High Court · 2025

Petition under Article 226 of lhe 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, decraring the notice u/s 148 dt. 1310312024 vide DIN No. ITBA/AST/S/14 B-112023-2411062543537(1) issued by the JA0(1st respondent) instead of FAO(3rd respondent) for A'Y' 2O2O-21' as void ' illegal' and contrary to the provisions of lncome-tax Act and contrary to the Principles of Natural Justice ,,,;a{.-*w?P -- l', ,:, .f ,,. IANO: 10F 2024 Petition under Section 151 CPC praying that in the circumsta.nces stated in the affidavit fired in support of the petition, the High court may be preased to stay a' further proceedings pursuant to the notice u/s 14g dt. 13103/2024 vide DrN No rrBA/AST/s/.4 8-112023-2411062543537(1) issued bv the JAO(1st respondent) instead of FAO(3rd respondent) for A.y. 2O2O_21 , and may pass such other o.de(s) as the Honou.abre court deems fit and proper in the interests of substantiar justice, as otherwise the petitioner wourd be put to irreparabre ross and severe injury. Counsel for the petitioner: SRI DUNDU MANMOHAN Counset for the Respondents: Ms. J.SUNITHA, Jr. SC FOR INCOME TAX The Court made the following: ORDER . ,l TIIE HONOURABLE SRI JUSTTCE P'SAM KOSIIY rHE HoNou."rHi$l#HT', N ARSING RAo WRIT PETITION No.2 7408 f2024 o ORDER, @er Hon'bLe Sri Justice P Sam Koshy) Heard Mr. Manmohan Dundu' leamed counsel for the petitioner and Ms' J'sunitha' learned Junior Standing Counsel for the lncome Tax DePartment for the resPondents Perused the rccord.

2. This is a writ petition where the proceedings are either challenged to the notices which rvere issued under Section 148,4 and 148 of the Income Tax Act' i961 (for shod'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 148,{ of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Officer' whereas in tems 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 Sectiorr I4gA of the Act as also under Section 14g of the Act ought to have also been issued and proceeded in a faceless I manner. 4' The contention of the petitioner is that the issue or proceedings being in violation of the Financ e Act, 2021 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 rvirh and decidcd by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME_TAX OFFICERT dccided on 11.09.2023 wrrereby a batch of writ petitions wer.e aflowed and the proceedings initiated under Section r4gA as also under.Section I48 of the Act were held to be bad with consequential reliefs on the g.ound of it being in vioration of the provisions of Section I 51A oi. the Act read with Notification 1g/2022 dated 29.03 .2022. l.he said judg,ent passed by this court has also been subsequentry foilorved in a large nurnber of writ petitions which were allowccr on similar. telms. 1 l(2023) 1 56 taxrnann.com 17g (Telangana)l -1 3

5. Down the line, we find that the same issue has also been decided against the Revenue by various High Courts i'e'' by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD', vs' ASSISTANT COMMISSIONER oFINCoMETAx&OTHERS2,GauhatiHighCouninthecase ol 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 Courl in the case of STIMNKATARAMANA REDDY PATLOOLA vs' DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of intemational 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' High Courl of Himachal Pradesh in the case of GOVIND SINGH vs' INCOME TAX OFFICBRT' Gujarat High Court in the case of MANSUKHBHAI ' yzoz+1464 lrR 430 (Bom) 'itzozil 156 taxmann.com 478 (Gauhati)l 'LQO24) 165 taxmann.com 115 (Punjab & Haryana)l 'L2024) 167 taxmann.com 41i (felangana)l " 12024) 166 taxmann.com 679 (Bombay)l 165 taxmann.com 113 (Himachal Pradesh)] "[2024) J 4 DAHYABHAI RADADIYA vs. INCOME TAx OFFICER, WARD 3(3X5)8, Jharkand IJigh Courl in the case of SIIyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitior.rsr0 which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court in the case ol GIRDHAIT 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 decide<l by a large number of IJigh Courts. we are still confronted with large filing of identical matters on daily basis ranging between 5 to l0 r,vr.it petitions. 1-hat upon the instructions being sought tiorn the Department. they have been taking a solitary ground thal thc decision of the Bornbay High Court in the casc oI- Hexawore Technologies Ltd., (2 supra) as also the one which ltas been decided by this court in the case of Konakara Ravindra Reddt, 82024 SCC Online Guj 4012 '2025 SCC Onlinc lhar 2g: p2023 : RI-JD :49 84-DB l 'o -i q (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 Courl 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 Coutls'

1. To a query being put to the leamed counsel for the Revenue' they have categorically accepted the fact that there is no interim older granted bY the Hon'ble Supreme Courl in anY of these rnatters pending befbre it' Meanwhilc' 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 lrasalreadybeendealtanddecidedbythisveryHighCourtitselt.

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 ofnotice under Section 1484. 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 14gA of the Act and also rnrtiating proceedings under Section l4g of the Act in contravention to the amendrnents brought into the Income Tax Act pursuant to the Finance Act,2020 as also the Finance Act2021. 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 Court in the case of Konskda Rovindra Reddy (l supra), Iearned Standing Counsel for. the Incorne Tax Department contends that those would unnecessarrly burden the I ncolue Tax Depar.trnent where the1, would be required to file equal number of SLps before the Hon'ble Strpreme Court and it rvould be further burdening the exchequer of the Union of India. It was also the contention of the learned Standing Counsel that no prejudice would be caused to thc 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 Deparlment have not come out with a mechanism to issue appropriate 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 decided by the various High Courts, it was submitted by the learned Standing Counsel that the said steps can only be taken at the level ofCBDT as any such steps would have to be taken Pan India and cannot be lin.rited to any of thcse jurisdictional High Courts" I0. As a result ol 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 lncome Tax authorities concerned are still even now in 2025 also initiating proceedings in contravention to the provisions of Section 151A of the Act and as a result by now' more than 600 toT00petitionshavebeenalreadygotpiledupbeforethisHigh Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakala Rovindra Redtly (1 supra). What is also surprising is the fact that though while altowing 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 t insofar as thc libefty which was grantecr to the Revenuc for initiating fresh proceedings strictly in accor.dance with the amended provisions of the Act, as arncnded by trre Financ e Act, 2020 and the Finance Act, 2o2r . The petitioner assessee would be entitred to challenge or raisc the other legal objections if the Revenue initiates fresh procecdings. The Department has lnade no endeavour in availing the said liberty that was reserved for t[.re l{evenue. On tlte contraty, they havc been still sticking on to the stand, rvhich this High Courl as well as many other High Courls already held to be bad. 1 l. It appears that because ofthe aforesaid liberty that this High Court had granted permitting the Revenue for initiating fi.esh proceedings as a one_tinte tneasure in a faceless manner, the Income Tax Depar.tment wants to take advantage ot.the same by protracting these proceedings which would enable thenr to mcet the limitation that rvould otherwisc corne 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 Couft confirms the decision taken by this High Courl as also by the other High Courts in v,,hich the SLps are still pending, the lncome Tax 9 l)epafiment would get the advantage of the liberty that is otherwise plotected in favour of the Revenue for initiation of fresh proceedings from the disposal of these matters at a much later stage r.vhioh 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 Dcpaltrnent gets an extended period of time for initiation of fresh ploceedings

12. The alarming trend of docket explosion in this Court' despite the clear precedent set in Konakala Rauindra Rettdy (l supra)' is a matter of grave concem' The Income Tax Department's persistent initiation of fresh proceedings., disregarding the established iudicial pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions piling up on the same issue' This detiberate approach not only undermines the principle of judicial precedent but also strains the judicial resources unnecessarily' The Depaftment's strategy of awaiting the Supreme Court'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 10 position. Such conduct raises serious questions about the administrative efficiency and the respect for 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 Deparlment itself and should har..e fbund out via media in ensuring that proceeclings under Sections l4g_A and l4g should not have been issued in a faceless manner, at least till the Hon,ble Suprerne Court decide the twelve hundred (l2OO) odd SLps which it is alreadl, seized ofor, at Ieast the Income Tax Departrnent should have fbund out solne remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections l4g_A and l4g. other than in a faceless manner, the proceedings should have bcen deferred without precipitating the rnatter furlhcr intimating the assessec that they shall initiate appropriate proceedings only after the SLp,s are decided by the Hon,ble Suprerne Court on the very same issue. This again, the Income Tax Depaftment, has not been able to give a convincing reply, except for the fact that such a clecision il at all ' 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 leve1 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 lorcing 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 tnatterbeforetheHon,blesupremeCoufthavingbeentakenon 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 l)epartment' Yet' the authorities concemed at the State level are not ready to accept the verdict passed by a majority of High Courts of different States on the same issue; and to make things further worse, the lncome Tax Department is showing audacity by issuing notices continuously under Sections 148-4 and L2 148 through the .jurisdictional Assessing Officer rvhereas it ought to have been only in the faceless lranner.

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAX]', on un iSsue rvhether it rvas justifiable on the parl of the income Tax Deparlmenl in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division Uench of the High Courr of Bornba;v held at paragraph No.25 as under, viz., . "25. Mr. paridwalla has righ y 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. lTO,3 of which one of us (Justice G.S. Kurkarni) was a member, wherein the Court categorically observed that the Revenue hav,ng not "accepted" the judgment of the High Court would not mean that tjll the same is set aside in a manner known to law, it would loose its binding force. Referring to the decision of lhe Supreme Court tn Union of lndia vs. Kamlakshi Finance Corporation Ltd.r4, the court observed fllat 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 retevant observations made by the Supreme Court. ll ttlr_tt, 170 rarunann.conr 422 (Bornbay.ll " I I9781 I l3 ITR 589 (Bombay) t3 1ZOZ41 165 raxmann.com 5gl/300 Taxman 452 (Bombay) llgozl taxmann.com I6155 ELT 43 j (SC) L3 "6 Sri Reddy officers were is perhaPs right in saylng not actuated bY any mala impugned orders. TheY that the fides in perhaPs passing the 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 otherwise 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 quasrjudicial 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 .iurrsdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appeltate 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 auihorities 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 this healthy '1.4 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 Solicrtor 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 vehen unpararabre to the Revenue, lllt;", ll"".i:i:'::,J a tendency in revenue matters whtch, if allowed to become widespread, could resull 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 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 requtrements of ludicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." 1 5. What is worrying this Bench more is the Iact that an endeavour is being made whole hearledly 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 Depaftment being violative of the 15 Finance Act,2020and 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 observatiorVdirection that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Katrkanala Ravindru Recldy (1 supra) shatl however be subject to the outcome of the SLPs which were filed by the Income Tax Department and which is pending consideration before the l:lor-r'ble Supreme Coutt.

16. In the given f'acts 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 Coutl and which stands fortified by the decisions of the various other High Courls on the very same issue' the pendency of this High Courl 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 ofthe Revenue has already been considered and protected, as has been observed in paragraphs 16 36,37 and 38 ofthe order which, 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 respondenlDepartment pursuant to the notices rssued under Section 141 quashed and it is o.o",."o ""1lol;1;".'l: ,j,::";: are quashing the consequential order is on the principles that when the initiation of the proceedings ttself 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 rarsed and contended in an appropriate proceedings. 38 Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one{ime measure exercising the powers under Article 142 of the Constitution of India, permifted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right \7 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 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 KunakalaRavindraReddy(|supra)issubjectedtochallenge belore the Hon'ble Supreme Courl in SLP No'3574 of 2024' preferred by t[-re Income Tax Departmenl' we rnake it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP prefened by the Revenue against the decision of this High Court in the case of Kanakala Ravindra Reddy (l srtpra)' This,inotherwords,wouldmeanthateitheroftheparties'ifthey so want, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Supreme Coun in the pending SLP on the very same issue'

19. Accordingly, the instant writ petition stands allowed 1n favouroftheassesseesofarastheissueofjurisdiction concemed. As a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set asideiquashed I t 18 The consequential orders, if any, also stand set asi<ielquashecl in similar terrns as have been passed by this High court in the case of Kankanolo Rovindro Reddy (l supra). There shall be no order.as to costs Consequently, miscellaneous petitions pending, if any, shall stand closed. To i/TRUE COPY/i SD/-A. PRATHIMA DEPUW REGISTRAR SECTION OFFICER 1 2 '"; 3il{i?fl?,],{:q,:,i:: %B!,r..,ffiil!i%I?1,"T3 The Assistant Commission iv ruo bipj"oi x;il#;: Serlingampaly. Ranga neoov,-ni-o6ri;;;: ilY;ffr;lsoooa+. The Principat Commissioner oJ-l19om9 Tax_2, Hyderabad, Signature Towers sy.No.6(P) of Kondaour S,v.a.qtFi "i k"tiAili,, opp. Botanica! Gardens sert insa mpa ly Ra nsi neooy,-ni,o6rab;;, i;Y;ffi;;!soooa+. 3. The Assessment Unit, lncome Tax Department, National Faceless Assessment Centre. Dethi, wtinistry oi Fi;r;ff il;rn No. 40.1 , 2nd Ftoor, E- Ramp, Jawahartat Nehru staaium,b6tni-ii0o0b. 4. One CC to SRt DUNDU IMANIVOHAN, Advocate IOPUC] 5. One CC to Ms. J.SUN|THA, Jr. SC FOR tNCOIVE TAX IOPUCI *' Two CD Copies 6 BSR GJP HIGH COURT DATED:25 tO4t2O2s ORDER WP.No.27408 of 2024 B THE ST4 14: o 13 tlj0 2u5 ) o o * D8s i, 1i.. ' o( ;, 1' ,/ ALLOWING THE WRIT PETITION, WITHOUT COSTS