Smt. Vijaya Laxmi Bommidi v. The lncome Tax Officer

9BDEB, (per Hon'ble Sri Justice P.San Koshy) Heard Mr. Venkatram Reddy Mantur, learned counsel for the petitioner and Mr K.Sudhakar (eddy, leamed Senior Standing Counsel for the Income Tax Department for the respondents Perused the record

2. This is a writ petition wherB the proceedings are either challenged to the notices which were issued under Section 148,4. and 148 of the Income Tax Act, 1961 (for shon '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 takgn up today only on one of the grounds, that the notices issued unper Section 1484 of the Act and the subsequent initiation ofprogeedings under Section 148 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 Act,202l w.e.f., 01.0f.2021 onwards, proceedings .1 under Section 148,4. of the Act as also under Sr:ction 148 of the Act ought to have also been issued and procee,led in a faceless manner

4. The contention of the petitioner is tliat the issue of proceedings being in violation ol'the Finance t\ct, 2021 i.e., the impugned notices under Section l48A and Secticn 148 of the Act not being issued in a faceless manner, have alrea,ly been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OI'FICERT decided on 14.09.2021 whereby a batch o1'writ petitions were allowed and the proceedings initiated under Section 148A as eLlso under Section 148 of the Act were held to be bad with consequertial reliefs on the ground of it being in violation of the provisions o I Section 1 5 1A ol the Act read with Notification 1812022 dated 29.C3 .2022. The said judgment passed by this Court has also been subsr:quently fotlowed in a large number of writ petitions which were allowed on similar 'l(2023) 156 taxmann.com 178 (Telangana)l 5

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 in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSTONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIA3, Punjab and Haryana High Court in the case ol JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the case of SRI VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation, Borrrbay High Court in the case of ABHIN ANILKUMAR SHAH VS. INCOME TAX OFFICER, INTERNATIONAL TAXATION6 which is again on international taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKTIBIIAI 2 Tzoz+1464 ITR 430 (Bom) ' l(2024) 156 taxmann.com 478 (Gauhati)l ^ l(2024) 165 taxmann.com I t 5 (Punja! & Haryana)l '12024) 167 taxmann.com 41 1 (Telangana)l "12024) 166 taxmann.com 679 (Bombay)l '12024) 165 taxmann.com I l3 (Himachal Pradesh)l DAIII'ABHAI RADADIYA vs. INCOME TAX OFFICER, WARD 3(3X5)8, Jharkand High Court in the case of SIIYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Courr in the case of SHARDA DEVI (IHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsro 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. UNION OF 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 High Courts, we are still confronted vrith large filing of identical matters on daily basis ranging betwt:en 5 to I 0 writ petitions. That upon the instructions being sought ftom the Department, they have been taking a solitary ground that the decision of the Bombay High Clourt in the case of Hexaware Technologies Ltd, (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Retldy 8z0z+ SCC Online Guj 4012 '2025 SCC Onlinb Jhar287 12023 : RI-JD :498 4-DBl o ' 5 (1 . supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 before the Hon'ble Supreme Court and the Hon'ble Supreme Qourt is seized of the matter In addition, there are about 1200 SI;Ps also filed arising out ofthe same issue being decided by various High Courts.

7. To a query being put to the lerrned 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 nahre are being piled up blefore this Bench on daily basis and the pendency is getting increa$ed on matter which otherwise has already been dealt and decided !y 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 f,rnd a4y remedial steps having been taken by the Income Tax Departmgnt to take appropriate steps to either hold back issuance of notice under Section 148A and under Section 148 of the Act by the jurisdictional Assessing Offrcer, rather the authorities concemed in lhe teeth of series of decisions 6 by all the rnajor High Courts in India are continuously still initiating proceedings under Section 1484' 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 Lct, 2020 as also the Finance Lct 2021.

9. Upon a query being put as ro why can't this writ petition be disposed of in the teeth of the decision renderetl by this Court in the case of Kanakala Ravindra Reddy (l supra), learned Standing Counsel for the Income Tax Department contend; that those would unnecessarily burden the Income Tax Deparlrnent where they would be required to file equal number of SLPs before the Hon'ble Supreme Court and it rvould be further burdening the exchequer of the Union of India. It was also the contention cf the leamed Standing Counsel that no prejudice woull be caused to the interest of the petitioners in case if this writ petition is kept pending till the finalization of the SLPs pending belbre the Hon'ble Supreme Court and the fact that the petitioner is already enjoying the benefit of interim protection. Nonetheless, on the earlier query of this Court as to why the Income Tax Departmr:nt have not come out with a mechanism to issue appropriate instnrctions or to take 7 appropriate steps in ensuring that propeedings under Section 1484' of the Act as also the assessment orders under Section 148 of the Act are kept in a hold in the light ofthe decisions dedcided by the various High Courts, it was submiffed by the learned Standing Counsel that the said steps can only $e taken at the level ofCBDT as any such steps would have to be taken Pan India and cannot be limited to any of these jurisdictional I'Iigh Courts.

10. As a result of which, what we bre facing is steep increase of litigation day in and day out even thqugh various orders have been passed by this High Court allowing writ petitions on the very same issue. The Income Tax authorities cQncemed are still even now in 2025 also initiating proceedings in cpntravention to the provisions of Section 15lA 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 Kanskala Ravindra Reddy (1 supra), the Division Bencfr while reserving the right of the Revenue, has also protected the interest of the petitioners insofar as the liberty which was granted to the Revenue for initiating frcsh proceedings strictly in accordance with the amended provisions ol-the Act, as amended by the Finance Act,2020 and the Finance Act,2021 . The petitioner assessee would be entitled to challenge or raise the other legal objections if the: Revenue initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was reserved for the Revenue. On the contrary, they have been still sticking on to the stand, which this High Court as well as many other High Courts already held to be 1 1. It appears that because of the aforesaid liberty that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a faceless manner, the Income Tax Department wants to take advantage of the same by protracting thcse proceedings which would enable them to meet the limitation that would otherwise come in the way. Likewise, if the writ petition is kept pending for a considerable long period of time and finally at a later stage if the Hon'ble Supreme Court confirms the decision taken by this High Court as also by the other High Courts in which the SLPs are still pending, the Income Tax 9 Department would get the advantagq of the liberty that is otherwise protected in favour of the Revenue for initiation of fresh proceedings from the disposal ofthese matters at a much later stage which would be advantageous and leneficial to the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concerned. As a consequence, the lncome Tax Department gets an extended period of time for initiation of fresh proceedings.

12. The alarming trend of docket gxplosion in this Court, despite the clear precedent set in Kanakala Ravindra Reddy (l supra), is a matter of grave concern. The Incor4e 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 undertnines the principte of judicial precedent but also strains the judiciEl resources unnecessarily. The Department's strategy of awaiting t\e Supreme Court's decision on pendlng SLPs while continuing [o initiate fresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than adhBring to the established legal 10 position. Such conduct raises serious questions about the administrative efficiency and the respec)t for judicial pronouncements, particularly wherr this Court has already provided a balanced approach by preserving both the Revenue's rights and assesses interests

13. Another aspect which needs to be considert:d is that in fact it should have been realized by the Income Tax Department itself and should have found out via media in ensuring that proceedings under Sections 148-4. and 148 should not have been issued in a faceless manner, at least till the Hon'ble Supreme' Court decide the twelve hundred ( I 200) odd SLPs vrhich it is alreaCy seized of or, at least the [ncome Tax Department should have fcund out some rernediai steps to ensure that wherever the autrorities intend to initiate proceedings under Sections 148-A and 148, other than in a faceless manner, the proceedings should have been deferred without precipitating the matter further intimatin6; the assessee that they shall initiate appropriate proceedings only after the SLP's are decided by the Hon'ble Supreme Court on the very same issue. This again, the Income Tax Department, has not b,een able to give a convincing reply, except for the fact that such a decision if at all L7 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 leamed Standing Counsel for the Income Jax Department contended that the Delhi High Court dismissed a wpit petition of similar nahrre, on the one hand when the High Court is struggling to reduce its pendency, such notices which arer under challenge in this writ petition are forcing 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 dipposal of the writ petitions but also consumes substantial time of the Bench in hearing these matters again and again on daily babis. Admittedly, in,spite of the matter before the Hon'ble Supremo Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the matter has been reluctant in grantin! any interim protection to the Income Tax Department. Yet, tho authorities concemed at the State level are not ready to accept the verdict passed by a majority of High Courts of different States op the same issue; and to make things further worse, the Income Tax Department is showing ' audacity by issuing notices conti slyunder Sections 148-4 and 72 148 through the jurisdictional Assessing Off,rcer whereas it o.ogirt to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXIt, on an iss,re whether it was justifiable on the part of the Income Tax Dipartment in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division Bench of the High Court of Bombay held at paragraph No.25 asr under, viz., : "25. Mr. Paridwalla has rightly drawn out atl.ention to the decision of this Court in Gommissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Cou( in Samp Furniture (Pl Ltd. v. lTO13 of which one of us (Justice G.S. Kulkarni) was a member, wherein the Court categorically observed that the Revenue having not "accepted" the judgment of the High Court would not mean that till the same is set aside in a manner known to law, it lvould loose its binding force. Referring to the decision of the Supreme Court in Union of lndia vs. Kamtakshi Finance Corporation Ltd.14, the Court observed that the approach of the officials of Revenue of lreating decisions being "not acceptable" was criticized by the Supreme Court. ln such decision, following ar€r the relevant observations made by the Supreme Court. Ir 12 [(2025) 170 taxmann.com 422 (Bombay)] 1t 9781 I l3 ITR 589 (Bombay) '3 120241165 taxmann.com 581/300 Taxmar452 (Bombay) 'o ltggzltaxmann.com 16/55 ELT 433 (SC) 13 "6. Sri Reddy is perhaps right in saying that the officers were not actuated iby 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 Repdy overlooks is that we are not concerned here wlth the Gorrebtness or otherwise of their conclusipn or of any factual malafides but with the fact that the officers, in reaching in their conclusion, by-passe( hvo 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 Courtt has, in our view, rightly criticized this conduct of the Assistant Collectors and the harassment to the assesspe caused by the failure of these officers to give dffect to the orders of authorities higher to them in tlle appellate hierarchy. lt cannot be too vehemently epphasized that it is of utmost importance that, iin disposing of the quasijudicial issues before them, revenue officers are bound by the decisions of ttie 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 birlding upon the Assistant Collectors and the Appellate rCollectors who function under the jurisdiction of the Trlbunal. The principles of iudicial discipline require that fihe orders of the higher appellate authorities should bb followed unreservedly i by lhe subordinate authorities, The mere fact that the order of the appellate authority is not "acceptable" to the department - in itself aniobjectionable 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 competpnt court. lf this healthy i ) 74 rule is not followed, the result will only b e undue harassment to assesses and chaos in adminiskation of tax laws.

12. We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. lt is clear that the observations of the High Court, seemingly vehement, and a cparently unpalatable to the Revenue are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assesses-public without arry benefit to the Revenue. We would like to say that the department should take these observations in 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 authorities; and the appellate authorities to the requirements of judicial discipline and the need for giving effect to tfre orders of the higher appellate authorities which are: binding on them."

15. What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have 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 Department being violative of the 15 Finance Act,2020 and Finance Act,:2021. Now, in order to 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 byithis High Court in the case of Kunkanala Ravindra Reddy (l suppa) shall however be subject to the outcome of the SLPs which Were filed by the Income Tax Department and which is pending cqnsideration before the Hon'ble Supreme Court.

16. In the given facts and circuffrstances, this Bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarely covergd by the decision of this Court and which stands fortif,red by the decisions of the various other High Courts on the very same isslre, the pendency of this High Court would further be burdened which otherwise can be decided and disposed ofas a covered matter., 11 . So far as the interest of the Rpvenue is concemed, we are of the considered opinion that the inte(est ofthe Revenue has already been considered and protected, as h1s been observed in paragraphs I L6 ...'' :. I 36,37 and 38 ofthe order which, fbr ready refere.rce, is reproduced hereunder

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the |espondent- Department is neither tenable, nor l;ustainable. The notices so issued and the procedure ad,:pted being per se illegat, deserves to be and are acc()rdingly set aside/quashed. As a consequence, all th€ orders getting quashed, the consequential orclers passed by the respondent-Department pursuant to the notices issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The reason we impugned are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically.

37. The preliminary objection raised by the cetitioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugrred notices and orders are getting quashed on thr> point of jurisdiction, we are not inclined to proceed further and decide the other issues raised by the petiticner which 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-timo measure exercising the powers under Article 14L of the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions bnly on the procedural flaw, the right 77 conferred on the Revenue wPuld remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashish AgaMal, supra.

18. We would only further like to make obseryations that since we are inclined to dispose of the instpnt writ petition, conscious of \ the fact that the earlier order of this High Couft in the case of Kanakala Ravindra Reddy (l supna) is subjected to challenge before the Hon'bte Supreme Court in SLP No'3574 of 2024, l t preferred by the Income Tax Deparlment, we make it clear that allowing of the instant writ petitionl is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakalp Ravindra Reddy (l supta)' This, in other words, would mean that either ol the parties, if they so want, may 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' lg. Accordingly, the instant writ petition stands allowed 1n favour of the assessee so far as the issue of jurisdiction IS concemed. As a consequence, the impugned notice under challenge under Sections 148-4 andi 148 stands set aside/quashed 18 The consequential orders, if any, also stand set aside/quashed in similar tenns as have been passed by this High Court in the case of Kankanala Ravindra Reddy (l supra). There shall bc no order as to costs. Consequently, miscellaneous petitions penciing, if any, shall stand closed. //TRUE COPY// SD/. A. JAYASREE ASiSISTANT REGISTRAR sec{&orrrcen To '1. The lncome Tax officer, Ward 15 ('1) Hyderabad, lnc:ome Tax Towers Masab Tank,Hyderabad-500004. Guards Masab Tank, Hyderabad-500004.

2. The Priircipal Chief Commissioner of lncome Tax lncome Tax Towers, AC 3.7 sessment Unit, lncome Tax Department Natic,nal Faceless ment Centre Room No 4O1.2nd Floor ERamp Jawaharlal Nehru ASSeSS Stadium Delhi '1 10003.

4. One CC to SRI VENKATRAM REDDY IUANTUR, Advocate [OPUC] 5. One CC to SRI K.SUDHAKAR REDDY, LEARNED S;ENIOR STANDING COUNSEL FOR THE INCOIME TAX DEPARTMENT, Advocate [OPUC]

6. Two CD Copies SA GJP trt- ,.- l/- ..L\:t ,. -(HE S14

14. 1,,

1. I I \ 23 ilB 2m ( \ I ..i.' HIGH COURT DATED:0210512025 ORDER WP.No.26842 of 2024 ALLOWING THE W.P WITHOUT COSTS. ?+ffiri