Krishna Reddy Roopireddy v. Telanoana-50600'1

THE I{ONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOUIT.ABLE SRI JUSTICE NARSTNG RAO NANDIKONDA WRIT PETITION No.29364 of 2024 ORDER, (per Hon'ble Sri .Iu"'tice P.Sam Koshy) I{eard Mr. Manmohan Dundu, leamed counsel for the petitioner and Ms. B.Sapna Reddy, leamed Junior Standing Counsel for the Income Tax Department for the respondents Pcrused thc record.

2. 'this is a writ petition where the proceedings are either challenged to the notices whioh were issr-red under Section 148A and 148 of the L.rcorne Tax Act, 1961 (for short'the Act') or the assessment orders those have been passed under Section 147 of the Act which have been assailed

3. This rvrit petition is being taken up today only on one of the grounds, that the notices issued under Section 1484 of the Act and the subsequent initiation of proccedings under Section i48 ol the Act by the jurisdictional Assessing Officer, whereas in tems of the amendment that was brought to the Income Tax Act by rvay ol Irinance Act, 2021 w.e.f., 01.04.2021 onwards, proceedir.rgs 2 under Section 148u\ of the Act as also under Section 148 of the Act ought to have also been issued and proceeded in a facelcss lranner

4. The contet.rtion ol the petitioner is that the issuc of proceedings being in violation of the Finance Act,202I i.e., the impugned notices under Section 148A and Section 1'18 of the Act not being issued in a faceless manner, have already been dealt n'ith and decided by this Court in the case of KANKANALA RAVINDRA IIEDDY vs. INCOIVIE-TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section 148A as also under Section 148 of the Act were l.reld to be bad with consequential reliefs on the ground of it being in violation of the provisions o1 Section 151 A of the Act read with Notification 1812022 dated 29.03.2022. The said judgment passed by this Court has also been subsequer.rtly followed in a large number of writ petitions which were allowcd on similar 'l(2023) 156 taxmann.corn I78 (Telangana)l 3

5. Down the line, we find that the same issue has also been decided against the Revenue by varl0us High Courts i.e., by the Bombay High Courl in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COIVIMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIA3, Punjab and Haryana High Cout in the case of JATINDER SINGH BANGU vs. UNION OF INDIAI, and Telangana High Court in the case ol SRI VENKATARAMANA REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in lespect of intemational taxation, Bombay High Court in the case of ABHTN ANILKUMAR SHAH vs. INCOME TAX OFFICER, IN'I'ERNATIONAL 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 ' lzoz+1464 ITR 430 (Bom) 'L(.2024) [56 taxmann.com 478 (Gauhati)] ^ l(2024) 165 taxmann.com 115 (Punjab & Haryana)l ' 12024) 167 taxrnairn.com 41 I (Telangana)l " 12024) 166 taxmann.com 679 (Bombay)l ' 12024) 165 taxmann.com 1 13 (Himachal Pradesh)l \ 4 DAHYABHAI RADADIYA vs. INCOME TAX OFFICEIi, 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. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsro which stood decided on 19.03.2024. Similar views have also been takcn by the Division Bencl.r of Calcutta I{igh Court ir.r the case of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 of 2023), decidcd on25.09.2024.

6. Even though the same issue having been decided by a large number of High Courls, we are still confronted with largc filing of identical matters on daily basis ranging between 5 to i 0 wlit petitions. That upon the instructions being sought from the Department, they have been taking a solitary grotrnd that the decision of the Bombay High Courl in the case of Hexawtre Technologies Ltd., (2 supra) as also the one whicl.r has been decided by this Courl in the case of Kanakala Ravindra Retldy rzo24 sCC onlinc Gu.i 4o 12 '2025 SCC Online Jhar 287 'o 12023, RJ-JD :4984-DBl ;.;:j_ :'' I 5 (l supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 ol 2024 before the Hon'ble Supreme Court and the Hon'ble Suprerne 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 qucry being put to the lean-red counsel for the Revenue, thcir have categorically accepted the fact that there is no interinr ordcr granted by the Hon'ble Supreme Court in any of these nratters pending belole it. Mcanwhile, fresh writ petitions of identical nature arc bcing piled up betbre this Bench on daily basis and the pendency is getting increased on matter which otherwise lras already been dealt and decided by this very High Court itsetf.

8. On thc onc hand, even though the order of this Court that was passed as early as on 14.09.2023 and more 16 months have tapscd, till date, we do not find any lemedial steps having been taken by the Income Tax Departrnent to take appropriate steps to either hold back issuance of notice under Section 148A and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concerned in the teeth of series of decisions ) 6 by ati the major High Courts in India arc continuously still initiating proceedings under Section i48A of the ,\ct and also initiating proceedings under Section 148 of the Act in contravention to thc arnendments brought into thc I ncome Tax r\ct pursuar.)t to the Finance AcL,2020 as also the Financc Act 2021

9. Upon a query being put as to why can't this writ petition be disposed of in thc teeth ol thc decision rendered t-.1 this Coult in the case of Ktnakala Ravindro Reddy (l supra), lealned Standing Counsel for the Incorne Tax Department contencls tltat those rvould unnecessarilv burden the Income Tax Departrncnt where thcy would be requilcd to file equal number of SL.Ps before the Hon'ble Suplerne Court and it would be furlher burdening the exchequer o1'the Ur-rion of India. It was also the conlention of the learned Standing Counsel that no prejudice woukl bc caused to the interest of the petitioners in case if this writ petition is kept pending till the finalization of the SLPs pending beforc the Hon'ble Supreme Cor-rrt and the fact that the petitioner is already enjoi,ing the benefit of interim protection. Nonetheless, on the earlier query of this Courl as to why the Lrcome Tax Department have not colne out with a mechan ism to issue appropriate instructions or to takc a::**:{.':.,: 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 Coufts, 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 lndia and cannot be lin.rited to any of these jurisdictional High Courts.

10. As a result of which, what we are facing is steep increase of titigation 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 15lA of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Courl on an issue which otherw,ise stands squarely covered by the judgment o1 this Court in the case of Ksnakala Ravindra Reddy (1 supra). What is also surprising is the fact that though white allowing the writ petitions in the case of Kanakala Ravindra Reddy (l supra),'the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners l \ 8 insofar as the liberty which was granted to tl.re Revenue for initiating fresh proceedings strictly in accordance with the amended provisions o1'the Act, as arnended by the Finarrce Act. 2020 and the Finarrce Act, 2021. The petitionel assessee would be entitled to challenge or raise the other legal objections if the Reverrue initiates fi'esh proceedings. The Department has made no endeavour itt availing the said liberty that was reserved for the Revenue. On thc contrary, they have been still sticking on to the starrd, rvhich this Iligh Court as well as many other High Courls alreadv l.reld to be

11. It appears that because ofthe aforesaid liberty' that this Iligh Court had granted pennitting the Revenue for initiating ficsh proceedings as a cne-time measure in a faceless tlannet, the Income Tax Department wants to take advantage of the same by protracting these proceedings which would enable them to mcet 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 Coutl confirms the decision taken by this Fligh Courl as also by tl.re other High Courts in which the SLPs are still pending, the lncome Tax ,, 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 concemed. As a consequence, the Income Tax Department 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 setin Kantktla Rtvindra 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 ofjudicial precedent but also strains the judicial lesources 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 pronounccments, parlicularly when this Court has already provided a balanced approach by preserving both the Revenue's rigl.rts and assesses lnterests

13. Another aspect which needs to be considered is that in lact it should have been realized by the Income Tax Department itsclf and should have found out via media in 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, al least the Income Tax Department should have ibund out sonte remedial stel)s to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 148, other than in a faceless manner, the proceedings should have been defer.r.ed without 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 Court on the very. sarne issue. This again, the Income Tax Department, has not been able to give a convincing reply, except for the fact that such a clecision if at all ir&&.r. . , 11 has to be taken, has to be taken lor 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 disrnissed 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 l{igh Court resulting in fiting of hur.rdrcds of nerv 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, ir.r spite of the rnatter before the Hon'ble Suplerne Court having been taken on rnany 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 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 Incorne Tax Depaftment ls showing audacity by issuing notices continuously under Sections 148-A and -1.2 :l 148 through the jurisdictional Assessing Olficer u,hereas it ought to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONEIT, INCOME TAXr'. o, un issue rrhcrher ir rvas .justifiable on the part of the lncome Tax Departrnent ln nof lollowing an ordel passed b1,the adjudicating authoritv only on the ground that the appeals are pending, the Division Ilench of tlre tligh Court of Bornbay held at paragraph No.25 as undcr, viz., : "25. l\/r. 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. ITO13 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 bindrng force. Referring to the decision of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.ri, 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 observations made by the Supreme Court. 'l ttzOzsl 170 raxmann.com 422 (Bombay)l '' 1tezs1 I l3 tTR 589 (Bombay) IZOZ+1 165 taxmann.com 58 l/300 Taxrnan 452 (Bornbay ) ' ' 1 I oo2 ; raxn rann.corn I 6/55 ELT 433 (SC) I 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, 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 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 \ \ 14 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, seerningly 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 ihe Revenue. We would like to say that the department should take these observations in the proper spirit. The observatrons 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 judrcial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." 1 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 rcst by a large nulnber of High Courts all of whom have taken a consistent stand that the actiorl of the Income Tax Depaftment 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 trite at this juncture, if we dispose of the writ petition with an observation/d irection that the disposal of the instant wlit petition in tcrrns of the judgment rendered by this High Courl in the case ol Konkansla Ravindra Reddy (l supra) shall however be subject to the outcome of the SLPs which were filed by thc Income Tax Depafiment and which is pending consideration before the [Ion'ble Supreme Coutt t6. ln the given facts and circumstances, this Bench is of the considered opinion that unless and until we do not tirnely dispose ol- matters which are squarely covered by the decision of this Courl and ivhich stands fortified by the decisions of the various other High Courts on the very same issue, the pendency of this High Courl would further be burdened which otherwise can be decidcd 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 L6 (q., ,#;', ,'& \ 36,37 and 3ii ofthe order which, for ready referencc, is reproduced hercunder: 36 For all the aforesaid reasons, the impugned notices rssued and the proceedings drawn by the respondent- Department rs neirher tenable, nor sustainab e. 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 1 47 and 148 would also get quashed and it is ordered accordingly. The reason we are quashrng 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 petitroner 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 decrde 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 Agarwal, supra, as a one-time measure exercising the powers under Article 142 of the Constitution of lndia, permifted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right ::t 17 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 sir.rce wc arc inclined to dispose of the instant writ petition, conscious of the lact that the earlier order of this High Court in the case of Ksnakslo Ravindra Reddy (l supra) is subjected to challenge befble the Hon'ble Supreme Court in SLP No.3574 of 2024, plet-en'ed by the lncorne Tax Department, we make it clear that allorving of the instant writ petition is subject to outcome of the I \ atbresaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravindra Reddy (l supra). \ t l-his, in other words, would mean that either of the parties, if they so want, rnay lnove an appropriate petition seeking revival of this rvrit petition in the light of the decision of the Hon'ble Supreme Court in the pending SLP on the very same issue I9. Accordingly, the instant writ petition stands allowed in f-avour of the assessee so far as the issue of jurisdiction IS concemed. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed 18 The consequential orders, il- any, also stand set aside/quashed in sirrilar terms as have becn passed by this High Court in the case of Konkanala Ravindrt Rettd.s' (l supra). There shall be no order as to costs. Consequently, miscellancous petitions pending, if any, shall stand closed ,TRUE COPY// SD/-K.BHAVANI SWAMY ASSISTANT REGISTRAR \Y\) SECTIbili OFFICER To, I I

1. The lncome Tax Officer Ward '1 , Warangal, # lncome tax office, 1-8-6'10, 3'd Floor, Mayuri Complex, Opp TSNPDCL Bhawan, Nakkalagutta, Warangal, Tela nga na-506001 Block, l.T. Towers, 10-2-3, A.C. Guards, Hyderabad-500004

2. The Principal Chief Commissioner of lncome Tax AP and TS, 'lOth Floor, C- 3. The Assessment Unit, lncome Tax Department, National . Faceless Assessment Centre, Delhi, Ministry of Finance, Room No. 401 , 2no Floor, E- Ramp, Jawaharlal Nehru Stadium, Delhi-110003

4. One CC to SRI DUNDU MANMOHAN, Advocate IOPUC] 5 One CC to lt/s. BOKARO SAPNA REDDY (Jr SC FOR INCOME TAX) 6. Two CD Copies loPUCl I Bru BS iiL n i4]..- I I 0 4 AUE zl[i ). .J .'-t, \: t-ro HIGH COURT DATED:2510412025 ORDER WP.No.29364 of 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS v