Smt. Radhika Gupta v. 1. Assessment Unit

Petition under section 15i cpc praying that in the circumstances stated in the affidavit fired in support of the petition, ihu- uigi, court may be preased to stay all further proceedings, including "ry -r".ou"ri of lncome f"i ,.J plrrfty, pursuant to the demand notice dt. 2s-or-2o2i issued by the 2nd ,.".[onJ"nt -pen:arty through cPC, pursuant to the re-assessment order dt.2a-0s-zoza ano order dt.08-01- 2024 passed by the 1 st respondent for the assessm yi^i z:ul- '18 bearing demand referencenumb e,r2O 1Z 2023201 73700.133931 5T for Rs.98,30,380i- and demand referencenumb er20172o232o1 7 4041 4BBi 7 s 3r for penaltyRs.4,38,81Olpending disposal of the above writ petition "nt Counsel for the Petitioner: SRl. TEJPRAKASH TOSHNIWAL 99_rI:"] for the Respondent Nos..t to 3: SRt K. SUDHAKAR REDDY SC FOR INCOME TAX DEPARTMENT the Respondent No.4: SRI B. MUKHERJEE REPRESENTTNG FOR 99y1.-"I I._. SRI GADI PRAVEEN KUMAR DY. SOLICITON CCUEhET- OF INDIA The Court made the following: ORDER {. TIIE HONOURABLE SRI JUSTICE P'SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITIO N No.294 18 oB 2024 @$, (per Hon'ble Sri Justice P'Sam Koshy) Heard Mr. Tejprakash Toshniwal' leamed counsel for the petitioner, Mr. K.Sudhakar Reddy' learned Senior Standing CounselforthelncomeTaxDepartmentforrespondentNos.i to 3 and Mr. B. Mukherjee, learned counsel representing the Union of India for respondent No'4' Perused the record'

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 148A 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 of the grounds, that the notices issued under Section 148A of the Act and the subsequent initiation ofproceedings 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 2 of Finance Act, 2021 w.e.f., 0l .04.2021 onwards, proceedings under Section l4gA ofthe Act as also under Section l4g ofthe Act ought to have also been issued and proceeded in a faceless manner.

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act,202l i.e., the impugned notices under Section l4gA and Section l4g of the Act not being issued in a faceless manner, have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME_TAX OFFICERT decided ot 14.09.2023 whereby a batch ol. writ petitions were allowed and the proceedings initiated under Section r4gA as also under Section 148 of the Act were helrl to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section 151A of the Act read wirh Notification lgl2022 dated29.03.ZO22. The said judgment passed by this court has also been subsequently followed in a large number of writ petitions which were allowed on similar terms. ' [(2023) I 56 taxmann.com 17g (Telangana)] i: r, J

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 Coprt in the case of HEXAWARE TECHNOLOGIES LTD', vs' ASSISTANT COMMISSIONER 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 of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the case of SRT VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER OI'' INCOME TAX5 where the issue was in respect of internationai taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH VS' TNCOME 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 MANSUKHBHAI ' Tzoz+1 464 ITR 430 (Bom) 'itznzi> 156 taxmann.com 478 (Gauhati)l ^iizozqj 165 taxmann.com 115 (Punjab & Haryana)l 'IZOZ+) 167 taxmarin.com 41 I (Telangana)l "izOzql 166 taxmann.com 679 (Bombay)l . - 'i;o;i; t;, iu**unn'to'' I l3 (Himachal Pradesh)l 4 DAHYABHAI RADADIYA vs. INCOME TAx OFFICE& WARD 3(3X5)8, Jharkand High Courr in the case of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Courr in the case of SHARDA DEVI CHIIAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsro which stood decided on 19.03.2024. Sirnilar 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 with large filing of identical matters on daily basis ranging between 5 to 10 writ petitions. 1'hat upon the instructions being sought from the Department, they have been taking a solitary ground that the decision of the Bombay High court 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 Reddy t2oz4 SCC Online Guj 4012 '2025 SCC Online Jhar2gT 'o 12023, RJ-JD :4984-DBl 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'bte Supreme Court is seized of the matter' Inaddition,thereareabouti200sL,Psalsofiled.arisingoutofthe same issue being decided by various High Courts' 7 . To a query being put to the leamed 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 atready 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 Department to take appropriate steps to either hold back issuance of notice under Section l48A and under Section 148 of the Act by the jurisdictional Assessing Offrcer' 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 14gA of the Act and also initiating proceedings under Section l4g of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act,202A as also the Finance Act202l.

9. Upon a query being put as to why can,t this writ petition be disposed of in the teeth of the decision rendered by this Couil in the case of Ksnakala Ravii:.drq Reddy (l supra), leamed Stairding Counsel for the Income Ta.< Departrnent contends that those would unnecessarily burden the iacome Tax Department where rhey would be required tc file equar number of SLps before the Ilon'ble Supreme Court a;rd it rvould be further burdening the exchequer of the Unio:i c;" i:,dia. It ,aras also the contention of the learned Standing Counsel that no prejudice would be caused to the interest of the petitioners in case if this writ petition is kept pending till the finalization of the SLps pending before 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 Department have not come out with a mechanism to issue appropriate instructions or to take 7 appropriate steps in ensuring that proceedings under Section 148,{ 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 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' l0.Asaresultofwhich,whatwearefacingissteepincreaseof 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 concemed are still even now in 2025 also initiating proceedings in contravention to the provisions ofsectionl5lAoftheActandasaresultbynow,morethan600 to 700 petitions have been already got piled up before this High Courtonanissuewhichotherwisestandssquarelycoveredbythe 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 insofar as the liberty which was granted to the Revenue for initiating liesh proceedings strictly in accordance rvith the amended provisions of the Act, as amended by the Financ e Act, 2020 and the Finance Act,202l. 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 Courl as well as many other. High Courts already held to be bad. 1 l. It appears that because of the aforesaid liberty that this High Court had granted pennitting 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 these proceedings which would enable thern to meet the limitation that would otherwise come in the way. Likewise, if the writ petition is kept pending for a considerable Iong period of time and finally at a latff 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 lncome Tax t., I 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 ofthese 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 concerned. As a consequence, the Income Tax Department gets an extended period of time for initiation of fiesh proceedings.

12. The atarming 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 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 limitation periods, rather than adhering to the established legal 10 position. Such conduct raises serious questions about the administrative efficiency and the respecr tbr judicial pronouncements, particularly when 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 considered 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 l4g should not have been issued in a laceless manner, at least till the Hon,ble Supreme Court decide the twelve hundred (1200) odd SLps which it is already seized ofor, at least the Income Tax Department should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 14g_A and l4g, other than in a faceless manner, the proceedings should have been deferred without precipitating the matter further intimating 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 been able to give a convincing reply, except for the fact that such a decision if at all 71 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 levelofCentralBoardofDirectTaxes.Thoughtheleamed 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 forcing the assessee to knock the doors of this High Court resulting in filing of hundreds ol 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 Income Tax Department. Yet, the authorities concemed at the State level are not ready to accept the verdict passed by a maj ority of High Courts of different States on the same issue; and to make things further worse, the Income Tax Department is showing audacity by issuing notices continuously under Sections 148-A and 12 i 48 through the jurisdictional Assessing officer rvhereas it ci:unf to have been only in the faceiess manner.

14. In rhe case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXrr, on an issue wherher it was justifiable on the part of the Income Tax Deparlrnent in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division tsench of the High Court of Bombay held at paragraph No.25 as under, viz., : "25. Mr. paridwalla has righfly drarrn out attention to the decision of this Court in Commissioner of Income Tax vs. Smt. Godavaridevi Sarafl2 as also lhe recent decision of the co_ ordinate Bench of this Court in Samp Furniture (p) Ltd. v. lTOr3 of which one of us (Justice G.S. Kulkarni) was a member, .,^/herein the Court categorically observed that the Revenue tiaving not "accepted" the judgment of the High Court would not mean that till the same is set aside in a rnanner known to law, it would icose its binding force. Referring to the deoision of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.14, the court observed that the approach of the officiars of Revenue of treating decisions being.not acceptable,, was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. n o yxmann.com 422 lBombay)l :1,l(.2::!:) '' U9781 t t3 ITR 589 (Bombay) " 120241 I65 raxmam.com 5gl/300 Taxman452(Bombay) 'o l-gg2ltaxmarm.com 16155 ELT 433 iSC) 13 "6- Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otheruise of their conclusion or of any factual malafides but with the fact that the officers' in reaching in their conclusion, by-passed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view' rightly criticized this conduct 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 department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court lf ffi healthy 14 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 thb learned Additional Solicitor General that observations made by the High Court, have been harsh on the officers. lt is clear that the observations of the High Cou(, seemingly vehement, and apparenfly 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 lo the assesses_public 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 discipline and the need for giving effect to the 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 whorn have taken a consistent stand that the action of the Income Tax Department being violative of the -t I I 1 i i I I 15 FinanceAct,2020andFinanceAct,202l:Now,inordertoprotect 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 ol Kankanala Ravindrq 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. ln 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 andwhichstandsfortifiedbythedecisionsof.thevariousother High Courts on the very same 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 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 :5 3o;37 and.38 cL thb or,Jcr rvi,ich, i.or ready referen;u, is r;pro,ju" ,l hereunder

36. For all the aforesaid reasons, the impugned notices ssued and the proceedings drawn by the respondent_ Department is neither tenable, nor sustainable. The notices so issLred and the procedure adopted being pe,. se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orCers getting queshed, the consequential orders passed by the respondenlDepartrnent pursuant to the notices issued under Section 147 and 14g would also get quashed and it is ordered accordingly. The reason we ai'e quashing the consequentiai order is on the principles that when the initiaticn of the proceedings itself was procedurally r.rrong, the subsequent orders also gets nullified automatically.

37. The p;eliminary objection raised by the petitioner is sustained and ail 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 tfre other issues raised by the petitioner which stands reserved to be raised and contended in an appi-opriate proceedings. 38 of Ashish Since the Hon'ble Supreme Court had, in the case Agarvral, supra, as a one-time measure the powers under Article 142 exercising of the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the p-.tititits cr^!y cn the r), ocedural flavr, the !.ight 17 conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case ofAshish Agarwal, suPra.

18. We would only further like to make obseryations that since we are inclined to dispose of the instant writ petition' conscious of the fact that the earlier order of this High Courl in the case of Kanakala Ravindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No 3574 of 2O24' 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 of this High Court in the case of Kanakala Ravindra Reddy (l srtpra)' 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' I {

19. Accordingly, the instant writ petition stands allowed favour of the assessee so far as the issue of jurisdiction concemed. As a consequence' the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed 1n IS 18 ,t' The consequential orders, if an1z, also stand set aside/quashed in similar terms as have been passed by this High Court in the case of Kankanala Rqvindra Reddy (l supra). There shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed i oT ,TRUE COPY// SD/.P. PONNA KRISHNA ASSISTANT REGISTRAR lkd,- ION OFFICER SECT 1 . Assessment Unit, lncome T^ax. Departmext, National e assessment centre, New Dethi, Room No.401, 2nd Ftrior, E_Rahp, jiwafrarril flefri, StrOirr, New Delhi. -1 10003.

2. lncome.Tax Officer, Ward 5(1), l. T. Tower, A.C. Guards, [\,4asab Tank, Hyderabad

3. Brincipal Chief Commissioner of lncome Tax, Andhra pradesh and I1"p:19,F1v,99!qbgd, Room.No 922, eth Ftoor, s erock, r i.rouj-ers. t0_2_3, A.u uuaros. A/asao lank, Hyderabad 4 IP.^S-:g:!qry Ministry of ,Fhance._Department of Revenue, Direct Taxes, bovernment ot tndia. North Block, 3rd Floor. Sansad IVlarg, New Delhi 5. One CC to SRt. TEJPRAKASH TOSHNTWAL Advocate tOpUCl 6. One CC to SRt K. SUDHAKAR REDDY SC FOR TNCOIME TAX 7. one cc to Sri Gadi Praveen Kumar, Deputy soricitor Generar of rndia [opUC] 8. Two CD Copies DEPARTMENT [OPUC] KKS GJP E+4- HIGH COURT DATED:02l\St2O2S l'r 2 3 AUE 206 * 0,t.. qlT.HEo ,* ORDER WP.No.2941B ot 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS (A t\ {