SRI A v. A. SIVA KARTIKEYA

Heard Mr. A.V.A.Siva Kartikeya, leamed counsel for the petitioner and Ms. J.Sunitha, leamed Junior Standing Counsel for the Income 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 148,4. and 148 of the lncome Tax Act, 1961 (for shorl'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 befng taken up today only on one of the grounds, that the notices issued under Section 148,4. of the Act and the subsequent initiation of proceedings 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 .l under Section l48A of the Act as also under Section 148 of the 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, 2()21 i'e', the impugned notices under Section 148,4 and Section l4tl of the Act not being issuecl in a faceless manner, have already been dealt with and decicled by this Courl in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICI;Rr decided ot 14.09.2023 whereby a batch of writ petitions were rrllowed and the proceedings initiated under Section 148A as also uttder Section 148 of the Act were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section 151A of the Act read rvith Notification l8l2o22 dated29.03.2022' The said judgment passed by this Court has also been subsequer.rtiy followed in a large number of writ petitions which were allowed on similar telms. ' [(2023) I 56 taxtnann.com 178 (Telangana)] 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 OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIA3, punjab and Haryana High Courr in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Courl in the case of SRI VENKATARAMANA REDDY PATL00LA vs. DEPUTY COMMISSIONER OF INCOMB 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 TAXATIONb which is r*urn on intemational taxation and central circle, High Courl of Himachal pradesh in the of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat HiCh Courr in rhe case of MANSUKIIBHAI 2 lzoz+1464 ITR 430 (Bom) ' [(2024) 156 taxrnann.com 478 (Gauhati)] '[(2024) 165 taxmann.com I 15 (punjab & Haryana)] ' [2024) 167 taxmann.com 4l I (Telangana)] " [2024) 166 taxmann.com 679 (Bombay)] ' [2024) 165 taxmann.com I l3 (Himachal pradesh)] 4 \ DAHYABHAI RADADIYA VS. INCOME TAX OFFICER, WARD 3(3Xr8, Jharkand High Court in the case of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan Fligh Court in the case ,rf SHARDA DEVI CHHAJER vs. INC'(IME' TAX OFFICER & ANOTHER and batch of writ petiti'rnsro which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court in lhe 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 lj to 10 writ petitions. 'Ihat upon the instructions being sough t from the Department, they have been taking a solitary grou nd that the decision of the Bombay High Court in the case <'tl Heraware Technologies Ltd., (2 supra) as also the one whic:h has been decided by this Court in the case of Kanakala Rat'indra Reddy 82024 SCc Online Guj 4012 '2025 SCC Online Jhar 281 72023, R J-JD : 4 9 8 4-DB l 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 Suprerne 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 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 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 Income Tax Department to take appropriate steps to either hold back issuance of notice under Section 14gA 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 thc major High Courts in India are continuously still \ initiating ploceedings under Section 148,4. of the A:t and also initiating proceedings under Section 148 of the Act in contravention to the amendments brought into the Incorne Tax Act pursuant to the Finance Act,2020 as also the Finance A.ct 2021

9. Upon a query being put as to Wh-y can,t this writ petition be disposed of in the teeth of the decision rendered by tnis Court in the case of Kantkala Ravindra Reddy (l supra), leamed Standing Counsel for the lncome Tax Department contends that rhose would unnecessarily burden the Income Tax Department vrhere they would be required to file equal number of SLps :eflore the Hon'ble Supreme Court and it would be furtl.rer burrlening the exchequel of thc Union of India. It was also the conte;-rtion ol the leamed Standing Counsel that no prejudice would be ca.Lrsed ro the interest of the petitioners in case if this writ petition is kert pending till the finalization of the SLPs pending before thr: Hon,ble Supreme Couft and the fact that the petitioner is alreadl, enjoying the benefit of interim protection. Nonetheless, on the ezu{ier qucry of this Court as to why the Income Tax Department hav.r: not come out with a lnechanism to issue appropnate rnstructions r)r to take 7 appropnate steps in ensuring that proceedings under Section 14gA of the Act as also the assessment orders under Section 14g 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 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.

10. As a result 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 Courl allowing writ petitions on the very same issue. The Income Tax authorities concemed ar.e stil[ even now in 2025 also initiating proceedings in contravention to the provisions of Section 151,{ of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Court on an issue which otherwise stands squarely covered by the judgrnent of this Court in the case of Konakala Ravindra Retldy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakula Ruvindra Reddy (1 supra), the Division Bench while reserwing 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 fi'esh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Finance Act, 2020 and the Finance Acl, 2021. The petitioner assessee would bt: entitled to challenge or raise the other legal objections if the Revc'rLue initiates fresh proceedings. The Department has madc 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, rvhich this High Court as u'ell as many other High Courts already held to be bad.

11. It appears that because of the aforesaid liberry th.at this High Court had glanted permitting the Revenue for initirting fresh proceedings as a one-time measure in a faceless rnanner, the Income Tax Department wants to take advantage of tlLe same by protracting these proceedings which would enable them to meet the limitation that rvould otherwise come in the way. Likr:wise, if the writ petition is kept pending for a considerable long period of time and finally at a latel stage if the Hon'ble Supreme Court confirms the decision taken by this High Couft as also by the other High Courts in which the SLPs are still pending, the Incorne Tax ( ./ :qP t'/ -7 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 of these 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 Deparlment 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 Kanakalu Ravindro Reddy (l supra), is a matter of grave concern. The Income Tax Department,s persistent initiation of fresh proceedings, disregarding the established judicial plonouncements, 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 calcurated 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 fcrr iudicial pronouncerrents' particularly when this Court has alrearly provided a balanced approach by preserving both the Revenue':r rights and assesses interests'

13. Another aspect which needs to l-'e considered is that in fact it should have been realized by the [ncome Tax Depaftnre'nt itself and should have tbund out via media in ensuring that proceedings under Sections 148-4 and 148 should not have been issued in a faceless lnanner, at least ti1l the Hon,ble Supreme Court decide the twelve hundred (1200) odd SLPs which it is already seized ofor' at least the Income Tax Deparlment should have found out some remedial steps to ensure that whetever the authorities intend to initiate proceedings under Sections 148-A and 148' other than in a faceless lrlanner, the proceedings should have been deferred without precipitating the matter further intimating the' assessee that they shall initiate appropriate proceedings only aftel the SLP's are decided by the Hon'ble Supreme Courl on the very same issue' This again. the Income 1'ax Department' has not beer able to give a convincing rcply, except for the fact that such a clecision if at a1t ( I I i : L-t_ 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 Dirept 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 *il"h ur" 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 Courl which is seized of the matter has been reluctant in granting any interim protection to the Income Tax Department. yet, the authorities concerned at the State level are not ready to accept the verdict passed by a majority ol High Courts of different States on the same issue; and to make things further worse, the Income Tax Deparlment is showing audacity by issuing notices continuously under Sections l4g_A and 12 ),. 148 through the jurisdictional Assessing Officer whert:as it ought to have been only in the faceless manner.

14. IN thc CASE Of BANK OF INDIA VS. ]\ISSISTANT COMMISSIONER, INCOME TAX'| r, on an issue whether it was justihabte on the part of the Income Tax Departntent in not following an ot'der passed by the adjudicating authoritv only on the ground that the appeals are pending, the Division R':nch of the High Court of Bombay held at paragraph No.25 as unde t', viz., : "25. tr/lr. Paridwalla has rightly 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. lTO13 of which one of us (Justice G.S. Kulkarni) was a member wherein the Court categorically observed that the Revenue having not "accepted" the judgment of the High Court would not mean that till the same is set aside in a manner known to Iaw, it would loose its binding force. Referring to the decision of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Lt'1.14, the Court observed that the approach of the offictals of Revenue of treating decisions being "not acceptable" was criticizerJ by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. " 11zozs| 170 taxmann.com 422 (Bombay)l t2 t' 1t9lt1 1 l3 I rR 589 (Bombay) 1zO2+1 165 taxmann.com 581/300 'laxman 452 (Bornbal ) 'o l9e2l taxmann.com 16/55 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 correctness or otherwise of their ponclusion 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, righ y criticized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers lo give effect to the orders of authorrties higher to them in the appellate hierarchy. lt cannot be too vehemen y emphasized that it is of utmost importance that, in disposing of the quasUudicial 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 drscrpline 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,, 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 14 .\ i rule is not followed, the result will only be undLle 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 learrre:d Aciditional Solicilor General that the observatiorrs made by the High Court, have been harsh on lhe officers. lt is clear that the observations of the Hi1lh Court, seemingly vehement, and apparenl.ly 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 lo the Revenue. We would like to say that the department should take these observations ln the proper spirit. The observations of the High Cotrrt 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 judi,; al 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 fact tl.rat an endeavour is being made whole heartedly to ensure nol to gcnerate further litigation on issues which have been laid to rest by a large number of High Courts all of whom have taken a cont;istent stand that the action of the Income Tax Department being violative of the ! l i I I I 15 Finance Act, 2020 and Finance Act, 2021 . Now, in order to protect the interest of the Revenue as also that of the assessee, it would be trite at this juncture, if we dispose of the writ petition with an observation/direction that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Redtly (l supra) shalt 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. 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 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 Courl would further be burdened which otherwise can be decided and disposed ofas 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 1_6 36,37 and 38 of the order which, for r'eady reference, is reproduced hereunder I i '.. i\

36. For all the aforesaid reasons, the impugned nctices issued and the proceedings drawn by the respon(lent- Department is neither tenable, nor sustainable. The notices so issued and the procedure adopted k)eing per se illegal, deserves to be and are accordinglv set aside/quashed. As a consequence, all the impuSned orders getting quashed, the consequential orders passed by the respondent-Department' pursuant to the nctices ,ssued under Section 147 and 148 would alsc get quashed and it is ordered accordingly. The reaso 1 we are quashing the consequential order is on the princ:iples that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullifred automaticallY.

37. The preliminary obiection raised by the petitiorler is sustained and all these writ petitions stands allow€rd 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 rvhich 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 me:lsure exercising the powers under Article 142 cf the Constitution of lndia, permitted the Revenue to pr()ceed under the substituted provisions, and this Court alk>wing the petitions only on the procedural flaw, the right (' 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 Agaruial, supra.

18. We would only further like to make obseruations 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 Kanakala Rsvindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLp No.3574 of 2024, 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 Courl in the case of Kanakala Rqvindra 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 ol this writ petition in the light of the decision of the Hon,ble Supreme i Court in the pending SLp on the very same issue.

19. Accordingly, the instant writ petition stands allowed in f'avour of the assessee so far as the issue of jurisdiction is concemed. As a consequence, the impugned notice under challenge under Sections 148-4 and 149 stands set aside/quashed. / 18 .- \--ti'. \ I .l The consequential orders, if any, also stand set asidr:'/quashed in sirnilar tertns as have been passed by this High Court in the case of Kankanalu Ravindra Reddy (l rupru). Thttt shall be no order as to costs Consequently, miscellaneous petitions pending, i I any, shall stand closed //TRUE COPY// SD/.B.CHANDRA PRAKASH TY REGISTRAR CTION OFFICER 'I . The Assessment Unit, lncome Tax Department, al e-Assessment Center, New Delhi, Room No.40'1 , 2nd Floor, E-Rampr, Jawaharlal Nehru Stadium, New Delhi - 110 003. 2. The Assistant Commissioner of lncome Tax, Circle 1, Karimnagar, lncome Tax Office, Aayakar Bhawan, Near Natraj Theatre, Karimnagar - 505 001, Telangana

3. The Principal Chief Commissioner of lncome Tax, Andhra Pradesh and Telangana, Hyderabad, Room No.. 922,9th Floor, 'B' Blor:<, l.T.Towers, 10-2- 3, AC Guards, Hyderabad - 500 004, Telangana.

4. One CC to SRl. A. V. A SIVA KARTIKEYA, Advocate IOPUC] 5. One CC to [Vs. J. SUNITHA (JUNIOR SC FOR INCOME rAX) [OPUC] 6. Two CD Copies BIV GJP \ To, @) [, I HIGH COURT DATED:2910412025 ORDER WP.No.28216 of 2024 yR IHE S (i , 1 0 JUL 2025 () T. * f tlrt -." ALLOWING THE WRIT PETITION WITHOUT COSTS tl{