High Court · 2025

Petition Under Articre 226 0f rhe constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ, order or Direction more particurarry one in the nature of a writ of rvandamus, decraring the impugned notice issued by the 2nd Respondent u/s 148 of the Act bearing DIN and Notice No. trBA/AST/s/14I 1/2022 2311051390952(1) dated 27 -03.2023 and the consequent Assessment order passed by the Respondent No. 3 u/s 147 read with section 1448 of the rncome Tax Act, 1961 bearing DrN No. rrBA/AST/s/14712023- 24t1o6os6so24(1) dated 06 02 '2024 for the Assessment year 2016-17, as arbitrary, iflegar, bad in raw, issued without jui-isdiction and as against the lar,v raid down by this Hon bre couri ; in Writ Petition No 15383 consequentlY set aside the same of 2023 and batch dated 14 - 09 - 2023 and to l.A. NO:1 OF 20 24 Pe tition Under Section 151 CPC praying the affidavit filed in support of the petition' t in Pursuance o further staY all the Proceedings passed bY the ResPondent No 3 u/s 147 rcad 961 bearing DIN No ITBA/AST/S/1 Tax Act, 1 06.O2.2024 for the Assessment Year 2016-17 P that in the circumstances stated in he High Court maY be Pleased to f the impugned Assessment Order with Section 144B of the lncome 47 I 2023-24 I 1 060565024(1 ) dated ending disPosal of the above writ petition. Counsel for the Petitioner : SRI T'PRADYOTH F:tsk.$L.J+lif .ssiitf;i;Ii.];'lll8.Tx$51[,5f+!'.miiBf OF INDIA 3Effi F.-^' Sgx,lsfl lTIffi [,t%"Jsi,t'J';"1?fl ;?^t5-il?H[?E[.='",?Ji'iEARNED The Court made the following ORDER 1 I THE IIONOLIRABLE SRI JUSTICE P.SAM KOSHY THE HoNoIIRABLE SfIYJSTICE NARSING RAo NANDIKONDA WRIT PETITIONNo.306580F 2024 ORDER: (per Hon,bte Sri Jusrice p.Sam Koshy) Heard Mr. T.pradyoth, leamed counser for the petitioner, Mr. B. Mukheq'ee, leamed counsel representing the Union of India for respondent No.l and Mr. K.Sudhakar Reddy, learned Senior Standing Counsel for the Income Tax Department fbr respondent Nos.2 to 4. perused the record.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 14gA and 1 48 of the Income 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 writ petition is being taken up today only on one of the grounds, that the notices issued under Seetion 14gA of the Act and the subsequent initiation ofproceedings under Section l4g of the Act by the jurisdictional Assessing Officer, whereas in terms of the amendment that was brought to the Income Tax Act by way \\ 2 of Finance Act, 2021 w'e'f'' 01 04'2021 onwards' proceedings under Section 148A ofthe Act as also under Section 148 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' 2027 i'e'' the impugned notices under Section 148,\ and Section 148 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 148A as also under Section 148 of the Act were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section 1 5 1A of the Act read with Notification l8l2)22 dated 29'03'2022' The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were allowed on similar .,l(2023) 156 taxmann.com 178 (Telangana)l 3 5 Down the line, we find that the same issue has also been decided agatrst the Revenue by various High Courts i.e., by the Bombay High Court in the case of IIEXAWARE TECIINOLOGIES LTD., vs. ASSISTANT COMMISSIONER oF TNCOME TAx & oTHERs2, Gaubati High courr in the case of RAM NARAYAN SAH vs. UNION OF INDIA3, punjab and Haryana High Court in rhe case of JATINDER SINGH BANGU vs. UNIoN oF rNDIA4, and Terangana High court in the case of SRI 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 ABIIIN ANILKUMAR SHAH vs. INCoME TAx OFFICER, INTERNATIONAL TAXATION6 which is again on intemational taxation and central circre, High court of Himachar pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICER?, Gujarat High Court in the case of MANSUI(HBHAI 'lzoz+1464 rrR 430 (Bom) '[(2024) 156 raxmann.com 47g (Gauhali)] '1Q024) 165 taxmann.com 115 (punjab &Uaryana)1 ' 12024) 167 taxmann.com 4l l (Telangana)l :12-9?4) 166 taxmann.com 679 (Bombay)l ' [2024) 165 taxmann.com f t f iUima"iui pradesh)] \ + iNCOME TAX OFFTCER' DAHYABIIAT RADADIYA IS. WARD 3(3XO8, Jharkand High Court in the case of SIIYAM SUNDAR SAW vs' UNION OF INDIAe' Rajasthan High Court m thecaseofSHARDADE!,ICHHAJERvs.tNCoMETAx OFFICER & ANOTHIIR and batch of writ petitionsro which stood decided ot 19'03'2024' Simiiar views have also been taken by the Division Bench of Calcutta High Court in the case of GIRDIIAR GOPAL DALMIA vs' UNION OF INDIA & ORS (M.A.T 1690 of 2023)' decided ot25'09'2024' 6. Even though the same issue having been decided by a large number of High Courts, we are still confronted with large filing of identicalmattersondailybasisrangingbetween5tol0writ 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 Kunakala Ravindra Reddy 82024 SCC online Guj 4012 "2025 SCC Online lhar 287 72023 : RJ-JD :49 g4-DBl o ' .5 ,(l supr4,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 ofthe same issue being decided by various 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 Supreme Courl in any of these matters pending before it. Meanwhile, fresh wnt 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 Income Tax Department to take appropriate steps to either hold back issuance ofnotice under Section l4gA and under Section 148 of the Act by the jurisdictional Assessing Officer, 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 148A 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'2020as also the Finance Lct202l' 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 Ravindta Reddy (l supra)' leamed Standing Counsel for the lncome Tax Department contends that those would unnecessarily burden the Income Tax Department where they would be required to file equal number of SLPs before the Hon'b1e Supreme Court and it would be further burdening the exchequer of the Union of India' It was also the contention of the learned 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 benelit of interim protection' Nonetheless, on the earlier query of this courr as to why the Income Tax Department have not come out wirh a mechanism to issue appropriate instructions or t0 lake 7 "r appropriate steps in ensuring that proceedings under Section I4gA of the Act as also the assessment orders under Section l4g of the Act are kept in a hold in the Iight of the decisions dedcided by the various High Courts, it was submitted by the le Counset thar the said steps can onty be taken r.";1":"J; 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 fbcing is steep increase of Iitigation day in and day out even though various orders have been passed by this High Court allowing writ petitions on the very same rssue. The Income Tax authorities concerned are still even now in 2025 also initiating proceedings in contravention to the provisions of Section l51A 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 judgment of this Court in the case of Kanakala Ravindra Reddy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravindra Reddy (1 supra), 'the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners .{'t-

8. insofar as the lioerry which was granted to the Revenue fcr initiating fresh 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 rn availing the said liberty that was reseryed for the Revenue' On the contrary, they have been still sticking on to the stand' which this High Court as well as many other High Courts already held to be

11. It appears that because ofthe aforesaid liberty that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a faceless manner' the Income 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 in which the SLPs are still pending, the Income Tax -l .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 an extended period of time for initiation of fresh Department gets proceedings.

12. The alarming trend of docket explosion in this Court, despite the clearprecedent set in Kanakala Ravindra Reddy (lsupra), is a matter of grave concem. The Income Tax Department,s persistent initiation of fresh proceedings, disregarding the established judicial pronouncements, has led to an unprecedented surge in titigation 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 fiesh proceedings appears to be a. calculated move to buy time and circumvent limitation p,eriods, rather than adhering to the established legal \1 v/ / 10 position. Such conduct raises serious questions about the and the respect for judicial administrative effrciencY pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revenue's rights and assesses interests '

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' at least the lncome 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 shall initiate appropriate proceedings only after the SLP'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 all '1,1. has to be taken, has to be taken for 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 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 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 Income Tax Department is showing audacity by issuing notices continuously under Sections l4g-A and - , ,,;'-r';';i; .L 148 throt gh the jurisiiictional Asscssing Officer whereas it cr:ght to have been only in the faceless manner' 14. In the case of BANK OF INDIA vs ASSISTANT COMMISSIONER' INCOME TAXrt' on an issue whether it was justifrable on the Part of the Income Tax DePartment in not er passed by the adjudicating authority only on the appeals are pending' the Division Bench of the ombay held at paragraph No'25 as under' viz'' : following an ord ground that the High Court of B -25. Mr. Paridwalla has rightly drawn out attention to the decision of this Cou( 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' tTO13 of which one of us (Justice G S Kulkarni) was a member' wherein the Court categorically observed that the Revenue having not "accepted' the iudgment 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. Referring to the decision of the Supreme Court in Unionoflndiavs.KamlakshiFinancecorporationLtd.ll'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(2025) 170 taxmann.com 422 (Bombay)l '2 1t9781 113 ITR 589 (Bombay) '3 [2024] 165 raxmann.com 5gl/300 Taxman452(Bombay) 'o 719921 taxrnann.com I 6/ 5 5 ELT 433 (SC) 73 "6. Sri Reddy is perh right in saying that the officers were not actra by any mala fides in passing the ,rornn."tto Thev perhaps genuinelv felt that the .:- -"|.^0.": lalm of the assessee was not tenabre and that, if it accePted' the Revenue would suffer. But what .was ReddY overlooks is that we are not concerned n"iri *'tn the correctness or otherwise gf their or of any factuar "oo" marafides but with the ,r""'u"'o' n the r concrus o" r;;;::::' J:,I[ii;]i#li regard to the same issu€ which were praced before them, one or tne cottector (Aooeals) and the other of the Tribunar- The High in our view, righfly "- criticized this conduct o, ,;'n.n":' Assistant corectors and the harassment to tn" assrt or these orricers ro ;T:jT";:'I:J:,:; authorities higher to them in cannot be too vehemenry ffij"",:::il:l,[:] J; 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 judiciat disciptine 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 mafter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. lf this healthy \\- L4 rule is not followed' the result will only be undue nr.""""m"* 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 oii,o"*, Solicitor General that the observations ,rO" O, the High Court' have been harsh on the ottlcers. tt is clear that the obseNations of the High Court, seemingty vehement' and apparently unpalatable to the Revenue' are only intended to curb u t"nd"n"y 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 adiudicating authorities and the appellate authorities to the requirements of 'udicial 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 laid to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the Income Tax Department being violative of fhe i, 15 observation/direction Finance Ail,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 that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (t supra) shall however be subject to the outcome of the SLps which were filed by the Income Tax Department and which is pending consideration before the Hon,ble Supreme Court.

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 Court would further be burdened which otherwise can be decided and disposed ofas a covered matter.

17. So far as the interest of the Revenue is concerned, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs \ v ?,6, 37 anC 38 citi'o cr;Jcr warci . [r' : :adY leference, i"'' ieProdt:';e." hereunder: ' sustainable '

36. For all the aforesaid reasons' the impugned notices issued and the proceedings drawn by the respondent- ,"O"nr"n, is neither tenable' nor fn" noti"es so issued and the procedure adopted being ,*n,, deserves to be and are accordingly set 0"t. "" aside/quashed As a consequence' all the impugned orders getting quashed' the consequential orders passed pursuant to the notices by the respondent-Department issued under Section 147 and 148 would atso get quashed and it is ordered accordingty 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' 1 I I I i I l i I

37. The preliminary obiection raised by the petitioner is sustained and all these writ petitions stands allowed on this very lurisdictional issue Since the impugned notices and orders are getting quashed on the point of jurisdiction, we are not inclined to proceed further and decide the other issues raised by the petitioner which stands reseryed 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{ime measure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Cou( allowing the p.etitions only on the procedural flaw, the right 17 confened on the Revenue proceed further if ,n", ,o **o',0 order of the Supreme Agarwar, supra- "o.tnt remain reserved to t'o' the stage of the rrt in the case of Ashish \ !,

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 (r supra) is subjected to chalrenge before the Hon,ble Supreme Court in SLp No.3574 of 2O24, preferred by the Income Tax Department, we make it clear that allowing of the instant writ petition is subject to ourcome of the aforesaid SLP prefered by the Revenue against the decision ofthis High Court in the case of Kanskala Rovindrs Reddy (L supra). 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 on the very same issue.

19. Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction is concemed. As .a consequence, the impugned notice under challenge under Sections l4g-A and 14g stands set aside/quashed. \ 18 The consequentiar 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 srtpra)' There shall be no order as to costs. Consequently, miscellaneous petitions pending' if any' shall stand closed' SD/. A. JAYASREE ANT REGISTRAR A /ITRUE COPY// To secrtoru oFFtcER 1. The Secretary' Union of lndia' Department of Revenue' Ministry of Finance' , +;y,?j:x\" rax officer' ward 1' Lalithamba complex' old Bus Stand' i nltHi'*f,i$$sm[ffi ft*:sir'i::'. :: ;i' ;E3#,*1;['s'fl{{fdmu'-+bi*T*ERi'^ti?T""Ju3' jri w De h 7 Two CD CoPies SA GJP lw /i... I i--r .1=':-...,r tdF- SIs - \r s'.. ',.,,i '1, 31 JlJt 20[ * Or' .-' a'>- .: ,/ i I i I I i I I I HIGH COURT DATED:0210512025 ORDER WP.No.30658 of 2024 I I I ALLOWING THE W.P WITHOUT COSTS. 1 6 '51) i:v