Mr.. Duggu Prashanth v. b.) consequential penalty order passed by the 1st

Heard Mr. A.V.A.Siva Kartikeya, leamed counsel for the pctitioner and Ms. J.Sunitha, leayned Junior Standing Counsel for the lncome I'ax Department for the respondents. Perused the lecord

2. This is a writ petition where the proceedings are either chailcnged to the notices which were issued under Section l48A and 148 of the Income Tax Act, 1961 (for short 'the Act') or the assessrnent ordcrs those have been passed under Section 147 of the Act which have been assailed. o 3 This writ petition is being taken up today only on one of the srornar, $ the notices issued under Section 148,{ of the Act and the subsequent initiation ofproceedings under Section 148 of thc Act by the jurisdictional Assessing Officer, whereas in terrns of the amendrnent that was brought to the Income Tax Act by way of Firrance Act, 2021 w.e.f., 01.04.2021 onwards, proceedings \i i 2 under Section l4gA of the Act as also under Scction l4g of the Act ought tc have also been issued and procceded in a faceless manner

4. I 'lhe contention of the petitioner is that the issue ol proceedirrgs being in violation of the Financ e Act, 2021 i.e., the impugned notices under Section l4gA and Section 14g of the Act not being issued in a faceress manner, have arread.y been deart with and decided by this Court in the case cl. KANKANALA RAVINDRA REDDY vs. INCOME_TAX OFF,ICERT decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section l4gA as :rlso under Section 148 of the Act were held to be bad with consequcntial reliefs on the ground of it being in violation of the provisions of Section l 5 l A of the Act read with Notification lgl2022 dated.29.C3.:r-022. The said judgment passed by this Court has also been subscquently followed in a large number of writ petitions which were ailorved on simirar I-d '[(2023) l-56 raxmann.ccrn l7g (Telangana)] { 3

5. Down the line, we hnd that the same issue has also been decided against the Revenue by various High Courts 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 the case ol RAM NARAYAN SAH vs. UNION OF INDIAT, Punjab and Haryana IJigh Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the case of SRI VENKATARAMANA'REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation, Bombay High Court 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 l{igh Court in the case of MANSUKHBHAI ' lzoz+1464 I'r It 430 (Born) 'l(2024) 156 taxrnann.com 478 (Gauhati)l " [(2024) 165 taxmann.com 1 l5 (Punjab & Haryana)] '[2021) 167 taxmann.com 4l I (Telangana)] "12024) 166 taxmann.com 679 (Bombay)l ' [2024) 165 taxmann.com 1 I 3 (Hirnachal Pradesh)] DAHYABHAI RADADIYA vs. INCOME T,d\x OFFICER, WARD 3(3X5)8, Jharkand High Court in rhe case ol SHyAM \ \-,'r SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Courr in the case of SHARDA DEVI CHHAJER vs. TNCOME 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 Courl in the case of GIRDHAR GOPAL DALMIA vs. UNION OF TNDIA & ORS (M.A.T 1690 of 2023), decided on 25.09.2024

6. Even though the same issue having been decidt:d by a large number of High Coun6, we are still confronted with ltrge filing of identical matters on daily basis ranging betweer 5 to l0 writ petitions. That upon the instructions being sorrglrt from the Department, they have been taking a solitary g.ound that the decision of' the Bombay High Court in the case ol lle_raware Technologies Ltd., (2 supra) as atio the one wrich has been decided by this Court in the case of Kanukala Rointlra Reddv 8202+ SCC Online Guj 4012 '2025 SCC Onl-ine lhar 287 " 72023, RJ-JD :49 8 4 -DB l ,V*.i 11! . .!4. :';,1. : gff'"rf: ,rit st.i , 7 l 5 (1 supra) has been subjected to challenge in a Special Leave 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 of the same issue being decided by various High Coufts.

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 I{on'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 Court that was passed as early as on 14.09.2023 and more 16 months have lapsed, till date, we do not find any remedial steps having been taken by the lncome Tax Deparlment 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 concerfled in the teeth of series of decisions t t 6 l by all the major High Courts in India are ccntinuously still initiating proceedings under Section l48A of th: ,\ct and also initiating proceedings under Section 148 ol' rhe Act in contravention to the amendntents brought into the Incorne Tax Act pursuant to the Finance Act, 2020 as also the Financ c ,\ct 2021 .

9. Upon a query being put is to why can'r this rvrit petition be disposed of in the teeth of the decision rendered by lhis Court in the case of Kanokala Ravi.ndra Reddy (l supra), learned Standing Counsel for the Income Tax Department contends tlrat those rvould unnecessarily burden the Income Tax Departme rt where they would be required to file equal number of SLps before the Hon'ble Supreme Court and it would be further brLrdening the exchequer of the Union of India. It was also the conti:ntion of the leamed Standing Counsel that no prejudice would b: caused to the interest of the petitioners in case if this writ perition is kept pending till the finalization of the SLPs pending before the Hon'ble Supreme Court and the fact that the petitioner is aheady enjoying the benefit of interim protection. Nonetheless, on th: earlier query of this Court as to why the Income Tax Department have not come out with a mechanism to issue appropriate instructirn:; or to take )-'^\l.\ 7 - 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 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 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 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 p.iled up before this High Couft on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakala Ravindra Reddy ( I supra). What is also surprising is the fact that though while 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 8 insofar as the liberty which was granted to thc Rer,enue for initiating fresh proceedings strictly in accordance w tli the amended provisions of the Act, as amended by the Financc Act, 2020 and the Finance Act,202l. The petitioner assessee wou d be entitled to challenge or raise the other legal objectidns il the R -.r t:nuc initiates fresh proceedings. The Department has made no cndeavour in availing the said liberty that was reserved for the Rcvenuc. On the contrary, they have been still sticking on to the stanr, rvhich this High Court as well as many other High Courts alrr.ady held to be

11. It appears that because ofthe aforesaid libertl tlrat rhis High Court had granted permitting the Revenue for iniriating fr-esh proceedings as a one-time measure in a laceless rnanner, the Income Tax Department wants to take advantage <,1'the same by protracting these proceedings which would enable th:rn to rreet the limitation that would otherwise come in the way. I ikcwise, if the writ petition is kept pending for a considerable long period of time and finally at a later stage if the Hon'ble Supremc ('orrrt confirms the decision taken by this High Couft as also by tlrc other I Iigh Courts in which the SLPs are still pending, the Incorne Tax 9 Department would get the advantage of the liberty that is otherwise protected in favour of the Revenue for initiation of fresh proceedings frorn the disposal olthese 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 set in Ksnaktla Ravindra Reddy (l supra), is a rnatter of grave concem. The Incorne 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 piting 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 appeals to be a calculated move to buy time and circumvent lin.ritation periods, rather than adhering to the established tegal 10 posltlon. Such conduct raises serious qut:stions about the administrative efficiency and the respoct for j ud icial pronouncements, particularly when this Court hzLs already provided a balanced approach by preserving both the Re'eluc,s righrs and assesses interests.

13. Another aspect which heeds to be consider:d is that in lact it should have been realized by the Income Tax Dsp,sn.mgnt itself.and should have found out via media in ensuring thiit proceedings under Sections I4g_A and l4g should not have been issued in a laceless manner. at least till the Hon,ble Supreme Court decide the twelve hundred (1200) odd SLps which it is alreaoy seized ofor, at least the Income Tax Department should have rbrrnd out sorre rernedial steps to ensure that wherever the auth,rrir_ies intencl to initiate proceedings under Sections l4g_A and l4g, other than in a laceless manner, the proceedings should have been defe,.ed without precipitating the matter further intimating tre assessee tliat thcy shall initiate appropriate proceedings only after the SLp,s are decided by the Hon'ble Supreme Court on the very same issue. 'fhis again, the Income Tax Departrnent, has not been able to give a convinsing reply, except for lhe fact that such a decision if at ail lr, 11 has to be taken, has to be taken for the whole o[ India, and which otherwise has to be by way of a policy decision and that too at the Ievel of Central Board of Direct Taxes. Though the leamed Standing Counsel for the Income Tax Departrnent 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 hirndreds 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 matter 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 Incotne Tax Department is showing audacity by issuing notices continuously under Sections 148-A and o ,{F t2 1 148 through the jurisdictional Assessing Officer ,r,h:reas it oughr to havc been only in the faceless manner. i.4. In the case ol BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOMB TAXrr, on an issu: vrhcther. ir w,as .iustifiable on the pafl of the Income Tax Del,ar ment in nor lollowing an order passed by t6e adjudicating authority only on the ground that the appeals are pending, the Divisior llench of thc I{igh Court of Bombay held at paragraph No.25 as rrncler. viz., : "25. lr,4r. Paridwplla has righfly 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) L.td. 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 ntean that ti the same is set aside in a manner known to law, it would loose its binding force. Referring to the decision of the Suprerne Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.14. the Court observed that the approach of the officials of llevenue of treating decisions being "not acceptable" was critici.zec by the Supreme Court. ln such decision, . following are the relevant observations made by the Supreme Court. 11:O2S; 170 raxmann.com 422 (Bombay)l 1to;81 I l3 ITR 589 (Bombay) IZOZ+1 l6-5 taxrnann.corn 581/300 Taxman 452 (tlombr1,) t' t' " 1to921raxrnann.corll 16155 DLT 433 (SC) ,t 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-pagsed two appellate orders tn 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, righfly 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 vehemenfly emphasized that it is of utmost importance . that, in disposing of the quasrudicial issues before them, revenue oflicers 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 -4* I 1 1 74 rule rs 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 l€ngth, because it has been suggested. by the le;rrned Additional Solicitor General that the observations made by the High Coud, have been harsh 01 the officers- lt is clear that the observations of the HiEh Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended tc' cr-rrb a tendency in revenue matters which, if allowed to in considorable become widespredd, could result harassment to lhe assesses-public without any benefit to the Revenue. We would like to say thart the department should take these observations i:r 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 adiudicating authorities arld the appellate authorities to the requirements of jrrdicial discipline and the need for giving effect to the orders of the higher appellate authorities which are bindrng on them."

15. What is worrying this Bench more is th: lact that an endeavour is being made whole heartedly to ensure nc't to generate further litigation on issues which have been laid to rest by a large number ol High Courts all of whom have taken a ()onsistent stand that thc action of the lncome Tax Department being vi':lative of the ; 15 Financc Act,2020 and Finance Act,202l. Now, in order to protect the interest of the Revenue as also that ofthe 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 Kankanula Ravindra Reddy (l supra) shall 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'ble S upreme Courl

16. In 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 same issue, the pendency of this High Courl 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 concemed, we are of the considered opinion that the interest ofthe Revenue has already been considered and protected, as has been observed in paragraphs * 3 76 36,,37 and 38 ofthe order which, for ready reference, is reproduced hereunder:

36. For all the aforesaid reasons, the impugned rotices issued and the proceedings drawn by the respordent- Department is neither tenable, nor sustainable. The notices so issued and the procedure adop-:ed being per se illegal, deserves to be and are accorc ingly set aside/quashed. As a consequence, all the irnp.tgned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to the notices issued under Section 147 and 148 would elso get quashed and it is'brdered accordingly. The reason we are quashing the consequential order is on the 6rrinciples that when thd inltiatlon of the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically

37. The preliminary objection raised by the pelitioner is sustained and all these writ petrtions stands all,lwed on this very junsdictional issue. Since the impugne<i notices and orders are getting quashed on the )oint of jurisdiction, we are not inclined to proceed funhe- and decide the other issues raised by the petitioner rvhich stands reserved to be raised and contenderi ir an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one{ime rneersure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to troceed under the substituted provisions, and this Court rllowing the petitions only on the procedural flaw, the right / r /.' 1 l I I l t7 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 Iu. we would only further Iike to make observations that since wc are inclined to dispose of the instant writ petition, conscious of thc l'acr that the earlier order of this High Courl in the case of Ranokala Ravindro Reddy (1 supra) is subjected to challenge belore the Hon,ble Supreme Court in SLp No.3574 of 2024, pref-crred by the Income Tax Department, we make it clear that allowing of the insJant writ petition is subject to outcome of.the afbresaid SLP preferred by the Revenue against the decision of this [Iigh Court in the case of Kanokala Ravindru Reddy (l supra). This, in other words, would mean that either of the parties, if they so want, rnay 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. I I 19 ' Accordingly, the instant writ petition stands allowed favour of the assessee so far as the issue of jurisdiction corrccrned. As a consequence, the impugned notice under challenge under Sections 14g-A and l4g stands set aside/quashed. a |$a 18 The consequential orders, if any, also stand set asirle/quashed in similar terms as have been passed by this High Court in the case ol Kankanala Ravindra Reddy (l supra). There shall t,e ;ro order as to costs. Consequently, miscellaneous petitions pending. if any, shall stand closed. //TRUE COPY// SD/. M. OSMAN ALI BAIG ASSISTANT REGISTRAR sEc mft" FFICER I To, Stadium, New Delhi - 110 003'

1. The Assessment Unit' lricome Tax Depa(ment, Nationtll e-Assessment ' d;i; N& o"rr'i noo* r'ro.- +ot, 2nd Floor, E-Ramp' Jawaharlal Nehru 2. The lncome Tax officer, Ward 2, Karimnagal^lncome l.ax office, Aayakar - Bi;;;;;, N;aiNatral Theatre, Karimnasar - 505 001 ? ThA Princioal Commissioner of lncome f ax - 2, Hydera:ad, Signature " i&#,5;. i'J;.- iiiii;ikondapur, 9.v \o,- 37(P) of K'rtha-suda' o.qPosite e6ii;ilbt curdens, s'eritinga;pa1y tr/'andal, Rahga Rerldy'District, Hyderabad - 500 084, Telangana Telansana '

4. One CC to SRI A.V.A.SIVA KARTIKEYA, Advocate' [OPUC] 5. One CC to Ms.J.SUNITHA' (JUNIOR SC FOR INCOIVE TAX) [OPUC] 6. Two CD CoPies. BSK GJP HIGH COURT DATED:291041202s t ORDER WP.No.3064T of 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS q 2- u \ \t' 03 siP x5 I 4,: t