YADAIAH IVARIPELLY v. the consequential order passed by the 'lst

2 and Mr. B.Mukherjee, leamed counsel representing the Union of India ibr respondcnt No.3. I)eruscd the record.

2. 'fhis is a writ petition where the proceedings are either challenged to the notices which u,crc issued under Section 1484. and 148 of the lncorne Tax Act, l!i6 I (for short 'the Act,) or.the assessment orders those have been passed under Section 147 of the Act rthich have been assailed. l This writ petition is being taken up today only on one of thc grounds, that the notices issued under Section l48A of the Act and the subsequent initiation of proceedings under Section 148 o1- the Act by the jurisdictional Assessing Oflticer, whereas in tenns of the amendment that was brought to the lrrcome Tax Act by way ) \ 2 of F-inance Act, 2021 w.e.f'., 01.04.2021 onwarclr'. proceedings under Section l48A o1'the Act as also under Sect on 118 of'the Act ougl-rt to have also becn issued and procecclctl ir-r .r taceless lTlanner

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act 201 I i.e.. the impugned notices under Section 148A and Section I .1[t ol- the Act not being issued in a Iaceless luanner, havc alreacll heen clealt with and decided by this Cor.rrt in the case ol I' AN KANALA RAVINDRA L.EDDY vs. INCOME-TAX OFlilCIiRr decided on 14.09.2023 whereby a batch of rvrit petitions \\/e e allovvcd and the proceedings initiatcd undcr Section l:18A as al-r, undcr Section 148 of the Act were held to be bad with consequenrir-I relicls on the ground of it being in violatiorr of thc provisions ol'li,rction I 5l A of the Act read rvith Notifrcation l8l2o22 dated 29.0 1 11022. I'hc said judgment passcd by this Court has also becn subscrprcntll' fbllou'ed in a large number of writ petitions which were allo,r,ed orr siurilar terms. '[(2023) 156 taxmann.corn 178 (Tclaneana)] !it':{ ) 3 I I i I ! i

5. Down the litrc, we find that the sarne issuc has also been decided against the Revenue by various High Courts i'e', by the llombay l{igh Court in the casc of HEXAWARE TECHNOLOGIES LTD., vs. ASSTSTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. tlNtON OF INDIAT' Punjab and l-laryana High Court in the case oIJATINDER SINGH BANGU vs. UNION OF INDIAT' and Telangana Iligh C-ourt in the case of SRI VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where thc issue was in respect of intemational taxation, Bombay Iligh Court in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICER' INTEIfNATIONAL TAXATION" ivhich is again on intemational taxation and central circle, High Court ol tlimachal Pradesh in the case ol GOVIND SINCH vs. INCOME TAX OFFICERT, Gujarat High Courl in thc case of MANSUKHBHAI 21zoz+1464 ITR 4lo (Bom) '[(2024) 156 taxmann.com 47tt (Gauhati)] ^ l;(2024) 165 taxmann.corn 115 (Puniab & Ilaryana)l ' [2024) 167 taxmann.com 4l I (Tclangana)] " 12024) 166 taxmann.com 679 (Bornbay)l '12024) 165 taxmann.com ll3 (l lirnachal Pradesh)l 4 DAHYABIIAI RADADIYA vs. INCOME -I'd.X OFFICER, WARD 3(3)(5)n, Jharkand High Courr in the c r.,e ol SHYAM SUNDAR SAW vs. TJNION OF INDIA'', Itaiasth rn I Iigh Clourt in the case o1'SHARDA DEVI CHHAJER vs. lI{COME TAX OFFICER & ANOTHER and batch of writ 1-,t'titionsr(' which stood decided on 19.03.2024. Sin.rilar vicu,s havc rrlso been taken by the Division Bench of Calcutta Iligh Courr tn the case of GIRDHAR GOPAL DALMIA vs. [JNION OF lliDlA & ORS (M.A.1' 1690 ol'2023), decided on 25.09.2024.

6. Even though the same issue having been dc,-'idcd by a largc number of ttigh Courts, we arc still confronted u itl Iarge. liling ol identical matters on daily basis langing betrvecn 5 to l0 r,r,rit petitions. That upon the instructions being sor lht fiont the Department, they have been taking a solitary ;.r,rLrnd that the decision of thc Bombay High Court in the casi' ol' ITa.rawure Technologies Ltd., (2 supra) as also the one rr,l-ich has been decided by this Court in the case of Kanakola Ruyindru Reddt' E202+ SCC Ont.ine Guj 4012 '202-5 SCC OnLinc Jhar 287 1z{l2f , RJ - JD : 49 tt4- DB l t o I i I : i i l :,7 5 (1 supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 ol 2024 before the Hon'ble Supreme Couft and the Hon'bte Supt'etne Cotrrt is seized of the matter' ln addition, there are about 1200 SLPs also trled arising out of thc same issue being decided by various Lligh Courts'

7. To a query being put to the learned counsel fbr the Revenuc' they have categorically accepted the fact that there is no interirn order granted by the Hon'ble Suprenre Coun irl any of these matters pending belbre it Meanwhile' liesh u'rit pctitions of identicat nature are being pitocl up belore this Bcnch on daily basis and the pendency is getting increased on matter which otherwise has already been dealt and decided by this very lligh Court itsetl"

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 tnonths have lapsed, till date, we do not lind any remedial steps having bcen 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 iurisdictional Assessing Officer' rather the authorities concerned in the teeth of series of decisions 6 * r.ti by all the rnajor High Courts in India are i c ntirruously still initiating proccedings under Section 148,4 of tl: Act and also initiating proceedings under Section 148 ot the Act in corrtravention to the arnendments brought into the lncontc Tax Act pursuant to the Financc Act, 2020 as also the Finan. c Act 202 I

9. Upon a query bcing put as to why can't thii srit petition bc disposed o1- in the teeth of the decision rendcrec ,r this Court in thc case ol Konakah Ravindra Reddy (l supra). l.arncd Standing Counsel fbr ihc Incorne Tax Department contends tlral lhose rvould unnecessarily burden the Income Tax Departrlt:nt rvhere lhey would bc requiled to file equal number of !,l Ps belorc the I{on'blc Suprerne Couft and it would be furlhe r burclening the exchequer o1- the Union of India. It was also thc t:,,ntention of the lcarned Standing Counsel that no prejudicc would lre caused to the interest of the petitioners in case if this writ petitiorr r.-' ke pt pcnding till the finalization of the SLPs pending belirrc thc l-lon'ble Supreme Courl and the fact that the petitioner is ir lead1, enjoying the benefit of interim protection. Nonetheless, on -l'e earlier query of this Court as to why the Income Tax Departnient havc not come out with a rnechanism to issue appropriate instru.rrons or to take 1 t I r i { 7 appropriate steps in ellsuring that proceedings under Section l48A of the Act as also the assessment ordcrs under Section 148 olthe Act are kept in a hold in the light ofthe decisions dedcided by thc various High Courts, it was submitted by the learned Standing Counsel that the said steps can only be taken at the level of CBDI' as any such steps would have to be taken Pan India and camot be timited to any of these jurisdictional I ligh Coutls'

10. As a result of which, what wc are l'acing is steep increase of titigation day in and day out even though various ordcrs havc been passed by this High Coufi allowing rvrit petitions on the very same issue. The Income Tax authorities concemed are still even norv in 2025 atso initiating proceedings in contravention to the provisious of Section I 5 I A of the Act and as a result by now, more than (r00 to 700 petitions have becn already got piled up befbre ttris High Couft on an issue which otherwise stands squarcly covered by thc judgment of this Court in the casc of Kanakalu Ruvindra Retldy (1 supra). What is also surprising is the fact that though rvhile allowing the writ petitions in the case ol Kanakala Ravindrt Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners & insofar as thc liberty which was granted to the Revenuc for initiating liesh proceedings strictly in accordance r,'ith the atnended provisions ol the Act, as amended by the Finarrc,: Act. 2020 and thc Finance Act,202l. The petitioner asscssee uo.Lld be entitled to challenge ur raise the other legal objections iI'thc l.levenuc initiates ficsh proccr'dings. The Departrnent has made lo endeavour in availing the said liberty that was reserved for the Iievenuc. On thc c()ntrary, thev have been still sticking on to the stand. which this Fligh Court as *,ell as many other High Courts al e'ady hcld to be 1 l. lt appears that because of the aforesaid libcr.l that this I Iigh Courr had granted perrnitting the Revenue lor irritiating li'esh procecdings as a one-timc measure in a f'acelcr;s manner, the Income T'ax I)cpartment wants to take advantagi c l' thc sarnc by protractiug these proceedings which would enable thcrn to rnect the lir-nitation tllat would olherwise come in the way. Likeivise, if the rvrit petition is kept pending for a considerable krril: period o1- time and finally at a later stage if the Hon'ble Supremi: ('ourl confimrs thc decision taken by this High Court as also b1 the other lJigh Cor"uls in u hicl'r the SLPs are still pending, Lh,: Incornc -lax i I I I I I I I ;. I I !r I I I I I i 9 Department would get the advantage of the libefly 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 concemed. As a consequence, the Income Tax Department gets an extended period of time lbr initiation of lresh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent seL in Kanakala Ravindra Reddy ll supra)' is a matter of grave concern. The Income Tax Department's persistent initiation of lresh proceedings, disregarding the established judicial pronouncements, has led to an unprecedented strrge 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 l'he Department's strategy of awaiting the Supreme Court's decision on pending SLPs while continuing to initiate tiesh 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 qucstions about the administrativc efficiency and the respc(il for judicial pronou ncenrcnts, palticularly when this Court has rrlrcady provided a balancecl approach by preserving both the Rer',.nue's rights and assesscs in tcrcsts.

13. Another aspect which needs to be considert:,,1 is that in fact it should havc bccrr rcalizcd by the lncome Tax Dc;:i rlrnent itself and should have tbund out via rncdia in ensuring l rat proceedings under Seclions I48-A and 148 should not havc l'ecn issued in a fbceless mirnner, at least till the Hon'bte Supreme l--our1 decide the twelvc hundred ( 1200) odd SLPs which it is alrearl' seized ol or, at le ast thc Inconre Tax Department should have ound out some remcdial steps to ensure that rvherever the ar.rthr.rities intend to initiate proccedings under Sections 148-A and l43. other than in a faceless nranncr, the proceedings should havt: been deferred without prccipitating the matter lufther intimating t irc assessee that they shall initiatc' appropriate proceedings only alir:r the SI-P's are decided by thc Hon'ble Suprerne Court on the.r.'r'v sarne issue. 1'his again. the lncome Tax Department, has not be,t:n able to give a convincing reply. exccpt for the f-act that such a C,:cision if at all I I Ir I j I 11 has to be taken, has to be taken fbr the whole of India' and which othcrwise has to be by way ol a policy decision and that too at the leve[ ol Central Board of Direct Taxes' Though the learned Standing Counsel for the lncorne Tax Department contended that tlreDethiHigtrCourtdismissedawritpetitionofsirnilarnature'on the one hand when the High Court is struggling to reduce its pendcncy, such notices which are under challenge in this writ pctition are tbrcing the assessee to knock the doors ol this I[igh Court resulting in hling of hundreds ol new writ petitions ivhich in the long run not only affects the disposat of the writ petitions but alsoconsumessubstantialtimeoftheBenchinhearingthese matters again and again on daily basis' Admittcdly' in spitc of the rratter before the l{on'ble Supreme Court having becn taken on many occasions, the l-lon'ble Supreme Court which is seized of the rurattct' has been reluctant in granting any interirn protcction to the lncomc Tax Department. Yet, the authorities concemed at the State level ate not ready to accept the verdict passed by a majority ol 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 \ t2 ! \- \ Y 148 through the jurisdictional Assessing Officer ,r,hereas it ought to have been only in the f-aceless manner

14. In tlrc case ol BANK OF INDIA ASSISTANT COMMISSIONER,, INCOME TAX|'. on an is:,uc rvhethel it was justifiable on the part o1' the Income Tax Departrnent rn not folloiving an older passed by the ad.iudicating aurh,)r'ity only on the glound that the appcals are pending, the Divis on Bench of the High Court ol'Bombay held at paragraph No.25 a:; rndcr, viz., : "25. t\ilr. Paridwalla has rightly drawn out atkrntion to the decision of this Court in Commissioner of lncome Iax vs. Smt. Godavaridevi Sarafl2 as also the recent decisro- of the co- ordinate Bench of thas Court in Samp Furniture (P) l-td. v. lTO13 of which one of us (Justice G S. Kulkarni) was a meltber, wherern the Coud categorically observed that the Revenrrc having not "accepted the Judgment of the High Court would not rnean that till the same rs set aside in a manner known to law, it vrr:uld loose its binding force. Referring to the decision of the Supr)me Court in Union of lndia vs. Kamlakshi Finance Corporatiotr Ltd.14, the Court observed that the approach of the officials c,f Revenue of treating decisions being "not acceptable" was critir: zed by the Supreme Court. ln such decision, following are lhe relevant observatrons made by the Supreme Court. " 11z0uS; 170 raxmann.com 422 (Bornbay)l '' Jtuz8l 113 ItR 589 (tlombay) '' J:OZ+1 165 tulnann.com 5tt l/300 Taxman 452 (Borrlirv) '* 1 tlOZl taxnrlrnrl.corn l6155 Iil-'l' 431 (SC) I I I I t I I I I I I I , t I a t t I I { i t ! i I I l I I 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 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 thrs conduct of the Assistant Collectors and the harassment to the assessee caused by the fatlure 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 quasijudicral issues before them, revenue officers are bcund 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 ludicial 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 "14 rule rs not followed, the result will only br: undue harassment to assesses and chaos in adm r stration of tax laws.

12. We have dealt with this aspect at son'r€ length, because it has been suggested by the earned Additional Solicitor General that the observations made by the High Court have been harsh on the officers. lt is clear that the observations of t-re High Court, seemingly vehement, and ap:,arently unpalatable to the Revenue are only intendeC to curb a tendency in revenue matters which, if al ()wed to become widespread, could result in conr; rlerable harassment to the assesses-public without any benefit to the Revenue. We would like to say tlat the department should take these observations rn the proper spirit. The obseruations of the Higtlr Court should be kept in mind in future and the utmosl regard should be paid by the adludrcatrng authorities ind the appellate authontres to the requirements 01 udicial discipline and the need for giving effect to the orders of the higher appellate authorities which are i)inding on theln."

15. What is worrying this Bench more is llre firct that an endeavour is being made whole heartedly to ensurl'not to generate further litigation on issues which have been laid ro lest b1,a large number of FIish Courts all of whom havc taken r1 .)onsistent stand that the action of tl-re Incomc -fax Deparlrnent beinu violative of tl-re i I !, I I I f I q L, P i r { *t t t I E 6 15 FinanceAct,2020andFinanceLct,202l'Now'inordertoprotect the iuterest o1'the Revenue as also that of the assessee' it would be trite at this juncture. if we dispose of the writ petition with an obscrwation/direction that the disposal ol the instant writ petition in terms of the judgment rendered by this tligh Court in the case of Kankanala Ruindrtt Reddy (l supra) shall however be subject to the outcotne of the Sl,Ps which were tiled by the Income Tax Depattmerlt and which is pending considcration bcfore the Hon'ble Suprctne Cottrt.

16. In the given lacts and circumstances, this Rench is of the considered opinion that unless and until we do not timely dispose of rnatters which are squarely covered by the decision of this Court andwhichstandsfortit-redbythedecisionsolthevariousother Fligh Courls on the very same issue, the pendency of this High Court would lurthet be burdened which otherwise can be decided and disposed of as a covered matter. 11 . So lar as the interest of the Revenue is concerned, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs "16 36, 37 and 38 o1-the order which, fbr ready referer:c, is reproduced hereunder

36. For all the aforesaid reasons, the impugn:d notices issued and the proceedings drawn by the -cspondent Department is neither tenable. nor s rstainable. The notices so issued and the procedure ad,:oted being per se illegal, deserves to be and are acco Cingly set aside/quashed. As a consequence, all the mpugned orders getting quashed, the consequential orcle:rs passed by the respondent-Department pursuant to tl'e notices issued under Section 147 and 148 would I so get quashed and it is ordered accordingly The rrtasort we are quashing the consequential order is on th,l Dtincrples that when the rnitiation of the proceedings itself was procedurally wrong. the subsequent orders ,llso gets nullified automatically.

37. The preliminary objection raised by the potitioner is sustained and all these wnt petittons stands I owed on thrs very jurisdictional issue. Since the impugn6,l ne1;6s5 and orders are getttng quashed on the pornt of jurisdiction, we are not inclined to proceed further and decide the other issues raised by the petitic,l:r which stands reserved to be raised and contendt:d in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, i.'t the case of Ashish Agarwal, supra, as a one{ime reasure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue tl proceed under the substituted provisions, and this Coutl allowing the petitions only on the procedural flaw, 1re right I I l! i,i I I I I I ", II I "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 Agarwal, suPra.

18. We would only tufther like to rnake observations that since n e ate inclined to dispose of tht' instant writ petition'' conscious of the lact that the earlier order ol this High Court in the case of Kanakala Rtrvindra Retldy (l supra) is subjccted to cl.rallenge bcfbrc the Hon'blc Supretle Court irr SLP No'3574 ol' 2024' pref-erred by the I ncorne Tax l)epartrnent, we make it clear that allowing ol- the instant writ petition is subject to outcome of the afbresaid SLP preferred by thc Revenue against the decision of this \ a HighCourtinthecaseofKanakaloRwindrnReddy(lsupra). This' in other rvords, r,r,ould nlcan that either of the parties, if they I I I so want, may move an appropriate petition seeking revival of this writ petition in thc light of the decision of the Hon'ble Supreme Courr in the pendirlg SLP on tlre very satne issue' I 9. Accordingly, the instant writ petition stands allowed in favour of the assessee so lar as the issue of jurisdiction concetned. As a consequence, the impugned notice under IS challenge under Sections 148-A and 148 stands set aside/quashed' 18 'l-he consequential orders, if any. also stand set uside/cluashed in similar tcrrns as have been passed by this High C:rtrt it.t the case of Kankondu Rttviudrt Redd-v (I supra). Therc sha I bc no order as to costs Consequently, misccllaneous petitions penclinr, i1' any, shall star-rd closed //TRUE COPY// SD/. MOHD. ISMAIL DEPUTY REGISTRAR G- SECTION OFFICER To The Assessment Unit, National Faceless Assessmer t Centre, lncome Tax Department, N/inistry of Finance, Room No. 401 ,2nc [:loor' E-Ramp, Jawaharlal Nehru Stadium. Delhi - 1'10 003. The lncome Tax Officer, Ward 1, SuryapeV Suryapet- ncome Tax Office, Krishna Nagar Colony, Krishna Nagar Colony, Suryap:1. Hyderabad' Telangana. The Slcretary, Union of lndia, IrIinistry of Finance Norh Block' New Delhi-1 10 001, One CC to SRI THANNERU CHAITANYA KUIVAR, l\ rvocate IOPUCI One CC to SRI B MUKHERJEE, LEARNED COUNSE - REPRESENTING THE UNION OF lNDIA, Advocate [OPUC] One CC to lVs. B SAPNA REDDY, LEARNED SENlOlt STANDING COUNSEL FOR THE INCOME TAX DEPARTMENT '\dvocate (OPUC) Two CD Copies 1 2 J 4 5 6 7 I I SA PVL I I I I I I I f h n I T 4t I J HIGH COURT DATED:0710812025 ..::'.-- - : 'l .) 2 E 5t'i' lg25 'I :. tt ./ ORDER WP.No.23402 of 2025 ALLOWING THE W.P WITHOUT COSTS. 2 *