax Act by way \, -- ^- .l 2 I of Finanr:e Act, 2021 w.e.f'., 01.04.2021 onward';, proceedings under Se,:tion l48A o1'the Act as also under Sect.on 148 of the Act ought to have also been issued and proceede,.l iu a faceless manner.

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance Ac' , 2021 i.e., the impugned noticcs under Section l48A and Section 148 of the Act not being issued in a laceless manner, have already been dealt with and decided by this Court in the case of I(ANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.09.2023 whereby a batch olwrit petitions w,)re allowed and the proceedings initiated under Section l48A as alsr under Section 148 of the Act were held to he bad with consequentral reliefs on the ground ol it being in violation of the provisions of llection 151A of the Act read rvith Notitlcation 1812022 dated 29.03 2022. The said judgment passed by this Court has also been subseq uently followed in a large: number of writ petitions which were alk rvved on similar terrns '[(2023) 156 taxmann.com lTtt (]'elangana)l 3

5. Down the line, we find that the same issue has also been decided against the Revenue by vanous 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 Iligh Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, 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 intemational taxation, Bombay High 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. INCOME TAX OFFICERT, Gujarat lligh Court in the case of MANSUKHBHAI 'lzoz+1464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauhati)l ^ [(2024) [65 taxmann.com I 15 (Punjab & Haryana)] '[2024) 167 taxmann.com 411 (Telangana)] " 12024) 166 taxmann.com 679 (Bombay)l '[2024) 165 taxmann.com 113 (Himachal Pradesh)] l l 4 DAHYABHAI RADADIYA VS. INCOMB TAX OFFICER' WARD 3(3X5)8, Jharkand lligh Court in the casre of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs. II{COME TAX OFFICER & ANOTHER and batch ol writ pctitionsr0 which stood decided on 19.03.2024. Simitar views have iLlso been taken by the Division Bench of Calcutta High Court in the case of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 of 2023), decided on25.09.2024.

6. Evr:n though the same issue having been decided by a large number of High Courts, we are still confronted witlr large filing of identical matters 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 g:ound that the decision of the Bombay High Court in the cas€ of Hexaware Technologies Ltd., (2 supra) as also the one uhich has been decided by this Court in the case of Kanakala Ravindra Reddy *zoz+ scc onl-ine Guj 4012 '2025 SCC Online Jhar 287 12023, RJ-JD : 49 84-DB l o ' 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 SuprernE Court is selzed of the matter. In addition, there are about 1200 SLPs also filed arising out of the same issue being decided by various 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 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 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, titt date, we do not flnd any remedial steps having been taken by the lncome 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 concemcd tn the teeth of series of decisions 6 !' by all the major High Courts in India are corLtinuously still l initiating proceedings under Section l48A of the Act and also initiating proceed ings under Section I 48 of the Act in contravention to the amendments brought into the l'tcome Tax Act pursuant to the Finance Act,2020 as also the Financ : Act 2021 . g. Uprtn a query being put as to why can't this ,rrrit petition be disposed of in the teeth of the decision rendered [-..v this C]ourt in the case of Kanakala Rovindru Reddy (l supra), lcarned Standing Counsel for the Income Tax Department contends tlLat thosc would unnecessarily burden the Income Tax Depaftment where they would be required to file equal number of SI 'Ps before the Hon'ble Supreme Court and it would be further burdening the exchequer of the Union of India. It was also the c(,ntention of the leamed Standing Counsel that no prejudice would Lc caused to the interest of the petitioners in case if this writ petition is kept pending till the lhnalization of the SLPs pending befbre the l-lon'ble Supreme Court and the fact that the petitioner is a ready enjoying the benefit of interim protection. Nonetheless, on t-re earlier query of this Court as to why the Income Tax Departmen, have not come out with a mechanism to issue appropriate instruc.ions or to take ,, :1i9{r: 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 wc 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 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 ol' Kanakala Ravindra Reddy (1 supra). What is al(o surprising is the fact that though while allowing the writ petitions in the case of Kanakalu Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protecled the interest of the petitioners a 8 '1 i insofar as the liberty wh{1h was granted to th: Revenue for initiating fresh proceedings strictly in accordance wrth the amended provisions of the Act, as amended by the Finance Act, 2020 and the Finance Act,2021. The petitioner assessee wou d be entitled to challenge or raise the other legal objections if the R:rcnue initiates fresh proceedings. The Department has made n,r endeavour in availing the said liberty that was.seserved for the R,:venue- On the contrary, they have been still sticking on to the st rnd, rvhich this High Court as well as many other High Courts alr,)ady held to be bad. I l. It appears that because of the aforesaid libert.i that this High Court had granted permitting the Revenue for initiating liesh proceedings as a one-time measure in a faceless manner, the Income Tax Department wants to take advantage ,rf the same by protracting these proceedings whieh would enable tl ern to mect the limitation that would otherwise come in the way. l.ikewise, if the writ petition is kept pbnding for a considerable lonp period of time and finally at a later stage if the Hon'ble Supreme louft confirms the decision taken by this High Court as also by .he other I ligh Courts in which the SLPs are still pending, th,: I ncome Tax 9 Department would get the advantage of the tiberty that is otherwise protected in favour of the Revenue lor initiation of fresh proceedings from the disposal of these matters at a much later stage which would be advantageous and beneflcial 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 fiesh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanakiila Rtvindra Reddy (1 supra), is a matter of grave concem. 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 piting up on the same issue. This deliberate approach not only undennines the principle of judicial precedent but also strains the judicial rcsources unnecessarily. The Depaftment's strategy bf awaiting the Supreme Courl's decision on pending SLPs while continuirg to initiate fresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than adhering to the established legal t\] 10 position. Such conduct raises serious questi( 'ns about the administrative efficiency and the respect fbr judicial pronouncements, particularly when this Court has a lready provided a balanced approach by preserving both the Revertue's rights and assesses interests.

13. Another aspect which needs to be considered is that in f'act it should have been realized by the Income Tax Department itself and should have lound out via media in ensuring tlLat proceedings under Sections 148-4 and 148 should not have b:en issued in a faceless manner, at least till the Hon'ble Supreme (lourt decide the twelve hrLndred ( 1200) odd SLPs which it is alreadl seized of or, at least the Income Tax Department should have f :und out some remedial steps to ensure that wherever the auth<'rities intend to initiate proceedings under Sections 148-A and 148 other than in a faceless manner, the proceedings should have been delened without precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only aftr:r the S[-P's are decided by the Hon'ble Supreme Court on the v,:ry 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 alt 11 has to be taken, has to be taken for the whole of lndia, 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 lncome 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 ol 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'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 majority of High Courts 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-A and ( I 't2 148 through the jurisdictional Assessing Officer v hereas it ought .l to have been only in the faceless manner

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXIr, on an issut rvhether 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 Divisiorr Bench of the High Court ol Bombay held at paragraph No.25 as r nder, viz., "25. Mr. Paridwalla has rightly 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) t.td. v. lTOr3 of which one of us (Justice G.S. Kulkarni) was a meml)er. wherein the Oourt categoflcally observed that the Revenue having not "accepted" the judgment of the High Court would not rlean that till the same is set aside in a manner known to law, it wcJld 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 critic zed by the Supreme Court. ln such deciiion, following are 'he relevant observations made by the Supreme Court. " ilZOZSl 170 taxmann.com 422 (Bombay)l '' it9zal I 13 I'fR 589 (Bombay) " 720241 I 65 taxmann.com 581i300 Taxman 452 (Bombay) " 1l99zlraxmann.com l6155 ELT 433 (SC) -// 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 lhe 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 (Appeals) 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 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 jurisdiction and the order of the Tribunal is binding upon the Assrstanl Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial disc,ipline 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 subiect matter of an appeal can furnish no ground for not following it unless ils operation has been suspended by a competent court. lf this healthy l .j 14 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 ength, because it has been suggested by the lr:arned Additional Solicitor General that the obsen ations made by the High Court, have been harsh ,rn the officers. lt is clear that the observations of thi: High Court, seemingly vehement, and app,lrently unpalatable to the Revenue, are only intended tc curb a tendency in revenue matters which, if allov/ed to become widespread, could result in considerable harassment to the assesses-public without any ,)enefit to the Revenue. We would like to say th rt the department should take these observations n the proper spirit. The observations of the High Court should be kept in mind in future and the utmost egard should be paid by the adjudicating authorities a1d the appellate authorities to the requirements of jrdicial discipline and the need for giving effect to the lrders of the higher appellate authorities which are binding on them." I 5. Wtrat is worrying this Bench more is th: 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 I ncome Tax Department being violative of the 15 FinanceAct,2020andFinanceAct,202l.Now,inordertoprotect 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 Kankanalu Ravindra Reddy (l supra) shall however be subject to theoutcomeoftheSLPswhichwerelrledbythelncomeTax Department and which is pending consideration before the Hon'ble Supreme Court.

16. [n 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 tligh Courts on the veiy same issue, the pendency of this Fligh 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 \6 36,37 an<l38 ofthe order which, for ready referenc,:, is reproduced hereunder: l .\!

36. For all the aforesaid reasons, the impugneii notices issued and the proceedings drawn by the res )ondent- Department rs neither tenable, nor sustainable. The notices so issued and the procedure adoptrd being per se illegal, deserves to be and are accord ngly set aside/quashed. As a consequence, all the irrpugned orders getting quashed, the consequential orderi passed by the respondent-Department pursuant to the notices issued under Section 147 and 148 would a so get quashed and it is ordered accordingly. The reilson we are quashing the consequential order is on the principles that when the initiation of the proceedings itr;elf was procedurally wrong, the subsequent orders a so gets nullified automatically.

37. The preliminary objection raised by the pet tioner is sustained and all these writ petitions stands alk>wed on this very jurisdictional issue. Since the impugnec notices and orders are getting quashed on the t)otnt of jurisdiction. we are not inclined to proceed furher and decide the other issues raised by the petitionr)r which stands reserved to be raised and contenderl in an appropriate proceedings.

38. Since ihe Hon'ble Supreme Court had, in lhe case of Ashash Agarwal, suprs', as a one{ime rneasure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, tr)e right 17 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 Aganaral, 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 Gourt in SLP No'3574 of 2024' preferred by the Income Tax Department, we make it clear that atlowing of the instant writ petitjon is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Ruvindra 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 of this writ petition in the light of the decision of the Hon'ble Supreme Courl 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 challenge under Sections 148-4 and 148 stands set aside/quashed' l6 --\.. *-:'1 The consequential orders, if any, also stand set aside/quashed in '! similar terms as have been passed by this High Court in the case of Kankanqla Ravindro Reddy (l supra). There shall be no order as to costs. Consequently, miscellaneous petitions pendirg, if any, shall stand closed //TRUE COPY// SD/. N. SRIHARI DEPUTY REGISTRAR secJhfff,rrrcen To, '1 . The lncome Tax Officer, Ward -4('1), lT Tower, AC Guards, N/asab Tank, Hyderabad-500004.

2. The Principal Commissioner Of lncome Tax 1, lncome Tax Towers, A.C.Guards, Hyderabad 500004.

3. One CC to SRI UPADHYAY RAGHAVENDER, Advocate [OPUC] 4. One CC kr Ms. B.SAPNA REDDY, Sr. SC INCOME TAX [OPUC] 5. Two CD C;opies BSR PVLfk '/ ,/- i'.' i'\, \ .,: \ --l::=-: 5 r,: ._ :_:"-., , \\ 'r: ri ;,\ 2 sEP 20ffi ', 'i .,1 ,t' ,, l- ') -4 rC!1. i' ^.,1.1,.,-,/ 1 * HIGH COURT DATED:0410812025 ORDER WP.No.22794 ot 2025 ALLOWING THE WRIT PETITION, WITHOUT COSTS rd,"A YiA,t &