Ir/ytrah Energy Limited v. 1. Union of lndia

Counsel for the Petitioner : SRI M.PRANAV Counsel for the Respondent No.1 : SRI B.MUKHERJEE, LEI,RNED COUNSEL REPRESENTING SRI GADI PRAVEEN KUMAR, DEPUTY SOI-ICITOR GENERAL OF INDIA Counsel for the Respondent Nos.2 to 7 : SRI VIJHAY K PUNNA, SENIOR STANDING COUNSEL FOR THE INCOME TAX DEPARTMENT The Court made the following ORDER .,, t TIIE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITION No.31387 OF 2024 ORDER, (per Hon'ble Sri Justice P.Sam Koshy) . Heard Mr. M.Pranav, learned counsel for the petitioner, Mr. B. Mukherjee, leamed counsel representing the Union of India for respondent No.l and Mr. Vijhay K Punna, leamed Senior Standing Counsel for the lncome Tax Department for respondent Nos.2 to 7. Perused the record.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 148,{ and 148 of the Income Tax Act, 1961 (for short'the Act') or the assessment orders those have been passed under Section 147 of the Act which have been assailed'

3. This writ petition is being taken up today only.on one of the grounds, that the notices issued under Section 148A. of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Office6whereas in terms of the amendment that was brought to the Income Tax Act by way 2 of Finance Act,, 2021 w.e.f., 01.04.2021 onwards, proceedings under Section 148.4 of the Act as also under Sectirln 14g 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 l4gA and Section l4g ofthe Act not being issued in a faceless manner, have already b:en dealt with and decided by rhis Court in the case of ICIiNKANALA RAVINDRA REDDY vs. INCOME_TAX OFFI( ERr decided on 14.09.2023 whereby a batch of writ petitions wer(, allowed and the proceedings initiated under Section l4gA as also rrnder Section 148 of the Act were hetd to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section l51A of the Act read with Notification tg/2022 dated2I.O3.2OZ2. The said judgment passed by this court has also been subsequerrtly folowed in a large number of writ petitions which were aror,r,r d on similar terms. 'l(2023) 156 taxmann.com l7g (Telangana)l 3

5. Down the line, we find that the'same issudnhas also been decided against the Revenue by vanous 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 the case of RAM NARAYAN SAH vs. UNION OF INDIA3, Punjab and Haryana High Courl 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 was in respect of intemational taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICE& INTERNATIONAL TAXATION6 which is again on intemational taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI 'lzoz+1464 rrR 430 (Bom) '1Q024) I56 taxmann.com 478 (Gauhati)l '[(2024) 165 taxmann.com I 15 (Punjab & Haryana)] '12024) 167 taxmarin.com 411 (Telangana)l " [2024) 166 taxmann.com 679 @ombay)] '12024) 165 taxmann.com 113 (Himachal Pradesh)l .L DAIIYABHAI. utADABiYA vs" ir\COME TA]( OFFICEb|* WARD 3(3Xr8, Jharkand High Court in the cas;: of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SIIARDA DEVI CIIHAJER vs. TNCOME TAX OFFICER & ANOTHER and batch of writ petitionsro which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court i r the case of GIRDHAR GOPAL DALIUIA vs. UNION OF II{DIA & ORS (M.A.T 1690 of 2023), decided on25.09.2024.

6. Even though the same issue having been deci,led by a large number of High Courls, we are still confronted with large filing of identical matters on daily basis ranging between 5 to 10 writ petitions. That upon the instructions being soul;ht fiom the Department, they have been taking a solitary gr,rund that the decision of the Bombay High Court in the case of Hexawure Technologies Ltd., (2 supra) as also the one wtrich has been decided by this Court in the case of Kanakala Ravindra Reddy E2024 SCC Online Guj 4012 '2025 SCC Onlini: thar 287 72023 : RJ-JD :49 84-DBl q (1 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 of the matter. In addition, there are about 1200 SLPs also filed arising out ofthe same issue being decided by various High Courts.

7. To a query being put to the learned counsel for the Revenue, they have categorically accepted the fact that there is no interim order granted by the Hon'ble Supreme Court in any of these matters 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 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 148,{ and under Section 148 of the Act by the jurisdictional Assessing Ofhcer, rather the authorities concemed in the teeth of series of decisions 6 by all the major High Courts in India are cortinuously still initiating proceedings under Section 148,4. of the Act and also initiating proceedings under Section 148 of the Act in contravention to the amendments brought into the Ir come Tax Act pursuant to the Finance Ac|2020 as also the Financr Act 2021.

9. Upon a query being put as to why can't this r,rrit petition be disposed of in the teeth of the decision rendered b.l, this Court in the case of Kanakala Ravindra Reddy (l supra), lei.rned Standing Counsel for the Income Tax Department contends thrt those would unnecessarily burden the Income Tax Departmer t where they would be required to file equal number of SL l)s before the Hon'ble Supreme Court and it would be further burdening the exchequer of the Union of India. It was also the contention of the iearned Standing Counsel that no prejudice would bt: caused to the interest of the petitioners in case if this writ petition i; kept pending till the frnalization of the SLPs pending before the Hon'bie Supreme Court and the fact that the petitioner is ah eady enjoying the benefit of interim protection. Nonetheless, on th,: earlier query of this Court as to why the Income Tax Department lave not come out with a mechanism.to issue appropriate instructi lns or to take .) 7 appropriate steps in ensuring that proceedings under Seotion 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 carr 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 jurisdictionat 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 concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section l51A of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakala Ravindra Reddy (l supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravindra Red.dy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners ( ':l:':: e insofar as the 1':.;liy i,hi,ri:, iva-s l:iranted to tlle Revenue - initiating fresh proceedings strictly in accordance wit.'r the amended provisions of the Act, as amended by the Finance ,\ct, 2020 and the Finance Act, 2021 . The petitioner assessee woulc be entitled to challenge or raise the other legal objections if the Re'zenue initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was reseled for the Revenue. On the contrary,, they have been still sticking on to the starrd, which this High Court as well as many other High Courts alrezdy held to be bad. 1 1. It appears that because of the aforesaid liberty that this High Court had granted permitting the Revenue for ir ritiating fresh proceedings as a one-time measure in a faceless manner, the Income Tax Depafiment wants to take advantage o 'the same by protracting these proceedings which would enable th< m to meet the limitation that would otherwise come in the way. L kewise, if the writ petition is kept pending for a considerable long period of time and hnally at a later stage if the Hon'ble Supreme C ourt confirms the decision taken by this High Court as also by the other High Courts in whrch the SLPs are still pending, the Income Tar 9 Department would get the advantage of the liberty that is otherwise protected 1n favour of the Revenue for initiation of fresh proceedings from 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 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 Kunakala Ravindra Reddy (1 supra), 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 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 a / ,.Y;-d\i 10 position. Such conduct raises serious questiorrs about the administrative efficiency and the respect for judicial pronouncements, particularly when this Court has al eady provided a balanced approach by preserving both the Revenrre's rights and assesses lnterests.

13. Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Departrnent itself and should have found out via media in ensuring thi,t proceedings under Sections 148-4 and 148 should not have be,:n issued in a faceless manner, at least till the Hon'ble Supreme Court decide the twelve hundred (1200) odd SLPs which it is already ;eized ofor, at least the Income Tax Department should have fo rnd out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 148, ,rther than in a faceless manner, the proceedings should have l>een deferred without precipitating the matter further intimating thr: assessee that they shall initiate appropriate proceedings only after the SLP's are decided by the Hon'ble Supreme Court on the very same issue This again, the Income Tax Department, has not beerr able to give a convincing reply, except for the fact that such a der:ision if at all 71- has to be taken, has to be taken for the whole of India, and which otherwise has to be by way ofa policy decision and that too at the level of Central Board of Direct Taxes. Though the learned Standing Counsel for the Income Tax Department contended that the Delhi High Court dismissed a writ petition of similar nature, on the one hand when the High Court is struggling to reduce its pendency, such notices which are under challenge in this writ petition are forcing the assessee to knock the doors of this High Court resulting in filing of hundreds of new writ petitions which in the long run not only affects the disposal of the writ petitions but also consumes substantial time of the Bench in hearing these matters again and again on daily basis. Admittedly, in spite of the matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the matter has been reluctant in granting any interim protection to the Income Tax Department. Yet, the authorities concemed at the State level are not ready to accept the verdict passed by a majority of High Courts of different States on the same issue; and to make things further worse, the Income Tax Department is showing audacity by issuing notices continuously under Sections 148-4 and 148 through the jurisdiciional Assessing Officer vllrereas it cug.,( to have been only in the faceless manner

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXrr, on an issue whether it was justihable on the part of the Income Tax Depa tment in not following an order passed by the adjudicating author.ty only on the ground that the appeals are pending, the Division Bench of the High Court of Bombay held at paragraph No.25 as urder, viz., : "25. I\,4r. Paridwalla has rightly drawn out attentron to the decision of this Court in Commissioner of lncome Tar( vs. Smt. Godavaridevi Sarafl2 as also the recent decision >f the co- ordinate Bench of this Court in Samp Furniture (P) Ltrl. v. ITOl3 of which one of us (Justice G.S. Kulkarni) was a membc,r, wherein the Court categorically observed that the Revenue lraving not "accepted" the judgment of the High Court would not m(,)an that till the same is set aside in a manner known to law, it wou C loose its binding force- Referring to the decision of the Suprenre 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 criticiz,.,d by the Supreme Court. ln such decision, following are thi) relevant observations made by the Supreme Court. " 11ZOZs1 170 taxmann.com 422 (Bombay)l " 119t81il3 ITR 589 (Bombay) " 720241I65 taxmann.com 58I/300 Taxmat452 (Bombay) t4 |t99z1taxmann.com 16/55 ELT 433 (5C) 13 "6. Sri Reddy is perhaps right in. saying that the olficers 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. Bul what Sri Reddy overlooks is that we are not concerned here with the correetness or otherwise of their conclusion or of any factual malafides but with the fact that the officers, in reaching in their conclusion, by-passed t\ivo appe{late orders in regard to lhe 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 authorrties 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 decisrons of the appellate authorities. The order of the Appellte Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of 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 fumish no ground for not following it unless its operation has been suspended by a competent court. lf this healthy I i i 14 rule is not followed, the result will only be undue harassment to assesses and chaos in administr rtion of tax laws.

12. We have dealt with this aspect at some lergth, because it has been suggested by the learned Additional Solicitor General that the observa:ions made by the High Court, have been harsh or the ofticers. lt is clear that the observations of the -1igh Court, seemingly vehement, and appar,:ntly unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowe,d to become widespread, could result in considerable harassment to the assesses-public without any bernefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High (:ourt should be kept in mind in future and the utmost reJard should be paid by the adjudicating authorities anr: the appellate authorities to the requirements of juc icial discipline and the need for giving effect to the orJers of the higher appellate authorities which are bir ding on them."

15. What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate fufther litigation on issues which have been laid to rost by a large number of High Courts all of whom have taken a cc nsistent stand that the action of the Income Tax Department being v iolative 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 Kankanala 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 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 already been considered and protected, as has been observed in paragraphs ( I i I ! 36,37 and 38 oithe oi<ier rvhich, for ready reference is reprodtioeu hereunder:

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respcndenl Department is neither tenable, nor sust tinable. The notices so issued and the procedure adopteC being per se illegal, deserves lo be and are accordir rgly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondenlDeparlment pursuant to the notices issued undei' Section 1 47 and '148 would ak,o get quashed and it is ordered accordingly. The rea;on we are quashing the consequential order is on the pr nciples that when the initiation of the proceedings itsr)lf was procedurally wrong, the subsequent orders ak o gets nullified automatically.

37. The preliminary objection raised by the petil oner is sustained and all these wril petitions stands allo ved on this very jurisdictional issue. Since the impugned notices and orders are getting quashed on the p >int of jurisdiction, we are not inclined to proceed furtl er and decide the other issues raised by the petitione which stands reserved to be raised and contended in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in tl e case of Ashish Agarwal, supra, as a one-time n easure exercising the powers under Article 142 )f the Constitution of lndia, permitted the Revenue to p.roceed under the substituted provisions, and this Court a llowing the petitions only on the pracedural flaw, thr: right t7 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 Kanakala Ravindra Reddy (l 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 allowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravindra 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 ln favour of the assessee so far as the issue of jurisdiction ls concemed. As a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed. I I 18 i: The consequential orders, if any, also stand set asi,lelquashed in similar terms as have been passed by this High Cou( in the case of Kankanala Ravindra Reddy (1 supra). There shall lre no order as to costs Consequently, miscellaneous petitions pending if any, shall stand closed. //TRUE COPY// AS.AI 1 SD/- M. NAGAMANI TANT RE GISTRAR \ l'.- tecrroru oFFrcER ce, Department of :rth Block, New The Principal Secretary, Union of lndia, Ministrv of FiXar jH3, S :';'-:1 IHll Re ve n u e, orri ce or rM i ri i st ry ;r"r"J Delhi-'l '10001. The Principal Chief Secretary, State of Telangana, Finar ce Secretariat Building, Hyderabad. The Assistant Director of lncome Tax, (lNT TAXN)-1 lT l owers, AC Guards, Masab Tank, Hyderabad. The Additional Director of lncome Tax, (lNT TAXN)-1 lT fowers, AC Guards, lVlasab Tank, Hyderabad. The Commissioner of lncome Tax, (lT and Tp) Aayakar l:]havan, Opposite LB !!adr-um, B-asheer Bagh, Hyderabad, Telangana- SOOOO.. The Chief Commissioner of lncome Tax, (S6uth Zone) CR Building, No.1, Queen's Road, Bengaluru- 560051 . The Principal Chief Commissioner of lncome Tax, Hyder lbad at 1Oth Floor, lT Towers, AC Guards lVlasab Tank, Hyderabad, Teianoanr. 9n" 99 to SRI M.PRANAV, Advocare IOPUC] ONE CC tO SRI GADI PRAVEEN KUIVAR, DEi'UTY SOL ICITOR GENERAL OF lNDlA, Advocate IOPUCI One CC to SRI VIJHAY K PUNNA, SENTOR STANDTNG COUNSEL FOR THE INCOME TAX DEPARTMENT, Advocate (OPUC) Two CD Copies i I To

4. 5 f) o. 9. rr(. 10 tzi\--' -t- 11 SA GJP hrHE s t4 ( o o c) (x 3 JlJir zffi it'. 1 * sn41, ,, HIGH COURT DATED:0210512025 ORDER WP.No.31387 of 2024 ALLOWING THE W.P WITHOUT COSTS. II 6