The High Court · 2025

THE HONOURABLE SRI JUpTTCE P.SAM KOSHY ANI) THE HONOURABLE SRI JUFTICE NARSING RAO NAI\TDIKOIYDA WRITPETTTIO NN .30078 of2024 9,BDEB, (per Hon'ble Sri Justi.e P.Sam Koshy) Heard Mr. A.V.Raghu Ra4, leamed counsel for the petitioner and Ms. B.Sapna Red(V, leamed Junior Standing Counsel lor the Income Tax Dep+rtment for the respondents' Perused the record.

2. This is a writ petition where the proceedings are either chaltenged to the notices which wefe issued under Section 148.{ and 148 of the lncome Tax Act, 196l (for short'the Act') or the assessment orders those have been passed under Section 147 ol the Act which have been assailed.

3. This writ petition is being takfn up today only on one of the grounds, that the notices issued under Section 148A of the Act and the subsequent initiation ofpropeedings under Section t48 of the Act by the jurisdictional Asses$ing Officer, whereas in terms of the amendment that was brought lto the Income fI A'"t by way of Finance Act, 2O2l w.e'f., 01.04.2021 onwards' proceedings z under Seclion 148,4' of the Act as also under Section l4g of the 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, Z02l i.e., the impugned rlotices under Section l48A and Section 14g of the Act not being issued in a faceless manner, have alreadrv been dealt with and decidt:d by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERI decided on 14.09.2C23 whereby a batch of writ petitions were allowed and the proceedings initiated under Section l48A as also under Section 148 of the 1.cr were held to be bad with consequential reliefs on the i I ground of it being in violarion of the provisions of Section l5lA of the Act read with Notificarion 18/2022 dated,29.03.2022. The said judgment passed by this Court has also been subsequently followed in a large nurnber of writ petitions which were allowed on similar '[(2023) 156 raxmann.com 178 (Telangana)] r 1 3

5. Down the line, we find that the same issue has also'been decided against the Revenue bJ various High Courts i'e', by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD., ".,q.SJTSTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vS. UTON OF INDIA3, PUNJAb ANd Haryana High Court in the case of trATINDER SINGH BANGU vs. UNION OF INDIA4, and Telaigana High Court in the case of SRJ VENKATARAMANA REDqY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation, Bopbay High Court in the case of ABHIN ANILKUMAR SHAH VS.INCOME TAX OFFICE& INTERNATIONAL TAXATIONJ which is again on intemational taxation and central circle, High Court of Himachal Pradesh in the case of COVIND SINGH vs. [NCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI '1zozt1464 trR 430 (Bom) 'K2024) 156 taxmann.com 478 (Gauheti)l 'tQO24) 165 taxmann.com I l5 (Punjat & Haryana)l '12024) 167 taxrnann.com +t t (Telan$ana)l "LZO24) 166 taxmann.com 0ZS (Benlgy)l 'izozq rcs taxmann.com I l3 (Himachal Pradesh)l T DAIIYA.BIIAI RAUADIYA vs. {NCOME TAx OFFICE& WARD 3(3X5)E, Jharkand High Court in the case of SI{yAM SIINDAIR. SAW vs. UNION OF INDIAe, Rajasrhan High Court in the case of SHAR"DA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and barch of writ petitionsro 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 GIRDIIAR GOPAL DALMIA vs. UNION OI.INDIA & ORS (M.A.T l(,90 of 2023),decided on 25.09.2024.

6. Even though the same issue having been decided by a large number of High Courts, we are still confronted with large filing of identical ntatters on daity basis ranging betwecn 5 to I0 writ petitions. 'Ihat upon the insrructions being sought from the Department, they have been taking a solitary ground that the decision of the Bombay High Court in rhe case of Hexaware Technologi,zs Ltd, (2 supra) as also the one ra,hich has been decided by this Court in the case ol Kanokala Ravindra Reddy 82024 SCC Online Guj 4012 '2025 SCC Online Jhar 287 12023 : RI-JD :4984- DB l .:it :iffiF'+ll f;;:1i,e.f,.$91ry :",'gj .., 6r ,t4 5 (1 supra) has been subjected to dhallepgp in a Special l,eave Petition i.e., SLP No.3574 of 2024 before 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 ofthe same issue being decided by various fligh Courts.

7. To a query being put to the lelrned counsel for the Revenue, they have categorically accepted the fact that there is no interim order granted by the Hon'ble Sufreme Court in any of these matters pending before it. Meanryhile, fresh writ petitions of identical nahrre 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 thoulh the order of this Court that was passed as early as on 14.09.2023 and more 16 months have lapsed, till date, we do not find ariy remedial steps having been taken by the lncome Tax Departme6rt to take appropriate steps to either hold back issuance of notice under Section l4EA and under Section 148 of the Act by the julsdictional Assessing Offrcer, rather the authorities concemed in the teeth of series of decisions j I I I I ! I I t I I i I l I I I I ! I I I 6 by all thr; major High Courts in lndia 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 Income Tax Act pursuant to the Finance Act,2020 as also the Finance Act202l-

9. Uporr a query being put as ro why can't this writ petition be disposed otl in the teeth of the decision rendered by this Court in the case of Kanakaln 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 ol SI-Ps before the Hon'ble Supreme Court and it would be further burdening the exchequer c,f the Union of India. [t was also the contention of the leamed Standing Counsel that no prejudice would he caused to the interest of the petitioners in case if this writ peririon is kept pending till the finalization of the SLPs pending belore the Hon'ble Supreme Cc,urt and the fact that the petitioner is already enjoying the benefit c,f interim protection. Nonetheless, on the earlier query of this Coun. as to why the Income Tax Department have not come out with a mechanism to issue appropriate instruclions or to take ..t1 appropriate steps in ensuring that prqceedings under Section 148A of the Act as also the assessment ofders under Section 148 of the Act are kept in a hold in the light oqthe decisions dedcided by the various High Courts, it was submltted 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 [aken Pan India and cannot be limited to any of these jurisdictional High Courts.

10. As a result of which, what w! are lacing is steep increase of litigation day in and day out even thjough various orders have been passed by this High Court allowing ivrit petitions on the very same issue. The Income Tax authorities qoncerned are still even now in 2025 also initiating proceedings in contravention to the provisions of Section l5tA of the Act and as l result by now' more than 600 to 700 petitions have been already got piled up before this High Court on an issue which otherwise Ftands squarely covered by the judgment of this Court in the case of Kanakala Ravindra Reddy (l supra). What is atso surprisin! is the fact that though while allowing the writ petitions in thq case of Kanakala Ravindra Reddy (l supra), the Division Benph while reserving tbe right of the Revenue, has also protected [he interest of the petitioners i I I I I I i I I t insofar as the liDeriy which was granted to rhe Revenue for initiating fresh proceedings strictly in accordance rvith the amended provisions of the Act, as amended by the Finance Act, 2020 and the Financ,: Act, 2021. The petitioner assess@ would be entitled to challenge or raise the other legal objections if the Revenue initiates fresh procr:edings. The Department has made no endeavour in availing thr: said liberty that was reserved for the Revenue. On the contrary, they have been still sticking on to the stand, which this High Coua as well as many other High Courts already held to be bad. I l. It appears that because ofthe aforesaid liberry that this High Court had granted permitting the Revenue lor initiating fresh proceedings as a one-time measure in a faceless manner, the Income Tax. Department wants to take advantage ol the same by protracting lhese proceedings which would enable them to meet the limitation that would otherwise come in the way. I_ikewise, it the writ petition is kept pending for a considerable long period of time and finally at a later stage if the Hon'ble Supreme Clourt confirms the decision taken by this High Court as also by the other High Courts in which the SLPs are still pending, rhc Income Tax .1 9 Department would got tho advantagQ of the liberty that is otherwise protected in favour of the Revdnue for initiation of fresh proceedings from the disposal of these matters at a much lat€r stage which would be advantageous and beneficial to the Revenue and would be equally disadvantageous afd 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 pxplosion in this Court, despite the clear precedent setir, Kanakala R.avindra Reddy (l supra), is a matter of grave concern. The lncortre Tax Department's persistent initiation of fresh proceedings, disreparding the established judicial pronouncements, has led to an unfrecedented 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 judicifl resources unnecessarily' The Department's strategy of awaiting ttie Supreme Court's decision on pending SLPs while continuing to initiate fresh proceedings appea$ to be a calculated move to buy time and circumvent limitation periods, rather than ad[enng to the established legal 10 position. Such conduct raises serious questions about the administraiive effrciency and the respecr for judicial pronounce)nents, particularly when this Court has already provided a balanced approach by preserving both the Revcnue,s rights and assesses inl.erests.

13. Another aspect which needs to be consideretl is that in fact it should havr: been realized by the Income Tax Department itself 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 hun<lred (1200) odd SLPs which it is alreadl, seized of or, at least the Ir come Tax Department should have lbund out some remedial st(rps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 148. other than in a laceless mzrnner, the proceedings should have been def-erred without pre<:ipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only after rhe SI_p's are decided by the Hon'ble Supreme Court 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 ail -:. ::4i:::.:=,=. :5, Fryf ffiffi l 11 has to be taken, has to be taken for the whole of India, and which otherwise has to be by way ofa policy decision and that too at the level of Central Board of Direct Taxes. Though the leamed Standing Counsel for the Income T Department contended that the Delhi High Court dismissed a wdt petition of similar nature, on the one hand when the High Court is struggling ro 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 peritions which in the long run not only affects the disposal ol 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 rvhich 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 th+ verdict passed by a majority of High Courts of different States orf the same issue; and to make things further worse, the Income fax Department is showing audacity by issuing notices continuously under Sections 148-A and 't ,i I I i I ; i . l . I I i I I l I 148 through th+ ;jul;-iictional .tsse,ssing Officer whereas it or.gtif to have been only in the faceless manner.

14. [n the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXil, on an issue whether it was justifiabk: 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 Courr of Bombay held at paragraph No.25 as under, viz., : "25. Mr. paridwalla has righfly drawn out aftention to the decision of this Courl in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co_ ordina:e Bench of this Court in Samp Furniture (p) Ltd. v. lTO,3 of which one of us (Justice G.S. Kulkami) was a member, wherein the Court calegorically observed that the Revenue having not "accepled" the judgment of the High court wourd not mean that ti, the sarre 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 India vs. Kamlakshi Finance Corporation Ltd.1o, the court cbserved that the approach of the officiars of Revenue of treating decisions being "not acceptable, was criticized by the Suprerne Cou(. ln such decision, following are the relevant observations made by the Supreme Court. ], I1*r":,.'l ).(axmann.com 422 (Bombay)l '' il9781 il3 ITR 589(Bombay) ',t,7202a1 I 65 raxmann.com 5E l/300 Taxmaa 4L2(Bombay) ltg12l raxrnann.com l6155 ELT 433 (SC) 13 '6. Sri Reddy is .perh.aps fqht.in saying tMt the officers v\€re not actuated !y 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 jccepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not @ncemed here with the correctness or otherwise of their conclusiOn or of any factual malafrdes but with the fact that the otftcers, in reaching in their conclusion, byaassed 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 ,\ssistant Collectors and the harassment to the assessee caused by the failure of these officers to give qffect to the orders of authorities higher to them in the appellate hierarchy. lt cannot be too vehemently ernphasized 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 Cdlector is binding on the Assistant Collectors working r{vithin 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 T[ibunal. The principles of iudicial discipline require that the orders of the higher appellate authorities should Qe followed unreservedly by the subordinate authoritiesi. The mere fact that the order of the appellate authodty is not "acceptable- to the department - in itself arl obiectionable phrase - and is the subject matter of an appeal can furnish no grouM for rrct following it unless its operation has been suspended by a compitent court lt this healthy I I t4 _.-__5: rule is not followed, the result will only be undue hirrassment to assesses and chaos in administration ol tax laws. lil. We have dealt with this aspect at some length, bocause 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, seemingly vehement, and apparently urrpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to b€ come widespread, could result in considerable he rassment lo the assesses-public without any benefit to the Revenue. We would like to say that the department should take these observations in the pr,)per spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adludicating authorities and the appellate authorities to the requirements of judicial dis.cipline 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 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 l-ligh Courts all o[ whom have taken a consistent stand that the actic n of the Income Tax Department being violative of the I 15 Finance Act, 2020 and Finance Act, 2021. Now, in order to protect the interest of the Revenue as also frat of the assessee, it would be trite at this juncture, if we di of the writ petition with an observation/direction that the dispos al of the instant writ petition rn terms of the judgment rendered by this High Court in the case of Kanknnala Ravindra Reddy (l sup[a) shall however be subject to the outcome of the SLPs which tt[ere filed by the Income Tax Department and which is pending c<bnsideration before the Hon'ble Supreme Court.

16. In the given facts and c , this Bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarely co by the decision of this Court and which stands fortified by the decisions of the various other High Courts on the very same. issfre, the pendency of this High Court would further be burdened u[hich otherwise can be decided and disposed of as a covered matter. Il . So far as the interest of the Rfevenue is concerned, we are of the considered opinion that the intetfest of the Revenue has already been considered and protected, as h as been observed in paragraphs I 1 i I i I I ! I I I I I I t I I I I i I t I 15 36, '3'i aul.'- 38 of the order which" for ready reference, is reproduced hereunder:

36. For all the aforesaid reasons, the impugned notices irisued and the proceedings drawn by the respondent- [)epartment is neither tenable, nor sustainable. Jhe 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 isrsued 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 autornatically.

37. The preliminary objection raised by the petitioner is s JStained and all these writ petitions stands allowed on ttris very .jurisdrctional issue. Since the impugned notices a'rd orders are getting quashed on the point of ju risdiction, we are not inclined to proceed further and d,3cide the other issues raised by the petitioner which slands reserved to be raised and contended in an a,:propriate proceedings.

38. Since the Hon'ble Supreme Court had, in the case oJ Ashish Agarwal, supra, as a one-time measure e:(ercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed ur]der the substituted provisions, and this Court allowing tl^e petitions only on the procedural flaw, the right L7 oonfend on the Revenue ryould remain reserved lo proceed further if they so wdnt from the stage of the order of the Suprerne Colrn in the case of Ashish Aganaral, supra.

18. We would only further like t0 make observations that since we are inclined to dispose of the insfant 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 Depailtment, we make it clear that allowing of the instant writ petitioq is subject to outcome of the aloresaid SLP preflerred by the Revepue against the decision ofthis High Court in the case of Kanaka[a Ravindra Reddy (l supra). This, in other words, would mean that either of the parties, if they so want, may move an appropriate $etition seeking revival of this writ petition in the light of the declsion of the Hon'ble Supreme Court in the pending SLP on the very same issue.

19. Accordingly, the instant wrlt petition stands allowed ln lavour of the assessee so far as the issue of jurisdiction rs concemed- As a consequence, the impugned notice under challenge under Sections 148-,,4. and l4E stands set aside/quashed 18 The consequential orders, if any, also stand set aside/quashed in similar tern.rs 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 close,l. To, //TRUE COPY// E II 1 . The Assessment Unit, National Faceless Asses Department, Mhistry of Finance, Room No. 4O1,2nd Floor, E-Ramp,, Jawaharla Nehru Stadium, Delhi - 110 003.

2. The lncome Tax Officer, Ward - 9(1), LT. Towers, A.C. Guards, Masabtank, Hyderabac - 500004.

3. One CC to SRI A.V.RAGHU RAM, Advocate. [OPUC] 4. One CC to Ms.B.SAPNA REDDY, SC for lncome Tax Department. [OPUC] 5. Two CD Copies. .(FSK JP 1: i I ! ! ,| .t HIGH COURT DATED:3010412025 ',,; Ti;Fr... -': /": il' " /. ,: 2 5 A|JB 2025 I t at., ,'/1; (," -,t ORDER WP.No.30078 of 2024 ALLOWINCi THE WRIT PETITION WITHOUT COSTS 69 (