pRtTMARY AGRICULTURAL cooPERATIVE cREDIT soclETY LllvlTlP' v. Telangana-502001 Telangana State'

Counsel for the Petitioner : SRI THANNERU CHA|TANYA KUMA.R Counsel for the Respondent Nos.1 & 2 : Ms. J.SUNITHA (JUNIOR SC FOR rNcoME TAX) Counsel for the Respondent Nos.3 to 5 : SRI cADt PRAVEEN KUMAR, DEpUTy SOLICITOR GENERAL OF INDIA The Cout1 made the following ORDER ) THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSTNG RAO NANDIKONDA WRTT PETITION No.31476 of 2024 ORDBR, (per Hon'ble Sri,lustice P.Sam Koshy) lleard Mr. T.Chaitanya Kumar, Ieamed counsel for the petitioner and Ms.J.Sunitha, leamed Junior Standing Counsel for the Income Tax Deparlrnent for 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, 1961 (for short'the Act') orthe 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 Section 148A of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Officer, whereas in terms of the amendment that was brought to the Income Tax Act by way of Finance Act, 2O2l w.e.f., 01.04.2021 onwards, proceedings 2 under Section 1,lgA of the Act as also under Section I 4g of the Act ouglrt to have also been issued and proceeded ,n a faceless manner.

4. Thc. contention of the petitioner is that tl ie issue of proceedings being in violation of the Finance Ac1, llr)2 I i.e., the impugned notices under section r4gA and Section l zLg of the Act not being issued in a faceless manner, have ah.eady be,:n dealt with and decided by this Court in the case of KAN,IKANALA RAVINDIIA REDDY vs. INCOME_TAX OFFICI]RT decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceecli,gs initiated under section 14gA as also u.rier Section 148 of the:\ct were held to be bad with consequcntial re ief! on the ground of it being in violation of the provisions of Sectic,n 15 r A or the Act read wirh Notification 1gl2)22 dated 29.03.20211 The said judgment passed by this Court has also been subsequenL,l, fbllowed in a large number of writ petitions which were alrowecr ,rn simirar telms. '[(2023) 156 taxrnann.oom l7g (Ielangana)l

5. Down the 1ine, we find that the same issue has also been decided against the Revenue by various High Courts i.e., by the Bombay High Courl in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIA3, Punjab and Haryana High Court in the case ol JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the case of SRI VENKATARAMANA RIIDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of intemational 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 OFFICER?, Gujarat High Court in the case of MANSUKHBHAI ' Tzoz+1464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauhati)l " l(2024) 165 taxmann.com 115 (Punjab & Haryana)l '12024) 167 taxmann,com 4l I (Telangana)l " [2024) 166 taxmann.com 679 (Bombay)] ' 12024) 165 taxmann.com 1 1 3 (Himachal Pradesh)l 4 DAHYABHAI RADADIYA vs. INCoME TAx: OFFTCER, WARD 3(3XS)8, Jharkand High Courl in the case ot SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan I ligh Courl in the case ol SHARDA DEVI CHHAJER vs. INC,OME TAX OFFICEIi. & ANOTHER and batch of wriL petiri,rnsr0 which stood decided on 19.03.2024. Similar views have alsrt been taken by the Division Bench of Calcutta High Court in rhe case of GIRDHAII GOPAL DALMIA vs. UNrON OF INDTA & ORs (M.A.T 161)() of 2023),decided on25.09.2024.

6. Even though the same issue having been decided by a lar.ge number of High Coufts, we are still confronted with lar,.rie hling of identical matters on daily basis ranging between 5 ro l0 rvrir petitions. 'l'hat upon the instructions being sought fiom the Departmenl, they have been taking a solitary grounc that the decision of tl.rc Bombay High Court in the case of l{eraware Technologies Ltd., (2 supra) as also the one whicb has been decided by this Couft in the case of Kanakola Ravinttrn Reddy 82024 SCC OnI_ine Guj 4012 " 2025 SCC Orrl irrc .thar 287 '01202 3 : R.t-JI):lsR4_DBl a<ai-d{n jEr!n.(!nsGrrd!c,,EE:!lr!€r.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 Courl and the Hon'ble Supreme Courl 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 Courts.

7. To a query being put to the learned counsel for the Revenue, they have categorically accepted the-[a9^t--t$t.jh?," is no interim 1riupra,1-...naF-De-q!.Suo1ect.eo.rocnat1engelna-.Dpecrat*!lQavg?'-:-,.ffii order granted by the Hon'ble Supreme Court in any of these matters pending before it. Meanwhile, lresh 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 Cour-t 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 of notice under Section 148A 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 I{igh courts in India are conrirlrously still initiating pr.oceedings under Section 14gA of the .a.ct and also initiating proceedings u4der Section 14g of t,re Act in contravent iot.r to the arnendments brought into the Incorne Tax Act pursuant to tl're Finance Act,2020 as also the Finance t\ct 2021 . 9' Upon a query being put as to why can,t this rvr.il petition be disposed olin the teeth of the decision rendered by tLis Court in the case of'Ktnakakt Ravindro Reddy (l supra), leanre:d Standing Counsel for the Inc ome Tax Department contends that those u,ould unnecessarill, burden the Income Tax Departrnent rdrere they would be r.equired to file equal number of SLps relore thc Hon'ble Suprcme Court and it would be further bur<lening thc exchequer of the Union of Inclia. It was also the contetr:ion of the learned Standing counsel that no prejudice wourd be catrsed to the interest of the petitioners in case if this writ petition is kept pending till the llnalization of the SLps pending before the l{on,ble Supreme Couft and the fact thar the petitioner is alread.v enjoying the benefit o1- interim protection. Nonetheless, on the ear ier quer1, of this Court as to why the Incorne Tax Department have not come out with a nrecharrism to issue appropriate instrrclions or to take a 7 appropdate steps in ensuring that proceedings under Section 1484 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 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 lacing 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 atso initiating proceedings in coritravention to the provisions of Section 151A of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up belore this High Courl 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 Kahukala Ravindta ?O?5 alcn inifiatinrr n"...'oor{inc'" in nnn'frorrantinn +n rhe fr;d)l; al riipi"),.'iir" oiviii"n eencl, while reserving the right of ^;^i';ai^r.'di- the Revenue, has also protected the interest of the petitioners ;-*iftt- - r. .i:?cs*sirFerr- 8 insofar as the l iberly which was granted to the ](evenue ror initiating tiesh proceeclings strictly in accordance with rhe amended provisions of the Act, as amended by the Finance Act, 2020 and the Finance Acr. 202r . The petitioner assessee u,ourd be entitled to challenge o. r.aise the otlrer legar objections if the Reverue initiates liesh proceedings. The Department has made no errdeavour in availing the said liberty that was reserved for the Rcvenue. On the contrary, thc1, have becn still sticking on to the star.rd, r.vhich this High Court as rvell as many other High Courts alread.,, held to be

11. It appears that because ofthe aforesaid liberly that this I{igh Court had granted perrnitting the Revenue for initiating frcsh proceedings as a one_time rreasure in a faceless manner., the Income Tax Depaftment wants to take advantage of tlLer sams !y protracting thesc proceedings which would enable them tr meet the limitation that u,ould otherwise come in the way. Likeiiise, if the writ petition is hept pending for a considerable long pericd of time and finally ar a later stage if the Hon,ble Supreme Court confirms the decision taken by this High Court as also by the other High are still pending, the Incoure .I.ax ln u'hich the SLps Courts , ,, 9 Department would get the advantage of the liberty that is otherwise protected in favour of the Revenue lor initiation of lresh 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 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 Kanakala Ravindra Reddy (l supra)' is a matter.ofgraveConcem.ThelncomeTaxDepartment'spersistent 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 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 appears to be a calculated move to buy time and circumvent limitation periods, rather than adhering to the established legal 10 position. SLtch conduct .raises serious questions. about the administrative efficiency and the respecr lbr judicial pronouncelllents, particularly rvhen this court has alrr:rrclv provided a balanced approach by preserving both the Revenue,s rights an<J assesses intcrests

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 lound out via media in ensuring that 1;r.oceedings under Sections l4g_A and l4g should not have been issued in a faceless manner! at least till the Ilon,ble Supreme Courl decide the twelve hundr.ed (1200) odd SLps which it is already sei.zed of or., at least the Incotle Tax Dspsltllgnt shou ld have fbun<l out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections I 4g_A and 14tj, othr:.. than in a faceless manner, the proceedings should have been deferred without precipitating the matter further intimating the assessee that they shatl initiate appropriate proceedings onry after the rj,-p,s are decided by the Hon,ble Supreme Court on the very sarne issue. This again, the Income Tax Department, has not been able to give a convincing repl1,, except for the fact that such a decisio.n if at all has to be taken, has to be taken for thq 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 leamed Standing Counsel for the Income Tax Deparlment contended that the Delhi High Court dismissed a writ petition of similar nature, on the one hand when the High Courl is struggling to reduce its pendency, such notices which are under challenge in this writ petition are forcing the assessee to kriock 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 belbre the Hon'bte Supreme Courl 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 lncome Tax Department. Yet, the authorities concerned 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 148-4 and 12 i48 tluough the jurisdictional Assessing Officer wl-ereas it ought to have been only in the faceless manner 14. In the case ol BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXI I. on an lssue urhether it was Tax Deparlment in not following an order passed by the adjudicating authority only on the ground that tlie appeals are pending, the Division Eier.rch of the High Courr ol Bombay held at paragraph No.25 as und,:r, viz., : the part of the Income j usti fiable ''nnt'' drawn out attentior to the "o,t 2 as l:T:",::::,' :::::]T';"":: "25. Mr. paridwalla decision of this court ,n c odava ridevi Sara 11 ordinate Bench of this Court of which one of us (Justice c the co urt caresorica rry "accepted,, the judgment of tt the same is set aside ,n " in samp Furniture (P) Ltd' v' lro13 rJ ;":'ll:l^lr::"1lTT: i[" :"J High court wourd not mean that till bindins rorce Rererring," ff:::::,,":*i-;l;::: l:ffi : Union of lndia vs. Kamlakshi Finance Corporation Ltcl.r4, the Court observed that the approach of the officials of Revenue of treating decisions being ,,not *"' criticized hv the supreme court. ," ,d o.,1,li^"jt1:1," are the rerevant observations made by the .rr:il'::":j"wing ,,'u " lj I{1q1:,.1t, ,axmann.corn 422 rBonbay)l ;;i]e18t r I] rrR 58e 1se.6,r, '.'.120241 165 taxmann.com : 7t oozj",;; ;;, ;l;'Jl',9H?ST o ' 452 (Bombav) 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-passed two appellate orders in 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, rightly 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 vehemently emphasized that it is of 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 principies 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" 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 un,lue harassment to assesses and chaos in administrarion of tax laws

12. We have dealt with this because it has been .rrrI::t; Tl"":?:I Additional Solicitor General that the observations made by the High Court, have been harsh on t1e officers. lt is clear that the observations of the Hir;h Court. seemlngly vehement, and apparen:ly unpalatable to the Revenue, are only intended to cu.b a tendency in revenue matters which, if allowed io become widespread, could result in considerab e harassment to the assesses-public without any bener,it to the Revenue. We would like to say that department should take these observations in proper spirit. The observations of the High Courl should be kept in mind in future.and the utmost reganj ' " Er{dt s& rL Slfi-o?| Ina rarybp,ulrg+;t6#ffi;Yfiil, appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders, of the higher appellate authorities whrch are bindinc on therl. " n, .,, n., " j-,ff*F. *g=i.. . inumhe

15. What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not k) generate further litigation on issues which have been laid to rest by a [arge number of High Courts all of whom have taken a consistent stand that the action of the Income Tax Department being violatu,e of the 1 15 Finance Act,2020 and Finance Act,202l. 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 of the instant writ petition in terms of the judgment rendered by this High Courl in the case of Kankanala Ravindra Reddy (1 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 l{on'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 Coutl 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 other.wise can be decided and disposed of as a covered matter. \7 . 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 16 ., ., ii:i€actBnlB*rq*F: .3 ,36,37^and\S.6Ttf , E"BfBE.fl \*ifiBilT'fl ,rdldy?gfe*dg.,ig IICFC reproduced hereunder 36 For all the aforesaid reasons, the impugned r otices issued and the proceedings drawn by the respondent_ Department is neither tenable, nor sustairable. The notices so issued and the procedure adopteci betno per se illegal, deserves to t and are accordinr,ly set aside/quashed. o. " "on."'u orders setting quashed, ,n" ":;.";"r:":: ::#::l:::: by the respondent-Department pursuant to the r6rti6g5 issued under Section 147 quashed and it is o,.o.*o "#ollTT[ ,:,::;,1: 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 petitionr__r is sustained and all these writ petitions stands allowecl on this very jurisdictional issue. Since the impugned notrces and orders are getttng quashed on the point of jurisdiction, we are not inclined to proceed further r:nd decide the other issues raised by the petitioner wl ich stands reserved to be raised and contended in an appropnate proceedings. JO Since the Hon,ble Supreme Court had, in the ce se of Ashish Agarwal, supra, as a one{tme the powers under Article 142 exercising Constitution of India, permitted the Revenue to under the substituted provisions, and this Court allowjDg the petitions only on the procedural flaw, the ri,lht measLlre of tie prOCC:rtd 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 ofAshish Agarwal, supra.

18. We would only further like to make observations that since we are inclined to dispose of the instant wlit petition, conscious of the fact that the earlier order of this High Court in the case of Kanakala Ravindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Courl 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 aloresaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravintlra Reddy (1 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 wl.it 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 1n favour of the assessee so far as the issue of jurisdiction IS concerned. As. a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed' ( ( 18 il' The consequential orders, if any, also stand set aside/quashed in similar ter,s as have been passed by this High courr in the case of Kankanala Rnvindra Reddy (l supra). There shall be no order as to cosLs Consequently, miscellaneous petitions pending, i I an1,, shall stand closed //TRUE COPY// SD/- M. NAGAMANI S\1T11:GISTRAR Si:CTION OFFICER \ To SA GJP

1. The lncome Tax Officer, Ward .1 Sangareddy ln Veerabhadra Nagar, New Bus Stand, Veerabhad Telang ana-502001 Telangana State eTa x r:)ffice, Nagar, Siangareddy, 2. The Principal Chief Commissioner of lncome Tax , Telangan,a and A.p, Hyderabad, lT Towers, AC Guards, Masab Tank, Hyderabatl - 500 028, Telan gana 3. The National Faceless Assessment Center, lncome Tax Defrartment, New Delhi. The Chairman, Central Board of Direct Taxes, Department of Revenue, 4 Ylliltry of Finance, Government of tndia, Siir"tiiiii'arirdings, New Dethi - 110001. The. Secretary to the Government, Union of lndia, Department of Revenue, I\rlinistry of Finance, New Delhi - 1 One CC to SRt THANNERU.CHATTANV_A KUA/AR, Advocate [OpUC] One CC to N4s. J.SUN|THA (JUNtoR SC FOR rr.rdiirrrre TAx:).Adv;;;re toPUCl One CC to SRI GADI PRAVEEN KUMAR, DEpUTy SOLtctTOR GENERAL OF lNDlA, Advocate (OPUC) Two CD Copies OO1 . .10 5 6 7 8 I ? d .,.,.".'', --1-ta"':- v,|.: L I --g 't 1 0 JUr 2fl5 Sr^TCH(p + I o i ! i i i I I I I I I I i I 1 i I I { ! : t l I I I i I ! I i HIGH COURT D.ATED:01 !0512025 ORDER WP.No.31476 ot 2024 ALLOWING THE W.P WITHOUT COSTS.