Viiender Kedia v. of the Constitution of lndia and Sec 1 48A of

Order

(per Hon'ble Sri Justice P.Sam Koshy) Heard Ms. Himangini Sanghi, learned counsel for the petitioner and Ms.B.Sapna Reddy, leamed Junior Standing Counsel for the Income Tax Department lor the respondents. Perused the record.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 148,4. and 148 of the Income Tax Act, 196 I (for short 'the Act') or the assessment orders those have been passed under Scction 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 Section l'18A ol the Act and the subsequent initiation of proceedings undcr Scction 148 of the Act by the jurisdictional Assessing Otlice r, rr hereas irt terms of the amendment that was brought to the lncottrc'fax Act by way of Finance Act, 2021 w.e.f., 01.04.201 1 onrvards. proceedings 2 under Section l48A of the Act as also under Section 148 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, 2021 i.e., the impugned notices under Section l48A and Section t48 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 148 of the Act were held to be bad with consequential reliels on thc ground of it being in violation of the provisions of Section l5lA ol' the Act read with Notification 18/2022 dated29.03.2022. l'he said judgmcnt passed by this Court has also been subsequently fbllorved in a large nunrber of writ petitions which were allowed on similar terms. '(2021) l-i6 taxrnann.corn 178 (Telangana)l 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 rhe case of RAM NARAYAN SAII vs. UNION OF INDIA3, Punjab and Haryana High 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 rvas in respect of intemational taxation, Bombay High Court in the casc of ABHIN ANTLKUMAR SHAH vs. INCOME TAX OFFICER, INTERNATIONAL TAXATIOIt' which is again orr internariorral taxation and central circle, High Court of Himachal l)radesh in the case of GOVIND SINGH vs. INCOME TAX OFFTCER?, Gujarat High Court in the case of MANSUKI{BHAI t lzoz+1 464 ITR43o (Bom) 't(2024) 156 taxmann.com 478 (Gauhati)l '112024) 165 taxmann.com 115 (Punjab & Ilaryana)l '12024) 167 taxmann.corn 411 (Telangana)l '[2024) 166 taxmann.com 679 (Bombay)] '[2021) 165 taxmann.com 113 (Himachal Pradesh)] 4 DAHYABHAI RADADIYA vs. TNCOME TAX OFFICER, WARD 3(3X5)8, Jharkand High Court in the case of SHyAM SUNDAR SAW vs. UNION OF INDlAe, Rajasthan High Court in the case ol SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsr0 which stood decided on 19.03.2024. Similar views have also been raken by the Division Bench of Calcutta High Court in the case of GIRDHAR GOPAL DALMIA vs. UMON OF INDIA & ORS (M.A.T 1690 of 2023), decided on25.09.2024.

6. Even though the same issue having been decided by a large number ol I{igh Courts, we are still confronted with large filing of identical matters on daily basis ranging between 5 to l0 wrir petitions. 1'hat upon the instructions being sought lrom the Dcpartment. they have been taking a solitary ground that thc decision of' the Bombay High Court in the case of Hexaware Tcchnologics Ltd., () supra) as also the one which has been decided bv this Court in the case of Kanakala Ravindro Reddv t2o2+ SCC Onl-ine Gu.i 4012 '2025 SCC Onl-ine Jhar 287 'n1202i, R.r-JD:49{t4-DBl 5 (l 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 o[ the matter. In addition, there are about 1200 SLPs also hled arising out of the 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 Court in any of these rnatters 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 itselt-.

8. On the one hand, even though the order of this Court that rvas passed as early as on 14.09.2023 and more I 6 months havc lapsed, till date, we do not find any remedial steps having been taken by the Income Tax Department to take appropriate steps ro eithcr hold back issuance of notice under Section l48A and undcr Section 148 o[ the Act by the jurisdictional Assessing Olllcer, rather the authorities concerned in the teeth of series of decisions 6 by all the major High Courts in 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 Act,2020 as also the Finance Act2O2l.

9. Upon a query being put as to why can't this writ petition be disposed ol in the teerh of the decision rendered by this Court in the case of Konokala Ravindro Reddy (l supra), leamed Standing Counsel lirr the Income Tax Department contends that those would unnecessarily burden the Income Tax Department where they would bc requircd to file equat number of SLps before the Hon'ble Supreme Court and it would be further burdening the exchequcr ol'the Union of India. [t was also the contention of the learned Standing Counsel that no prejudice would be caused to the interest ol'the pctirioners in case if this writ petition is kept pending titl the lirralization of the SLps pending before the Hon,ble Suprerne ('ourl and rhe lact rhar the petitioner is already enjoying the benellt of interim protection. Nonetheless, on the earlier query of this CoLrrt as to why thc Inconte Tax Department have not come out rvith a rnechanism to issue appropriate instructions or to take I 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 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.'lhe lncome Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions ol- Section 151A of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Cout't on an issue which otherwise stands squarely covered by the .iudgnrent ol this Court in the case of Kanakala Ravindra Reddy (l supra). What is also surprising is the fact that though while allowing the rvrit petitions in the case of Kanakala Ravindra Reddv (l supra), tlie Division Bench while reserving the right ol the Revenue, has also protected the interest of the petitioners 8 insofar as the tiberty 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 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 Deparlment 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 well as many other High Courts already held to be bad. I 1. It appears that because of rhe aloresaid tiberty that this High Court had granted pennirting rhe Revenue for initiating fresh proceedings as a onc-timc measure in a laceless manner, the Income Tax Deparlmenl rvants to take advantage of the same by protracting these proceedings rvhich would enable them to meet the limitation that would otherwise come in the way. Likewise, if the writ petition is kcpt pcnding lor a considerable tong period of time and finally at a later stage il the Hon,ble Supreme Court confirms the decision taken by this l.ligh Court as also by the other High Courts in which the S LPs are still pending, the Income Tax 9 Department would get the advantage of the liberty that is otherwise protected in favour of the Revenue for initiation of fresh proceedings lrom the disposal ofthese 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 Departrnent 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 io Kan kala Ravindra Reddy (l supra), is a matter of grave concem. The lncome Tax Department's persistent initiation of fresh proceedings, disregarding the established judicial pronouncements, has led to an unprecedented surge in litigation with ovcr 600-700 petitions piting up on the same issue. This deliberate approach not only undermines the principle of judicial precedcnt but also strains the judicial resources unnecessarily. The Deparlnrent's strategy ol arvaiting 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 lirnitation periods, rather than adhering 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 interests.

13. Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Department itsetf 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 Couft decide the twelve hundred (1200) odd SLPs which it is alrcady seized of or, at least the Income Tax Deparlment shou ld have lound out some remedial steps to ensure that w,herever the authorities intend to initiate proceedings under Secrions I48-A and 148, other than in a faceless manner, the proceedings should hare been deferred without precipitating the rnarter lurther intintatine thc assessee that they shall initiate appropriate proceedirrgs onll after the SLp's are decided by the Hon'ble Suprerne Court on tlie vcry same issue. This again, the Income Tax Department, has nor been able to give a convincing reply, except fbr the lact that such a decision if at a .,r 11 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 t}re 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 filing ol hundreds of new writ petitions which in the long run not only aflects the disposal of the writ petitions but also consumes substantial tirne ol the Bench in hearing these matters again and again on daily basis. Admittedly, in spite of the matter before the Ilon'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 Departrnent. Yet, the authorities concemed at the State level are not ready to accept the verdict passed by a maj ority of High Courts of dilferent States on the same issue; and to make things further worse, the lncome Tax Department ls showing audacity by issuing norices continuously under Sections 148-A and t2 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner.

14. In the case of BAIIIK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAX|r, on an issue wherher it was justifiable on the part of the Income Tax Departrnent rn 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. 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 decisron 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 Court categorically observed that the Revenue having not "accepted' the judgment of the High Court woutd not mean that till the same is set aside in a manner known to law, it would loose its binding force. Referring to the decisron of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporataon Ltd.'4, the Court observed that the approach of the officials of Revenue of treating decisions being "not acceptable" was critrcrzed by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. 't 11ZOZS1 I 70 taxmann.com 422 (Bombal ) | '' 1tezs1 I t3 ITR 589 (Bombay) 12OZ+1165 taxmann.com 581/300 '[ axrnln 452 (Rorntray ) 'n TtgSZl taxmann.com l6155 ELI 43-.) (S(') 13 .6. Sn Reddy is perhaps right in saying that the officers vt/ere 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 aoc€pted, 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-passed two appellate orders in iegard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticized this conduct of the Assistant Collectors and the harassment to the assessee caused by lhe failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. lt cannot be too vehemently emphasized that it ls of utmost importance that, in disposing of the quasijudicial issues before them, revenue officers are bound by the decrsions 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 Tnbunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the lurisdiction of the Trrbunal The principles of iudicial discipline require that the orders of the higher appellate authonties should be followed unreservedly by the subordinate authorilies. The mere fact that the order of the appellate authority is not "acceplable" to the department - in (self 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 ( T4 rule is not foltowed, 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 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 apparently 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 would like to say that the department should take these observations in the proper spirit. The observations of the Hlgh Court should be kept in mind in ftrture and the utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are bindrng on them." I 5. What is worrying this Bench more is the tact that an endeavour is being made whole heartedly to ensurc not to generate further titigation 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 &ct,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 junchrre, if we dispose of the writ petition with an observation/direction 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 (l supra) shalI however be subject to the outcome of the SLPs which were filed by the lncome Tax Department and which is pending consideration before the Hon'ble Supreme Court.

16. In the given facts and circumstances, this Bench is o[ 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 dccisions of the various other High Courts on the very same issue, the pendency ol this High Court would further be burdened w,hich othenvise 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 of'the Revenue has alrcady been considered and protected, as has been observed in paragraphs ( L6 36,37 and 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 betng 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 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 itsetf was procedurally wrong, the subsequent orders also gets nullifi ed 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 getting quashed on the point of lurisdiction, we are not inclined to proceed furlher 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 lhe case of Ashish Aganval, supra, as a onelime measure exercising the powers under Article 142 of the Constitution of lndia, permifted the Revenue to proceed under the substituted provisions, and this Courl allowing the petitions only on the procedural flaw, the nght 17 confend on the Revenue woulC remain reserved to proceed furlher if they so want from the stage of the order of the Supreme Court in the case of Ashish Aganval, 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 Kanakala Ravindra Reddy (1 supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, preferred by the Income Tax Department,, we make it clear that I t allowing of the instant writ petition is subject to outcome of the aloresaid SLP prefened by the Revenue against the decision of this High Court in the case of Kanakala Ravindra Reddy (l supra). I'his, 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 tavour of the assessee so far as the issue ol jurisdiction ts concemed. As a consequence, the impugned notice under challenge under Sections 148-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 Ravindra Reddy (l supra). There shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shalt stand closed. To, \\ //TRUE COPY// -'(s SD/-K.BH AVANI SWAMY TANT REGISTRAR S \ \..1 secnorv oFFtcER 1 The lncome Tax Officer, lncome Tax Oepartmen\.A yderabad 2 Assessment Unit. lneoine Tax. Departmert, National c_Assessment Center No 40 1, 2 nd F do,r'E--ili,i,"i X"Zi.,', [, r rv ;hil Si";;, ;' il:W B:i I l,iB"# One CC to SRt. HtMANGtNt SANGHI Advocate tOpUCI to l\/s BoKARo SAPNA REDDY (Jr. SC FOR tNcoME rAX) ? 4 5 KKS GJP 3&r."? Two CD Copies o HIGH COURT DATED:01 10512025 ORDER WP.No.31254 of 2024 ,.-:'- c ts [l]s il6 (, ..) , oe s'.., l :--:- .) 1' -t ALLOWING THE WRIT PETITION WITHOUT COSTS u