IVADHUSUDHANA RAO DIRISALA v. THE HONOURABLE SRI JUSTICE SUDDALA CHALAPATHI RAO

representing Ms.J.Sunitha, learned 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 which were issued under Section l48A and 148 of the Income Tax Act, 1961 (for short'the Act') or the assessment orders those have been passed uuder Section lzlT 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 , 2 of Finance Acl, 2021 w.e.f., 01.04.2021 onwards, proceedings under Section 148,4 of the Act as also under Section 148 of the Act ougtrt to have also been issued and proceede,J in a faceless manneI

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act, 2021 i.e., the impugnerl notices under Section l48A and Section 148 of the Act not being issued in a f-aceless manner, have already been dealt with and decided by this Court in the case ol .I(ANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.09 2023 whereby a batch of, writ petitions wi)re allowed and the procecdings initiated under Section 148A as also under Se<;tion 148 of the Act were held to be bad with consequential reliels on the ground o I it being in violation of the provisions of l:lectiorL i 5 1 A of the Act rr:ad with Notification 1812022 dated 29.03 2022. The said judgment passed by this Court has also been subsequentll,followed in a largr: number of writ petitions which were allc,wed on similar terms. ' l(2023) I 56 taxrnann.com I 78 (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 i' 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 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 ABHIN ANILKUI\{AR SHAH vs. INCOME TAX OFFICER' INTERNATIONAL TAXATION6 which is again on international taxation and central circle, High Court of Himachal I'radesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKIIBHAI ' Tzoz+1464 ITR 430 (Bom) 'LQ024) 156 taxmann.com 478 (Gauhati)l ^ l(2024) 165 taxmann.com I I 5 (Punjab & Haryana)l ' 12024) I 67 taxmann.com 41 I (Telangana)l " [2024) 166 taxmann.com 679 (Bombay)] ' L2024) 165 taxmann.com 113 (Himachal Pradesh)l I 4 DAHYABHAI RADADIYA vs. TNCOME Tlr.X OFFICER, WARD 3(3)(5)8, Jharkand I{igh Court in the case of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case ol SHARDA DEVI CHHAJER vs. INCOI\{E TAX OFFICER & ANOTHER and batch of writ p::titionsr0 which stood der:ided on 19.03.2024. Similar views have ,rlso been taken by the t)ivision Bench of Calcdtta High Court in the case of GIRDH,\R GOPAL DALMIA vs. UNION OF INDIA. & ORS (M.A.T I 690 of 2023), decided on 25.09.2024.

6. Even though the same issue having been der;ided by a iarge number of High Courts, we are still confronted with largc filing of identical matters on daily basis ranging betrveer r 5 to 10 writ petitions. Ihat upon the instructions being so ught lrom the Depaftmr:nt, they have becn taking a solitary 1:,round thal the decision ol the Bombay Fligh Courl in the cas,:) of Hexawure Technologies Lld., (2 supra) as also the one vzhich has been decided by this Court in the case of Kanakala Ravindra Reddy 8202+ SCC Online Guj 4012 "2015 S('( ()nLine Jhar 187 to y2023 : RI-JD :4984-DBl ' 5 (1 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 of the matter. In addition, there are about I200 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 rnatters 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 tapsed, titt date, wc do not find any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hotd back issuance of notice under Section 148A and under Section 148 of the Act by the jurisdictional Assessing OtIicer, rather the authorities concemed in the teeth of series of decisions I 6 by alt the major High Courts in India are continuously still initiating proceedings under Section 148,{ of th:: Act and also initiating proceedings under Section 148 o1 the Act in contravention to the amendments brought into the lncome Tax Act pursuant to the Finance Act,2020 as also the Finanr.:e Acr 2021.

9. Upon a query being put as to why can't this writ petition be disposed of in the teeth of the decision rendered by this Court in the case of Knnakala Ravindrt Retfuly (1 supra), l::arned Standing Counsel lor the Incorne Tax Department contends l.hat those would unnecessarily burden the lncome Tax Departmr::nt where they would be required to file equal number of S l,Ps before the Hon'ble Supreme Courl and it would be further burdening the exchequt:r of the Union of India. It was also the c ontention of the leamed Standing Counsel that no prejudice would be caused to the interest of the petitioners in case if this writ petitior, is kept pending till the finalization of the SLPs pending befole the Hon'ble Supreme Court and the fact that the petitioner is zrlready enjoying the benefit of interim protection. Nonetheless, on lhe earlier query of this Court as to why the Income Tax Departmer t havc not oome out with a mechanism to issue appropriate instru<:tions ,rr to take 7 appropriate steps in ensuring that proceedings under Section 148.4 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 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 Courl allowing rvrit 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 l51A 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 Kanakala Ravindra Reddy (1 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 of the petitioners 8 insofar as the liberty which was granted to ttre Revenue for initiating fresh proceedings strictly in accordance uith the amended provisions of the Act, as amended by the Finance Act, 2020 and the Finance Act,2021. The petitioner assessee worLld be entitled to challenge or raise the other legal objections if the Flevenue initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was reserued for the Revenue. On the contrary, they have been still sticking on to the srand, rvhich this High Court as well as rnany other High Courts aheady held to be bad.

11. It appears that because ofthe aforesaid liberry that this High Court had granted permitting the Revenue lor initiating fresh proceedings as a one-time measure in a facele ss manner. the Income -lax Deparlment wants to take advantagc of the same by protractitrg thcse proceedings which would enable treln to meet the limitation that would otherwise come in the way. t,ikewise, if the writ petition is kept pending for a considerable lon;r period of time and finally at a later stage if the Hon'ble Supreme Court confirms the decision taken by this High Court as also by the other High Courts in which the SI-Ps are still pending, tlie Income 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 of 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 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 Rovindra Reddy (l 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 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 calculated move to buy time and circumvent limitation periods, rather than adhering to the established legal \ 10 position. Such conduct raises serious questions about the administrative efficiency and the respect Ibr jud icial pronounc,ements, particularly when this Court has a lreadv provided a balanced approach by preserving both the Reve.rue'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 itsell- and should havc found out via rnedia in ensuring tlrat procecdings under Sections 148-4 and 148 shouid not have b:en issued in a faceless rnanner, at least till the Hon'ble Supremc (lourt decide the twelve hundred (1200) odd SLPs which it is alreadl, seized of or, at least the Income Tax Department should have firund out some remedial steps to ensule that whcrever the authc,r'ilies intend to initiate proceedings under Sections 148-A and 148. other than in a faceless manner, the proceedings should have been deferred without precipitating the matter further intimating the assr:ssee that they shal[ initiate appropriate proceedings only aftr:r the SLP's are decided by the Hon'ble Supreme Court on the v,.:1y sarne issue. This again, the Income Tax Department, has not becn able to give a convincing reply, except for the fact that such a d:cision if at all l I I I I I IIi I u I I I 71 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 learned Standing Counsel for the lncome Tax Department contended that the Delhi High Courr 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 olhundreds of new writ petitions which in the long run not only affects 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 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 Departrnent. 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 148-4 and f I i I I 12 t. 148 thror:gh the jurisdictional Assessing Officer rrhereas it ought to have been only in the faceless manner.

14. In thc case of BANK OF INDIA vs, ASSISTANT COMMISSIONER, INCOME TAXI', on o,., issu,.: r,r'hethet il was justihable on the part of the Incorne fax DeJrarlmerlt in not following an order passed by the adjudicating auth()rity only on the ground that the appeals are pending, the Division Bench of the High Court of Bombay held at paragraph No.25 as .rnder. viz., : "25. Mr. Paridwalla has rightly drawn out attertion to the decision of this Court in Commissioner of lncome'll'ax vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Court in Samp Furniture (P) l-td. v. lTOl3 of which one of us (Justice G.S. Kulkarni) was a menber, wherein the Court categorically observed that the Revenur: having not "accepted" the judgment of the High Court would not rnean thal till the same is set aside in a manner known to law, it would loose its bindrng force. Referring to the decision of the Suprr:me 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 critir:ized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. " 120251 170 raxmann.com 422 (Bornbay)l '' Jteztl I l3 ItR 589 (Bombay) t' IZOZ+1 165 taxrnann.com 581/300 Taxrnan 452 (Bombay) 'o ltggzl raxmann.com l6155 ELT433 (SC) I I I I I i j 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 wlth 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 critrcized 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 vehementl! 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 Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of yudicial 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 it unless its operation has been suspended by a competent court. lf this healthy . ,, l I t4 ( rule is not followed, the result will only be undue harassment to assesses and chaos in adminir:rtration of tax laws.

12. We have dealt with this aspect at some length, because it has been suggested by the lrarned Additional Solicitor General that the observations made by the High Court, have been harsh :n the officers. lt is clear that the observations of the High Court, seemingly vehe,ment, and app arently unpalatable to the Revenue, are only intended io curb a tendency in revenue matters which, if allo.ved to become widespread, could result in consir:lerable harassment to the assesses-public without any 3enefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of udicial discipline and the need for giving effect to the orders of the higher appellate authorities which are :rinding on them."

15. What is wonying this Bench more is tl c fact that an endeavour is being made whole heartedly to ensurt: not to generate further titigation on issues which have been laid t(, rest by a large number of High Courts all of whom have taken a lonsistent stand that the action of the lncome Tax Department beinp. violative of the 15 Finance Act,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 juncture, if we disposc of the writ petition with an obseruation/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 hled 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 of 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 of the Revenue has already been considered and protected, as has been observed in paragraphs 1 16 36,37 and 38 of the order which, for ready referenr. e, is reproduced hereunde:r:

36. For all the aforesaid reasons, the impugn3d notices issued and the proceedings drawn by the re;pondent- Department is neither tenable. nor sr.stainable. The notices so issued and the procedure adot:ted being per se illegal, deserves to be and are accor,lingly set aside/quashed. As a consequence, all the mpugned orders getting quashed, the consequential orde rs 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 rilason we are quashing the consequential order is on the principles that when the initiation of the proceedings tself was procedurally wrong, the subsequent orders also gets nullif ied automatically.

37. The preliminary objection raised by the pr:ditioner is sustained and all these writ petitions stands a'lowed on this very jurisdictional issue. Since the impugnr:rd notices and orders are getting quashed on the point of jurisdiction, we are. not rnclined to proceed further and decide the other issues raised by the petitiorer which stands reserved to be raised and contend,:d in an approprrate proceedings.

38. Since the Hon'ble Supreme Court had, ir the case of Ashish Agarwal, supra, as a one-time measure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue trl proceed under the substituted provisions, and this Coult allowing the petitions only on the procedural flaw, the right L7 conferred on the Revenue would remain reserved to proceed further lf they s6 want from the stage of the order of the Supreme Court in the case ofAshish Agarwal, supra.

18. We would only f'urther like to make observations that since wc are inclined to dispose ol- the instant writ petition, conscious of the fact that the earlier order of this High Court in the case of Kanakalu Ravindro Reddy (l supra) is subjected to challenge bcfore the Hon'ble Supreme Courl in SLP No.3574 of 2024, prelerred by the Income Tax Departrnent, rve make it c lear 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 Ravindra Reddy (l stpra) t I This, in other words, would mean that either of the parties, if they so want, rnay 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 t 9. Accordingly, the instant writ petition stands allowed in lavour 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. t; I i 18 4-i: The consequential orders, if any, also stand set aride/quashed in similar terms as have been passed by this High Cor rt in tlre case of Kankonula Ravintlrs Reddy (l supra). There shal be no ordcr as to costs Consequcntly, nriscellaneous petitions pendir:g, if any, shall stand closed SD/. K. AMMAJI PUTY REGISTRAR D ,,N //TRUE COPY// , \ \r To, 1 2 J 4 SECTION OFFICER \\ The lncome Tax Off icer. Ward - 1 f 1t 1, UyOerab\\d., Towers. A.C. Guards, Hyderabad SOO6O+|-- ---y lncome Ta;< Office, l_T Th^e f rincipal Commissione_r- Of lncome Tax - 2 lncome Tax Towers, A.C.Guards, Hyderabad - 500004 One CC to SRt UPADHYAY RAGHAVENDER, Advocate [OpUC] One CC to Ms J.SUN|THA, Sr. SC TNCOME TAX [OPUC] Two CD Copies BSR GJ G HIGH COURT DATED:0410812025 ..--.::.-.--:\ i it: 5.',i r,l :-- -,: ..\ ' -a ,l:'i .l 1lj sEP 206 * o t/ ORDER WP.No.22835 of 2025 i l ALLOWING THE WRIT PETITION, WITHOUT COSTS ,{-