Writ Petition No. 28896 of2024 · High Court · 2025

ORDER: (per Hon'ble Sri Justice p.Sam Koshy) Heard Mr. T.Chaitanya Kumar, learned counsel for the petitioner and Ms.B.Sapna Reddy, learned Junior Standing Counsel for the Income Tax Deparlment for the respondents. Perused the record.

2. This is a writ petition where the pr.oceedings are either challenged to the notices which were issued under Section r4gA and 148 of the Income Tax Act, 196l (for short,rhe 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 l4gA of the Act and the subsequent initiation of proceedings under Section l4g of the Act by the jurisdictional Assessing Officer, whereas in tenns 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 Section 148A of the Act as also under Section 148 of the Actoughttohavealsobeenissuedandproceededinalaceless manner.

4. The contention of the petitioner is that the issue ol proceedings being in violation of the Finance Act' 2021 i'e'' the impugned notices under Section 148A and Section 148 of the Act not being issued in a faceless manner, have already been dealt ivith and decidecl by this Courl in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section i48A as also under Section l43oftheActwereheldtobebadwithconsequentialrelielsonthe ground of it being in violation of the provisions of Section 1 51 A of the Act read with Notification 1812022 dated 2g '03 '2022 The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were allowed on similar terms. '[(2023) 156 taxmann.corn I 78 (Telangana)] ; I I ! i I t i , I ,-l

5. Down the line, we find that the same issue has also been decided against the Revenue by various High Courls 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 rhe case of RAM NARAYAN SAH vs. UNION OF INDIAT, punjab and Haryana High Court in rhe case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the oase ol SRI VENKATARAMANA REDDY PATLOOLA vs. DE,pUTy COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation, Bombay High Courl 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 High Court in the case of MANSUKHBHAI ' Tzoz+1464 ITR 430 (Bom) ' [(2024) 156 taxmann.com 478 (Gauhati)] " 1Q024) 165 raxmann.com I l5 (punjab & Haryana)l '[2024) 167 taxmann.com 411 (Telangana)] "_l?024) 166 taxmann.com 679 (Bombay)l '12024) 165 taxmann.com l 13 (Himachai pradesh)l 4 DAHYABHAI RADADIYA VS. INCOME TAX OFFICER, WARD 3(3X5)8, Jharkand High Court in the case of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs. TNCOME TAX OFFICER & ANOTHER and batch of writ petitionsr0 which stood decided on 19.03.2024. Similar views have also been takcn by the Division Bench of Calcutta High Court in the case of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 o12023), decided on25.09.2024.

6. Even thougl.r the same issue having been decided by a large number of High Courts, we are still confronted with large filing o1' identical matters on daily basis ranging between 5 to 10 writ petitions. That upon the instructions being sought from the Deparlment, they have been taking a solitary ground that the decision of the Bombay High Court in the case of Hetawtre Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakalu Ravindra Reddy t2024 SCC Online Guj 40 l2 '2025 SCC Online Jhar 287 12023, RI- JD : 49 84-DB I t n ,1 5 (1 supra) has been subjected to chalrenge in a special Leave Petition i.e., SLp No.3574 of 2024 before the Hon,ble Supreme Courl 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.

7. 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 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 Courl that was passed as earry as on 14.0g.2023 and more 16 months have tapsed, 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 concerned in the teeth of series of decisions 5 by all the major High Courls in India are continuously still initiating proceedings under Section 148,{ 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 2021'

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 Courl in the case of Konaktrlo Ravindra Retldy (l supra), Ieamed Standing Counsel for the Income Tax DepaLtn-rent contends that those would unr-recessalily burden the lncome Tax Department where they would be required to file equal number of SLPs before the Hon'ble Supreme Courl and it would be furlher burdening the exchequer ol the Union of India lt was also the contention 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 till the finalization ol 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 Couft as to why the Income Tax Deparlment have not come out with a mechanism to issue appropriate instructions or to take --="r' 7 appropriate 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 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 wourd 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 are still even now in 2025 also initiating proceedings in contravention to the provisions of Section l5l A of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Couft on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Ranakala Ravindra Reddy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakara Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners 8 ;i insofar as the tiberty which u'as granted to the Revenue for initiating fresh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Finance Act, 2020 and the Finance Act,202l. The petitioner assessee would be entitled to challenge or raise the other legal objections if the Revenue initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was reseled for the Revenue On the contrary, they have been still sticking on to the stand, which this High Court as well as many other High Coufts already held to be bad. 1 i. It appears that because of the aforesaid liberly that this High Court had grantcd perrnitting the Revenue for initiating fresh proceedings as a one-time measure in a faceless manner, the Income Tax Deparlment wants to [ake advantage of the same by protracting these proceedings which would enable them to meet the limitation that would otherwise come 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 Court confirms the decision taken by this High Court as also by the other High Courts in which the SLPs are stitl pending, the Income Tax /. 9 Department would get the advantage of the liberty that is otherwise protected in lavour 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 detrirnental so f-ar as interest of the assesses are concemed. As a consequence, the Income Tax Depa(ment gcts 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 Kanakalo Ravindra Reddy (l supra), is a matter of grave concern. The Income Tax Deparlment'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 legal 10 position. Such conduct raises serious questions about the administrative efficiency and the respect for judicial pronouncements, parlicularly when this Court has ah'eady 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 have found out via media itl ensuring that proceedings under Sections 148-4 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 Income Tax Depaftment should have found out some remedial steps to ensure that whcrever the authorities intend to initiate proceedings under Sections 148-A and 148, other than in a faceless manner, the proceedings shoutd have been deferred rvithout precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only after the SLP's are decided by the Hon'ble Supreme Couft on the very same issue' This again, the Income Tax Department, has not been able to give a convincing reply, except for the fact that such a decision 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 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 rnatter 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 Income Tax Department. 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 Income Tax Department is showing audacity by issuing notices continuously under Sections 14g_A and xi-l 12 148 through the jurisdictional Assessing Officer 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 isstte whethcr it was justifiable on the palt of the Income Tax Department in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division Bench of the High Courl of Bombay held at palagraph No.25 as Lrnder, viz., "25. Mr. Paridwalla has rightly drawn out attention to the decision of this Court in Commissioner of Income Tax vs. Smt. Godavaridevi Saraflz 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 decision of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.14, the Court observed that the approach of the officials of Revenue of treating decisions being "not acceptable" was criticized by the Supreme Court. ln such decision, following are the relevant observatrons made by the Supreme Court. " 11zozs1 170 taxmann.corn 422 (Bombay)l '' 1t9281 113 ITR 589 (Bombay) " 120241 165 taxmann.com 581/300 Taxman 452 (Bombay) " llggZl 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 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, righ y criticized this conduct of the Assistant Collectors and the harassment lo 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 vehemenfly 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,, 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 L4 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 Solicitor 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, seemrngly vehement, and apparently 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 to the Revenue. We would like to say that the department should take these observations tn 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 requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." I 5. What is worrying this Bench more is the fact that an 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 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 tlite at this juncture, if we dispose of the writ petition with an observation/direction that the disposar of the instant writ petition in terms of the judgment rendered by this I{igh Court in the case of Kankanala Ravindru R edtly (1 supra) shalt however be subject to the outcome of the SLps which were filed by the Income Tax Depaftment and which is pending consideration before the Hon,bre Supreme Coun. 16 In the given facts and circurnstances, this Bench is of the cor.rsidered opinion that unless and until we do not timely dispose ol matters which are squarely covered by the decision of this Court and which stands fortified by the decisions of the various other l{igh Coufts 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 concerned, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs 16 36,37 and 38 of the order which, for ready I'eference, 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 respondent-Department pursuant to the notices issued under Seclion 147 and 148 would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles that when the initiation of the proceedings itself 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 lurisdiction, 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 Ashrsh Agarwal, supra, as a one-time measure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right I I I i I L7 confered on the Revenue would remain reserved to proceed further jf they so want from the stage of the order of the Supreme Court in the case ofAshish Agarural, supra.

18. we would only further rike to make obserwations that since we ale inclined to dispose of the instant wr.it petitiorr. conscious of the fact that the earlier order of this High Courl in the case of Kanakala Ravindra Rerttly (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLp No.j574 of 2024, pref'erred by the Income Tax Department, we make it crear that allowing of the instant writ petition is subject to outcome of the atbresaid SLP preferred by the Revenue against the decision of this l{igh Court in the case of Ksnakala Rsvindra 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 Iavour of the assessee so far as the issue of jurisdiction IS concemed. As a consequence, the impugned notice under challenge under Sections l4g-A and 148 stands set aside/quashed. 18 The consequential orders, if any, also stand set aside/quasl.red in similar terms as have been passed by this High courl in the case of Kankanila Ravindra Rettdy (l supra)' There shall be no order as to costs. Consequently, miscellarieous petitions pending, if any, shall stand closed. i/TRUE COPY// SDi-A. PRATHIMA UTY REGISTRAR D SECTION OFFICER To, 1 z 3 4 5 6 7 I r r ow E R' AC G u a rd s' "r5bad iuilli6'i'n rt" Hvo il:".:tr:1"-1fi 1 Sg'fi itxs:i:l1 i#I:"{?i'::' The Principal Chief Com-mrssioner of lncome Tax'.Telanoana and A'P' -500 028' H yd e rabad. lr rowe rs, ""'il"'ii't] Telangana. TheChairman,CentralBoardofDirectTaxes,D.ep.afTentofRevenue, tvlinistry of Finance, co,"'n'iJiti'iiioitli"i'"t"iat Buildinss' New Delhi - 110 001. The National Faceless Assessment Center' lncome Tax Department' New Delhi. The Secretary to the Government, Department of Revenue' tvlinistry of rinince, New Dethi - 110 001 ' One CC to SRl. THANNERU CHAITANYA KUMAR Advocate IOPUCI oneCCtoIVIs,BoKARoSAPNAREDDY(JT.SCFoRINCoIVIETAX) W loPUCl

8. Two CD CoPies KKS GJP HIGH COURT DATED:01 lOSl2025 ! I I I I I : I t I I a I I I b t I I I I t t t-' .l_ 1.,.-.," ,l/ t.-- ,'J :) lJ t 1 lU\. ORDER WP.No.28896 of 2024 .,,1/ + O5' j5J-i ALLOWING THE WRIT PETITION WITHOUT COSTS l 1 b " 4.. ,i; \\ 'or-. zffi jrr : !',t' :l ':)/