High Court · 2025

Petition under Articre 226 0f rhe constitution of rndia praying that in the I rv qrlrvovrl rrrea Inerewith' the High court may be circumstances stated in the affidavit filed therewit preased to ...RESPONDENTS lssue a Writ, Order or Dir wr t or Ma nd a,,., o "",,,i;"j T"11'."" ::]:::l'l; llJ -l Jj;]J"_:: 2 in passing.the Order dated 30. 03.2OZ3 rl.. l+ae1O; and Notice issued by the Respondent No. 2 under Section 148 of the lncome Tax Act, 1961 datea O1 .Oq.2023 as i[egal, arbitrary, bad in law, void ab initio' violative of the principles of natural justice and being violative of -' Articles 14,'19 and 265 of the Constitution of lndia "nO "onJ"qu"ntry, "und"' Set aside the Order dated 30 03' 2023u/s 14BA(d) and Notice issued Section 148 of the lncome Tax Act' by the Respondent No 1961 dated 01 . 04. 2o23ca1ing for the return of income of the Petitioner lont"Ou"nt proceedings as lacking tn for AY 2016- 17and 'n' jurisdiction' ' NO: 1 oF2024 IA Petition under Section '151 in the affidavit filed in suPPort of of the Petl stay the Proceedings with the Assessment Order and stePS. CPC praying that in the circumstances stated the petition, the High Court may be pleased to l,ion"r. case for AY 2016- 17 and not proceed direct the Department to not take any coerclve Counsel for the Petitioner: SRI P'SRIKANTH RAO Counsel for the Respondent No'1: SRI B'MUKHERJEE' SC FOR UOI Counsel for the Respondent No'2 to 4: Ms' B'SAPNA REDDY' Sr' SC FOR lT The Court made the following: ORDER THE HONOTIRABLE S, P.SAM KOSHY THE HONOURA*'" S'T*#'TICE NoNrTrlSi;lcE NARS rNG RA o PETIT ON No.308s ORDER, (per Hon,ble Sri Justice p.Sam Koshy) I 70F2 024 Heard Mr. p.Srikanth Rao, leamed counsel for the petitioner, Mr. B. Mukherjee, Iearned counsel representing the Union of India for respondent No.l and Ms.B. Sapna Reddy, learned Senior Standing Counsel for the Income Tax Department fbr respondent Nos.2 to 4 and .perused the record.

2. This is a writ petition where the proceedings are either challenged to the notices which were isru"a unAe. Section l4gA and 148 of the Income Tax Act, 1961 (for short .the Act,) or the assessment orders those have been passed under Section I47 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 Section l4EA of the Act and the subsequent initiation of proceedings under Section l4g of the Act by the jurisdictional Assessing Officer, whereas in terms of the amendmenl that was brought to the Income Tax Act by way 2 l':.:' of Finance Act,202l 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 Lct' 2021 i'e'' the impugned notices under Section 148A and Section 148 ofthe 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 proceerlings 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 151A of the Act read with Notification l8l2}22 dated2g'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) 1 56 taxmann.com 178 (Telangana)l 3 5 decided by the Down the line, we find that the same issue has also been agarnst the Revenue by various High Courts i.e., Bombay High Court in the case of IIEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMTSSIONER OF INCOME TAX & OTIIERS2, Gauhati High Court in rhe case of RAM NARAYAN SAII vs, UNION oF INDIA3, Punjab and Haryana High Courr in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the case of SRI VENKATARAMANA REDDY PATLO0LA vs. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of intemational taxation, Bombay High Court in the case of ABHIN ANTLKUI\{AR SHAH vs. INCOME TAX OFFICE& INTERNATIONAL TAXATION6 which is again on inremational taxation and central circle, High Court of Himachal pradesh in the case of GOVIND SINGII vs. INCOME TAX OFFICER?, Gujarat High Court the case of MANSUKHBHAI I '1zoz+1464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 47g (Gauhati)l ^ l(2024) 165 taxmann.com l l5 (punjab & Haryana)l '12024) 167 taxm:inn.com 4l l (Telangana)l " 12024) 166 taxmann.com 679 (Bombay)l '12024) 165 taxmann.com I 13 (Himachaipradesh)l 4 DAI{YABI{AI RADADIYA vs' INCOME TAX OFFICER' WARD 3(3X$E' Jharkand High Court in the case of SIfYAM SUNDAR SAW vs' UNION OF INDIAe' Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs' INCOME TAX OFFICER & ANOTTIER and batch of writ petitionslo 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' UNION OF INDIA & ORS (M.A.T 1690 of 2023)' decided or.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 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 Kanakala Ravindra Reddy "2024 SCC Online Guj 4012 " 2025 SCC Online Jhar 287 'o 12023 : RJ-JD:49g4-DBl l 5 (1 supra) has been subjected to challenge in a Special teave 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 leamed counsel for the Revenue, they have categorically accepted the fact that there is no interim order granted by the Hon,ble Supreme Court 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 oh 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 andmore 16 months have lapsed, till date, we do not hnd any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance of notice under Section 14gA 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 AII'IOZO as also the Finance Act202l' g. 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)' learned Standing Counsel for the Income Tax Department contends that those would unnecessariiy burden the Income Tax Department where they would be required to file equal nunber of SLPs before the Hon'ble Supreme Court and it would be further burdening the exchequer of the Union oflndia' 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 titlthefinalizationoftheSLPSpendingbeforetheHon,ble Supreme court and the fact that the petitioner is already enjoying the benefit of 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 appropnate steps in ensuring that proceedings under Section l4gA of the Act as also the assessment orders under Section 14g of the Acr are kept in a hold in the light ofthe decisions dedcided 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 concerned 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 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 insofar as the liberty rvtiich was granted to the Revenue fal 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 iegal 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 stitl sticking on to the stand' which this High Court as well as many other High Courts already held to be bad.

11. It appears that because of the afortsaid liberty that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a laceless 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 woutd otherwise come in the way' Likewise' if the writ petition is kept pending for a considerable long period of time and finally at a latr.l- stage if the Hon'ble Supreme Court confirms the decision taken by this High Court as also by the other High Courrs in which the SLps are still pending, the Income Tax 9 Department would get the advantage of the liberfy 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 f-ar as interest of the assesses are concerned. 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 clearprecedent set in Kanskala Ravindra Redtly (lsupra), is a matter of grave concern. The Income Tax Department,s persistent initiation of fresh proceedings, disregarding the established judicial pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions piling up on the same issue. This deliberate approach not only undermines the principle ofjudicial precedent but also strains the judicial resources unnecessarily. The Department's strategy of awaiting the Supreme Court,s decision on pending SLPs while continuing to initiate fresh proceedings appears to be a. calculated move to buy time and circumvent limitation periods, rather than adhering to the established legal 10 ( positlon administrattve Such conduct raises serious questions about the efhciency and the respect for judicial pronouncements, particularly when this Court has already provided a balanced aPProach bY Preservtng 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 148-4 and 148 should not have been issued in a faceless manner, at least till the Hon'ble Supreme Court decide the twelve hundred (1200) odd SLPs whichlt 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-A 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 Iucome Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all t l-t has to be taken, has to be taken for the whole oflndia, and which otherwise has to be by way of a policy decision and that too at the level of Central Board of Direct Taxes. Though the leamed Standing Counsel for the Income Tax Department contended that the Delhi High Court 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 firing of hundreds of new writ petitions which in the Iong 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 " . *'& . -- -Il.a *'-+{ _*+ _ I I I I I ( 148 through the jurisdrctional Assessing Officer whereas it ought 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 justihable 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 Court of Bombay held at paragraph No'25 as under' viz'' : "25. t\ilr. Paridwatla 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 Forniture (P) Ltd' v' ITO!3 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 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 Cou(' 71zOzs1 170 taxmann.com422 (Bombay)) '2 7t9t81 113 ITR 589 (Bombay) " 12Oz+1 1 65 taxmann.com 581/300 Taxman 452 (Bombay) 'o llggzltaxmann.com 16/55ELT 433 (SC) 13 lusion or of any factuar right in salng that the t"#ll" :n:J: laim of the assessee was not accepted, the Revenue ,,6. Sri Reddy is perhr officers were not actra passins rhe,r*n""'o't"j,.ol'" genuinely felt that the c tenabre and that, if it wourd suffer. But what .was are n:t concerned ."::T;;';:';H:1:: otherwise of their con marafides but with the facr in their concrusio,, rr r;::::'ff ,:'ffi,]j:.1:,1: regard to the same issur them, one or the corrector il;:rff:r:'il:H:t"; the Tribunal. The High C ", ;:i::il:::ffi :rli} criticized this conduct the harassment to the assr or these orricers ro ,,rJ";il";"il'I:J:':; authorities higher to them ir cannor be too venementryrffi::.:: Hr[:] J utmost importance that, in iisposing of the quasijudicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appeltte Co ector 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 subordinale authorities. The mere fact that the order of the appellate authority is not "acceptable,, to the department - in itself an objectionable phrase _ and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. lf this healthy 74 rule is not followed' the result will only be undue n-".""**t 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 naa,,,onrf Solicitor General that the observations mra" oy the High Court' have been harsh on the officers. lt is clear that the observations of the High Court, seemingly vehement' and apparently unpalatable to the Revenue' are only intended to curb u r"nO"n"y in revenue matters which' if allowed to b""o*" *id"tpread' could result in considerable harassment to the assesses-public without any benefil to the Revenue. We would like to say that the Orpun*"n, 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 judicial discipline and the need for giving effect to the orders authorities which are binding of the higher appellate on them." 1 5. What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been laid to 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 the 15 Finance Act, 2020 and Finance Act, 2021. Now; in order. to protect the interest of the Revenue as also that of the assessee, it would be trite at this juncture, if we dispose of the writ petition with an observation'/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 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 concemed, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs 16 t. 36,37 ard38 of the crder 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 getting quashed, the consequential orders passed by the respondent-Department pursuant to the notices issued 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 automaticallY'

37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very iurisdictional 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 reserved to be raised and contended in an appropriate Proceedings.

38. Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one-time measure exercising the powers under Article 142 of the Constitution of lndia, permifted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right L7 conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashish Agarwal, supra.

18. We would only further like to make observations that 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 Kqnakala Ravintlra RefuIy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLp No.3574 of 2024, preferred by the lncome Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid sl-p preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravintlra 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 148-,4. and 148 stands set aside/quashed. ) I 18 G 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 Ravindra Reddy (1 supta) There shall be no order as to costs. Consequently, miscellaneous petitions pending' if any' shall stand closed. //TRUE COPY// SD/. V. HARI PRASAD UTY REGISTRAR ECTION OFFICER To, 1 . union of lndia, Ministry of Finance Rep. by its secretary, 1 66- B North Block' New Delhi - 110 001 '

2. lncome Tax Officer, Ward 1, Nalgonda lT-Office'Under Bridge Nalgonda ' itrJig";'olli"lrnsana - 50Boo1 3. The Principal Commissioner of lncome Tax - l' Hyderabad lT Towers' ltlasab - Tjnk, Hyd'erabad, Telangana - 500004'

4. The National Faceless Assessment centre, lncome Tax Department Ministry of Finance Govt. of lndia, New Delhi.

5. One CC to SRI P.SRIKANTH RAO, Advocate [OPUC] 6. One CC to SRI B.MUKHERJEE, SC FOR UOI [OPUC] 7. One CC to Ms. B.SAPNA REDDY, Sr. SC FOR lT [OPUC] 8. One CC to SRI GADI PRAVEEN KUMAR, Dy. SOLICITOR GEN. OF INDIA High Court for the State of Telangana at Hyderabad [OPUC]

9. Two CD Copies BSR GJP Vtr- HIGH COURT DATED:0210512025 ORDER WP.No.30857 of 2024 ,,1+fi-''Fr:';i;" ;/.i ,'j 3 1 JUt 2U5 \ ,2. o tsn . -,- ,,- a ,'/ \-'/ ALLOWING THE WRIT PETITION, WITHOUT COSTS \\ ca6k W