High Court · 2025

Order

(per Hon'ble Sri Justice P.Som Koshy) Heard Mr. A.V.A.Siva Kartikeya, leamed counsel for the petitioner and Ms. B.Sapna.Reddy, learned 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 I4gA and 148 of the Income Tax Act, 196l (for short .the Act') or the assessment orders those have been passed under Section 147 of the Act which havc been assailed.

3. This writ petiiion is being taken up today only on one of the grounds, that the notices issued under Section l48A 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 arnendment that was brought to the Income Tax Act by way of Finance Act, 2021 w.e.f., 01.04.2021 onwards, proceedings \\ t 2 \\ under Section 1484 of the Act as also under Sectior.r I 48 of the Act ought to have also been issued and proceeded in a laceless manner.

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act, 2021 i.e., thc impugned notices under Section l48A and Section 148 ol'the Act not being issued in a faceless manncr, have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY, vs. INCOME-TAX OFFICF'Rr decided on 14.09.2023 whereby a batch ol writ petitions were rrllowed and the proceedings initiated under Section 148A as also uttder Section 148 of the Act were hetd to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section 15lA of the Act read with Notification l8l2o22 dated 29.03.2022. The said judgment passed by this Court has also been subsequently lollowed in a large number of writ petitions which were allowed on similar terrns 'l(2023) I 56 taxmann.corn 178 (Telangana)l J

5. Down the line, we find that the same issue has also been decided against rhe Revenue by various High Courts i.e., by the Bombay High Cqurt in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIA3, punjab and Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and 'felangana High Court in the case of SRI VBNKATARAMANA.REDDY PATLOOLA vs. DEPUTY COMMISSIONER Op 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, High Court of Himachal pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat Hieh Court in the case of MANSUKHBHAI 2 lzoz+1464 ITR 430 (Bom) ' l(2024) 156 taxmann.corn 478 (Gauhati)l " [(2024) 165 taxmann.com I l5 (Punjab & Haryana)] '[2024) 167 taxrnann.corn 4l I (Tetangana)] " [2024) 166 taxmann.com 679 (Bombay)] '[2024) 165 taxmann.com I l3 (Flimachal pradesh)] o f, t 4 DAHYABHAI RADADIYA vs. INCOME TAX OFFICER, WARD 3(3XO8, Jharkand High Court in the case of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan Ftigh Courl in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch'of writ petitionsr0 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. UNION OF I\DIA & ORS (M.A.T 1690 of 2023), deiided on25.09.2024

6. Even though the same issue having been decrded by a large number of High Courts, we are still confronted with large filing of identical matters on daily basis ranging between 5 to l0 writ petitions. That upon the instructions being sought from the Department, they have been taking a solitary ground that the decision of the Bombay High Cout in the case o1' Herawore Technologies Lttl., (2 supra) as also the one wirich has been decided by this Court in the case of Kanakala Rtvindra Reddy r2\2q SCC Online Guj 4012 "2025 SCC Online Jhar287 12023 : RJ-JD : 49 84-DB l o ' 5 (1 supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 belore the Hon'ble Supreme Court and the Hon'ble Supreme Court 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. fri 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 Supreme Court in any of these matters pending before it,'' Meanwhile, fresh writ petitions of identical nature are beirlg 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, titl date, we do not find any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance of notice under Section l48A and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions J 6 by all the major High Courts in India are continuouslv 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 Ircome Tax Act pursuant to the Finance Act, 2020 as also the Finance z\ct 202 I .

9. Upon a query being put as to why can't this rvrLt petition be disposed of in the teeth of the decision rendered by this Court in the case of Kanakala Ravindra Reddy (l supra), Ieanred Standing Counsel for the Income Tax Department contends that those tvould unnecessarily burden the Income Tax Department where they would be required to file equal number of SL I's befbre the Hon'ble Supreme Court and it would be further btrrdening the exchequer of the Union of India. It was also the cc,nt,:ntion of the learned Standing Counsel that no prejudice would bc taused to the interest of the petitioners in case if this writ petition is kept pending till the finalization of the SLPs pending before the Hon'ble Supreme Court and the fact that the petitioner is already enjoying the beneht of interim protection. Nonetheless, on tlre carlier query of this Court as to why the Income Tax Department have not come ** out with a mechanism to issue appropriate instructiot rs or to take -il 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 leamed Standing $ornr"l 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 jurisdictiofial 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 Cou[ allowing writ petitions on the very same issue. The Income Tax authorities concemed are still even now in 2025 atso initiating proceedings in contravention to the provisions of Section 15lA of the Act and as a result by now, more than 600 to 700 petitions have been already got pited up before this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanokalu Ravindra Reddy ( 1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakalu Ravindra Reddy (l supra), the Divisiqn Bench while reserving the right of the Revenue, has also protected the i;G of the petitioners a { E 8 insofar as the liberty which was granted to the Revenue lor initiating fresh proceedings strictly in accordance witl.r the amended provisions of the Act, as amended by thc Finance 'A'c" 2020 and the Finance Act,202l. The petitioner assessee woulrl b': entitled ttr challenge or raise the other legal objeitioris if the Reverrue initiatcs fresh proceedings. The Department has made no endeavour in availing the said liberty that was reserved for the Revenue On thc contrary, they have been stilt sticking on to the stand' which this High Court as well as many other High Courts alread'" held to be

11. It appears that because ofthe aforesaid libertl' that this [{igh Court had granted permitting the Revenue for initiating fi'esh proceedings as a one-titne measure in a faceless manner' thc Income Tax Department wants to take advantage of the sanre by protracting these proceedings which would enable thenl to meet the limitation that would otherwise come in the way l-ikeu'ise' if the writ petition is kept pending for a considerable long' period of tirre and finally at a later stage if the Hontble Supreme Court confirms the decision taken by this High Court as also by thc other l-ligh Courts in which the SLPs are still pending, the Incotnc 'l-ax 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 ofthese matters at a much later stage which would be advantageous and beneficial to the Revenue and rvould be equally disadvantageous and detrimental so lar as interest of the assesses are concemed. As a consequence, the Income Tax Department gets an extended period of time lor initiation of fresh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanakala Ravindra Reddy (l supra), is a matter of grave concern. The Income Tax Department's persistent initiation of fresh proceedings, disregarding the established judicial pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions piling up on the same issue. This deliberate approach not only undermines the principle of judicial precedent but also strains the judicial resources unnecessarily. The Department's strategy of awaiting the Supreme Court's decision on pending SLPs while continuing to initiate fresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than adhering'to the established tegal I 10 position. Such conduct raises serious questions about the administrativeefficiencyandtherespectfor!udicial pronouncements, particularly when this Court has a:rerrdy provided a balanced approach by preserving both the Revettuc-'s rights and assesses interests.

13. Another aspect which n"td' to be considered is that in fact it should have been realized by the Income Tax Department itself and should have found out vja media in ensuring that proccedings under Sections 148-{ and 148 should not have been 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 of or' at least the [ncome Tax Department should have forrnd out some remedial steps to ensure that wherever the authorjties intend to than in a initiate proceedings under Sections 148-4 and 148' 'lther faceless manner, the proceedings should hav': oeen deferred without precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only aliel the SLP's are decided by the Hon'ble Supreme Court on the very same issue' This again, the Income Tax Department' has not b'een able to give a convincing reply, except for the fact that such a decision if at all I 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 level 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 thc 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 matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the matter has been reluctant in granting any interim protection to the lncome Tax Department. Yet, the authorities concerned 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 Income Tax Department IS showing audacity by issuing notices continuously under Sections 148-A and ..{ a2 148 through the jurisdictional Assessing Olficer w[ereas 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 isstte whether it was justifiable on the part of the Income Tax D-'prLflrnent in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Divisior Bench of the High Court of Bombay hetd at paragraph No.25 as under, viz , : "25. I\ilr. Paridwalla has rightly drawn out attention to the decision of this Court in Commissioner of lncome Tax vs' Smt' Godavaridevi Saraf'2 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 law, it would loose its binding force. Referring to the decisrdn of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.'4, the Court observed that the approach of the officials of Revenue of treating decisions being "not acceptable" was criticzed by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. " 11zo2s1 170 taxmann.com 422 (Bombay)l '' 1t9;s1 I l3 ITR 589 (Bombay) " 12Oz+1165 taxmann.com 581/300 Taxman 452 (Bombay) 'o 1t992ltaxmann.com 16155ELT 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 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 lo the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. lt cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasijudicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellte Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to the department - in itself an objectionable phrase - and rs 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 I "b t4 rule is not followed, the result will only be undue harassment to assesses and chaos in administratton of tax laws. 'the

12. We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that observatrc ns made by the High Court, have been harsh on the officers. lt is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widesprepd, could result in considerable harassment to the assesses-public without any benr:fit to the Revende. 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 ad.judicating authorities and the appellate authorities to the requirements of jtrdic.ral discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them."

15. What is worrying this Bench more is the lact that ar.t endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the Income Tax Department being violative of the :rri-'t:&--r .,!-_ I' 15 Finance Act,202O and Finance Act,202l. 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 tligh Court in the case of Kankanala Ravindra 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. 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 forlified by the decisions of the various other High Courts on the very same issue, the pendency of this High Court would further be burdened which otherwise can be decided and disposed of as a covered matter. 17 . So far as the interest of the Revenue is concemed, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs t6 36,37 and,3 8 of the order which, for ready reference, ;s reproduced hereunder:

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respoldent- Department is neither tenable, nor sustainable. The notices so issued and the proledure adopted being per se illegal, deserves to be and are accordingly set aside/quashed. As a donsequence, all the impugned orders getting quashed, the consequential orders passed by the respondenLDepartment pursuant to the notices issued under Section 147 and 148 would also get quashed and it is,brdered accordingly. The reason we are quashing the consequential order is on the principles that when th6 initiation of the proceedings ilself was procedurally wrong, the subsequent orders alsc 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 raised and contended in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in the case of Ashish Agarual, supra, as a one-time measure exercising the powers und6r Article 142 ot the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, lhe right 77 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 Kanakala Ravindra 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 Court in the case of Kanakala Ravindra 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 of this writ petition in the light of the decision of the Hon'ble Supreme Court in the pending SLP on the very same issue

19. Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction concemed. As a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed I I t 18 -.1 The consequential orders, if any, also stand set aside/quashed in similar terms as have been passed by this High Court in the case ol Kunkanala Ravindra Reddy (l supra)' There shall be no order as to costs Consequently, miscellaneous petitions pending' i1' any' shall stand closed. sD/- P P#DJtN^BREt,EiRRI //TRUE COPY// SECTI OFFICER To, 1 2 3 ThelncomeTaxofiicer,WardT(1)'HyderaPad,-S,ignRl'reTowers,Sy. [H:,R,"JJ*rffi H[td#?ri'1FL"JxR51','Bt.,g;1';5""'B$31ifl 084, Telangana 11"" Irilfi f.*S :I1T6"r"Sff : +ffi ru", Is', 1 H vd e ra b a d' I r rowe rs Ac ft ::f B'Ji.::*:li'R"jro",l'*P8B?EHI;I1l"Jfl New Delni - 1 10 003

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6. Two CD CoPies KKS GJP /7 / HIGH COURT DATED:2910412025 De [] -tt ORDER WP.No.28747 of 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS lt- t