PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY v. The income tax officer ward 1

THB HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITION No.2 8959 of2024 ORDI'lR, (1t,r !httt hlL'Sri Ju:ritc P.Sam K,rhy) llcard Mr'. 'l'.Chaitnya Kumar, ledrned counsel lor the petitioner and Ms.B.Sapna RSdy, learned Junior Standing Counsel for the Income Tax Department for the respondents. Peruscd the rccord.

2. 'l-his is a writ petition where the proceedings are either challcnged to the notices which were issued under Section l48A and 148 of lhc lncorne Tax Act, 1961 (for short 'the Act') or the assesslrellt orders those have been passed under Section 147 of the Act rvhich have been assailed. J 'l'his writ petition is being taken up today only on one of the grounds, that lhe notices issued under Section 1484. of the Act and the subscquent initiation ofproceedings under Section 148 of the Act by the jurisdictional Assessing Officer, whereas in rerms of'the amendrnent that was brought to the Income Tax Act by way o1' Finance Act, 202 I w.e.f., 01.04.2021 onwards, proceedings ) under Section l48A of the Act as also under Sect on 14g of the Act ought to have also bcen issued and proceederl in a laceless manner

4. The contention of' the petitioner is that the issue of proceedings bcing in violation ol the Finance Acr, 202 I i.e., the impugned notices under Scctidn l48A and Section I4g of the Act not being issued in a f'aceless manner, have already heen dealt with and decided by this Courl in rhe case of I(ANKANALA RAVINDRA REDDY vs. INCOME-TAX OFF|CERT decided on 14.09.2023 whereby a batch ol writ petitiolts w( rc ailowed and the proceedings initiated under Section r4gA as als. under Section 148 of the Act were hcld to be bad rvith consequenti rl r.eliefs on the ground of it being ir.r violation of trre provisions of Section l51A of the Act read with Notification lB/2022 dated 29.03..1022. The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were allorvcd on similar terms. '[(2023) 156 raxrnann.corn 178 (Tclaneana)] 3

5. Down the line, we find that the same issue has also been decided against the Revenue by vanous High Courts i.e., by the Bombay High Courl 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 INDIAI, and Telangana High Court in the case of SRI VENKATARAMANARBDDY PATLOOLA VS. DEPUTY COMMISSIONER OF TNCOIUE 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 intemational taxation and central circte, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. TNCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI ' Tzoz+1464 rtR 430 (Bom) '[(2024) 156 taxmann.oom 478 (Gauhati)] " tQO24) [65 taxmann.com I l5 (Punjab & Haryana)] '12024) 167 taxmann.com 411 (Tclangana)l " [2024) 166 taxmann.com 679 (Bombay)] '12024) 165 taxrnann.corn I l3 (Himachal Pradesh)l 4 I j DAHyABHAI RADADIYA vs. INCOT{I TAX OFFICER, WARD 3(3X5)8, Jharkand Fligh Court in rhe case of SHyAM STINDAR SAW vs. UNION OF INDIAe, Rrrjasrhan High Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHIER and batch of v,rit petitionsro which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcurta High Crurt -'urt rn the case of GTRDHAR GopAL DALnr ra ,.^-,'^'."t^ .. ILMIA vs. UNION ()F INDIA & ORS (M.A.T 1690 of 20.23), decided on 25.09.2024. 6. Even though the same issue having been number of High Coufts, we are still confronted r identical mafters on daily basis ranging betwr petitions. That upon the instructions being I Department, they have been taking a solitary decision of the Bombay High Court in the car Technologies Lrd., (2 supra.) as also the one r decided by this Court in the case of Kanakalo A vith large filing of :en 5 to I0 writ ;ought from the decided by a large ground that the vhich has been e of l{exaware 'avindra Redtly t2024 sCC online Gui '2025 SCC Onl-ine.rhar ' " [2023 : RJ_JD:4984_DB 4012 287 l 5 (I supra) has been subjected to challenge in a Special Leave Petition i.e., SLp No.3.574 of 2024 before the Hon,ble Supreme courl and the Hon'ble Supreme courl is seized of the matter. In addition, there are abou[ 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 fbr the Revenue, they have categorically accepted the fact that there is no interim order granted by the Hon,ble Suprerne Court in any of these matters pending before it. Meanwhile, fresh writ petitions of identical nature are Ueing iit"a up betbre 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 da1e, we do not find any remedial steps having been taken by the Income Tax Depaftrnent to take appropriate steps to either hold back issuance of notice under Section l4gA and under Section 148 of the Acr by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions 6 by atl the major High Courts in India are r'ontinuously still initiating proceedings under Section 1484 of rhe Act and also initiating proceedings under Section 148 ,rf the Act in contravention to the amendments brought into the [ncome Tax Act pursuant to the Finance Act,2020 as also the Finance Act 2021

9. Upon a query being ptit as to why can'r this writ petition be disposed of in the teeth of the decision rendered bv this Court in the case of Kanakala Ravindra Reddy (l supra), leamed Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Deparlnrent rvhere they would be required to file equal number of S,Lps betbre the Hon'ble Supreme Court and it would be furthe r burdening the exchequer of the Union of India. It was also the r:ontention of the learned Standing Counsel that no prejudice would be caused to the interest of the petitioners in case if this writ petition is kept pending tili the finalization of the SLPs pending befcre rhe Hon,ble Supreme Court and the fact that the petitioner is alreacly enjoying the benefit of interim protection. Nonetheless, on rhc earlier query of this Court as to why the Income Tax Deparlmer: t have not come out with a mechanism to issue appropriate instructions or to take 7 appropriate steps in ensuring that proceedings under Section l48A of the Act as also the assessmcnt orders under Section 148 of the Act are kept in a hold in the light ofthe dccisions dedcided by the various High Courts, 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 rve are lacing 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 Income Tax authorities concerned are still even now in 2025 also initiating proceedings in contravcntion to the provisions of Section 151A of the Act and as a result by now, rnore than 600 to 700 petitions have been already got piled up belore this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case ol Kanokola Ravindra Reddy (1 supra). What is also surprising is the lact that though while allowing the writ petitions in the case ol Kunakala Ravindra Reddy (1 supra), the Division Bench whilc reserving the right of the Revenue, has also protected the interest of the petitioners 8 insofar as the liberty which was granted to t re Revenue lor l initiating fresh proceedings strictly in accordance r,,ith the amended provisions of the Act, as amended by the Financr' ,,\ct, 2020 and the Financc Act,202l. The petitioner assessee wo rld be entitled to challenge or raise the other legal objections if the llcvenue iniriates fresh proceedings. The Department has madc rro endeavour in availing the said liberty that was reserved lor the lLs'enue. On the contrary, they have been still sticking on to the stand, which this High Courr as well as many other High Courts already held to be bad. I l. It appears that because of the aforesaid libertl, that this l.tigh Court had granted permitting the Revenue fbr initiating ticsh proceedings as a one-time measure in a facelt'ss tnanncr. the Income Tax Department wants to take.advantagc ol'the sarne by protracting these proceedings which would enable ltcm to nteet the limitation that would othenvise come in the way. t.ikewise, il the writ petition is kept pending for a considerable long period of tirne and finally at a later stage if the Hon'ble Suprernc (lour1 conflnns the decision taken by this High Court as also b1 the other l{igh Courts in r,,,hich the SLPs are still pending, r rc [ncome ']-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 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 concefiled A; 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'Kanakaltr Ravindra Reddy (l supra), is a matter of grave concern. The Income Tax Departrnent,s persistent initiation of fresh proceedings, disregarding the esrablished 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 Depaftment'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 lirnitation periods, rather than adhering to the established legat ,{ l l 10 position. Such conduct .raises serious questions about the administrativc efficiency and the respecl for j udiciat pronouncements, particularly when this Court has ah'eady providcd a balanced approach by preserwing both the Rev,:nue's rights and assesses rnterests

13. Another aspect which needs to be considere I is that in fact it should have been realized by the Income Tax DeprL(ment itself and should have found out .via media in ensuring .hat proceedings under Sections i48-A and i48 should not have :ccn 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 ofor, ar least the lncome Tax Department should have lound out sonle remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 14[i, other than in a faceless manner, the proceedings should have been del-erred 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 Court on the rery same lssue. This again, the Income Tax Department, has not been able to give a convincing reply, except for the fact that such a rlecision if 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 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 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 Court resulting in filing of hrtndreds of new writ petitions which in the long run not only afftcts 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 ol 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 Depadment. 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 lurther worse, the Income Tax Department IS showing audacity by issuing notices continuously under Sections 148-A and 72 148 through the jurisdictional Assessing Officer whereas it ought .l -r1 to have been only in the faceless maruter.

14. In the case of BANK OF INDIA rs. ASSISTANT COMMISSIONER, INCOME TAXI I, on an issue whether it rvas justifiabte on the part of the Income Tax Dr:partment in not foltowing an order passed by the adjudicating aurhority 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. lVr. Paridwallq has righfly drawn out a ention 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. lTOi3 of which one of us (Justice G.S. Kulkarni) was a mernber, wherejn the Court categorically observed that the Revenle having not 'accepted" the ludgment of the High Court would nol mean that till the same is set aside in a manner known to law, it \^,ould Ioose its binding force. Referring to the decision of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporati,tn Ltd.14, the Court observed that the approach of the officials of Revenue of treating decisions being "not acceptable,, was crit cized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Couri. ljttzozsl 170 raxmam.com 422 (Bombay)l '' lle78l ll3 ITR 589 (Bombay) " TZOZ+1 165 taxmann.com 581/300 Taxman 452 (Bonrbay) 'o lgeZl hxmann.com l6155 ELT 433 (SC) ri, 13 "6. Sri Reddy is perhaps rrght 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 Sfl Reddy overlooks is that we are not concerned here with the correctness or otherwtse of their conclusion or of any factual malafides but with the fact that the officers, in reaching in their conclusion, by-passe! 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, righfly crittcized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers fo grve effect to the orders of authorities higher to them in the appellate hierarchy. lt cannot be too vehemently emphasized that it is of ulmost tmportance that, in disposing of the quasijudlcial 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 judlcral discipline require that the orders of the higher appellate authoflties should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not ,,acceptable,, the depa(ment - 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 1t 1-4 rule is not followed, the result will only be undue harassment to assesses and chaos in admin stration of tax laws.

12. We have dealt with this aspect at some length. because it has been suggested by the earned Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. lt is clear thai the observations of " e High Court, seemingly vehement, and apparen y unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, rf allo,rued to become widespreEd, could result in conskjerable harassment to the assesses_public without any benefit to the Reveriue. We would like to say t at the department should take these observations jn 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 lhe requirements of ludicial discrpline and the need for giving effect to the orders of the higher appellate authorities which are t rnding on them."

15. What is \lrorrying this Bench more is the fact that an endeavour is bcing made whole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of Fligh Courts all of whom have taken a c onsistent stand that the action of the Income Tax Department being violative of thc 15 lrinanceAct.2020andFinanceAct,202l'Now,inordertoprotect the interest oi thc Revcnue 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 disposat of the instant writ petition in terms ol'the judgment rendered by this High Court in the case of Konkanultr Rnvindra Redtly (1 supra) shall however be subject to the outcotne of the SLPs which 'were hled by the Income Tax Departtrent and which is pending consideration before the Hon'ble Suprernc Court.

16. In the given lacts pnd circuntstances' 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 fortihed by the decisions of the various other lligh Courts on the very same issue, the pendency of this High Court would funher be burdened which otherwise can be decided and disposed of as a covered matter'

17. So lar 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 of the order which. for ready reference. is reproduced hereunder

36. For all the aforesaid reasons, the rmpugned notices issued and the proceedings drawn by the ft)sponden! Department is nerther tenable, nor sustainable. The notices so issued and the procedure adcpted being per se rllegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential ordlrs passed by the respondent-Department pursuant to the notrces issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The Teason we are quashing the consequential order is on ther principles that when the in'itiation of the proceedings itself was procedurally, wrong, the subsequent orders also gets nullified automalically.

37. The preliminary ob.iection raised by the f etitioner is sustained and all these writ petitions stands itllowed on this very jurisdictional issue. Since the impugred 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 petiti()ner which stands reserved to be raised and conten(led tn an appropfl ate proceedings.

38. Since lhe Hon'ble Supreme Court had, ln the case of Ashish Agarwal, supra, as a one{ime measuTe exercising the powers under Article 142 of the Constitution of lndia, permttted the Revenue 1o proceed under the substituted provisions, and this Cou rt allowing the petitions only on the procedural flaw, the right HEiSSrer-'._ r--{"1 L7 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 Aga:'wal, suPra.

18. We would only lurther like to make observations that since u,e are inclined to dispose ol the instant writ petition, conscious of the fact that the earlier order of this High Court in the case of Rsnakcrla Ravindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No'3574 of 2024' preferred by the tncorne 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 ofthis High Court in the case of Kanakala Ravindra Reddy (1 sttpra)' This, in other words, would tnean that either of the parties' if they so want, may move an appropriate petition seeking revival of this writ petition in the tight of the decision of the Hon'ble Supreme Coun in the pending SLP on the very same issue'

19. AccordingtY, the instant writ petition stands allowed rn favour of the assessee so far as the issue of jurisdiction 1S concerned. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed I I l 18 The consequential ordels, if any, also stand set aside/quashed in similar tems as have been passed by this High Court in the case of Kankanula Rovindra Reddv (l supra). Tl.rerc ;hall be no order as to costs Consequently, miscellaneous petitions pending, if any, shall stand closed //TRUE COPYII ^'L?;J{^"rTtt6,'Jr'#F tuCTIgN OFFICER SE To, 1 a I:;'i tij#?'fl[:Ii:,ily,.zlt-1 {har1mqr1/ rncome rax orrice, Rajeev Gunt i!,1",td,[:T 1 | "*kffi ffi Ii#; I i:ffit;; ;; S j!;,wational Faceless Assessment Center, Income Tax Department, New 'ffi;rl8:llsib3;,p.,f lff :iIf,",[.J€;#il?l#8,,,,iii,1",""f 5. The Secretary to the 6. One CC to SRt THANNERU CHA|TANYA KUMAR, Acvocate. tOpUCl ' ,oairr"r3," 8. Two CD Copies. to I\4s.BoKARo sApNA REDDY, (Jr. SC FoR TNCOME TAX). Finance, u".ioir,ii:, $s;#fr::!.,88Bin,"n, o' Revenue, Ministry or ,s:?#:,1,"J BSK GJP fr M I HIGH COURT DATED:01 10512025 ORDER WP.No.28959 of 2024 ./ ,,1'.!.' \\ 10 stP 2025 Dr.SF,i ,\ - " ALLOWING THE WRIT PETITION WITHOUT COSTS PT qw) >t I