Aniaiah Ache, S,b l',larsimhaiah Ache v. notice

Heard Mr. Sashank D*dU, leamed counsel for the petitioner and Ms. B.Sapna y, learned Junior Standing Counsel for the lncome Tax artment for the respondents. Perused the record.

2. This is a writ-petition whle the procecdings are either challenged tlo the notioes which were issued under Section t48A and 148 of the Income Tax assessment orders those ha ::l 6l (for short 'the Act') or the passed under Section 147 of the Act which have been assailed

3. This writ petition is being talgcn up today only on one of the grounds, that the notices issued der Section l48A of the Act and the subsequent initiation of prqceedings under Sectiorr 148 ol the Act by the jurisdictional As sing Officer, whereas in terms olthe amendment that was broughtr to the [ncorne Tar Act bl rvay of Finance Act, 2021 w.e.f., Ot.fa.Z02l onwards, procecdings )t!trz_F,r .. r:-E;.:.e.. 2 under Section l48A of the Act as also under St:ction 148 of the Act ought to have also been issued and proc,:eried in a faceless manner.

4. The contention of the petitioner is ttrat the issue of proceedings being in violation of the Finance A,ct,, 2021 i.e., the impugned notices under Section l48A and Secti<ln 148 of the Act not being issued in a faceless manner, have alnrady been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions \vere allowed and the proceedings initiated under Section l48A as also under Section 148 of the Acr were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section l5lA of the Act read with Notification 18/2022 dated29.01t.2022. The said judgment passed by this Court has also been subsequently fotlowed in a large nurnbcr of writ petitions which were allowed on sirnilar terms. ' [(202] ) I 56 raxmann.corn I 78 (Telangana)l -\ 3

5. Down the line, we nna tfr[t the same issr.re has also been decided against the Re,uerxre py various High Courts i.e., by the Bombay High Court if, th" of HEXAWARE TECIINOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTIIE , Gauhati High Court in the case "ur" of RAM NARAYAN SAII vs. ON OF INDIAs, punjab and Haryana High Court in the case o JATINDER SINGH BANGU vs. UNION OF IltDIA4, and Te High Court in the case of SRI VENKATARAMANA REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCO TAX5 where the issue was in respect of intemational taxation, bay High Court in rhe case of ABHIN ANILKUMAR SIIAII v+. INCOME TAx OFFICER, INTERNATIONAL TAXATIOI w+rictr is again on inrernarional taxation and central circle, High Court of Himachal pradesh in the case of GOVIND SINGH vs. ME TAX OFFICERT, Gujarar High Court in tre [*" of MANSUKI{BHAI t 1:o:-11464 ITR 430 (Born) ' [( 2o]J ) I 56 taxmann.com 478 (Cafta+i)l '[(2021) t 65 raxmann.com t tS,(punjad & H 1202.+) 167 raxmann.com al I flelangqna)l llO2-l ) I 66 raxrnann.cotn 679 (Bombav)l ll02l) lt j ra\mann.com f r: iffima*rlifr aryana)l adesh)l "/< 4 DAHYABHAI RADADIYA vs' INCOME 'fA'X OFFICER' WARD 3(3XO8, Jharkand High Court in the case of SIIYAM SUNDARSAWvs.UNIoNoFINDIAg,RajaslhanHighCourtin the case of SHARDA DEVI CIIHAJER vs' INCOME TAX OFFICER & ANOTHER and batch of writ petitionsro which stood decided oo 19.03.2024' Similar views have also been taken by the Div ision Bench of Calcutta High Court in the case of GIRDHAR GOPAL DAI'MIA 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 tligh Courls, wc are still confronted with large fiIing of identical matters on daily basis ranging betu'eern 5 to 10 writ petitions. 'l'hat upon the instructions being s'lught from the Department. they have been taking a solitary ground that the of Hexaware decision ol the Bombay High Court in the ':ase Technologics Lld., (2 supra) as also the one which has been decided b1' this Court in the case of Kanakala Ravindra Reddy t202+ scc t)nl-ine Guj 4012 '2025 SCC ()nl-ine Jhar 287 'o12023'. R.f -.1l):4984-Dl) | v ( t' 5 (l supra) has been sudecte.d to challenge in a Special Leave Petition i.e., SLP No.3574 of 2ola before the Flon'ble Supreme Court and the Hon'ble Supreme Court is seized of the matter In addition, there are about 1200 s also filed arising out of the same issue being decided by vario,,s High Courts.

7. To a query being put to the Iparned counsel for the Revenue, they have categorically accepted fact that there is no interim order granted by the Hon'ble S Court in any of these matters pending before it. M while, fresh writ petitions of identical nature are being piled up before this Bench on daily basis and the pendency is getting increaped on matter which otherwise has already been dealt and decided ff this veV High Court itself. 8. On the one hand, even thou the order of this Court that rvas passed as early as on 14.09.2 23 and. more 16 months have lapsed, till date, we do not find ahy remedial steps having been taken by the [ncome Tax Departm{nt to take appropriate steps to either hold back issuance of notice under Section l48A and under Section [48 ol tl.re Act by the juiisdictional Assessing Officer, lather the authorities concemed in Ilhe teeth of series of decisions * 6 by all the major High Courts in India are continuously still initiating proceedings under Section l48A of the Act and also initiating proceedings under Section 148 of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act, 2020 as also the Finance Act 2O2l .

9. Upon a query being put as to why can't this writ petition be disposed of in the teeth of the tlecision rendered by this Court in the case of Kanakala Ruvindra Reddy (l supra), leamed Standing Counsel for the Income Tax Department conten,Js that those would unnecessarily burden the Incorne Tax Departnlent where they would be required to file equal number of IiLPs before the Hon'ble Supreme Couft and it would be furr.ht:r burdening the exchequer of the Union of India It was also the contention of the leamed Standing Counsel that ntt 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 b,:fore the Hon'ble Supreme Court and the fact that the petitioner is already enjoying the benefit of interirn protection. Nonetheless, on the earlier query of this Court as to rvhy the Inconte Tax Departnlent have not come out with a mechanism to issue appropriate instructions or to take 7 appropriate steps in ensuring that f roceedings under Section l48A of the Act as also the assessment orders under Section 148 of the Act are kept in a hold in ttre light ofthe decisions decidod by the various High Courts, it was subrpitted by ttre leamed Standing Counsel that the said steps can onlf be taken at the level of CBDT as any such steps would have to UJ ,*"n pan India and canrrct be limited to any of these jurisdictionaf High Courts.

10. As a result of which. *tut *L are facing is steep increase of litigation day in and day out even though variols orders have been passed by this High Courr allowing writ petitions on the very same rssue. The Income Tax authorities toncemed are still even now in 2O25 also initiating proceedings in contravention to the provisions of Section 15 lA of the Act and as p result by now, more than 600 to 700 petitions have been already got piled up before this High Court on an issue which otherwise ds squarely covered by the judgment of this Court in the case,of Kanakala Ravindru Reddy ( I supral. What is also surprisinq is the fact that though while allorwing the writ petitions in the case of Kanakala Ravindra Reddy (l supra), rhe Division Benoh while reserving the right of the Revenue, has also protected e interest of the petitioners l' \i 8 insofar as the libe*y which was granted to the Revenue for initiating fresh proceedings strictly in accordancr: with the amended provisions of the Act, as amended by the Finance Act, 2020 and the Tinance Act,202l. The petitioner assessee vror:ld be entitled to challenge or raise the other legal objections if the ltevenue initiates fresh proceedings. The Department has madt: Iro endeavour in availing the said liberty that was reserved for thr: Revenue. On the contrary, they have been stitl sticking on to tho s'tand, which this High Court as well as many other High Courts already held to be bad. I l. It appears that because of the aforesaid tibertl' that this HiEh Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a facelr:ss manner, the Income Tax Department wants to take advantagc of the same bY protracting these proceedings which would enab e them to meet the limitation that would otherwise come in the wa'i. Likewise, if the writ petition is kept pending for a considerable lorg period of time and finally at a later stage if the Hon'ble Suprern<' (loutt confirms the decision taken by this High Court as also b1 the other Eligh Courts in which the SLPs arc stilt pending, thc [ncome Tax d Departrnent would get the advantqge of the iiberty that is otherwise protected in favour of the Rgvenue for initiation of fresh proceedings from the disposal oftf"r" matters at a much Iater stage which would be advantageor. *f O".,"n.ial to the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concemed. As a consequence, the Inconre Tax Department gets an extended peri of time for initiation of fresh proceedings. L2. The alarming trend of docke explosion in this Courl despite the clear precedent set in Kanakulo, Ravindra Reddy (l supra), is a matter of grave concem. The [ncofire Tax Department,s persistent initiation of fresh proceedings, disr garding the establisfied judiciat pronouncements, has led to an un recedented surge in litigation with over 600-700 petitions piti up on the same issue. This deliberate approach not only undenrrines the principle of judicial precedent but also srrains rhe judicill resources unnecessarily. The Department's strategy of awaiting t\e Suprerne Court,s decision on pending SLPs while conrinuing lo rnrtrale ftesh proceedings to buy time and circumvent appears to be a calculated move limitation periods, rather than adhgring to the established legal . ]J:::r!E;{i.l,tr;r:+ .t 10 position. Such conduct raises serious ques;tions about the administrative efficiency and the resPot for judicial pronouncements, particularly when this Court has a.lready provided a balanced approach by preserving both the Revenue's rights and assesses interests.

13. Another aspect which needs to be considerecl is that in fact it should have been realized by the [ncome Tax Department itself and shouldhavefoundoutviamediainensuring,thatproceedings under Sections l4E-A and 148 should not havt: lreen issued in a faceless manner, at least till the Hon'ble Supreme Court decide the twelve hundred (1200) odd SLPs which it is already seized olor' at least the Income Tax Department should hav': lburrd out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and l4tl' other than in a faceless manner, the proceedings should ha"'r' hecn deferred without precipitating the matter further intimatiltg the assessee that they shall initiate appropriate proceedings only aftcr the SLP's are decided by the Hon'ble Supreme Court on 1[13 "er1' satne issue' This again, the Income Tax Department, has not b':en ahle to give a convincing rePly, except lor the fact that such a clccision if eet all 7 has to be taken, has to be taken r the whole of India, and which otherrvise has to be by way of a p ticy decision and that too at the level of Central Board of Dire t Taxes. Though the leamed Standing Counsel for the Income ax Departrnent contended that the Delhi High Court dismissed a it petition of similar nature, on the one hand when the High C is struggling to reduce its pendency, such notices which under challenge in this writ petition are forcing tlre assessee knock the doors of this High Court resulting in filing of hundred of new writ petitions which in the long run not only affects the d sposal of the writ petitions but also consumes substantial time o the Bench in hearing these matt€rs again and again on daily b is. Admittedly, in spite of the matter before the Hon,ble Suprem Court having been taken on many occasio{ls, the Hon'ble Su e Court which is seized of the matter has been reluctant in grantin any interirrr protection to the Income Tax Department. yet, th authorities concerned at the State level are not ready to accept t e verdict passed by a majority of High Courts of diflerent States o the same issue; and to make things further worse, the [ncome Tax Department is showing audacit5i by issuing notices continuo sly under Sections 148-4 and G i ilriP;ffi rEz:ri-.-i:- ; l 72 148 through the jurisdictional Assessing Offrce:r rvhereas it ought to have been only in the faceless manner

14. In the case of BANK OF INDIA vs ASSISTANT COMMISSIONER, INCOME TAXrr, on an issue whether it was justifiable on the part of the Income Tax l)ecartment in not fottowing an order passed by the adjudicating atrthority only on the ground that the appeals are pending, the Division Bench of the High Court of Bombay held at paragraph No'25 as under' viz'' : "25. Mr. Paridwalla has rightly drawn out attention to the decision of this Court in Commissioner of lnconne Tax vs' smt' Godavaridevi Sarafr2 as also the recent decisic'n of the co- ordinate Bench of this Court in Samp Furniture (P) Ltd' v' ITO'3 of which one of us (Justice G.S. Kulkarni) was a rnember' wherein the Court categorically observed that the Reventre having not "accepted' the judgment of the High Gourt would not mean that till the same is set as'Hle in a manner known to law' it would loose its binding force. Referring to the decision of the S'upreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd'l{ the Court observed that the approach of the o6i"1315 r:f Revenue of treating decisions being "not acceptable" was criticrzed by the Supreme Court. ln such decision, following aro the relevant observations made by the Supreme Court " 11zoz51 170 taxmann.com 422 (Bombay)l '' 1t9281 l t3 ITR 589 (Bombay) '3 7202+1165 taxmann.com 581/300 Taxman 452 (tlcrrbay) 1tss21 taxmann.com l6155 ELT 433 (SC) 1 ] Derhaos ac*uate{ impugned drders {6. Sri Reddy is right in seying that the officeE were afly mala fides in passirE the 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 Rpddy overlooks is that we are not concemed here the correctness or With otheMise of their @ncluqion or of any factual malafides but with the fact that the offrcers, in reaching in their conclusion, by-passed two appellate orders in regard to the same issue which were placed before thern, one of the Collector (ApOealsy and the other of the Tribunal. The High Cou( has, in our view, righUy criticized this conduct of the flssistant Collectors and the harassment to the assessFe caused by the faiture of these officers to give effect to the orders of authonlies higher to them in th appellate hierarchy. tt cannot be too vehemen y e(nphasized that rt is of utmost importance that. fn d,.*.,nn of the quasijridicial issues before the revenue officers are bound by the decisions of thF appellate authorities The order of the Appellte Cotlpctor is binding on the Assistant Colleclors working wfh;n tris jurisdiction and the order of the Tribunal is bi n{rng upon the Asststant Collectors and the Appellate ;ollectors who function c under ttE jurisdiction of the Trr! unal. The principles of judiciat disciptine require that rf re orders of the higher appellate authoritbs should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority rs not "acceptable,, to the department - in itself an o b,ectronable phrase - and is the subjecl matter of an appeal can furnish no g round for not fo owing it unt] )ss its operation has been suspended by a competerf t court. lf this healthy fn, F d ?_r::!'jiRY';E: I . ..;.-- - 14 rule is not followed' the result will only be undue harassment to assesses and ctraos in adm nistration of tax laws

12. We have dealt with this aspec{ at sonre length' because it has been suggested by the leamed Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. lt is clear that the observations o' the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which' if allc'wed to become widespread, could result in considerable harassment to the assesses-public without zrny benefit to the Revenue. We would like to say that the department should take these observaticns in the proper spirit. The observations of the lligl Court should be kept in mind in future and the utrnost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial drscipline and the need for giving effect to th'-l orders of the higher appellate authorities which are binding on them." I 5. What is worrying this Bench more is the f'act that an cndeavour is being made whole heartedly to ensure not to generate hrrrher litigation on issues which have been laid to rest by a large rrunrber ol l{igh Courts all of whom have taken I consistcnt stand that the action of the lncome Tax Department being violative of'the Finance Acg202O and Finance 2021 . Now, in order to protect the interest of ttre Reventre as also that ofthe assessee, it would be trite at this juncture, if we dis of the writ petition with an observation /direction that the dis of the instant writ petition in terms of the judgrrent rendered this High Court in the case of Kankanala Ravindra Reddy (l st ra) shall however be subject to the outcome of the SLPs which filed by the Income Tax Department and which is pending sideration before the Hon'ble Supreme Court.

16. In the given facts and circ tances, this Bench is of the considered opinion that unless and until we do not timely dispose of mattem which are squarely co by the decision of this Court and which stands fortified by the decisions of the various other High Courts on the very same iss the pendency of this High Court would further. be burdened hich otherwise can be decided and disposed ofas a covered matter.

17. So far as the interest of the venue is concemed, rve are of the considered opinion that the inte of the Revenue ['ras already been considered ard protected, as h been observed in paragraphs 76 36,37 and' 3 8 ofthe order which, for ready referenr:e, is reproduced hereunder:

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent- Deparlment is neither tenable, nor stlstainable 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 respondenhDepartment pursuant to tle notices issued under Section 147 and 148 wouk, also get quashed and it is ordered accordingly. The 'eason we are quashing the consequential order is on th€r principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders atso gets nulhlied automaticallY.

37. The preliminary objection raised by the F'etitioner is sustained and all these writ petitions stands ;rllowed on th s very iurisdictional issue. Since the impugned notices and orders are getting quashed on the point of jur-isdrction, we are not anclined to proceed lurther and decide the other issues raised by the Petitbner which stands reserved to be raised and conten'led in an approprrate proceedings. 38 Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one-tim€ measure exercising the powers under Article 14il of the Ccnstitution of lndia, permitted the Reventle to proceed under the substituted provisions, and this Oourt allowing the pettions only on the procedural flaw the right r ( l l I i , I I I I 1 l I i I I I l t7 confened on the Reverue proced further if ttEy so order of the Suprenre frcu Agaruval, supra. ld remain reserved to nt from the stage of the h the case of Ashish

18. We would only further like mate observations that since we are inclined to dispose of the writ petition, conscious of the fact that the earlier ord€r of High Court in the case of Kanakala Ravindra Reddy (l xt ) is subjected to challenge before the Hon'ble Supreme Co in SLP No.3574 of 2024, preferred by the Income Tax ent, we make it clear that allowing of the instant writ petiti is subject to outcome of the atbresaid SLP preferred by the Rev against the decision of this High Court in the case of Kan Ravindra Reddy (1 supra) This, in other words, would mean t either of the parties, if they so want, may move an appropriate tion seeking revival of this rvrit petition in the light of the dec ion of the Hon'ble Suprerne Court in the pending SLP on the same lssue I 9. Accordingly, the instant wri petition stands allowed in lavour of the assessee so far as the issue of jurisdiction IS concerned. As a consequence, impugned notice under challenge under Sections 148-..4' and 148 stands set aside/quashed. 1l ,/' 18 The consequential orders, if any, also stand s,3t aside/quashed in similar terms as have been passed by this High ,Court in the case of Kankanala Ravindra Reddy (l supra). There shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed. //TRUE COPY// sD/- Ir. PADMANABHA REDDY DTPUTY REGISTRAR \ Y SECTION OFFICER - ----'- l,\, To, 1 . lncome Tax Officer Ward 1 , Warangal, D.No. 1-8-6'10, 3rd Floor, Mayuri Complex, Opp TSNPDCL Bhawan Nakkalagufta, l'lanamkonda, Warangal- 506001

2. The Principal Chief Commissioner of lnmme Tax A,P and TS, 'l0th Floor, C- Block, l.T. Towers, 10-2-3, A.C. Guards, Hyderabarl-tiOO004.

3. The Assessment Unit, lncome Tax Department, National Faceless Assessment Centre, Delhi, tvtinistry of Finance, Rotln No.4O1,2nd Floor, E- Ramp, Jawaharlal Nehru Stadium, Delhi-1 10003

4. One CC to SRl. DUNDU SASHANK Advocate [OPUC] 5. One CC to SRI BOKARO SAPNA REDDY (Jr. SC FOR INCOME TAX) loPUCl

6. Two CD Copies KKSr:r o. crPwb o" \-4-/ /\ I j HIGH COURT DATED:2510412025 -.-"'z '':-: ri t 51..\ ,1 . 'a, ')t' f4 2 3 A|JB 2025 /,/, /,j j,; i,' \r :- ORDER WP.No.28084 ot 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS