PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LIMITED v. '1 . The lncome Tax Officer

ORDER, (per Hon'ble Sri .Iusticc P.Sam Koshy) Heard Mr. T.Chaitanya Kumar, learned counsel for the petitioner and Ms.J.Sunitha, learned Junior Standing Counsel for the Income Tax Departrnent lor the respondents. Perused the record.

2. This is a writ petiticn where the proceedings are either challenged to the notices which were issued under Section l48A and 148 of the Income'lax Act, 196l (for shorl'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 148,,4. ol the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Officer, whereas in terms olthe amendment that was brought to the Income Tax Act by way of Finance Act, 2021 w.e.f., 01 .04.202 I onwards, proceedings 2 under Section l48A of the Act as also under Se,rtion I 4g of thc Act ought to have also been issued and pr.oceed:d in a faceless manner.

4. 'lrte contention of the petitioner is thar thc issr-re of proceedrngs being in violation of the Finance A,:t. 202 I i.e., the impugncd notices u.der Section I4gA and Sectio r r4g of the Act not bei.r3 issue<l i, a faceless lranner, ha'e alreacl...bec, clcalt rvitlr and de<:ided by this Court in the case of K,\NKANALA RAVINDIIA REDDY vs. INCOME_TAX OFI.ICEIIT decidecj on 14.09.2023 whereby a batch ol writ petitions \lere allou,ed and the proccedings initiated under Section l4gA as alrro u,cler Scction 148 olthe Acr were held to be bad with consecluential rclicfs on the ground oI it being in violation ol thc provisions of ljcction l5lz\ ol the Act read wirh Notification lgl2o22 dared 29.03 2rJ22. .the judgrncnt passed by this Court has also been subseqr-rently follou,ed in a large number of writ petitions which were allou,cd on similar Ierms. '[(2023) 156 taxmann.corn l7g (l.elangana)] -7

5. Down the line, 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 HBXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case ol RAM NARAYAN SAH vs. UNION OF INDIAT, Punjab and Ilaryana High Court in the case of JATINDER SINCI{ BANGU vs. UNION OF INDIA4, and'l'elangana l{igh Courl 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 ABHIN ANILKUMAR SHAH vS. INCOME TAX OFFICER, lN'I'BRNATIONAL TAXATION6 which is again on inl.elnational taxation and central circle, High Court ol Hirnachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI 'yzoz+1464 ITR 430 (Bom) 'L(2024) 156 taxmann.com 478 (Gauhati)l 'l(2024) 165 taxmann.com 115 (Punjab & Haryana)l ' 12024) 16'7 taxmann.com 4 1 1 (Telangana)l " [2024) 166 taxmann.com 679 (Bombay)] '[2024) 165 taxmann.corn 113 (Ilirnachal Pradesh)] 4 ;";.::: ;+. DAIIYABHAI RADADIYA vs. INCOME T{x OFFTCER, WARD 3(3x5)lt, Jharkand High Court in rhe crsc ol SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasth rn High Courr in the case of SHARDA DEVI CHHAJER vs. TNCOME TAX OFFICIIR & ANOTIIER and batch of writ pctirionsr0 which stood de,:ided on 19.03.2024. Sirnilar views have also been taken by the I)ivision Bench of Calcutta High Court in the case of GIRDIL\R GOPAL DALMIA vs. UNION OF INDTA & OIIS (M.A. I 1690 ol'2023), decided on25.09.2024.

6. Even though thc sarne issue having been decided by a large number of High Courts, we are still confi.onted with large, filing of identical lnattcrs on dai11, basis ranging betwccl 5 to l0 u,r.it petitions. That upon the ir.rstructions being so.rght tiom tlie Deparlment, titey have been taking a solitary grouncl that the decision of the Bombay High Court in the case of Hestaware Technolo,qies Ltd., (2 supra) as also the one u hich has bcen decided by this Couft in the case of Kanakola Rmintlra Retldv rz\2q SCC Ont-ine Guj 4012 '2025 SCC' Onl.ine Jhar 2lJ7 12023, IU- JD : 49 84-DB I o ' 5 (I supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 befbre the Hon'ble Supreme Court and the Hon'ble Supreme Court is seized of the matter. In addition, there are about I200 SLPs also filed arising out ol the same issue being decided by various High Courts : : *-.: 'l: -_r_rY- r=EEa-Fj l. To a query being put to the learned counsel for the Revenue, thcy have categorically accepted the lact that there is no interim older granted by the Hon'ble Supreme Court in any of these niattcrs pending before it. Meanrvhile, fresh writ petitions ol identical nature are being piled up belbre 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 1 6 months have lapsed, till date, we do not find any rernedial steps having been taken by the lncome Tax Department to take appropriate steps to either hold back lssuance of notice under Section l48A 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 ctnrinuously still initiating proceedings under. Section 148,4 of tlie Act and also initiating proceedings under Section 148 c l- the Act in contravention to the antendrnents brought into the Incorne Tax Act pursuant [o thc Finance Act.2020 as also the Finance Act 2021

9. Upon a query being put as ro rvhy can,t this rvrit petition be disposed of in the teeth o1'the decision rendered b1, this Court in the case o1- Kanokala Rovindra Reddy (l supra), learnecl Standing Counsel lol the Incorne Tax Deparln-rent contends hat tl-rose would unnecessarily bur-den the Income Tax Depaftm:nl where they would be required to file equal number of S t_l)s before tl.re Hon'ble Suprcnte Court and it rvould be furlher. burdening thc exchequer o I thc Union of India. lt u,as also the cutlention ol- the leamed Standing Counscl that no prejudicc would bc caused to the interest of the petitioners in case if this writ petition is kept pending till the ,inalization of the SLps pending before the Hon,bte Supreme Court and the lact that the petitioner is alr.eadl, enjol,ing the benef,it of interim protection. Nonetheless, on t re earlier query of this Court as to why the Income Tax Deparlmenl have not corne out with ;r mechanism to issue appropriate instrucrions or to take 7 appropriate steps in ensuring that proceedings under Section l48A of the Act as also the assesslnent 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 ol 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 ol uhich, what we are lacing is steep increase of litigation day in and day out even though various orders have been passed by ttris High Court allowing writ petitions on the very same issuc. The Income Tax authorities concerned are still even now in 2025 also initiating ploceedings in contravention 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 before ttris High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of .Kanakala Ravindra Reddy .E -r?l€i.s ( I supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakals Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners 8 insofar as the liberty which wai granted to the Revenue for initiating fresh proceedings strictry in accordance .'r'ith the amended provisions of thc Act, as arncnded by the Financ c Act. 2020 and the Fi.ance Act. 202 r . The petitioner assessee woLrrd be entitrcd to challenge or'aise the other legar objections if the l{evenue initiates fresh proceedings. The Departurent has made rro endeavotrr in availing the said liberty that rvas reserved for the l.le'en,e. On the contrary. the; have been sriil sticking on to thc stand, rvhich this High Court as rvell as rranv other High Courts al cady held to be 1 1. It appears rhat because of the aforesaid liber y, rhat this High CouIt had grantcd pcrmitting the Revenue ltrr initiating fr.esh proceedings as a one-time lrreasurc in a l'aceless manner, the Income 'l'ax Department wants to take advantage of the sarne by protracting thcse proceedings which would enable ti)err to meet the limitation that would otherwise corne in the way. .ikewise, if the writ petition is kept pending fbr a considerable long period ol tinre and finally at a Iater stage if the Hon,ble Supreme Courl confir.ms the decision taken by this High Court as also by rhe other High Courts in which the SLps are still pending, tl.r,: lncome l-ax 9 Deparlment would get the advantage of the liberty that is otherwise protected in favour of the Revenue for initiation of fresh proceedings lrom the disposal olthese matters at a much later stage which would be advantageous and beneficial to the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concemed. As a consequence, the Income Tax Depafiment gets an extended period of time for initiation of fresh proceedings.

12. The alarming trend of docket explosion in this Cou(, despite the clear precedent set in Kannkala Rovindra Rerttty (l supra), is a matter of grave concern. The Income Tax Department,s persistent initiation of fiesh proceedings, disregarding the established judiciar pronouncements, has lcd to an unprecedented surge in litigation rvith 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 Depaftment'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 \ e.r 10 position Such conduct raises serious quest ons about the adminislrative efficiency and the respect lor juclicial pronouncernents. parlicularly when this Courl has .rlrcacll, provided a balanced approach by prcserving both the Revt.nLrc's rights and assesses tntcrests. i3. Anothcr aspect which needs to be considere<l is that in fhct it should have been realized bv the Inco,-re Tax Depa'trrrcnt it.self and should havc found out via rnedia in ensuring thrt proceedings under Sections 148-,{ and 148 should not have t,ccn issued in a faceless tnannel', at least till the Hon,bte Supreme r.oLrrt decide the twelve hrrndred (1200) odd SLps which it is alread,.scizec.l of or, at least the Income Tax Department should have lbrrnd ollt some remedial stcps to ensure that wherever the authc,r.ities i.tend to initiate plocecdings under Sections 148-A and l4g orher than in a faceless manner, the proccedings should lrave bcen deferred without precipitating the matter further intimating thc assessee that they shall initiate appropriate proceedings onll, after the St,p,s are decided by thc Hon'ble Suprcme Court on the v<.n sarne issue. This again, the Income Tax Department, has not becn ablc to give a convincing reply, except for the fact that such a d:cision if at all , ) t'l 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 the level of Central Board of Direct Taxes. Though the leamed Standing Counsel for the Income Tax Deparlment contended that the Delhi High Courl 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 lorcing the assessee to knock the doors of this High Courl resulting in filing of hundreds of nerv 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 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 1S showing audacity by issuing notices continuously under Sections 148-A and 'L2 t\ 148 thrrtugh the jurisdictional Assessing Officer whereas it ought to have been only in the faceless maruler.

14. In the case of BANK OF INDIA vr;. ASSISTANT COMMISSIONER, INCOME TAXrr, on an issue whether it was justifiable 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.. : .fax "25. l\4r. Paridwalla has righfly drawn out att€rntion to the decrsion of this Court in Commissioner of lncome vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Court in Samp Furniture (p) Ltd. v. lTO13 of whrch one of us (Justice G.S. Kulkarni) was a mentber, whereln the Court categorically observed that the Revenue having not "accepted" the judgment of the High Court would not mean that ti the same is set aside in a manner known to law, it would loose its binding force. Referring to the decision of the Suprr:me Court jn Union of lndia vs. Kamlakshi Finance Corporation Ltd.14, the Court observed that the approach of the officials of Revenue of treat ng decisions being ,,not acceptable,, was critic;ized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. ',t,K2025) 170 raxmann.com 422 (Bombay)l '" ll978l ilJ ITR 589 (Bornbay) t3 lZOZll l 65 taxmann.com 5g 1i300 Taxman 452 (Bomtral ) 'o TtO}Zltaxmann.com t6/55 ELT 433 (SC) -_."^ 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 *.y-1e"19.:s.g;..."8:l-y.kl9ti-B-eggy,""x..l9-9!:i9gql;ry.g*-^._."--. are not concerned here with the correclness or othenrise 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 thrs 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 princrples 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 rt unless lts operation has been suspended by a competent court. lf this healthy \ \ .4< 't-4 rule is not followed, the result will only be, undue harassment to assesses and chaos in admir istration of tax laws.

12. We have dealt with this aspect at sqme 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 tlre High Court, seemingly vehement, and ap larenfly unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allc,wed to become widespread, could result in considerable harassment to the assesses-public without any benefit to the Revenue. We would like to say t-rat the department should take these observations in the proper spirit. The observations of the Higtr Court should be kept in mind in future and the utmosl regard should be paid by the adjudicating authorities rnd the appellate authorities to the requirements of judicial discipline and the need for giving effect to lhe orders of the higher appellate authorities which are binding on them." I 5. What is wotrying this Bench more is the fact that an endeavour is being made whoie heartedly to ensuro not to generate further litigation on issues which have been laid to rest by a large number ,f High courts all of whom have taken a consistent stand that the a.ction 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 of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanqla Ravindra Reddy (l supra) shalt however be subject to the outcome of the SLPs which were filed by the Incon.re Tax Depaftment and which is pending consideration before the l{on,ble Supreme Courl.

16. In the given facts and circumstances, this Bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarely covered by the decision of this Court and which stands fortified by the decisions of the various other High Courts on the very same issue, the pendency of this High Court would further be burdened which otherwise can be decided and disposed of as a covered matter.

17. So far as the interest of the Revenue is 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 I t6 36,37 ald 38 of the order which, for ready referen(:e, is r.eproduced heleundi:r

36. For all the aforesaid reasons, the impugnod notices issued and the proceedings drawn by the. respondent- Department is neither tenable, no[ sustainable. The notices so issued and the procedure adoFted being per se illegal, deserves to be and are accorilingly set aside/quashed. As a consequence, all the mpugned orders getting quashed, the consequential orde.s passed by the respondent-Department pursuant to the notices issued under Section 147 and 148 would rlso get quashed and it is ordered accordingly. The roason we are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders tlso gets nullified automatically.

37. The preliminary objection raised by the pe titioner 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 jurisdiction, we are not inclined to proceed further and decide the other issues raised by the petitior er which stands reserved tc be raised and contendr:d 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 Arlicle 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 right 17 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 furlher 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 Courl in the case of Kanakala Ravindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLp No.3574 of 2024, prefered by the Income Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the r ( aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakalu Ravindra Rettdy (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. 18 ( The consequential orders, if any, also stand set irside/quashed in similar terms as have been passed by this High Corrrt in the case of Ktnkanalo Ravindrt Reddy (l supra). There sha I be no order as to costs. Consequently, miscellaneous petitions pendir.rg, if any, shall stand closed //TRUE COPY/i SD/. M. NAGAMANI ASSISTANT REGISTRAR - I, SECTION OFFICER To

1. The lncome Tax Officer, ward 1, Sangareddy lncome Tax Office, Veerabhadra Nagar, New Bus Stand, Veerabhadra Nilgar, Sangareddy, Telangana-50200 1 Telangana State.

2. The Principal Chief Commissioner of lncome Tax Telzrngana and A.P, Hyderabad. lT Towers, AC Guards, [V'lasab Tank, Hyderabad 500 028, Telangana.

3. The National Faceless Assessment Center, Income Tax Department, New Delhi.

4. The Chairman, Central Board of Direct Taxes, Depart Tent of Revenue, t\,4inistry of Finance, Government of lndia, Secretariat Buildings, New Delhi - 1 10 001

5. The Secretary to the Government, Union of lndia, Degrartment of Revenue, l\4inistry of Finance, New Delhi - 1 '10001.

6. One CC to SRI THANNERU CHAITANYA KUIVAR, A,lvocate [OPUC] 7. One CC to IVS J SUNITHA (JUNIOR SC FOR INCOI\IE TAX) Advocate loPUCl 8- ONE CC tO SRI GADI PRAVEEN KUMAR, DEPUTY S;OLICITOR GENERAL OF lNDlA, Advocate (OPUC)

9. One CC to SRI P.DEVENDER, Advocate (OPUC) 10. Two CD Copies SA GJ a. 6 i /,,,.\. ==:1i E S I.1 a€ s I 10 sEP 206 ,' * DL f HIGH COURT DATED:01 10512025 ORDER WP.No.31364 of 2024 ALLOWING THE W.P WITHOUT COSTS.