The High Court · 2025

THE TIONOURABLE SRI JUSTICE P.SAM KOSHY AND TIIB IIONOURAT}LE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITION No.29575 OF 2024 ORDER, (per Hon'ble Sri Justice P.fum Koshy) Heard Mr. Raja Shekar Salvaji, learned counsel for the petitioner, Ms. J.Sunitha, leamed Junior Standing Counsel for the Income Tax Department for respondent Nos.l and 2 and Mr. B. Mukhe{ee, leamed counsel representing the Union of lndia for respondent No.3. Perused the necord.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section l48A and 148 of the Income Tax Act, 1961 (forshort'the Act') orthe assessment orders those have bepn passed under Section 147 of the Act which have been assailed.

3. This writ petition is being taken up today only on one o[ 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 Offrcer, thereas in terms olthe amendment that was brought to the Income Tax Act by way 1 2 a of Finance Act,202l w.e.f., 01.04.2021 onwards, proceedings under Section l48A ofthe Act as also under Section l4g ofthe 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,202l i.e., the impugned notices under Section l48A and Section l4g of the Act not being issued in a faceless manner, have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.Q9.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section l4gA as also under Section 148 of the Act were hetd to be bad with consequential reliefs on the ground of it being in violation of the provisions ofSection l51A of the Act read with Notification 18/2022 dated,29.O3.2022. The said judgment passed by this Court has also been subsequently followed in a large number ol w,rit petitions which were allowed on similar terms. '[(2023) 156 taxnrann.corn 178 (Telangana)] 3

5. Down tlre line, we find that the seme issue has also been decidecl against the Revenue by various High Courts i'e', by the Bombay High Court in the case of IIEXAWARE TECHNOLOGIES LTD., vs. ASSISTAITIT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. LNION OF INDIA3, Punjab and Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana Hig[ Court in the case of SRJ VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of intemational taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH VS' TNCOME TAX OFFICE& INTERNATIONAL TAXATION6 which is again on intemational 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 taxrnann.com 478 (Gauhati)l ' t(2024) 165 taxmann.com I l5 (Punjab & Harfana)I 'f2M.4) 167 taxmann.com 4 t I (Telangana)l " [2024) 166 taxmarn.com 679 (Bombay)] 'IzO:+) 165 taxmann.com t l3 (Himachal Pradesh)] A r'- DAIf,YABP^AI RA-DADIY.a" vs. INCOME TAX OFFICB& WARD 3(3X5)8, Jharkand High Court in the case of SIfyAM ST NDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CIIHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petirionsro 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 INDIA & ORS (M.A.T 1690 ot2023), decided on25.09.2024.

6. Even though the same issue having been decided by alarge number of High Courts, we are still confionted with large filing of identical matters on daity basis ranging between 5 to l0 writ petitions. That upon the instructions being sought from the Departrnent, they have been taking a sotitary ground that the decision of the Bombay lligh Court in the case of Hexaware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy 82024 SCC Online Guj 4012 "2025 SCC Online Jhar 287 72023 : RI-JD :4984-DB l 5 (l supra) has beerr subjected to challcnge in a Special lrave Petition i.e., SLP No.3574 of 20?4 bofore the Hon'ble Suprcme Court and the Hon'ble Supreme Court is seized of the matter. In addition, there are about 1200 SLPs also filed arising out ofthe same issue being decided by varior.ls 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 Suprerne Court in any of these mafters 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, tilt 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 Offrcer, rather the authorities concemed in the 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 lncome 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 Court in the case of Kanakala Ravindra Reddy (l supra), learned Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Department where they would be required to file equal number of Sl_ps before the Hon'ble Supreme Court and it would be furthcr burdening the exchequer of the Union of India. It was also the contention of the leamed Standing Counsel that no prejudice would be caused to the interest ofthe petitioners in case if this writ petirion is kept pending till the finalization of the SLps pending belore the Hon,ble Supreme Court and the fact that the petitioner is aiready enjoying the benefit of interim protection. Nonetheless, on the earlier query of this Court as to why the Income Tax Department have not come out with a mechanism to issue appropriate instructions or to take 7 appropriatc stops in etrsuring tlrat proceedings under Soction l4EA 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 dedcide'd 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 tndia 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 Court 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 l5lA 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 jndgment of this Court in the case of Kanakala Ravindra Reddy (l supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravindta Reddy (l supra), the Division Bcnch whlle reserving the right of the Revenue, has also protected the interest of the petitioners \ ../..J insofar as the libert-v which 'was granted to the Revenue fcr initiating fiesh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Finance Act,2020 and the Finance Act, 2021. 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 reserved for the Revenue. On the contrary, they have been still sticking on to the srand, which this High Court as well as many other High Courts already held to be

11. It appears that because ofthe aforesaid tiberty that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a faceless rnanner, the Income Tax Departrnent wants to take advantage ol the same by protracting these proceedings which would enable them to meer the limitation that would otherwise come in the way. I_ikeu.ise, if the writ petition is kept pending for a considerable long period oltime and finally at a later stage if the Hon'ble Supreme (lourt confirms the decision taken by this High Court as also by rhe other High Courts in which the SLPs are stilt pending, the lncome Tax I Department would get the advantage ol'the liberty that is otherwise protected in favour o[ the Revenue lbr initiation of f]esh proceedings from the disposal ofthese matters at a much later stage which woutd be advantageous and benefrcial to the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concerned. As a consequence, the Income Tax Departmetrt 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 Kanakala Rsvindra Reddy (l supra), is a matter of grave concern. The lncome 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 ofjudicial 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 appearc to be a calculated move to buy time and circumvent limitation periods, rather than ddhering to the established legal 10 position. Such conduct raises serious questions about the administrative efficiency and the respect for judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revenue's rights and assesses lnterests.

13. Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Department itself and should have found out via media in ensuring that proceedings under Sections 148-A 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 ofor, ar least the Income Tax Department should have lbund out some remedial sreps to ensure that wherever the authorities intend to initiate proceedings under Sections l4g-A and l4g, other than in a faceless manner, the proceedings should have been detened without precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only after rhe SLp.s are decided by the Hon'ble Supreme Court on the very same issue. This again, rhe Income Tax Department, has not been able to gir,.e a convincing reply, except for the fact that such a decision if at all 17 has {o be taken, has to be t&ken for the rvhole of India,,aml, 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 learned 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 p€titions which 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 agaifl on daily basis. Admittedly, in spite of the matter before the Hon'ble Suprerne Court having been taken on many occasions, the Hon'ble Suprpme Court which is seized of the matter has been reluctant in granting any interim protection to the lncome 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 148-4' and a 1zi8 ti,n.;ugh the ,;1; is1le1lrrl-i rr ss.j.sitrg Oft-rcerarhereas it org;r to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXIT, on an issue whether it was justihable on the part 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 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 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. Kulkami) was a member, wherein the Court categorically observed that the Revenue having not "accepted" the.,udgment 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. Refening 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 ofiicials of Revenue of treating decisions being "not acceptable" was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. [(2025) [ 7(t ra:rmann.com 422 (Bombay)] '2 1toz81 I l3 ITR 589 (Bombay) " 1ZOZal 165 raxmann.com 58 1/300 Taxman 452 (Bombay) 1'119921 raxmar.r-corl l6155 Er,T433 (SC) { 13 '6. Sri Reddy i* perhapc right ln EEying thet the offlccrB w€re not eelu8ted t,y eny male fid€s passing the impugned orders, They perhaps genuinely felt that the clairn of the assessee was not tenable and that, if it was accepted, th€ Revenue would suffer. But what Sri Reddy overlooks is that we are not concemed here with the correctness or otherwise of their rcnclusion or of any factual malafides but with the fact that tfE officers, in reaching in their conclusion, by-passed two appellate orders in regard to the same issue which were placed before lhem, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticized this mnduct 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 hbher to them in the appellate hierarchy. lt cannol 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 Gollector 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 is tfe subiect matter of an appeal can furnish no ground for not following it unless its operation has been suspepded by a competent court- lf this healthy 74 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 leamed 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, seemingly 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 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,udicating authorities and lhe appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the hrgher appellate authorities which are binding on them."

15. 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 f{igh 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, inbldef {o,protect the interest of the Revenue as also that of th€ assessee, it would be trite at this juncture, if we dispose of the writ petition with an observation/direction that the disposal ofthe instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (l supra) shall however be subject to the outcome ol the SLPs which were filed by the Income Tax Department and which is pending consideration before the Hon'ble Supreme Court.

16. [n 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 szxne issue, the pendency of this High Court would further be burdened which otherwise can be decided and disposed ofas a covered matter.

17. So lar as the interest of the R.evenue 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 36, :;,' at<i 33 c,'.:.2 )(.t .. ., :i,:ii. ri . ready reference, is reproduceC hereunder: I

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respoMent- 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 Section 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 rssue. Since the impugned notices and orders are getting quashed on the point of jurisdiction, we are not inclined to proceed further and decide the olher 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 Aganval, supra, as a one-time measure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed under lhe substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right ( 17 confened on the Revenue vt/ould remain resend 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 th. inrtunt 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 (1 wpra)' 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 onthe very sarne issue.

19. Accordingly, the instant writ petition stands allowed in lavour ol the assessee so far as the isstre of jurisdiction rs concemed. As a consequenc€, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed. I I 18 The consequential orders, if any, also stand set 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' REKHA RANI REGISTRAR T: \se CTION OFFICER

1. The Assistant Commissioner of lncome Tax, Circl 2. National Faceless Assessment Centre lncome Ta x Department, Ministry of anmnagar Finance , Room No 401 2nd Floor E- Ramp, Jawa harlal Nehru Stadium, Delhi 1 10 003 ";^

3. The Secretary, Ministry of Finance, Department of Revenue, North Block, Central Secretariat, Union of lndia, New Delhi- 1 1O OO1 . 4. One CC to Ms. Raja Shekar Rao Salvaji, Advocate IOPUCI 5. One CC to Ms. J. Sunitha, SC for lncome Tax Department tbpucl 6. Two CD Copies \ To, TJ GJP o HIGH COURT DATED:0210512025 ORDER WP.No.29575 ot 2024 '''- ':r='' -- ,.; ,i'--" ,'.'l' e 6 ilE 2125 ALLOWING THE WRIT PETITION WITHOUT COSTS O,C