GTR.DHAR GOPAL DALMIA vs UNION OF INDIA & ORS

THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITT ON No.26304 OF 2024 ORDER, (per Hon'ble Sri Jrtstice Narsing Rao Nantlikondq) Heard Mr.Thanneru Chaitanya Kumar, leamed counsel for the petitioner, Ms. B.Sapna Reddy, learned Junior Standing Counsel for the Income Tax Department 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 l4gA and 148 of the Income Tax Act, 196l (for short ,the Act,) or the assessment orders those have been passed under Section 147 of the Act which have been assailed.

3. This writ petition is being taken up today only on one of the grounds, that the notices issued under Section 1484. of the Act and the subsequent initiation of proceedings under Section 14g of the Act by the jurisdictional Assessing Officer, whereas in terms of the amendment that was brought to the Income Tax Act by way of Finance *t{, ZOZ\ w.e.f., 01.04.2021 onwards, proceedings 2 under Section 148,{ ofthe Act as so under Section 148 of the Act ought to have also been rssue and proceeded in a faceless manner.

4. The contention of the pet ioner is that the issue of proceedings being in violation of t e Finance Act, 2021 i.e., the impugned notices under Section 14 A and Section 148 of the Act not being issued in a faceless , have already been dealt with and decided by this Court in e case of KANKANALA RAVINDRA REDDY vs. INCO -TAx OFFICERT decided on 14.09.2023 whereby a batch of t petitions were allowed and the proceedings initiated under Secti n l48A as also under Sectron 148 of the Act were held to be bad w th consequential reliefs on the ground of it being in violation of the provisions ofSection 151A of the Act read with Notification 18/20 dated 29.03.2022. The said judgment passed by this Court has al o been subsequently followed in a large number of writ petitions hich were allowed on similar terms. 'l(2023) 156 taxmann.com 178 (Tel l L ^ J

5. Down the iine, 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 ot. HEXAWARE TECHNOLOGIES LTD., vs. ASSTSTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhari High Courr in the case of RAM NARAYAN SAH vs. UNION OF INDIA3, 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 OE'INCOME TAX5 where the issue was in respect of intemational taxation, Bombay High Court in the case of ABHIN ANTLKUMAR SHAH vs. INCoME TAx OFFICER, INTERNATIONAL TAXATION6 which is again on intemarional taxation and central circle, High Court of Himachal pradesh in the case of GOVIND SINGH vs. INCOMB TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI ' Tzoz+1464ITR 430 (Bom) 'l(2024) 156 taxmanacom 47g (Gauhati)l '[(2024) 165 taxmann.com 1 l5 (punjab & Haryana)] [2024) 167 taxmann.com 4l l (Telangana)] " 12024) 166 taxr*dcom 679 (Bombay)l ' 12024) I 65 taxmann.com t t: iHimachai pradesh)l s 4 i iltAtrSY{!}FLdI; -': .qDIYI, 's iNCOI'IE -lA,:- (iFFICrIi. '..1 WARD 3(3X5)8, Jharkand High ourt in the case of SHYAM SUNDAR SAW vs. UNION OF I DIAe, Rajasthan High Court in the case of SHARDA DEVI C R vs. INCOME TAX OFFICER & ANOTHER and tch of writ petitionsro which stood decided on 19.03.2024. Simil views have also been taken by the Division Bench of Calcu High Court in the case of GTR.DHAR GOPAL DALMIA vs UNION OF INDIA & ORS (M.A.T 1690 of 2023), decided on 2 .09.2024.

6. Even though the same issue ving been decided by a large number of High Courts, we are still onfronted with large filing of identical matters on daily basis r nging between 5 to l0 writ petitions. That upon the instruct ns being sought fiom the Department, they have been takin a solitary ground that the decision of the Bombay High Co in the case of Hexaware Technologies Ltd., (2 supra) as a so the one which has been decided by this Court in the case f Kanakula Ravindra Reddy 8202q sCC online Guj 4012 '2025 SCC Online lhar 287 12023 : RJ-JD :4984-DB l I o --/' // 5 --7 (i supfa) las.been.qubjecred to challenge in a;Special ,Lsavg Petition i.e., SLP No.3574 of 2024 before rhe Hon,ble Supreme Court and the Hon'ble Supreme Court is seized of the matter. In addition, there are about 1200 SLps also filed ansing out ofthe same issue being decided by various High Courts.

1. To a query being put to the learned counsel for the Revenue, they have categorically accepted the fact that there is no interim order granted by the Hon,ble Supreme Court in any of these matters pending before it. Meanwhile, fresh writ petitions of identical nature are being piled up before this Bench on daily basis and the pendency is getting increased on matter which otherwise has already been dealt and decided by this very High Court itself.

8. On the one hand, even though the order of this Court that was passed as early as on 14.09.2023 and, more 16 months have lapsed, till date, we do not find any remedial steps having been taken by the Income Tax Depar.tment to take appropriate steps to either hold back issuance of notice under Section l4gA and under Section 148 of the Act by the jurisdiuional Assessing Officer, rather the authorities concemed in the teeth of series of decisions 6 by all the major High Courts India are continuously still l .t initiating proceedings under Secti n 148A of the Act and also initiating proceedings under S tion 148 of the Act in contravention to the amendments b ught into the Income Tax Act pursuant to the Finance Act, 2020 a also the Finance Lct202l.

9. Upon a query being put as to why can't this writ petition be disposed of in the teeth of the deci ion rendered by this Court in the case of Kanakala Ravindra R (l supra), leamed Standing Counsel for the Income Tax Dep ent contends that those would unnecessarily burden the Income ax Department where they would be required to file equal umber of SLPs before the Hon'ble Supreme Court and it w ld be further burdening the exchequer of the Union of India. It was also the contention of the leamed Standing Counsel that no pr udice would be caused to the interest of the petitioners in case if s writ petition is kept pending till the finalization of the SLPs ending before the Hon'ble Supreme Court and the fact that the petitioner is already enjoying the benefit of interim protection. N netheless, on the earlier query of this Court as to why the Income Department have not come out with a mechanism to issue app priate instructions or to take 7 - appropriate steps in ensuring that proceedings under Section 14gA of the Act as also the assessment orders under Section 14g 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 Court allowing writ petitions on thc very same issue. The Income Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section 151,4 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 i insofar as the liberty which was granted to the Revenue for initiating fresh proceedings strictly i accordance with the amended provisions of the Act, as amended y the Finance Act,2020 and the Finance Act,202l. The petition assessee would be entitled to challenge or raise the other legal obj tions if the Revenue initiates fresh proceedings. The Departme has made no endeavour in availing the said liberty that was res ed for the Revenue. On the contrary, they have been still sticki on to the stand, which this High Court as well as many other gh Courts already held to be bad.

11. It appears that because ofthe oresal d liberty that this High Court had granted permitting the evenue for initiating fresh proceedings as a one-time measu in a faceless manner, the Income Tax Department wants to t e advantage of the same by protracting these proceedings which ould enable them to meet the limitation that would otherwise come in the way. Likewise, if the writ petition is kept pending for a co iderable long period of time and flnally at a laterr stage if the Hon ble Supreme Court confirms the decision taken by this High Cou as also by the other High Courts in which the SLPs are stil pending, the Income Tax 1 - 9 Department would get the advantage of the liberty th.at isr Ottrerwise 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 for initiation of fresh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanakala Ravindra Reddy (l supra), is a matter of grave concern. 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 principte ofjudicial 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 /, / position. Such condu,:t raises erious questions about the administrative efficiency and the respect for judicial pronouncements, particularly when his Court has already provided a balanced approach by preserving both the Revenue's rights and assesses interests.

13. Another aspect which needs t be considered is that in fact it should have been realized by the In me Tax Department itself and should have found out via media in ensuring that proceedings under Sections 148-4 and 148 sho ld not have been issued in a faceless manner, at least till the Ho ble Supreme Court decide the twelve hundred (1200) odd SLPs wh ch it is already seized of or, at least the Income Tax Department hould have found out somc remedial steps to ensure that wh ver the authorities intend to initiate proceedings under Sections 48-A and 148, other than rn a faceless manner, the proceedings should have been defened without precipitating the matter fu r intimating the assessee that they shall initiate appropriate proce ings only after the SLP's are decided by the Hon'ble Supreme ourt on the very same issue. This again, the Income Tax Dep t, has not been able to give a convincing reply, except for the fac that such a decision if at all \ .fl1 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 Income Tax Department contended that the Delhi High Court dismissed a writ petition of similar nature, on the one hand when the High Court is struggling to reduce its pendency, such notices which are under challenge in this writ petition are fbrcing the assessee to knock the doors of this High court resulting in filing of hundreds of new writ petitions which in the long run not only affects the disposal 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 lncome Tax Department. yet, the authorities concerned 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 furlher worse, the Income Tax Department is showing audacity by issuing notices continuously under Sections r4g-A and ,/ / \z 148 through the jurisdictiondl Asses ing Offrcer whereas it ought to have been only in the faceless man

14. In the case of BANK O INDIA VS. ASSISTANT COMMISSIONE& INCOME T ", on an issue whether it was justifiable on the part of the Inc me Tax Department in not following an order passed by the adj dicating authority only on the ground that the appeals are pen , the Division Bench of the High Court of Bombay held at Parag ph No.25 as under, viz., : "25. Mr. Paridwalla has rightly decision of this Court in Gommissi Godavaridevi Saraf'2 as also the ordinate Bench of this Court in Sam of which one of us (Justice G.S. Kul the Court categorically observed t "accepted" the judgment of the High the same is set aside in a manner k binding force. Referring to the deci Union of lndia vs. Kamlakshi Fi Court observed that the approach treating decisions being "not acce Supreme Court. ln such decision observations made bY the SuPreme " 11zozs; 170 taxmann.com422(Bo t2 1t9281 113 ITR 589 (Bombay) drawn out attention to the er of lncome Tax vs. Smt. recent decision of the co- Furniture (P) Ltd. v. lTO13 rni) was a member, wherein t the Revenue having not ourt would not mean that till n to law, it would loose its ion of the Supreme Court in ce Corporation Ltd.14, the the officials of Revenue of ble' was criticized by the following are the relevant y)l " 1202+1165 taxmann.com 581i300 T ltggzl taxmann.com 16155 ELT 431 SC) 452 (BombaY) . 7A "6. Sri Redciy 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, righfly criticized this conduct of the Assistant Collectors and the harassmenl lo 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 vehemenfly 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 Appellle Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assislant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial 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 competenl court. lf this healthy ruig i$ !-ot i::i:.,,,'-'d tlre re haiass,Tei-it to assesses and uit will oniy be undue chaos in administration o[ tax laws.

12. We have dealt with this because it has been sugg Additional Solicitor General made by the High Court, h officers. [t is clear that the o Court, seemingly vehem unpalatable to the Revenue, a a tendency in revenue ma become widespreqd, could harassment to the assesses-p to the Revenue. We woul department should take th proper spirit. The observati aspect at some length, sted by the learned that the observations been harsh on the servations of the High nt, and apparently only intended to curb which, if allowed to sult in considerable blic without any benefit like to say that the e observations in the ns of the High Court should be kept in mind in futu and the utmost regard should be paid by the ad.iudi appellate authorities to the ting authorities and the uirements of judicial discipline and the need for gi ng effect to the orders of the higher appellate autho ties which are binding on them."

15. What is worrying this B h more is the fact that an endeavour is being made whole h dly to ensure not to generate further litigation on issues which ha e been laid to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the Income Tax D ent being violative of the 15 Finance Act,2020 and Finance Act,ZO2L Now, inorderto protect the interest of the Revenue as also that of the assessee, it would be trite at this juncture, if we dispose of the writ petition with an observation/direction that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (l supra) shall however be subject to the outcome of the SLps which were filed 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 ofas 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 t6 36,37 and 38 ofthe order which, for y reference, is reproduced hereunder:

36. For all the aforesaid reas issued and the proceedings Department is neither te The notices so issued and the per se illegal, deserves to be aside/quashed. As a conseq orders getting quashed, the co ns, the impugned notices wn by the respondent- able, nor sustainable. procedure adopted being and are accordingly set ence, all the imPugned sequential orders passed by the respondent-DePartmen issued under Section 147 quashed and it is ordered a pursuant to the notices d 148 would also get ordingly. The reason we are quashing the consequentia that when the initiation of th procedurally wrong, the subs order is on the principles proceedings itself was uent orders also gets nullified automatically.

37. The preliminary objection sustained and all these writ this very jurisdictional issue. Si and orders are getting qu jurisdiction, we are not inclin decide the other issues raise stands reserved to be raise appropriate proceedings- raised by the petitioner is titions stands allowed on ce the impugned notices hed on the point of to proceed further and by the petitioner which and contended in an

38. Since the Hon'ble SuPr of Ashish Agarual, supra' exercising the Powers un Constitution of lndia, Perm e Court had, in the case s a one{ime measure er Article 142 of the the Revenue to proceed s, and this Court allowing under the substituted Provisio the petitions onlY on the P cedural flaw, the 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 like to make observations that since we are inclined to dispose of the instant writ petition, conscious of the fact that the earlier order of this High Court in the case of Kanakala Ravindra Reddy (1 supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, preferred by the Income Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision ofthis High Court in the case of Kanakala Ravindru Reddy (l tryra). This, in other words, would mean that either of the parties, if they so want, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Supreme Court in the pending SLP on the very same issue

19. Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction 1S concemed. As a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed. ( ( I \ t t .r a. '[ ho coitsequeniiai cr'Jers, if any, a so stand set aside/quashed in similar terms as have been Passed b this High Court in the case of Kankanala Ravindra ReddY (l sttP ). There shall be no order as ..1 to costs ConsequentlY, miscellaneous etitions pending, ifanY, shall stand closed. ,/TRUE PY,, A !iE'?i,TttAld'"dE SECTtoN OFFICER I re Towers, SY No 6(P) of rdens, SerlingamPallY 84 H erabad Sig o. Botanica 'gana, 5000 lncome Tax, Telangana and A P ab Tank HYderaoao enter, lncomeTax Department New NYA KUMAR, Advocate lOPUCl for lncome Tax Department IOPUCI To, I I 2 ) ) P C hC a d n Come a x office v ( 3 1 ( ( of Ko hag U d a o Th P( Ko nd ap U S J7 t M R R D S ct H D E RABAD Te a ( e C omm S oner o f r n c pa The G U ard M a yderabad T Tow H The National Faceless Assessment Delhi. One CC to SRI THANNERU CHAIT 4 5 One CC to Ms B SAPNA REDDY' 6. Two CD CoPies J BSK BS 19- ./, '',., .,/ - i,j Ir? li9 6( ?_ 13 rlJE ztE t Cs ::-.-^,,fJ HlGH COURT DATED:2810412025 ORDER WP.No.26304 of 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS I t t I