Tulasi Padmaja v. '1 . Assessment Unit

THE HONOT]RABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE SUDDALA CHALAPATHI RAO WRIT PETITION No.23352 OF 2025 ORDER, (per IIon'ble Sri Justica Suddala Chalapalhi Rao) Heard Mr. Thanneru Chaitanya Kurnar, learned corrnsel for the petitioner, Mr. K.Sudhakar Reddy, learned Senior Standing Counsel for the Income -fax Depaftment for respondent Nos.l and 2 and Mr. B.Mukhcrjee, learned counsel representing thc lJnion of lndia fbr respondent No.3. Perused the rccord.

2. This is a writ petition where the proceedings are either challenged to the notices vi.hich lr,ere issued under Section 148A and 148 olthe Income Tax Act, i961 (for short'the Act') or thc assessment orders those have been passed under Section 147 ol 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,.{ of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Officer, whereas in tetms of the amendment that was brought to the Income Tax Act by way 2 of Finance AcL, 2021 w.e f', 01 04'2021 onwal C:;' proceedings under Section 148,{ of the Act as also under Sec'ion 148 of the Act ought to have also been issued and proceederl in a f'aceless manner

4. The contcntion of tl-re petitioner is thz I the issue of proceedings being in violation of the Finance i!'r:t' 2021 i e ' the impugned notices under Section 148A and Sectiorr I48 of the Act not being issr.red in a lacelc'ss lnallner, have alrea'-l' becn dealt with arrd decided b,"- this Court in the case ot KANKANALA RAVINDRA ITEDDY vs. INCOME-TAX OliF'lCERr decided on 14.09.202i r'vhereby a batch of writ petitions ':"ere allowed and the proceedings initiated under Section 148A as rlso ttnder Section l48ofthcActwereheldtobebadwithconsequtlt.tialreliel.sonthe ground of it being in violation of the provisions o l section I 5 1A of the Act read rvith Notification l8l2}22 dated 29 (ri 2022' Thc said judgment passe d by this Court has also been subs''cluently lollowed in a large uumber of writ petitions which u'ere r itowed on similar terms. '[(2023) 156 taxrnann.com lTS (1'elangana)] 3

5. Down thc line, we find that the same issue has also been decided against the Revenue by various Iligh Courls i'e ., by the Bombay High Court in the case ol HEXAWARE TECHNOLOGIES LTD., VS. ASSISTANT COMMISSIONER oFINCOMETAx&OTI{ERS2,GauhatiHighCourlinthecase of RAM NARAYAN SAH vs' UNION OF INDIA3' Puniab and Haryana t'ligh Courl in the case of JATTNDER SINGH BANGU vs. UNION OF INDtAl, and Telangana lligh 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 ANILKUMAR SHAH vs' TNCOME TAX OFFICER' INTERNATIONAL'I'AXATloN6 which is agaitr on international taxation and central circle, High Courl of Himachal Pradcsh in the case of GOVTND SINGH vs' INCOME TAX OFFICERT' Gujarat High Courl in the case of MANSUKHBHAI '1zoz+1464 ITR 430 (Bom) 'kzozi) 156 taxmann.com 478 (Gauhati)l 'iizoz+l 165 taxtnann.com l l5 (l'unjab & Haryana)l 'LZOZ+) 167 taxmann.com 4ll (-felangana)l uitollt 166 taxmann.eom 679 (Romba) )l 'i]ol+i ios taxmanncom lll (llimachal Pradesh)l + DAHYABHAI RADADIYA vs. INCOME T.,t.X OFFICER, WARD 3(3Xr8, Jharkand High Court in the casc of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajastlirrn High Court in the case of SHARDA DFI,VI CHHAJER vs. l\COME TAX OFFICER & ANOTHER and batch of rvrit p,:titior-rsr0 rvhich stood decided on 19.03.2024. Sirnilar vieu,s havc also beerr taken by the Division Bench ol Calcutta High Court in the case of GIRDHAR GOPAL DALMIA vs. TINION OF INDIA & ORS (M.A.T 1690 o12023), decided on 25.09.2024

6. Even though the same issue l.raving been d:t:ided by a large numbcr of Fligh Courts, rve are still confi'ontcd v,i h large tiliLrg of identical matters on daily basis ranging between -5 to I 0 writ petitions. That upon the instructions being -.ouqht fi'om the Depaftment, they have been taking a solitan, .:r'ound that the decision of the Bombay lligh Courl in the casi: ol Herax,ure Technologies Ltd., (2 supra) as also thc one ,,,'hich has beer.r decided by this Courl in the case of K nukala Ravinclrt Reddy 82024 SCC onl.ine Guj 4012 '2025 SCC Online Jhar 287 72023, RJ-J D:4984-DB I 5 (1 supra) has been subjected to challenge lna Special Leave Pctition i.e., SLP No.3574 of 2024 before thc Hon'ble Supreme Courl and the Hon'ble Suprerne Cou( is seized of the matter In addition, there are about 1200 SLPs also filed arising out of the samc issue bcing decided by various High Courls

7. To a query being put to the learned counsel for the Revenue, they have categorically accepted the f'act that therc is no interim order granted by thc Hon'ble Supreme Court in any of these matters pending belole it. Ivleanwhilc, tl'esh writ petitions of idcntical nature arc being piled up belore this Bench on daily basis and the pendency is getting iucreased on matter which otherwise has already becn dealt and decided by this very High Court itself'.

8. On the one hand, even tholrgh the order of this Court that was passed as early as on 14.09.2023 and urore 16 months have lapsed, till date, we do not trnd any remcdial 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 julisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions 6 by all the rnajor High Courts in India are c ontinuously still initiating proceedings under Section i4tlA of th,,. Acr and also initiating proceedings under Section 148 ol rhe Act in contravention to the amendments brought into thc Incorre Tax Act pursuant to the Finance Act,2020 as also the Finarr, r Act 201 I

9. Upon a query being put as to why can't thi; urit petition be disposed of in the teeth ol the dccision rendered l.r this Cour.t in tlre case of Kaniltla Rmindru Redd.t ( I supr.x ). lr. ur-ne d Stancling Counsel lor lhc Inconte Tax Dcpartrneut contends tlrtt those would unnecessarily burder-r the lncome Tax [)epartntr LrL rvher.e they woLrld be required to file equal number of S I I,s belbrc the Hon'ble Suprerre Courl and it ri,ould be lunher hurdening tlre exchequer of the Union ol India. It was also the trrrrLention of the learned Standing Counsel that no prejudice u,outd i,: caused to the interest of the petitioners in case it'this writ petitior s kcpt pending till the flnalization ol' the St.Ps pending belirr. thc I lon'bte Supreme Court and the lact that the petitioner is : lr.cadv en joying the benefit of interim protection. Nonetheless, on tlre earlicr query of this Court as to why the Income Tax Department rilve not corne out with a ntechanism to issue appropriate instruct i)n s or to take 7 appropriate steps in ensuring that proceedings under Section 148A 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 Courls, it was submitted by the learned Standing Counse[ 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 carurot be limited to any of these jurisdictional IIigh Courls.

10. As a result of which, what we are f-acing is steep increase of litigation day in and day out even though various orders have been passed by this High Couft allowing wlit 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 15 iA 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 otherr.r,isc stands squarely covered by the judgment of this Court in the case of Kanakala Ruvindra Reddy (l supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravindra Redtly (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 wss granted to th,: Revenue for initiating fresl'r proceedings strictly in accordance r,vith the amended provisions of the Act, as amended by the Financc .A.ct. 2020 and the Finance Act, 2021. 'Ihe petitioner assessec wo,rlcl bc cntitled to challenge or raise the other legal objections if the ll -'r enue initiates ttesh proceedings. The Department has rnade no endeavour availing the said liberty that was reserved for the [{r:r cnr.re. Or-r the contrary, they have been still sticking on to the stund, w,lrich this lligh Courl as rvell as many other High Clourts alriradl, held to be I l. It appears that because of the aforesaid libert,r that this High Court had granted permitting the Revenue fbr initiating fresh proceedings as a one-time measure in a f-acelt: ,s manner, the Income Tax Department wants to take advantage ,r1-the same by protracting these proceedings which would enable tl-cm to meet the lirnitation that would other-wise corne in the way. i-ikew,ise, if the writ petition is kept pending for a considerable lorrr peliod of time and hnally at a later stage if the Hon'ble Supreme. ilourt contlrms the decision taken by this High Court as also bl thc other High Courts in which the SLPs are still per.rding, rb,: lncome Tax w 9 Department would get the advantage ol the tiberty that is otherwise protected in favour of the Revenue tbr initiation of fiesh proceedings lrom the disposal olthesc matters at a much later stage which would be advantageous and beneflcial to the Revenue and would be equally disadvantageous and detrirnental so far as interest of the assesscs are concemed. As a consequence, the Income Tax Depaftment gets an extended period ol tirrc fol initiation of fresh proceedings

12. The alarming trcnd of dockct explosion in this Couft, dcspitc the clear preccdent sel in Kuntkrlu Ruvindra Reddy (l supra), is a matter of grave concem. The lncorne Tax Depaftrnent's persistent initiation of fresh proceedings, disregarding the established judicial pronouncements, has lcd to an unpreccdented surge in litigation with over 600-700 petitions piling up on the samc issue. This deliberate approach not only undermines the principlc ol .iudicial 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 lirnitation periods, rather than adhering to the established legal 10 position. Such conduct ralses senous questir''ns about the adrninistrative efficiency and the respect lirr judicial pronounccnrents, particularlv when this Court has a readv provided a balanced approach by' preserving both thc Revt:r.ue's rights and assesscs r n tcrests li. Another aspect which needs to be considerc<l is that in lact it should have becr-r realized bi'the Income Tax Dep:rrtnrcnt itself and shou ld havc lirund out i,ia n-redia in ensuling Ll rt plocccdings urrder Sections 148-A and 148 should not havc tr,,t-n i:;suecl irr a lirceless luanner, at least till the Hon'ble Supreme l- lLrrl decide the tnelve hundred (1200) odd SLPs which it is alread.r scizcd of or. at least the Income T'ax Dcpartrnent should have ltrund orrt sonre remedial steps to ensure that wherever the author-itics intend to initiate proceedings under Sections 148-A and 148, .rthcr than in a laceless lnanncr, the proceedings should havc rccr-r def'errcd r.r,ithout prccipitating the matter further intimating tl -, :rsscssee tl'rat they shall initiate appropriate proceedings only aftcr the SI-P's are decided by the Hon'ble Supreme Court on the v().\ satTle ISSue. This again, the Income Tax Department, has not bee rr able to give a convincing reply, except for the fact that such a clet:isior-r if at all 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 Ta-xes. Though thc learned Standing Counsel for the Incorne Tax Dcpartr.nent oontended that the Delhi High Court dismissed a writ petition olsimilar nature, on the one hand when the High Court is str-uggling to reduce its pendency, such notices which are under challcrrge in this writ petition are fbrcing the assessee to knock thc doors of this l{igh Court rcsulting in filing of hundreds of new writ pctitions ivhich in the long run not only aft-ects the disposal of the writ pctitions but also consumes substantial time of the Bench in hearing these matters again and again on daily basis. Admittedly, in spite of the rnatter before the Hon'ble Supreme Courl having been takcn on many occasions, the Hon'ble Supreme Court which is seizcd ol-the matter has been reluctant in granting any interim protection to the Income Tax Department. Yet, the authorities concemed at the Statc level are not ready to acccpt 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 Deparlment IS showing audacity by issuing notices continuously under Sections 148-A and 72 148 thlough the jurisdictional Assessing Officer v,hcreas it ought to have been only in the f'aceless manner.

14. hr lhc case ol' BANK OF INDIA vs ASSISTANT COMMISSIONER, INCOME TAXrr. on an issLrr: rvhcther it rvas iustillable on the part of the Incorne Tax De,f rtmctlt rn nol following an order passed by the adjudicating auth('r'irv only on the gror-rnd that thc appeals are pending, the Divisio r []cnch of the Iligh Court olBornbay hcld at paragraph No.25 as rrntlcr, viz., : "25. Mr. Parrdwalla has rightly drawn out att()r'tron to the decision of this Court in Commissioner of lncome T,rx vs. Smt. Godavaridevi Saraflz as also the recent decisio,'t of the co- ordinate Bench of thrs Court in Samp Furniture (p) l.td. v. lTO13 of which one of us (Justice G.S. Kulkarni) was a menr:)er wherein the Court categorically observed that the Revenur: having nol "accepted" the judgment of the Hilh Court would not rrrean that till the same is set aside in a manner known to law, it wlrilcl loose its binding force. Referrrng to the decision of the Suprerne Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.14, the Court observed that the approach of the officials ol llevenue of treating decisions being "not acceptable" was cntr:..ed by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. "I,. ,, ,, I I I (2025) ll0 laxnrann.com 422 (Bornbay)] 19781 I l3 ITII 589 (llornbay) 20241 l6-i taxrnann.corn 581i300 Taxman 452 (Bonrbur ) 19921 taxrnann.corn l6155 lil.-t 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 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 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 rt 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 withrn hrs jurisdictron 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 judrcial 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 operatron has been suspended by a competent court. lf this healthy \ 14 rule is not followed, the result will only be-. undue harassment to assesses and chaos in admini:;tration of tax laws.

12. We have dealt with this aspect at som€. ength, because rt has been suggested by the li)arned Additional Solicitor General that the obseriations made by the High Court, have been harsh r)n the officers lt is clear that the observations of tT:) Htgh Court, seemingly vehement, and aprarently unpalatable to the Revenue, are only tntended rt curb a tendency an revenue matters which, rf allcxved to become widespread. could result in consic -.rable harassment to the assesses-public wtthout any :,enefrt to the Revenue. We would like to say tnat the department should take these observations in the proper spint. The observations of the High Court should be kept in mind in future and the utmost egard should be pard by the adjudicating authorities ir-rd the appellate authorities to the requirements of j.rd cral discipline and the need for giving effect to the ,:,rders of the higher appellate authorities which are oi'rding on thcrn."

15. What is wollving this Bench more is thr. f'act that an endeavoLlr is being made whole heartedly to ensure not to generate lurther litigatiorl on issues ,'r,hich have been laid to resl 1-,, u 1urn. number ol'High Courts all of whorn have taken a ,lorsistent stand that the action tll- the' Income 'l'ax Deparlment being .,.iolative of the :"' 15 Finance Act,2020 and F inance Act,2O2l. Now, in order to protect the interest of the Revenue as also that of the assessee, it would be trite at this juncture, il we dispose of the writ pctition with an observation/direction that the disposat of the instant writ petition in terrns of the judgment rendered by this High Courl in the case of Konkanala Ravindra Reddy (l supra) shall howevet' be subject to -lax the outcome ol the SLPs which were filed by the lnconle Deparlment and which is pending consideration before the I lon'blc Suprenre Court.

16. ln the given facts and circutnstances, this Bench is of the considered opinion that unless and until we do not timely dispose of mattcrs which are squarely covered by the decision of this Coutt and which stands fortified by the decisions of the various other High Cou(s on the vcry same issue, the pendency of this lligh 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 ofthe Revenue has alrcady been considered and protected, as has been observed in paragraphs -16 v- -l 36, 37 and -18 olthe order which, lor ready refercnc:. is reproduccd heleunder': 36 For all the aforesaid reasons, the impugr'€rC notrces issued and the proceedings drawn by the rer;pondent- Department is neither tenable, nor su:itainable. The notrces so issued and the procedure adocted being per se illegal, deserves to be and are accor(jingly set aside/quashed. As a consequence, all the irnpugned orders getting quashed, the consequential order s passed by the respondent-Department pursuant to th:l notrces issued under Sectron 147 and 148 would a lso get quashed and it is ordered accordingly. The r€ ason we are quashing the consequential order is on the 1: rinciples that when the initiation of the proceedings i;elf was procedurally wrong, the subsequent orders €llso gets nullified automatically 37 The preliminary objection raised by the p{r:itioner is sustained and all these writ petitions stands alirrwed on th s very lurisdictional issue Since the impugneJ notices and orders are getting quashed on the point of lurisdiction, we are not inclined to proceed fLlrlher and decide the other issues raised by the petitior.r:rr whrch stands reserved to be raised and contended in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one{ime 'neasure exercising the powers under Article 142 of the Constitution of lndia, permrtted the Revenue tO :roceed under the substituted provisions, and this Court rllowing the petitions only on the procedural flaw, tre riqht 17 conferred on the Revenue would remain reserved to proceed further tf 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 like to make obsewations that since we arc inclined to dispose of the instant writ petition, conscious of the fact that the earlier order ol this I{igh Court in the case of Kannkals Rat intlra Redrty (l supra) is subjected to challenge bclorc the Hon'blc Supretne Cou( in SI-P No.3574 of 2024, pref'elred by the Income Tax Dcparhnent, we makc it clear that atlowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision of this I{igh Courl in the case of Kanakala Ruvindru Redtly (l supra)' I I This, in other ivords, would tnean that either of the parties, il'they 1 so want, rnay move an appropriate petition seeking revival of this writ petition in the tight 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 t-avour of the assessee so far as the issue of jurisdiction 1S concemed. As a consequence, the impugned notice under challenge under Sections i48-A and 148 stands set aside/quashed 18 The consequential orders, if any, also stand set ,r,;ide/quashed in sinrilar tenns as have been passed by this High Co.r't in the case ol Ktnkunalu Rtn,indrt Redtly (l supra). There shal be tro order as to costs. Consequently. rniscellaneous petitions pencli r:3. il any, shall stand closed. //TRUE COPY// SD/. MOHD. ISMAIL DEPUry REGISTRAR G SECTION OFFICER To I I 2nd Flcor, E-Ramp, The Assessment Unit, National Facetess Assessment (-'entre, lncome Tax Department, It4inistry of Finance, Room No. 4O1 ' Jawaharlal Nehru Stadium, Delhi - 1 10 003. The lncome Tax Officer, Ward 9(1), Hyderabad I T TC\'/ER, AC Guards, Masab Tank, Hyderabad-500004 Telangana. The Secretary, Union of lndia, lVlinistry of Finance Norit' Block, New Delhi- 1 10 001 One CC to SRI THANNERU CHAITANYA KUMAR, Ad',ocate [OPUC] One CC to SRI B I\/UKHERJEE, UNION OF lNDlA, Ad,ocate [OPUC] One CC to SRI K.SUDHAKAR REDDY, LEARNED SEI'llOR STANDING COUNSEL FOR THE INCOTUE TAX DEPARTTUENT, t\dvocate (OPUC) Two CD Copies 1 2 3 4 5 C) 7 I I SA PVL /.' .1 i) " '-i i ... --\,. 2 i srp ,:,tx -t- HIGH COURT DATED:0710812025 ORDER WP.No.23352 of 2025 ALLOWING THE W.P WITHOUT COSTS. @ lefr- lqs{