Praveen Master v. Union of lndia

Counsel forthe Respondent No 3: MS. J SRI P. MURALI KRISHNA, SENIOR i I I SUNITHA, REPRESENTING SC FOR INCOME TAX DEPARTMENT Counsel for the Respondent 2 & 4: -- The Court made the following: ORDER TIIE HONOURABLE SRI JUSTICE P.SAM KOSITY AND THE HONOTJRABLE SRI JU NANDIKO STICE NARSINGRAO NDA W.P.No.3024 oF 2024 ORDER: (per Hon'ble Sri Justice P.Saty Koshy) Heard Mr. Sheetal Srikanth Iearned counsel representi ng Ms. Mytri Indukuru, learned coinsel for the petitioner and Ms. J.Sunitha, leamed Junior Stpnding Counsel representing Mr. P.Murali Krishna, learned Sedior Standing Counsel for the Income Tax Department for respon{ent No.3. Perused the record. 2 This is a writ petition whele the proceedings are either challenged to the notices which wQre issued under Section 1484 and 148 of the Income Tax Act, I!6 I (for short 'the 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 takpn up today only on one ofthe grounds, that the notices issued urlder Section 1484 of the Act and the subsequent initiation ofproceedings under Section 148 of the Act by the jurisdictional Asses ging O fficer, whereas in terms of the amendment that was brought Ito the Income Tax Act by way I 2 of Finance Act,202l w.e.f., 01.04.2021 onwards, proceedings under Section 148,4. of the Act as also under Section 14g 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, 2O2l 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 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section l48A as also under Section I 48 of the Act were held to be bad with consequential reliels on the ground of it being in violation of the provisions of Secticn l5lA cf the Act read with Notification Ls/zOZZ dated 29.0i.2022. The said judgment passed by this Court has also been subsequently foilowed in a large number of writ petitions which were allowed on similar terms. 'tQ023) 156 taxmann.com 178 (Telangana)l 3

5. Down the line, we find thaq the same issue has also been decided against the Revenue by vanous High Courts i.e., by the Bombay High Court int the case of HEXAWARE TECHNOLOGIES LTD., VS. ASFISTANT COMMISSIONER OF INCOME TAX & OTHERS21 Gauhati High Court in the case of RAM NARAYAN SAH vs. UiYION OF INDIA3, Punjab and HaryanaHigh Court in the case ofIJATINDER SINGH BANGU vs. IIMON OF INDIA4, and Tela$Bana High Court in the case of : SRI VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOM! TAX5 where the issue was in respect ofinternational taxation, Bopnbay High Court in the case of I ABHIN ANILKTMAR SHAH v$ INCOME TAX OFFICE& I INTERNATIONAL TAXATION which is again on intemational 1 I taxation and central circle, High C urt of Himachal Pradesh in the q case of GOVIND SINGH vs. NCOME TAX OFFICER?, I Gujarat High Court in the I of MANSUKHBHAI I ' lzoz+1464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauh{ti)l 'l(2024) I65 taxmann.com I l5 (Punjab & Haryana)j '12024) 167 taxmann.com 4l 1 (Telan+na)l " 12024) 166 taxmann.com 679 (Bomb4y)l '12024) 165 taxmann.com I l3 (Himacfral Pradesh)l 4 DAHYABHAI RADADIYA Ys. INCOME TAX OFFICER, WARD 3(3X5)8, Jharkand High Court in the case of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Courr in the case of SHARDA DE\T CIIHAJER vs. INCOME TAX OFFICER & ANOTHER and batch 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 GIRDHAR GOPAL DALMIA vs. {JNION OF INDrA & ORS (M.A.T 1690 of 2023), decided on25.09.2024.

6. Even though the same issue having been decided by a large number of High Courts, we are still confronted with large filing ol identical matters on daily basis ranging between 5 to l0 writ petitions. That upon the instructions being sought from the Department, they have been taking a solitary ground that the decision of the Bombay High 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 Kanakalu Ravindra Redtly t202+ SCC Online Guj 4012 '2025 SCC Online Jhar287 to72023:RI-JD:4' {-DBl / \/ 5 (l supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 202ft before the Hon'ble Supreme Court and the Hon'ble Supreme pourt is seized of the matter. In addition, there are about 1200 Sf-Ps also filed arising out ofthe same issue being decided by variou High Courts. $

1. To a query being put to the lQarned counsel for the Revenue, they have categorically accepted tfe fact that there is no interim : order granted by the Hon'ble Supreme Court in any of these matters pending before it. Meariwhile, fresh writ petitions of identical nature are being piled up $efore this Bench on daily basis and the pendency is getting increafed on matter which otherwise has already been dealt and decided $y this very High Court itself.

8. On the one hand, even thou h the order of this Court that I P was passed as early as on 14.09.2 23 and more 16 months have 0 i lapsed, till date, we do not find a y remedial steps having been I n taken by the Income Tax Departm nt to take appropriate steps to I I + either hold back issuance of notice under Section [48A and under Section l4E of the Act by the ju[isdictional Assessing Offrcer, rather the authorities concerned in he teeth of series of decisions I t 6 by all the major High Courts tn 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 Income Tax Act pursuant to the Finance Lct,2020 as also the Finance Act202l.

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), leamed 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 nurrber of SLPs before the Hon'bte Supreme Court and it would be further burdening the exchequer of the Union of tndia. It was also the contention of the leamed 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 of the SLPs pending before the Hon'ble Supreme Court and the fact that the petitioner is already enjoying the benefit ol 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 appropriate steps in ensuring that p6oceedings under Section 148A of the Act as also the assessment prders under Section 148 of the Act are kept in a hold in the light qfthe decisions dedcided by the various High Courts, it was sub4itted 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 b9 taken Pan India and cannot be limited to any of these jurisdictiona{ High Courts.

10. As a result of which, what w are facing is steep increase of F litigation day in and day out even t$ough various orders have been passed by this High Court allowing writ petitions on the very same issue. The Income Tax authorities Qoncemed are still even now in 2025 also initiating proceedings in pontravention to the provisions of Section l51A of the Act and as + result by now, more than 600 to 700 petitions have been alreadyl got pited up before this High Court on an issue which otherwise ptands squarely covered by the judgment of this Court in the case of Kanakala Ravindra Reddy (t supra). What is also surprisin_g is the fact that though while allowing the writ petitions in thel case of Kanakala Ravindra Reddy (l supra), the Division Benfh while reserving the right of the Revenue, has also protected {he interest of the petitioners o insofar as the liberty which was granted to the Revenue for initiating fresh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Finance Lct,2020 and the Finance Act,202l. The petitioner assess@ 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 stand, which this High Court as weii as many other High Courts already held to be

11. It appears that because of the aforesaid liberry that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a faceless manner, the lncome Tax Department wants to take 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 ln which the SLPs are still pending, the Income Tax 9 Department would get the advantagp of the liberty that is otherwise protected in favour of the Rer,fenue for initiation of fresh proceedings from the disposal of thgse matters at a much later stage which would be advantageous and beneficial to the Revenue and would be equally disadvantageous aSd detrimental so far as interest i t { of the assesses are concerned. As consequence, the Income Tax Department gets an extended perio of time for initiation of fresh proceedings. I

12. The alarming trend of docket iexplosion in this Court, despite Reddy (l supra), is a the clear precedent set in Kanakala lnauiolra matter ol grave concern. The Incope Tax Department's persistent initiation of [resh proceedings, disrdgarding the established judicial pronouncements, has led to an unirecedented surge in titigation i with over 600-700 petitions pitin$ up on the same issue. This i deliberate approach not only underfnines the principle ofjudicial i precedent but also strains the judici resources unnecessarily. The F i Department's strategy of awaiting tlie Supreme Court's decision on pending SLPs white continuing i initiate fresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than adtieri ng 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 rnterests

13. Another aspect which needs to be considered is that in fact it should have been realized by the [ncome 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 tilt the Hon'ble Supreme Court decide the twelve hundred (1200) odd SLPs which it is already seized ofor, at least the Income Tax Department should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-,4 and 148, other than in a faceless manner, the proceedings should have been deferred without precipitating the matter further intimating the assessee that they shalt initiate appropriate proceedings only after the SLp's are decided by the Hon'ble Suprerne (lourt on the very same issue. This again, the Income Tax Department, has not been able to give a convincing reply, except for the lact that such a decision if at ail 11 has to be taken, has to be taken fo1 the whole of India, and which otherwise has to be by way of a poflicy decision and that too at the level of Central Board of Direci Taxes. Though the leamed Standing Counsel for the Income fax Department contended that the Delhi High Court dismissed a ufit Retition of similar nature, on the one hand when the High Cofrrt is struggling to reduce its pendency, such notices which arg under challenge in this writ petition are forcing the assessee t1 knock the doors of this High Court resulting in filing of hundredq of new writ petitions which in the long run not only affects the dtsposal of the writ petitions but also consumes substantial time of the Bench in hearing these matters again and again on daily ba$is. Admi6e{ly, in spite of the matter before the Hon'ble Supremp Court having been taken on many occasions, the Hon'ble Supre e Court which is seized of the P matter has been reluctant in grantinlg any interim protection to the lncome Tax Department. Yet, thP authorities concemed at the State level are not ready to accept t{re verdict passed by a majority of High Courts ol diflerent States qn the same issue; and to make things further worse, the lncome Tax Department is showing audacity by issuing notices continu! usly under Sections 148-A and 12 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner

14. In the case of BANK OF INDIA vs. ASSISTANT COMI4ISSIONE& INCOME TAXrr, on an issue whether it was justifiable on the part of the lncome Tax Department ln not following an order passed by the adjudicating authority only on the $ound 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. Kulkarni) was a member, wherein the Cou( categorically observed that the Revenue having not the judgment of the High Cou( would not mean that till "acc€pted" 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 observations made by the Supreme Couft. 11ZOZS1l70 taxmann.com a22 (tsombay)l t2 ltsltl l t3 ITR 589 (Bombay) " 12OZ+1165 taxmann.com 58 l/300 Taxman 452 (Bombay) 'o ltggZl taxmann.com 16/55 ELT 433 (SC) \ 13 "6. Sri Reddy is perhaps right in saying that the officers were not actuated i by any mala fides in passing the impugned orpers. They perhaps genuinely felt that the claim ef the assessee was not tenable and that, if it was ,accepted, the Revenue would suffer. But what Sri RQddy overlooks is that we are not concemed here {ith the correctness or otherwise of their concluslon or of any factual malafides but with the fact thalt the officers, in reaching in their conclusion, by-passe( two appellate orders in regard to the same issue wftich were placed before them, one of the Collector (ApOeals) and the other of the Tribunal. The High Cou( has, in our view, rightly criticized this conduct of the lqssistant Collectors and the harassment to the asseslee caused by the failure of these officers to give (ffect to the orders of authorities higher to them in ttie appellate hierarchy. lt that it is of cannot be too vehemently utmost importance that, iin disposing of the quasijudicial issues before thfm, revenue officers are bound by the decisions of tfe appellate authorities. The order of the Appellte Coitector is binding on the $mphasized Assistant Collectors working vfithin his jurisdiction and the order of the Tribunal is birf ding upon the Assistant I Collectors and the Appellate iCollectors who function under the iurisdiction of the TriOunal. The principles of judicial discipline require that ithe orders of the higher appellate authorities should Qe followed unreservedly by the subordinate authoritiesf The mere fact that the order of the appellate authoriFy is not 'acceptable" to the department - in itself ani ob.iectionable phrase - n appeal can furnish no and is the subject matter of nless its operation has ground for not following it been suspended by a competpnt court. lf this healthy I ,.l 14 rule is not followed, the result will only be undue harassment to assesses and chaos in administration of tax laws.

12. We have deatt 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, seemingly vehement, and apparenfly 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 wouid 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 adjudicating authorities and the appellate authorities to the requirements of judiciat discipline 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 taid to rest by a large number of High Courts all of 'whom have taken a consisteni stand that the action of the Income Tax Department being violative of the I 15 Finance Act,202O and Finance Act)2021. Now, in order to protect the interest of the Revenue as also {hat of the assessee, it would be trite at this juncture, if we disposp of the writ petition with an observation/direction that the dispo al of the instant writ petition in I 1 terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (l suflra) shall however be subject to the outcome of the SLPs which ere hled by the Income Tax 1" Department and which is pending ctnsideration before the Hon'ble Supreme Court.

16. In the given facts and circufnstances, this Bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarely co'rerpd by the decision of this Court I and which stands fortihed by the decisions of the various other High Courts on the very same issire, the pendency of this High Court would further be burdened hich otherwise can be decided "l and disposed of as a covered matter.i

17. So far as the interest of the evenue is concemed, we are of d I the considered opinion that the intefest ofthe Revenue has already been considered and protected, as hps been observed in paragraphs 16 36,37 aod 38 ofthe order which, for ready reference, 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 gefting quashed, the consequential orders passed by the respondent-Department pursuant to the notices on 147 and 148 would also get issued unde quashed and it is ordered accordingly. The reason we are quashing the mnsequential order is on the principles that when the initiation of the proceedings itsetf 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 gefting quashed on the point of jurisdiction, we are not inclined to proceed further and decide 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 supra, as a one-time measure of Ashish exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court aiiowing the petitions only on the procedural flaw, the right confened on the Revenue would remain reserved to 77 proceed further if they so wlant from the stage of the order of the Supreme Coqn in the case of Ashish Aqarwal, supra. 18. We would only further like tP i I make observations that since we are inclined to dispose of the ingtant writ petition, conscious of the fact that the earlier order of t$is High Court in the case of Kanakala Ravindra Rnddy (l suf,ra) is subjected to challenge I before the Hon'ble Supreme Couft in SLP No.3574 of 2024, i preferred by the Income Tax Depa{tment, we make it clear that i allowing of the instant wfit petitioq is subject to outcome of the tI I , i aforesaid SLP preferred by the Reveiue against the decision of this I 'i High Court in the case of Kanakafo Ravindra Reddy (l supra). I This, in other words, would mean t either of the parties, if they so want, may move an appropriate i 4"t, tion seeking revival of this writ petition in the light of the decilsion of the I{on'bte Supreme Court in the pending SLP on the veryj same issue.

19. Accordingly, the instant wrif petition srands allowed in flavour of the assessee so far as the issue of jurisdiction IS concerned. As a consequence, fhe impugned noticc under challenge under Sections I48-A and 148 stands set aside/quashed. 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 Ravtndra Reddy (l supra). There shall be no order as to costs Consequently, miscellaneous petitions pending, if any, shall stand closed. //TRUE COPY// D/ T . L. VIJAYA LAXMI ANT REGISTRAR \- ccnrrnr.l rltrtrll:FEl t \rl.-v . rv.! rtment, New Delhi - 100 01 1 iso75, srot,ash Nagar, Nizamabad, Telangana - 503002'

1. Union of lndia, Ministry of Finance' lncome Tax De Z. ifre Omce of Commissioner, lncome^Tax Department' Ministry of Finance' -' dou.rn*.nt of lndia, New Delhi- 1O0 011' . 3. 5ff;';iilr""orr" rri'b"ni"Li, w*rro-i, tri.r*abad, lncome Tax Office, 6-2- " 4. The National Faceless ni.-"ii."nt CJntei ln-come Tax Department' Ministry ' oi'Fini*", Government of lndia'.New Delhi- 10,0 011' S. One CC to Ms. Mytri lndukuru, Advocate toYUUJ ;. il; cc i" siicrdi P;;;; KL*;i sdticitor cen' or lndia t-o^P-qgl- ;. 6;; cc i; s;i F, vrruri riiintii, scLj' lncome Tax Department[oPuc] B. Two CD CoPies -o-v' I To, TJ GJP HIGH COURT DATED:2 410412025 ..4_::"-:'_ -. -..tt -:eti\, __ -\ ORDER WP.No.30244 ot 2024 :.) 2 2 AIJE 20[ \\, .\ . '.iI,..t_i -"'-' - --,aa--t' 2'- ALLOWING THE WRIT PETITION WITHOUT COSTS