Smt. Ragha Sudha Bommidi, Wo B. Su v. 1. The lncome Tax Officer

Counsel for the Petitioner : SRI VENKATRAM REDDY MANTUR Counsel for the Respondents : SRI K.SUDHAKAR REDDY, LEARNED SENTOR STANDING COUNSEL FOR THE INCOME TAX DEPAR-TMENT The Court made the following ORDER THE IIONOURABLE SRI JUSTICE P'SAM KOSHY AND THE HoNoTIRABLE sRr Jusrrcr NARSING RAo NANDIIIONDA WRIT PETITIO N No.267 900F 2024 ORDER' (per Hon'ble Si JtLstice P-Ssm Koshv) Heard Mr. Venkatram Reddy Mantur' learned counsel for the petitioner and Mr K.Sudhakal Reddy' leamed Senior Standing CounselforthelncomeTaxDepartmentfortherespondents. Perused the record.

2. This is a writ petition wlrere the proceedings are either challenged to the notices which were issued under Section l48A andl48oftheIncomeTaxAct,lg6l(forshort.theAct,)orthe assessment orders those have bqen passed under Section 147 of the Act which have been assaile{'

3. This vrit petition is being taken up today only on one of the grounds, that the notices issued under Section l48A of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Officer' whereas in terms of the amendmeot that was brought to the lncorne Tax Act by way of Finance Lct, 202l w e t", 0l'04'2021 onwards' proceedings 2 under Section l48A of the Act as also under Siection I4g of the Act ought to have also been issued and pror:er:ded in a faceless manner.

4. The contention of the petitioner is tlat the issue of proceedings being in violation of the Financet t\ct, 2021 i.e., the impugned notices under Section l4gA and Sectirtn l4g of the Act not being issued in a faceless maDner, have alroa<ly been dealt with and decided by rhis Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME_TAX OF.FICERT decided on 14.09.2023 whereby a batch of writ petitions vrere allowed and the proceedings initiated under Section l4gA as also under Section I 48 of the Acr were held to be bad with consequenlial reliefs on the ground of it being in violation of the provisions .f Seoion r5 rA or the Acr read with Notificati on lg/2022 dated, 29.03 2022. The said j udgment passed by this Court has also been subs,equently lollowed in a large number of writ petitions which were a[cwed on simirar tcrms. 'l(2023) 156 tarmann.com l7g (Telangana)l { 3

5. Down the line, we find that the same issue has also been decided against the Revenue by various High Courts i.e., by the Bombay High Court fn the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSTONER OF INCOME TAX & OTIIERS2, Gauhati High Court 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 Otr'INDIA4, and Telfngana High Court in the case of SRI VENKATARAMANA REilDY PATLOOLA VS. DEPUTY COMMISSIOI\IER OF INCOME TAX5 where the issue was in respect of intemational taxation, Bombay High Court in the case of ABHIN AMLKUMAR SIIAH vs. INCOME TAx OFFICER, INTERNATIONAL TAXATIOIY6 which is again on inremarional taxation and central circle, High Qourt of Himachal pradesh in the case of GOVIND SINGH vs. TNCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI 2 1zozt1464 rrR 430 (Bom) ' [(2024) 156 taxmann.com 478 (Gauttati)] " tQO24) 165 taxmann.com I l5 (Punj{b & Haryana)l '[2024) 167 taxmann.com 411 (Telangana)] " 12024) I 66 taxmann.com 679 (Bombay)l ' 12024) 165 taxmann.com I l3 (Himachal Pradesh)l 4 DAHYABHAI RADADIYA VS. INCOME TAX OFFICE& WARD 3(3)(5)t, Jharkand High Court in the case of SIIYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHAR-DA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsto which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court in the case of GIRDHAR GOPAL DALMIA vs. UMON OI'INDIA & ORS (M.A.T 1690 of 2023), decided on25.09-2024-

6. Even though the same issue having been decided by a large number of l{igh Courts. we are still confronted udth large fiting of identical matters on daily basis ranging between 5 to l0 writ petitions. That upon the instructions being sought from the Department, they have been taking a solitary p;round that the decision o[' the Bombay High Court in the cast: of Hexaware Technologies Ltd., (2 supra) as also the one which has been decided by rhis Court in the case of Kanakala Ravindra Reddy '202+ SCC onLine Cuj 4012 '2025 SCC Online Jhar 287 'o y2oz3, RJ -.r D :49tt,l- DB l \ ( 5 (l supra) has been subjected !o challenge in a Special teave Petition i.e., SLp No.3574 of 2QZ4 before the Hon,ble Supreme Court and the Hon'ble Sunremt Court is seized of the matter. In addition, there are about 1200 ]Stfs aho filed arising out of the same issue being decided by variotrrs High Courts.

7. To a query being put to the ]learned counsel for the Revenue, they have categorically accepted [te fa"t that there is no interim order granted by the Hon'ble S]upreme Court in any of these matters pending before it. Meqnwhile, fresh writ petitions of identical nature are being piled up ["fo." this Bench on daily basis and the pendency is getting sed on matter which otherwise has already been dealt and decided this very High Court itsetf

8. On the one hand, even th the order of this Court that was passed as early as on 14.09.2 23 and more 16 months have Iapsed, titl date, we do not find y remedial steps having been p taken by the lncome Tax t to take appropriate steps to either hold back issuance of notice er Section l48A and under Section 148 of the Act by the ju{isdictional Assessing Officer, rather the authorities concerned in fre teeth of series of decisions 6 by all the major High Courts in India are continuously still initiating proceedings under Section 148A of the Act and also initiating proceedings under Section 148 of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act,2020 as also the Financr: Act202l' g. Upon a query being put as to why can't this'lrit petition be disposed of in the teeth of the decision rendered by this Court in the case of Kanakala Ravindra Reddy (l supra), leamed Standing Counsel for the Income Tax Department contends' that those would unnecessarily burden the Income Tax Departrnent where they would be required to fite equal number of SL'Ps before the Hon'ble Supreme Court and it rvould be further burdening the exchequer of the Union of India. It was also the contention of the learned Standing Counsel that no prejudice woull be caused to the interest of the petitioncrs in case itthis writ petition is kept pending till the finalization of' the SLPs pending be'flore the Hon'ble Supreme Court and the fact that the petitioner isi already enjoying the benefit of interirn protection. Nonetheless, on the earlier query of this Court as to why the lncome Tax Departm'enl have not come out with a mechanism to issue appropriate instruc'tions or to take 7 appropnate steps in ensuring that proceedings under Section r4gA ofthe Act as also the assessmedt orders under Section l4g ofthe Act are kept in a hold in the light of the decisions dedcided by the various High Courts, it was submitted by the learned Standing Counsel that the said steps can o0ly be taken at the level of CBDT as any such steps would have to $e taken pan India and cannot be limited to any of these jurisdictionpl High Courts. I0. As a result of which, *t ut fv" are facing is steep increase of Iitigation day in and day out even fhough various orders have been passed by this High Court allowin$ writ petitions on the very same issue. The Income Tax authorities ,concerned are still even now in 2025 also initiating proceedings in, contravention to the provisions ol Scction l5 lA of the Act and as a result by now, more than 600 to 700 petitions have been already got pild 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 ( I supra). What is also surprisinS is the fact that though while allowing the writ petitions in the case of Kanakala Ravindra Reddy (l supra), the Division Ben(h ur*rile reserving the right of the Revenue, has also protected the interest of the petitioners E r- insofar as the liberty which was granted to the Revenue for initiating fresh proceedings strictly in accordance rvith the amended provisions of the Act, as amended by the Finan<;e Act' 2020 and the Finance Act,202l . The petitioner assessee wc'uld be entitled to challenge or raise the other legal objections if the Rt:venue initiates fresh proceedings. The Department has made nc' endeavour in availing the said liberty that was reserved for the Rcvenue' On the contrary, they have been still sticking on to the stirnd' which this High Court as well as many other High Courts zLlrr:ady held to be bad.

11. It appears that because of the aloresaid liberty that this High Court had granted permitting the Revenue fc'r initiating fresh proceedings as a one-time measure in a faceless manner' the Income Tax Department wants to take advanta6;e of the same by protracting these proceedings which would enable them to meet the limitation that would otherwise come in the wa1" Likewise' if the writ petition is kept pending for a considerable lcng period of time and finally at a later stage il the Hon'ble Suprerne Court confirms the decision taken by this High Court as also bl the other High CourtsinwhichtheSLPsarestillpending'lhgflggrngTax ) I Department would get the advantpg€ of the liberty that is otherwise protected in favour of the Revenue for initiation of fresh proceedings from the disposal of these matters at a much later stage which would be advantageous arid beneficial to the Revenue and would be equalty disadvantageous and detrimental so far as interest of the assesses are concemed. Ap a consequence, the Income Tax Department gets an extended period of timp for initiation of fresh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanakalg Ravindra Reddy (l supra), is a matter of grave concem. The Inc$me Tax Department's persistent initiation of lresh proceedings, disregarding the established judicial pronouncements, has led to an uirprecedented surge in litigation with over 600-700 petitions pili$g up on the same issue. This detiberate approach not only undermines the principle of judicial precedent but also strains the judiCial resources unnecessarily. The Department's strategy of awaiting the Supreme Court's decision on pending SLPs while conrinuing to initiate fresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than ad[rering to the established legal 1tl (- position. Such conduct raises serious quet;tions about the administrative efficiency and the respe()t for judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Re'renue's rights and assesses interests.

13. Another aspect which needs to be considered is that in fact it should have been realized by the lncome Tax Department itself and should have found out via media in ensuring that proceedings under Sections 148-A and 148 should not have been issued in a faceless manner, at least till the Hon'ble Supremr: (lourt decide the twelve hundred (1200) odd SLPs rvhich it is already'seized ofor, at least the lncome Tax Department should have fcund out some remedial steps to ensure that wherever the aut hc rities intend to initiate proceedings under Sections 148-A and 148. other than in a faceless manner, the proceedings should lrave been defened without precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only aftt:r the SLP's are decided by the Hon'ble Supreme Court on the v,:ry same issue' This again, the Income Tax Depanment, has not tret:n able to give a convincing reply, except for the lact that such a decision 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 ofa policy decision and that too at the level of Central Board of Dirgct Taxes. Though the leamed Standing Counsel for the Incom! Tax Department contended that the Delhi High Court dismissed a writ petition of similar nahrre, on the one hand when the High -Court is struggling to reduce its pendency, such notices which ape under challenge in this writ petition are forcing rhe assessee to knock the doors of this High Court resulting in filing of hundreds o[ new writ petitions which in the long run not only affects the $isposal of the writ petitions but also consumes substantial time ff the Bench in hearing these matters again and again on daily bfisis. Admittedly, in spite of the matter before the Hon'ble Suprerhe Court having been taken on many occasions, the Hon'ble Suprgme Court which is seized of the matter has been reluctanr in granting any interim protection to the Income Tax Department. yet, ttie authorities concemed at the State level are not ready to accept lhe verdict passed by a majority of High Courts of diflerenr Srares Qn the same issue; and to make things further worse, rhe tn.orn"l Tax Department is showing audacity by issuing notices continugusly under Sections l4g-A and 72 ( 148 through the jurisdictional Assessing Offrcer w:lereas it ought to have been only in the faceless manner'

14. In the case of BANK OF INDIA rs' ASSISTANT COMI\flSSIONE& INCOME TAXrr, on an issue whether it was justifiable on the part of the Income Tax Dr:partment in not following an order passed by the adjudicating autlority only on the ground that the appeals are pending, the Divis orL Bench of the High Court of Bombay held at paragraph No'25 as under' viz'' : "25. Mr. Paridwalla has rightly drawn out altention to the decision of this Court in Commissioner of lncome Tax vs' Smt' Godavaridevi Sarafl2 as also the recent decision of the co- ordinale Bench of this Court in Samp Furniture (P') l"td v' lTO13 of which one of us (Justice G.S. Kulkarni) was a mom'ler' wherein the Court categorically observed that the Revenue having not "accepted" the iudgment of the High Court would not rnean that till the same is set aside in a manner known to law, it wculd loose its binding force. Refening to the decision of the Suor€me Court in Union of lndia vs' Kamlakshi Finance Corporatiol Ltd '"' the Court observed that the approach of the officials of Revenue of treating decisions being "not acceptable" was criticized by the Supreme Court. ln such decision, following are lhe relevant observations made by the Supreme Court. " 11202s1170 taxmann.com 422 (Bombay)l '' 1t9281 113 ITR 589 (Bombay) " 12OZ+1165 taxmann.com 581/300 Taxman 452 (Bornbay) " ltggzl traxmanr.com 16155ELT 433 (SC) [3 '6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the irnpugned 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 lReddy overlooks is that we are not concerned here with the correctness or otheruvise of their of any factual concl slon or i, malafides but with the fact tfrat the officers, in reaching in their conclusion, by-pasled two appellate orders in regard to the same issue Which were placed before them, one of the Co ector (Appeats) and the other of the Tribunal. The High Co rt has, in our view, righfly criticized this mnduct of th6 Assistant Collectors and the harassment to the asse$see 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 lhat, in disposing of the quasijudicial issues before tfiem, revenue officers are bound by the decisions of fhe appeflate authorities. The order of the Appe te Cb ector is binding on the Assistant Collectors working [vrthin his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appe ate Co ectors who function under the jurisdiction of the Ti.tbunat. The principles of judicial discipline require that, the orders of the higher appellate authorities should be followed unreservedly by the subordinate authoritres. The mere fact that the order of the appellate aulhorf,y is not ,,acceptabte" the department - in itself an obiectronable phrase _ and is the subject mafler of ap appeal can furnish no ground for not following rl untess its operation has been suspended by a competent court. lf this healthy 74 rule is not followed, the result will only be e ndue harassment to assesses and chaos in administ'ation of tax laws.

12. We have dealt with this aspect at some bngth' because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsl' cn the officers. lt is clear that the observations of th€' High Court, seemingly vehement, and apperrently unpalatable to the Revenue. are only intenderl t') curb a tendency in revenue matters which, if allotared to become widespread, could result in con:;iderabte harassment to the assesses-public without any benefit to the Revenue. We would like to say that the department should take these observations ln the proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authoritieri and the appellate authorities to the requirements of udicial discipline and the need for giving effect to tlre orders of the higher appellate authorities which ar3 binding on them."

15. What is worrying this Bench more is the tact that an endeavour is being made whole heartedly to ensllro not to generate further litigation on issues which have been laict t': rest by a large number of High Courts all of whom have taken a consistent stand that the action of the Income Tax Department bein;l vi,llatiYe of the 4 Finance Act, 2020 and Finance A!t,2021 . Now, in order to protect the interest of the Revenue as alsg that ofthe assessee, it would be trite at this juncture, if we disp$se of the writ petition with an observation/direction that the disp[sal of the instant writ petition in terms of the judgment rendered bf this High Court in the case of l Kankanala Ravindra Reddy (l sr{pra) shall however be subject to the outcome of the SLPs which were filed bv the Income 'l'ax Department and which is pending ponsideration before the Hon'ble l Supreme Court.

16. In the given facts and circiLrmstances, this Bench is of the I considered opinion that unless an until we do not timely dispose q l I of matters which are squarely co red by the decision of this Court "4 and which stands fortified by th decisions of the various other 4 High Courts on the very same i ue, the pendency of this High I Court would further be burdened hich otherwise can be decided I P and disposed ofas a covered matt Ief

17. So far as the interest of the Revenue is concemed, we are of the considered opinion that the int [rest of the Revenue has already been considered and protected, as fras been observed in paragraphs 16 36, 37 and 38 of the order which, for ready refen:n,:e, is reproduced hereunder

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent- Department is neither tenable, nor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are ac(Drdingly set aside/quashed. As a consequence, all the impugned orders gefting quashed, the consequential orders passed by the respondent-Department pursuant to ttre notices issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The r:ason we are quashing the consequential order is on the principles that when the initiation of the proceedings rtself was procedurally wrong, the subsequent orders also gets nuilified automatically.

37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very iurisdictional issue. Since the impugnerd notices and orders are getting quashed on the point of iurisdiction, we are not inclined to proceed further and decide the other issues raised by the petilioner which stands reserved to be raised and contended in an appropriate proceedings. 38 Since the Hon'ble Supreme Court had ir the case of Ashish Agarwal, supra, as a one-time measure exercising the powers under Article 142 of the Conslitution of lndia, permitted the Revenue tc, proceed under the substituted provisions, and this Couri allowing the petitions only on the procedural flaur, the right 17 confend on the Revenue would rernain reserved to proceed further if they so want from ttle 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 ol Kanakala Ravindra Reddy (l suprp) is subjected to challenge before the Hon'bte Supreme Cour( in SLP No.3574 of 2024. preferred by the Income Tax Depar$ment, we make it clear that altowing of the instant writ petition]is subject to outcome of the aforesaid SLP preferred by the Reverlue against the decision of this High Court in the case of Kanakals Ravindru Reddy (l supra)' This, in other wonds, would mean thpt either of the parties, il they so want, may move an aPpropriate petition seeking revival ol this writ petition in the light of the decision of the Hon'ble Suprcme Court in the pending SLP on the very same issue'

19. Accordingly, the instant writ petition stands allorved in f'avour of the assessee so far as the issue of jurisdiction IS concemed. As a consequence, the impugned notice under challenge under Sections 148-4 and, 148 stands set aside/quashed ( ( 18 The consequential orders, if any, also stand se1. aside/quashed in similar terms as have been passed by this High CorLrt in the case of Kankanala Ravindra Reddy (l supra). There stLall be no order as to costs. Consequently, miscellaneous petitions penriing, if any, shall stand closed //TRUE COPY// To

1. The lncome Tax Officer, Ward 9 (1), Hyderabad, I SD/. A. JAYASREE ASSIsTANT REGISTRAR t-,--_ __/ \\ I ',,r SECTION OFFICER I ,I lv/ome Tax Towers, AC Guards, Masab Tank,Hyderabad-500004.

2. The Principal Chief Commissioner of lncome Tax lncome Tax Towers, AC Guards Masab Tank, Hyderabad-500004.

3. The Assessment Unit, lncome Tax Departrnent National Faceless Assessment Centre Room No 401 2nd Floor E Ranrp Jawaharlal Nehru Stadium

4. One CC to SRI VENKATRAM REDDY MANTUR, Arlwcate [OPUC] 5 One CC to SRI K SUDHAKAR REDDY, LEARNED SENTOR STANDTNG COUNSEL FOR THE INCOME TAX DEPARTMENI-, r\dvocate IOPUCI

6. Two CD Copies SA GJP % .t / HIGH COURT DATED:0210512025 ORDER WP.No.26790 of 2024 i r:: Sl4 o^ 3 filJE 20[ '( o o ?+ ALLOWING THE W.P WITHOUT COSTS- b3