Raghuveen Perka v. Union of lndia

THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND T'HE HONOURABLE SRI .IUSTICE SUDDALA CIIALAPATHT RAO WRIT PETITION No.22908 OF 2025 ORDER: Qter Hon'ble Sri Justice Suddala Chalapathi Rao) Heard Sri Shcetal Srikanth, learned counsel for the petitioner and Ms.B.Sapna Reddy, leamed Senior Standing Counsel for the Income Tax Department, for l'espondent Nos.2 to 4. Perused the record.

2. This is a rvrit petition where the proceedings arc either challenged to the notices which were issued under Section l48A and 148 of the lncorne Tax Act, 1961 (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 gror.Lnds, that the notices issued under Section 1484. of the Act and the subsequent initiation of proceedings under Section 148 of thc Act by thc jurisdictional Assessing Officer, whereas in terms of the amendment that was brought to the Income Tax Act by way of Finance Act, 2021 w.e.f., 01 .04.'2021 onwards, proceedings - . /./ ../,, A1;// ' : I I l I I I I I 1 l I 2 under Section 148A of the Act as also under Secricn 148 ol the Act ought to lrave also beerr issued and proceederi rn a faceless manner

4. The contention of thc pctitioner is thar he issue of proceedings being in violation of the Finance Acr, l02l i.e., the impugned notices under Section l48A and Section I {8 of the Act not being issued in a faceless manner, have alreadv br:en dealt with and decided by this Court in the case of I(,,NKANALA RAVINDRA REDDY vs. INCOME-TAX OFFI[('ERr decided on 14.09.2023 whereby a batch of writ peritions r\,or.,- allowed and the proceedings initiated under Section l48A as als,r rrnder Section 148 of thc Acr rvcrc held to be bad u'ith consequcntial relicfs on lhe ground of it bcing in violation of thc provisions of Se:tion l51A of the Act read u,ith Notification 1812022 dared 29.01i.1022. 'l'he said judgment passcd by this Court has also bccn subseclur rtl1, tbltowed in a large nurnber of writ petitions rvlrich were al[,:u :d on similar '[(2023) [ 56 taxnann.corn lTtl (1'elangana)] 7---.b i J$t ,,..,, ./. /:/ ,l 'lII I I t ! I I I I ; i I i I I I i : , I I I I i l 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 Courl in the case of HEXAWARE TECHNOLOGIBS LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTIIERS2, Gauhati High Court in the case of RAM NARAYAN SAII vs. UNION OF INDIA3, Puniab and Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIAT, and Telangana High Court in the case of SRI VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAXs where the issue was in respect of international taxation, Bombay High Court in the case of ABHIN ANILKUN/IAI{ SHAH vs. INCOME TAX OFFICER, INTBRNATIONAL TAXATION6 which is again on international taxation and central circle, High Court of I limachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI DAHYABHAI ' yzoz+1464 ITR 430 (Born) 'l(2024) 156 taxmann.com 478 (Gaultati)l ^ [(2024) 165 taxmam.corn I l5 (Punjab & Haryana)] '12024) 167 taxrnann.com 4l I (Telangana)l " [2024) 166 taxrnann.corn 679 (Bombay)] '12024) 165 taxrnann.com 113 (Hirnachal Pradesh)l 4 RADADIYA vs. INCOME TAX OFI'ICER, \t'Lg1p 3(3Xr8, Jharkand High Court in the case ol SHYAN{ SUlil)AR SAW vs. UNION OF lNDlAe, Rajasthan I{igh Court in thc casr: of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER ,!r ANOTHER and batch of wlit petitionsr" rvhich stood dccidc.tl i n 19.03.2024. Similar views liave also been takcn by the Division Be ch of Calcutta High Court in the case ol GIRDHAR GOPAI, DALMIA r.s. UNION OF INDIA & OlLS (MA.T 1690 ol 2()2r), decided on 2s.09.2024.

6. Even though the same issuc having bccn cler:i, cd by a large nurnber of I{igli Courts, u,e are still confronted witir large filing of identical matters on daily basis ranging betu,een 5 to l(r writ petitions. That upon thc instructions being sought fronr the f-)ejrartrnent, they havc bccn taking a solitary grounci that thc decision of the Bou'rbay IIiglr Court in the case of He-rawura lechnologias Lht., (2 supra) as also the one rvhich has been decided by thi,s llourt in the Kanakakt Ruvindru Reddy (l supra) has been subjected to challenge in a lipecial Leave 8202+ SCC Online Guj 4AD '2025 SCC OnI-inc Jhar 287 "' 72023'. RJ - J D :4984- DB l ..:: ..: . 5 /' i I i I I I ; 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 1200 SLPs also filed arising out of the same issue being decided by variqus I{igh Courts

7. To a query being put to thc learned counsel for the Revenue, they have categorically accepted the fact that there is no interim order granted by the Hon'ble Supreme Courl in any of these lnatters pending befbre it. Meanwhile, fresh writ petitions of identical nature are being piled up belore this Bench on daily basis and the pendency is getting incrcased 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 carly as on 14.09.2023 and morc 16 months have lapsed, till date,, we do not find 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 Scction I48 of the Act by the jurisdictional Assessing Officer, rather thc authorities concerned in the teeth of series of decisions by atl the major High Courts in India are continuously still 6 initiating proceedings under Section 148A of thr: Act and also initiating proceedings under Section 148 ol the Act in contravcntion to the amendrnents brought into the [n. ome Tax Act pursuant to the Finance Act, 2020 as also the Finance Act 2021.

9. Upon a query being put as.to rvhy can't this rr rit petition be disposed of in the teeth of the decision rendered br this Court in the case of Kanakala Ravindra Reddy (l supra). ii:a,necl Standing Clounsel lor the Income Tax Depaftment contends ttrirt those would unnecessarily burden the Income Tax Departnreni ri,here they would be required to file equal number ol- S[,I']s belbre the Hon'ble Supreme Court and it would be lurther :,urdening the exchequer of the Union ol India. It nas also the c,rrrLention of the learned Standing Counsel that no prejudice rvould bi catrsed to the interest of the petitioners in case if this writ petition i, kept pending titI the finalization of the SLPs pending belblc thc Hon'bLc Sr.rprenre Court and the fact that the petitionel is adv enjoying '.rlr. the benefit of interim protection. Nonetheless. on th,r earlier query of this Court as to why the Income I'ax Depanrnenl. lrave not comc out with a rnechanisrn to issue appropriate instructi 'ns or to take appropriate steps in ensuring that proceedings unde'r iection 148A 7 of thc Act as also the assess[Ient orders under Section 148 of the Act arc kept in a hold in the light of the decisions dedcided by the various High Courts, it rvas submitted by the learned Standing Counsel that the said steps can only be taken at the level of CBD I as any such steps would lrave to be taken Pan India and cannot be lirnited to any of these julisdictional I{igh Courts'

10. As a result of which, what we are tacing is steep increase of litigation day in and day out evcn though various otders have been passed by this Iligh Court allotving rvrit petitions on the very same issue.Thelncotne'faxauthoritiesconccrnedarcstillevennowin 2025 also initiating proceedings in contravention to the provisions of Section I 5 tA of the Act ancl as a result by now, rnore than 600 to 700 petitions have been alrea<ly got piled up before this lligh Court on an issue which otherwise stancls squarely covered by the judgment of this Court in thc casc of Kanskalo Ruvindra Reddy ( I supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakola Ravindra Reddy (l supra), the Division Bcnch while reserving the right ol the Revenue, has also protectcd the intcrest of the petitioners insofar as the tiberty which was granted to the Revenue for i:) t; .t, -'..-it 8 initiating liesh procccdings strictly in accordance rvit thc arnended provisions of the Act, as amendcd by the F inancc 'rct. 2020 ar-rd the Finance Act, 202 l. 'Ihe petitioner assesscc rvoulri be entitled to challengc or laise thc other legal ob.iections if thc Ile'enuc initiates fi'esh procccclings. 'ftre Departrnent has made rro cncleavour in availing thc said libcfly that was reserved for Lhe lle', enue . On the contrary, thev havc becn still sticking on to the sta d, w,hich this [{ig[r Coult as well as rnany other lligh Coults a]rc dy held to be I I . It appears that because of the aloresaid libe;'rr that this High Court had grantcd pcrmitting the Revenue lor i itiating fiesh proceedings as a one-timc lllcasure in a lace lcs:r nranner, thc lncornc 'l ax Deparlment wants to take advantage o 'thc samc bv protracting these proceedings which would enable rh,. m to rneet the linritation that rvould otherivise come in thc rvav. I kew ise. if thc q,rit pctition is kept pending for a considerablc long rcliod of timc and finally al a laler stage if the I lon'ble Suprcrn.- ( ourl confinns thc decision taken by this High Court as also br tire other High Courls in which thc SLPs are still pending, tl'u lrrcome 'l ax Departrnent *,ould get the advantage of the liberty :h rt is othenvise I I I I i i I 9 protected in favour of the Revenue for initiation of fresh proceedings lrom the disposal of these matters at a much later stage rvhich would be advantageous and beneflcial to the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concerned. As a consequence, thc [ncome Tax Department gets an extended period of tirne for initiation ol fresh proceedings.

12. The alarming trend of docket explosion in this Court, despite tlre clear precedent sel in Kunakalo Ravinlru Reddy (l supra), is a rnatter of grave concern. The Inconte Tax Department's persistent initiation of fresh proccedings, disregarding thc cstablished judicial pronouncements, has led to an unprecedcnted sulge in litigation rvith over 600-700 petitions piling up on thc saure issue. This deliberate approach not only undermines the principle ol judicial precedent but also strains the judicial resources unnccessarily. The Departrnent's strategy ol awaiting the Supremc Courl's decision on pending SLPs white continuing to initiate fiesh proceedings appears to be a calculated move to buy tirne and circumvent limitation periods, rather than adhering to the established legal position. Such conduct raises serious questions about the ;.t!$E ,] ,: \ 10 adnrinistrative el'liciency and the rcspect Ibr judicial pronouncements, particularlv when this Court has allrradv provided a balanced approach b1' preserving both the Rcvcrue's rights and assesses interests

13. Another aspcct which needs to be considelecl i: that in fact it should have beer-r realized b1,the Income Tax l)epartr-rent itself and shor-rld have fbuncl out via rnedia in ensuring thlr. proceedings undcr Scctions l4ii-A and 148 should not havc 1-':. n issued in a f-aceless Inanner. at lcast titl the Hon'bte Suprcrne ( li urt clccide the twelve hundred (1200) odd SLPs which it is alread., .eized of or, at least thc Incornc 'l'ax Departrnent should havc ftrrrnd out sonlc renredial stcps to ensure that wherever thc authorities intend to initiate ploceedinqs under Sections 148-A and l4S. .,thcr than in a faccless nlanner, the proceedings should have Ireerr defertcd u,ithout prccipitatinq the matter further intirnatinq rh(. asscssee that they shall initiatc aPpropriate proceedings only alt,rr the SLP's arc decided by the Hon'ble Supreme Court on the ve y seme issue 'l'his again, the Inconre Tax Department, has not bc.:l able to give a convincing reply, except for the f-act that such a clc;isior-r if at all has to be taken, has to be taken lor the wholc ol ln.lia, and which ,iS"''; r,A 11 otherwise has to be by way of a policy decision and that too at the level of Central Board of Dircct Taxes. Though the lcarned Standing Counscl for the Incomc '['ax Deparlment contended that the t)elhi High Court dismissed a writ petition of similar nature, on the one hand rvhen the High Coutt is struggling to reduce its pendency, such notices which arc under challenge in this writ petition are fbrcing the assessee to knock the doors of this Iligtr Court resulting in filing of hundreds of new writ petitions rvhich in thc long run not only al1'ects the disposal o1'the rvlit Petitions but also consumes substantial time of the Bench in hearing these matters again and again on daily basis. Adrnittedly, in spite of the matter befbre the Hon'ble Supreme Court having becn taken on many occasions, the Hon'ble Supletne Court which is seized ol- the rnatter has been t'eluctant in granting any interim protection to the Income Tax I)epartment. Yet, the authorities concerned at the State levcl arc not rcady to acccpt the verdict passed by a ma.iority of I ligh Courts of different States on the same issue; and to make things lurther worse, the lncotttc Tax Departmcnt IS showing audacity'by issuing notices continuously under Sections 148-A ar-rd 12 ,{!-i !iJ, - r-dr \t! 148 through rhe .iurisdictional Assessing Officcr v,lLrreaS it ought to have been only in the f'aceless manner'

14. In the casc of IIANK OF INDIA vs ASSISTAn..T COMMISSIONER. INCOMFi, TAXIr. on an issrr,:,\'hethcr it $'as justiliable on the parl ol' the Inconre Tax Dc; ,artmcnt in not lbllou'ing an order passed by,the adjudicating authority only on the ground that the appeals are per.rding, the Division Bench of the Iliqh Court ol'Ilombay lreld at paragraph No.25 as r-rnder'. l iz.. : "25. NIr Paridwalla has rightly drawn out attenl on to the decision of this Court in Commissioner of lncome '-a < vs. Smt. Godavaridevi Sarafl2 as also the recent decision ()f the co- ordinate Bench of this Court in Samp Furniture (P) Lt,J. v. lTOl3 of which one of us (Justice G.S. Kulkarni) was a mer b:rr, wherern the Court categorically observed that the Revenue; lraving not "accepted" the judgment of the High Court would not rnr,.an that till the same is set aside in a manner known to law, it wor. d loose its binding force. Referring to the decision of the Suprr:r-e Court rn Union of lndia vs. Kamlakshi Finance Corporaticn Ltd.'0, the Court observed that the approaeh of the officials of [ievenue of treating decisions being "not acceptable" was critr,:i;:ed by the Supreme Court. ln such decision, following are ths relevant observations made by the Supreme Court " [(2tlz.s) 170 tarmann.com 422 (l3ombay)] r'1tez81 I t3 I I't{ -5tt9 (t}ombar') 't 12tt241 165 Laxrnann.com 5ltl,'300 Taxnran 452 (Borrrhrrr) r' ;lOOZ1 laxmann.conl l6l-55 HL l433 (SC) .,-s; 13 "6. Sri Reddy rs 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 Sn 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 conclusron, 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 thrs 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 authorrties 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 Assrstant Collectors working within his jurisdiction and the order of the Tribunal rs binding upon the Assistant Collectors and the Appellate Collectors who functton under the jurisdiction of the Tribunal. The principles of judicial discrpline 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 ob.iectionable phrase - and ls 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 74 )..,\ii€! ': I rule rs not followed, the result will only be urdue harassment to assesses and chaos in administr: tion of tax laws 12 We have dealt with this aspect at some ler gth, because rt has been suggested by the lr)a ned Addrtional Solicitor General that the observat ons made by the High Court, have been harsh r)r the officers. lt is clear that the observations of th,: lligh Courl, seemingly vehement, and appan:ntly unpalatable to the Revenue, are only intended 1o lurb a tendency in revenue matters which, if allcive:l to become wrdespread, could result in consic erable harassment to the assesses-pubiic wrthout any lonefrt to the Revenue. We would like to say tha' the department should take these observations r the proper spint. The observations of the High ( ourt should be kept in mind in future and the utmost r€)lard should be paid by the adJudicating authorities e n:l the appellate authorities to the requirements of u:licral discrpline and the need for giving effect to the orders of the higher appellate authorities which are l:itding on them."

15. What is rvorrying this Rench rllore is tlre t'act that an endeavour is being tnade whole heartedly to ensllro I ot lo genelate lurther litigation on issues which have been laid ro rest b1,a large number of High Courts all of whom have taken a c.,nsistent stand that the action of the lncome Tax Deparlrnent bein!: , iolative of the I I ! I I I I I I I ! i I t i E 15 Financc Act, 2020 and Financc Act,202l. Now, in order to protect the interest of the Revenue as also that ol the assessee, it woutd be trite at this juncture, if ,'ve dispose ol the writ petition with an observation/direction that the disposal of the instant writ petition in terms ol'the judgment rendered by this High Court in the case of Kunkanola Ravindrs Reldy (l supra) shall horvever be subject to the outcorne ol the SLPs which were fited by the Incourc 'lax Departnrent and which is pending consideration belbre the FIon'ble Suprerne Court

16. [n the givcn facts and circumstances, this l]cnch is of the cor.rsidcred opinion that un less and until we do not timely dispose of malters which are squarcly covered by the decision of this Court and which stands fbrtif-rcd by the decisions of the various other High Courrs on the vety satne issue, the pendency of this High Court would lurlher be burdcned which otherwise can be dccided and disposed ofas a covered matter.

17. So f'ar as the interest of the Revenue is concemed, wc are of the considered opinion that the interest olthe Revcnue has already been considered and protected, as has been observed in paragraphs i t { i I I : I I i 16 '" -rr-r :' Eia:t'{:ffi!' r.l:-. e ' :-:- -r':'r 36, 37 and 38 of the order which, fbr ready refcrenc:,-.. is re ploduced hereunder

36. For all the aforesaid reasons, lhe impugnel rrotices rssued and the proceedings drawn by the resp(tndent- Depaftment rs neither tenable, nor s-tsitzt nable. The notices so issued and the procedure adople,: berng per se illegal, deserves to be and are accordinr;ly set aside/quashed. As a consequence, all the irn:ugned orders getting quashed, the consequential order-s lrassed by the respondent-Department pursuant to th(: notices issued under Section 147 and 148 would a rs 1) get quashed and it is ordered accordrngly The .earton we are quashing the consequential order is on the i)r,lciples that when the initiation of the proceedings rtsolf was procedurally wrong, the subsequent orders als,) gets nullfied automatically.

37. The preliminary objection raised by the pe:tt lner is Sustained and all these writ petitions stands allovred on this very jurisdictional issue. Since the impugne I notices and orders are getting quashed on the p:int of lurisdiction, we are not tnclined to proceed furfl^:r and decide the other rssues raised by the petitioner whrch stands reserved to be raised and contended in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had. in th: case of Ashish Agarwal, supra, as a one{ime m()asure exercising the powers under Article 142 r: f the Constitution of India, permitted the Revenue to p r oceed under the substituted provisions, and this Coud ailowing the petitions only on the procedural flaw, li: right 't7 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 Agarwal, supra.

18. We would only further' [ike to make observations that since we are inclined to dispose of the instant writ petition, conscious ol the f'act that the earlier order ol this High Court in the case of Kanokula Ravindra Redtll' (l supra) is subjected to challenge \ before thc llon'blc Supretne Court in SLP No.3574 of 2024, preferrecl by thc lncome'fax l)epartr-r1ent, we make it cleal that allowing of the instant rvrit petition is subject to outcome of'the aforesaid SLP pref-erred by the Revenue against the decision of this High Court in the case ol Kanakda Ravindra Reddy (l supra) Ttris, in other words, would tnean that either of the parties, if they so want, ntay move an appropriatc petition seeking revival of this writ pctition in thc light of the decision ol the Hon'ble Supretne Couft in the pcnding SLP on the very satne issue lg. Accordingly, the instant writ petition stands allowed in favoul of the assessee so f'ar as the issue of jurisdiction TS concemed. As a consequence, the impugned notice r.rnder challenge under Sections 148-A and 148 stands set aside/quashed. i I I i I I i I I ! J 18 t\ The consequenLial orders, il' any; also stand set ir; i :te/q uasheci in similar terms as have been passed by this High Corrrl in rhe case ol Ktnktn a Rtyindru Reddy (l supra). There shall l.e no order as to costs Conseclucntly, miscellaneous petil_ions pentlir1-1. if an1,, shalI stand c losed //TRUE COPY// A.. :;RINIVASA REDDY SII{]TANT REGISTRAR SP1. ,\r SECTION OFFICER To 'l . Union of lndia, Ministry of Finance, lncome Tax D 011 eM rtrrr;nt, New Delhi 100

2. The Office of Commissioner, lncome Tax Department, f,lirristry of Finance, Government of lndia, New Delhi -100 01 1 .

3. Office of the lncome Tax Officer, Ward 1 1, Hyderabad T Towers, AC Guards, lr/asab Tank, Hyderabad -500 004.

4. The National Faceless Assessment Center, lncome Ta)i i )epadment, Ministry of Finance, Government of lndia, New Delhi -100 011 5. One CC to SRl. SHEETAL SRIKANTH Advocate [OPllC 6. One CC to SC FOR CENTRAL GOVERNMENT [OPUai 7. One CC to Ms B. SAPNA REDDY SC FOR ITD [OPU()I 8. Two CD Copies KKS IQ'"(lr HIGH COURT DATED:0410812025 ORDER WP.No.22908 of 2025 ..a1' ll ,...:\ 21 '[P zffi L'. t...4, \\. .t ., ALLOWING THE WRIT PETITION WITHOUT COSTS \C (CY ,-,(d b Y*',- -/G\/: q,\.