The High Court · 2025

THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITION No.27407 of 2024 ORDER, (per llon'ble Sri Jusricc P.Sam Koshy) Heard Mr. T.Chaintanya Kumar, Iearned counsel for the petitioner and Ms.B.Sapna Reddy, leamed Junior Standing Counsel for thc Income Tax Deparlment for the respondents. Perused the record

2. This is a writ petition where the proceedings are eithor challenged to the notices which were issued under Section l48A and 148 of the lncome Tax Act, 196 I (for short 'the Act') or the assessment ordcrs thosc have been passed under Section 147 of the Act which have been assailed.

3. This writ petition is being taken up today only on one of the grounds, that the notices issued under Section 1484 ol 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 of Finance Act, 2021 w.e.f., 01.04.2021 onwards, proceedings 2 under Section l48A ol the Act as also under Section l4g of the Act ought to have also been issued and proceedecl in a faceless mannel. 4 The contention ol the petitioner is that the issue of proceedings bcing in violation or the Finance Act. 202 l i.e., thc _'" r : -_--_ Y'^",..:-'.. - ".--- :_ irnpugned notices under Scction l4gA and Section l4g of the Act not being issued in a faceless trramer, have already becn dealt with and decided by this Courr in the case of KANKANALA RAVINDRA IIEDDY vs. TNCOME_TAX OFFICERT decicled on | 4.09.2023 whereby a batch ol writ petitions werc allowed and the proceedings initiatcd under Section t4gA as also Lrnder Section 148 of the Act were held to be bad rvith consequential rclicfs on the ground of it bcing in violation of the provisions of Scctio. l 5l A of the Act read wirh Notification lg/2022 dated 29.03 .2022. The said judgment passcd by this Courr has also bcen subsequcntly lollorved in a large number of writ petitions which were allo*,cd ., simirar tems. 'l(2023) 156 taxrnann.com i 7g (Telangana)l

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 COMMISSIONER OF.INCOME TAX & -OTHERS2, Cauhati 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, ancl 'Ielangana 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, Bombay High Court in the case of ABHIN ANILKUMAR SHAH VS. INCOME TAX OFFICER, INTERNATIONAL TAXATION6 which is again on international taxation and central circle, Iligh Court of Himachal Pradesh in the case of GOVIND SINGH vs' INCOME TAX OFFICERT' Gujarat High Courl in the case of MANSUKHBHAI 'yzoz+1464 Il'R 430 (llorn) 'l(2024) 156 taxmann.corn 478 (Cauhati)l' 'l(2024) 165 laxmann.com 115 (Punjab & Haryana)l ' 12024) 167 taxniann.corn 4l 1 ('fclangana)l " [2024) 166 taxtnann.corn 679 (Bombay)] 'izOzq 165 taxmann.com I l3 (Ilirnachal Pradesh)l ( 4 DAHYABHAI RADADIYA vs. INCOME, TAX ()FFICER, WARD 3(3Xq8, Jharkand High Court in the casc ol'SHyAM SUNDAR SAW vs. UNION OF INDIAe, Ra.iasthan High Court in the case of SHARDA DEVI CHHAJER vs; INCOME TAX OFFICER & ANOTHER and batch of writ pctiriorrsro 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. UNTON OF INDL\ & 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 I 0 writ . petitions. That upon the instructions being sought tiom the Department, they have been taking a solitary gror-rnd that the decision of the Bombay High Court in the case <tf llexuuore Technologies Ltd., (2 supra) as also the one which has beer.r decided by this Court in the case of Konakalt Ror.indrt Reddv 8ZOZ4 SCC Online Guj 4012 '2025 SCC Online lhar287 ' o y2o23, RJ -J D : 49 g 4-DB l ' 5 (l supra) has been subjected to challcnge 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. ln 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 interim order granted by the Hon'ble Suprernc Courl in any of these rnatters pending before it. Meanwhile, lresh 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 Iapsed, till date, we do not finci any remedial steps having been taken by the Income Tax Department io take appropriate steps to either hold back issuance of notice under Section 148,{ 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 p.oceedings under section l4gA of the Act and also initiating proceedings under Section r4g .f trre Act i. contraventior-r to the amendments brought into the Incorne .fax Act pursuant to the Finance Act, 2020as also the Finance Act 2021.

9. Upon a query being put as to why can,t this rvrit petition be disposed of in the teeth of the decision rendered by this Court in the case of Kanakala Ravindro Redd.v (t supra), lcamed Standing Counsel for the Income Tax Departrnent contends that those would unnecessarily burden the Income Tax Department where they would be required to file equal number of SLr)s before the Flon'ble Supreme Court and it would be lurthel burdening tlre exchequer ol- the Union of India. It was also the contcntion ol thc Iearned Standing Counsel that no prejudice would be caused to the interest of the petitioners in case if this writ petition is kept pending tilt the finalization of the SLps pending before rhe Hon,ble Supreme Court and the fact that the petitioner is alr.cady enjoying the benefit of interim protection. Nonetheless, on thc earlier query of this Court as to why the Income Tax Department have not colne out with a mcchanism to issue appropriate instruclions o4 ro take I 7 appropriate steps in ensuring that proceedings 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 of the decisions dedcided by the various High Courls, 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 result of which, what we arre tacing 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 lncome Tax authorities concemed are still even now in 2025 atso initiating proceedings in contravention to the provisions ofsectionl5lAoftheActandasaresultbynow,morethan600 to 700 petitions have been already got piled up before this IJigh court on an issue which otherrvise stands squarely covered by the judgment of this Court in the case of Kanakah Ravindra Reddy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case ol Kanakila Ravindra Reddy (l supra); the Division Bench while reserwing the right of protected the interest of the petitioners the Revenue, has also I 8 insofar as the liberly which was granted to the l(evenue fbr initiating fresh proceedings strictly in accordance * ith the amended provisions of the Act, as amended by the Finance Act, 2020 and the Finance Act,202l. The petitioner assessce would bc entitlcd to challenge or raise the othe. legal objectio.s if the lle'enue initiates fresh proceedings. The Deparlment has made no cndeavour ir.r availing the said liberty that was reseryed for the Revenue. on the contrary, they have been still sticking on to the stand, which this High Court as rvell as many other High Courls alrcady held to bc 1 l. lt appears that because of the aforesaid libertl that this IJigh Court had granted permitting the Revenue for initiating h.esh proceedings as a one-time measure in a laceless manner. the Income 1'ax Depaftment wants to take advantage of the sarlc by protracting these proceedings which would enable thern to mect thc lirnitation that would otherwise come in the way. Ljker.r,ise, il the rvrit petition is kept pending for a considerable long period of tirne and finally at a latcr stage if the Hon,bre Suprerne courl confirnrs the decision taken by this High Court as also by rhe other l,ligh 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 olthese matters at a much later stage which would be advantageous and beneficial to the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concemed. As a consequence, the Income Tax Department gets an extended period of time for initiation of fresh proceedings

12. The alarming trend of docket explosion in this Couft, despite the clear precedent set in Kanak{tla Rwindra Reddy (l sLrpra), is a matter of grave concem. The Incorne Tax Department's persistent initiation of lresh proceedings, disregardir.rg 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 Supleme Courl's decision on pending SLPs white 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 ;;- -B :i.. 10 position. Such conduct raises serious questions about the administrative elficiency and the respect lor judicial pronouncements, particularly when this Court has alreadv providcd a balanced approach by preserving both the Revenue's rights and assesses lnterests.

13. Another aspect which needs to be considered is that in fact it should have been realized by the lncome Tax Deparlment itself and should have fbund out via rnedia in ensuring thar proceedings under Sections 148-4. and 148 should not have been issued in a laceless manrler, at least till the Hon'ble Supreme Court decide the twelve hundred (1200) odd SLps which it is already scized ofor, ar least the Income Tax Department should have found out sonte remedial steps to cnsure that wherever the author.ities intend to initiate proceedings under Sections 148-A and l4g, orher than ir.r a faceless rnanner, the proceedings should have been defered without precipitating the matter further intimating the asscssee that they shall initiate appropriate proceedings only after the SLp,s are decided by the Hon'ble Supreme Couft on the ver.v sarne issuc. This again, the Incorne Tax Department, has not been able to givc a convincing reply, except for the fact that such a decision if at all 11 has to be taken, has to be taken lor the whole of India, and which otherwise has to be by way of a policy decision and that too at the Ievel of Central Board of Direct Taxes. Though the leamed 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 Courl 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 mattcr before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the rnatter has been reluctant in granting any interim protection to the Income 'lax Department. Yet, the authorities concerned at the Statc level are not ready to accept the verdict passed by a rnajority of Higir Courts of diflerent States on the same issue; and to make things further worse, the Income Tax Depaftment rs showing audacity by issuing notices continuously under Sections 148-A and -12 148 through the jurisdictional Assessing Officer whercas it ought to have been only in the faceless manner.

14. In thc case of BANK OF INDIA vs. ASSISTANT COMMISSIONEIT, INCOMII TAXrr, on an issue rvherher it rvas justifiable on the part of the Incorne Tax Department in not following an order passed by the adjudicating authority only on rhe ground that the appeals are pending, the Division Bench of the High Court o1'Bombay held at paragraph No.25 as under, viz., : "25. tt/r. Paridwalla has righfly drawn out attention to the decision of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Court in Samp Furniture (p) Ltd. v. tTO13 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 rs set aside in a manner known to law, it would loose its binding force. Referring to the decision of the Supreme Court rn Union of lndia vs. Kamlakshi Finance Corporation Ltd.1o, the Cou( 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 the relevant observatrons made by the Supreme Court. 'l Jr2025) 170 raxmann.com 422 tBornbal.)] '' ll978l I13 ItR 58q (Bomba)l " TZOZ+1 165 raxrnann.corn 581/300 Taxman 452 (Bombat) ta leOZl taxmar)n.corn l6155 t.l, t 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 correctness or othemise 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 offlcers 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 thrs healthy \ L4 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 aspecl 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 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 to the assesses-public without any benefit to the Revenue. We would like to say that the department should take these observations tn the proper spirit. The observations of the High Court should be kept in mrnd in future and the utmost regard should be paid by the adjudicating authonties 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." . P._r<.E**EIt.. :r_,..:, -arr.__;:- "

15. What is worrying this Bench rnore is the f-act that an endeavour is bcing made whole heartedly to ensure not to generate lurther litigation on issues which have been laid to r.cst by a large nulnber of High Courts all ol whom have taken a consistent stand that the action of the Income .Iax Department being violative of the 15 F'inance Act, 2020 and Finance Act,202l. Now, in order to protect the intercst 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 insta.nt writ petition in terms of the judgment rendered by this High Court in the case of Kanktnala Ruvindra 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. [n the given facts and circumstances, this Bench is of the considered opinion that un less and until we do not timely dispose of uratters which are squarely covered by the decision of this Court and which stands fortified by the decisions of the various other High Courts on the very same issue, the pendency of this High Couft u,ould lurther 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 olthe Revenue has already been considered and protected, as has been observed in paragraphs 16 36,37 and 38 of the order rvhich, for ready reference, 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 accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to the notices issued under Section 147 and 14g would also get quashed and it is ordered accordingly. The reason we are quashing the consequentral order is on the principles that when the initiation of the proceedings rtself was procedurally wrong, the subsequent orders also gets nullified automatically. 37 The preliminary objection raised by the petitioner is sustained and all these wrrt petitions stands aliowed on this very jurisdictional issue. Since the impugned nottces 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 appropriate proceedings. 38 Since the Hon,ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one_time measure exercising the powers under Article 142 of the Constitution 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 lhe Revenue would remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashish Agarwal, supra.

18. We would only lurther like to make obselations that since we are inolined to dispose of the instant writ petition, conscious of the fact that thc earlier order of this High Court in the case of Kanakola Rwindra Reddy (l supra) is subjected to challenge before the Hon'ble Suprerne Court in SLP No.3574 of 2024, preferred by the Incorne Tax Deparlment, 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 ol Kantkala Ravindra Reddy (l supra). This, in other words, rvould mean that either of the parties, if they so want, may rnove an appropriate petition seeking revival of this writ petition in the light ol the decision of the Hon'ble Supreme Coun in the pending SI-P on the very satne issue

19. Accordingly, the instant writ petition stands. allowed in favour ol the assessce so far as the issue of jurisdiction IS concerned. As a consequence, the impugned notice under challenge under Sections 148-A 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 Higli Courl in the casc of Konkanakr Ravindrt Retld.1, ( supra). There shall be no order. as to costs. Consequently, rniscellaneous petitions pending, if any, shall stand closed. x\\ ,\\ sEcrtoNoFFtcER U 1. The lncome Tax Officer Ward-'l, Khammam/ lncome Tax Office, Rajeev Gunt, //TRUE COPY// ", r SD/.A.SRINIVAS REDDY AESISTANT REGISTRAR Rajiv Chowk, Near Kinnerasani Theatre, Khammam Telangana State. To, / /

2. The Principal Chief Commissioner of lncomb Tax Telangana and A.P., Hyderabad, lT Towers, AC Guards, Masab Tank, Hyde.abad - 500 028, Telangana.

3. The National Faceless Assessment Center, lncome Tax Department, New Delhi.

4. The Chairman, Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of lndia, Secretariat Buildings, New Delhi - '1 10 001.

5. The Secretary to the Government, Department of Revenue, Ministry of Finance, New Delhi - '1 10 001.

6. One CC to SRI THANNERU CHAITANYA KUMAR Advocate [OPUC] 7. One CC to Ms. B.SAPNA REDDY, Jr. SC FOR INCOME TAX [OPUC] 8. One CC to SRI GADI PRAVEEN KUMAR, DEPUTY SOLICITOR GENERIAL OF lNDlA, High Court for the State of Telangana at Hyderabad [OPUC] W

9. Two CD Copies BSRIBSK HIGH COURT DATED:01 10512025 ORDER WP.No.27407 of 2024 o G {HE S t4 r{l. (,( a 2 7 ,lult lg6 \,l /... i.. *''\ -^.-\ ALLOWING THE WRIT PETITION, WITHOUT COSTS tD! t)$