High Court · 2025

Judgment

4. The lncome tax officer ward 1 , Khammam/ lncome Tax Office, Raieev Gunt, Rajiv Chowk, Near Kinnerasani Theatre, Khammam Telangana State. The Principal Chief Commissioner of lncome Tax Telangana and AP, Hyderabad, lT Towers, AC Guards, Masab Tank, Hyderabad - 5O0 028, Telangana The National Faceless Assessment Center, lncome Tax Department, New Delhi The Central Board of Direct Taxes, Represented by its Chairman, Department of Rerrenue, Ministryof Finance, Govemment of lndia, Secretariat Buildings, New Delhi - 1 10 O01 .

5. The Union of lndia, Represented by its Secretary to the Govemment, Department of Revenue, Ministry of Finance, New Delhi - 1 10 001 ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the

circumstances stated in the affidavit filed therewith, the High Court may be. pleased to issue an appropriate writ, order or direction more particularly one in the nature of Writ of Mandamus, declaring the impugned notice dated. O5lO4l2O23 tor A.Y. 2019 - 20 passed u/s 148A(d) of the Act vide DIN No. ITBA/AST/F1148N2023 -2411051868646(1)and the consequential notice u/s 148 dated OSlO4l2023 vide DIN No. ITBA/AST/S/148 112f'23-2411051875743(1)issued by the JAO(1st respondent) instead of FA.O(3rd respondent),as void, illegal, and contrary to the provisions of lncome-tax Act and contrary to the Principles of Natural Justice Counsel for the Petitioner: SRl. THANNERU CHAITANYA KUMAR Counsel for the Respondent Nos.l&2: Ms. BOKARO SAPNA REDDY (Jr. SC FOR INCOME rAX) Counsel for the Respondent Nos.3 to 5: SRI GADI PRAVEEN KUMAR OEpUTy SOLICITOR GENERAL OF INDIA The Court macle the following: THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSTNG RAO NANDIKONDA WRIT PETITION No.27431 of 2024 ORDER: (per Hon'ble Sri Justice P.Sam Koshy) Heard Mr. T.Chaitanya Kumar, learned counsel for the petitioner and Ms.B.Sapna Reddy, leamed Junior Standing Counsel for the lncome 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 l48A and 148 of the Income Tax Act, 1961 (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 ot'the qrounds, 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 tertns ol'the arnendment that was brought to the lncome Tax Act by way ot' Finance Act, 2OZl w.e.f., 01.04.2021 onwards, proceedings I { .,-z?, 2 under iJection l48A of the Act as arso under Section t4g of the Act ought to have arso been issued and proceeded in a faceress manner

4. T'he contention of the petitioner is that the issue of proceedings being in vioration of the Finance Act, zo2t i.e., the impugned norices under Section r4gA and Section r4g of the Act not bein;g issued in a flaceless manner, have arready been dealt with and dec:ided by this Court in the case of KANKANALA RAVINDRA REDDy vs. tNCoME-TAx oFFrcERr decided on 14.09.2023 whereby a batch of writ petitions were alrowed and the proceedings initiated under Section l4gA as arso under Section 148 of thr: Act were herd to be bad with consequentiar reliefs on rhe ground ol'it being in vioration of the provisions of section r5rA of the Act read r.vith Notiftcati on Lg/2022 dated 29.03.2022. The said judgment passed by this court rras also been subsequently foflowed in a large nunrber of writ petitions which v,,ere allowed on similar terms. | [(2023) l5r-r taxmann.cor-rl l7g (.1-elangana)] I 3

5. Down the line, we find that the sam€ 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. ASSISTAITT COMMISSIONER OF INCOME TAX & OTHEBS', Gauhati High Court in the case of RAM NARAYAN SAH vs. UMON 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 SRT 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 ABI{IN ANILKUMAR SHAH vs. INCOME TAX OFFICER' INTERNATIONAL TAXATIOIS 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 MANSUKHBHAI ' 1:oz+1 464 I't-R a3o (Bom) '[(2024) t56 taxmann.corn 478 (Gauhati)] '[(2024) 165 taxmann.com 115 (Punjab & Haryana)] '12024) t67 taxmann.com 411 (Telangana)l " [2024) 166 ta.xrnalrlr.corlr 679 (Bombay)] '[2024) [65 taxrtrann.com t 13 (Himachal Pradesh)] 4 DAHYABHAI RADADIYA vs. INCOME TAx OFF,ICER, WARf,i 3(3X5)8, Jharkand High Court in the case of SIIyAM SUNDr\R SAW vs. UNION OF INDIAe, Rajasthan High Court in the cas,: of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsro which stood d<rcided on 19.03.2024. Sirnilar views have also been taken by the Division Bench of Calcutra High Court in the case of GIRDIIAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 of 2023), decided on 25.09.2024.

6. Even though the same issue having been decided by a large number of High Courts, we are still confronted with large filing 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 ground that the decision ,,f the Bombay High court in the case of Hexowore Technologies Lttt., (2 supra) as also the one which has been decided by this Court in rhe case of Kanokola Ravindra Reddy 82024 SCC Online Guj 4012 '2025 SCC Online Jhar 2g7 12023 : RJ-J D: 4 984-Du l I o 5 (l 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 Court is seized of the matter. In addition, there are about 1200 SLPs also filed arising out of the same issue being decided by various High Courts.

7. To a query being put to the learned counsel for the Revenue, they have categorically accepted the fact that there is no interirn order granted by the Hon'ble Supreme Court in any of these rnatters 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 lncome Tax Department 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 Officer, rather the authorities concemed in the teeth of series of decisions 6 by all the major High Courts in India are continuously still initiating proceedings under Section l4gA of the Act and arso initiating proceedings under Section l4g of the Act in contravr:ntion to the amendments brought into the Income Tax Act pursuanr: to the Finance Act,2020 as also the Finance Act202r.

9. U;2on a query being put as ro why can't this writ 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 [or the Income Tax Department contends that those would unnecess:rrily burden the Incorne Tax Department where they would bt> required to file equal number of SLps before the Hon'ble Supreme Court and it would be further burdening the exchequer of the Union of tndia. It was also the contention of the learned Standing Counsel that no prejudice u,ould be caused to the interest ofthe petitioners in case ifthis writ petition is kept pending till the finalization of the SLps pending before the Hon,ble Supreme Oourt and the fact rhar the peririoner is already enjoying the benefit of interim protection. Nonetheless, on the earlier query of this Court as to why the Income Tax Department have not come out with a mechanism to issue appropriatr. instructions 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 Courts, it was submitted by the learned 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 resutt 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 the very same issue. The Income Tax authorities concerned are still even now in 2025 also initiating proceedings in contravention to the provisions of Section l5l A 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 whictr othenvise stands squarely covered by the judgment of this Court in the case of Kanukala Ravindra Reddy (t 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 insofar as the liberty which was granted to the Revenue for initiating fresh proceedings strictly in accordance with the amended provisirrns of the Act, as amended by the Finance Act, 2020 and the Fin:rnce Act, 202r. The petitioner assessee would be entitled to challery;e or raise the other regar objections if the Revenue initiates fresh p.oceedings. The Department has made no endeavour in availing the said liberty that was reserved for the Revenue. on the contrary, they have been stilr sticking on to the srand, which this High court as well as many other High courts arready herd to be bad. I l ' It etppears that because of the aforesaid riberry that this High court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure i. a fbceress rnanner, the lncome Tax Department wants to take ad'antage of trre sarne by protractinl; these proceedings which would enabre them to meet the limitation that would otherwise come in the way. t,ikewise, if the writ petitic,n is kept pending for a considerabre rong period of time and finally at a rater stage if the Hon,ble Supreme court confirms the decision taken by this High court as arso by the other High courts in which the slps are sti, pending, the Incorne Tax 9 Department would get the advantage of the liberty that is otherwise protected in favour of the Revenue for initiation of fresh proceedings from the disposal of these rnatters 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 Ta>r 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 Kanakola Ravindra Reddy (1 supra), is a matter of grave concern. The tncome 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 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 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 L0 position. Such conduct raises serious questions about the adminir;trative efficiency and the respect for judicial pronou,cements, particularly when this court has already provided a balanr:ed approach by preserving both the Revenue,s rights and assesses interests.

13. Another aspect which needs to be considered is that in fact it should have been realizsdby the Income Tax Department itself and should have found out via media in ensuring that proceedings under Se'ctions 148-4 and r4g should not have been issued in a faceless rnanner, at least till the Hon'ble Supreme court decide the twelve htmdred (1200) odd slps which it is already seized of or, ar least the Income Tax Department should have lound oul so,1e remedial steps to ensure that wherever the authorities inte,d tcr initiate pr,rceedings under Sections r4g-A and r4g, other than in a faceless lnanner, the proceedings should have been deflered without precipitating the matter further intirnating the assessee th,t they shall initiate appropriate proceedings onry after the SLp,s are decided b}' the Hon'bre supreme court on the very sarne issue. This again, the Income Tax Department, has not been abre to gi'e zr convincing reply, except for the fact that such a decision if at ail Y 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 Taxes. Though the learned Standing Counsel for the Income Tax Department contended that the Dethi 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 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 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 interirn protection to the Incorne 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 sarne issue; and to make things further worse, the [ncome Tax Department is showing audacity by issuing notices continuously under Sections 148-A and _/ J ; 12 148 through the jurisdictional Assessing officer whereas it ought to have been only in the faceless manner.

14. I' rhe case of BANK oF rNDIA vs. ASSISTANT COMMIISSIONER, INCOME TAx,, o, an issue whether ir was justifiable on the part of the Income Tax Department in. not following an order passed by the adjudicating authority onry on the ground that the appeals are pending, the Division Bench of the High Co,rt of Bombay herd atparagraph No.25 as under, viz.,: "25. Mr. paridwaila has righfly drawn out attention to the decision of this court in commissioner of rncome Tax vs. smt. Godavaridevi sarafl2 as arso the recent decision of the co- ordinate Bench of this court in samp Furniture (p) Ltd. v. rro13 of which one of us (Justice G.s. Kurkarni) was a member, wherein the c:ourt categoricaily observed that the Revenue having not "accepted" the judgment of the High Court would not mean that till the surme is set aside in a manner known to raw, it wourd roose its binding force. Refening to the decision of the supreme court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.14, the court observed that the approach of the officials of Revenue of treating decisions being 'not acceptabre" was criticized by the supreme court. rn such decision, foilowing are the rerevant observations made by the Supreme Court. ll tfqlt. I ll$r,nn.com 422 @ombay)I " [1978] I t3 ITR 589 (Bombay) t3 IZOZ+1 r6 5 taxmann.com 5gr/300 Taxman 452 (Bombay) 't 1tlOZ1 raxmann.com l6155 ELT 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 Sri Reddy overlooks is that we are not concerned here with the conectness or othen/lrise of their conclusion or of any factual malafrdes 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 mnduct 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 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 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 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 departrnent - 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 hy a competent court. lf this heallhy t4 rule is not followed, the result will only be undue harassment to assesses and chaos in administration of tax laws.

12. We have dealt with this aspect at some length, because it has been suggested by the learned Additional soricitor Generar 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 apparenfly unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, courd resurt in considerabte harassment to the assesses-pubtic without any 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 Ciscipline and the need for giving effect to the orders :f the higher appeilate authorities which are binding ,)n [hem."

15. wh.t is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate llrther 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 act on of the [ncome Tax Department being violative of,trre 15 Finance Act,2020 and Finance Act, 202L 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 by this High Court in the case of Kankanalo Rovindra Reddy (1 supra) shall however be subject to the outcome of the SLPs which were filed by the lncome 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 squalely covered by the decision of this Court and which stands fonified by the decisions of the various other High Courts on the very sarn€ issue, the pendency of this High 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 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 md 38 of the order which, for ready reference, is reproduced hereun<ler:

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 accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orde6 passed by the respondent-Department pursuant to the notices issued under Section 141 and 14g would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles that when the initiation of the proceedirlgs itself was procedurally wrong, the subsequent orders also gets nullified automatically.

37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are getting quashed on the point of jurisdiction. we are not inclined to proceed further and decide the other issues raised by the petitioner which stands reserved to be raised and contended in an .rppropriate proceedings. 38 of Ashish Since the Hon'ble Supreme Court had, in the case Agarwal, supra, as a one_time measure the powers under Article .142 erxercising of the Oonstitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right 17 conferred on the Revenue would remain reserved to proceed further if tfey 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 Konakala Ravindra Reddy (l supra) is subjected to challenge \ \ before the Hon'ble Supreme Court in SLP No.3574 of 2024, I ( preferred by the [ncome 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 of this I{igh Court in the case of Kanakala Ravindra Reddy (l supra). 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 ttre decision of the Hon'ble Supreme Court in the pending SLP on the very sarne issue. t9. Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction is concerned. As a consequence, the impugned notice under challenge uqder S_ections 148-,4. and 148 stands set aside/quashed. 18 The consequential orders, if any, also stand set aside/quashed in similar terms as have been passed by this High court in the case of Konkanala Ravindra Reddy (l supra). There shalt be no order as to costs Consequently, miscellaneous petitions pending, if any, shall stand clr:sed. To, ,/TRUE COPY// SD/. B. REKHA RANI ASSISTANT REGISTRAR SECT'6f;FFICER

1. The inconle tax officer ward 1, Khammam/ lncome Tax ffice, RajeevGunt, Rajiv chowk, Near Kinnerasani rheatre, Khammam Telanglria siiG. 2. T.he Principa.l chief commissioner of lncome Tax Telangana and Ap, Hyderabac, lr rowers, AC Guards, Masab rank, Hyderibao - soo oza, Telanganil

3. The Natiorral Faceless Assessment Center, lncome Tax Departrnent, New Delhi

4. The chainran, central Board of Direct Taxes, Department of Revenue, Vjli._Q of Finance, Government of lndia, Secretariat Buildings; Ne* Obtfri - 110 001.

5. The secretary to the Government, Department of Revenue, Ministry of Finance, Nlew Delha - 110 001

6. One CC to SRl. THANNERU CHAITANYA KUMAR Adrocate {OPUCI 7. One CC to Sri Gadi Praveen Kumar, Deputy Solicitor General of lndia tOpUCI 8. one cc to Ms. BoKARo sApNA REDDY (Jr. sc FoR tNcoME TAx) IoPUCI , ./ 9. Two CD Copies V KKS GJP R TH€ S o a-o I / Ptl 426 tn|. k .. '.r.:;n ..,! HIGH COURT DATED:0110512025 ORDER WP.No.27431 of 2024 t7 /.4, ALLOWING THE WRIT PETITION WITHOUT COSTS €