The High Court · 2025

Counsel for the Respondent Nos.1 & 2 : Ms. J.SUNITHA (JUNIC)R SC FOR rNcoME TAX) Counsel for the Respondent No.3 : SRI GADI PRAVEEN KUMAll, DEPUTY SOLICITOR GENERAL OF INDIA Counsel for the Respondent Nos.4 to 5 : SRI P.SHASHIDHAR REDDY The Court made the following ORDER 1 THE I{ONOURABLE SITI JUSTICE P.SAM KOSHY AND TIIE IIONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIl'PE]'ITION No.31417 of 2024 ORDER, (par Hon'ble Sri Jusrice P.Sam Koshv) I Ieard Mr. T.Chaitanya Kunrar, leamed counsel for the pc:titioner and Ms.J.Sunitha, learned Junior Standing Counsel for thc Income Tax Deparlnrcnt lbr thc respondents. Perused the rccord. l. 'l'his is a u,rit petition u,herc the proceedings are either challenged to the notices rvhich were issued under Section l48A 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 assailcd.

3. l his writ petition is being taken up today only on one of the grounds, that the notices issued under Section l48A of the Act and thc subseqrrent initiation ol- proccedings under Section 148 of the Act by the jurisdictional Assessing Officer, whereas in terms o1'tl-re amendmerlt that was brought to the lncorne Tax Act by way ol' Irinarrce Act, 2021 w.e.f., 01.04.2021 onwards, proceedings z under Secticn 1484. ofthe Act as also under Section 148 ofthe Act ought to have also been issued and proceedecl in a lacelcss IIanner.

4. The r:ontention of thc petitioner is that thr: issue ol proceedirrgs being in violation of the Finance Au, 2A2l i.e., thc impugnecl notices under Section l48A and Scction 148 of the Act not being issued in a laceless rnanner, have alreadv been dealt u,ith and decideci by this Court in the case of KAITIKANALA RAVINDIII. REDDY vs. INCOME-TAX OFFICERT decicled on 14.09.2013 whcreby a batcli of writ petitions \\,ele allowed and thc proceedings initiated under Section 148A as also unler Section 148 of the Ar:t were held to be bad rvith consequentiaI rcliefs on the ground ol' it being in violation ol the provisions ol Sccti,rn l5 lA ol tlre Act rcad with Notification 1812022 dated 29.0i.1021:. The said .judgrnent passed by this Court has also been subseqr-1,:ntly followed in a large nunber ol writ petitions which were allorved on similar tellns ' [(2023 ) I -56 t rxrnann.com 178 (Telangana)] -EZ 7 .,

5. Down the line, we find that the same issue has also been decided against the Revenue by vanous High Courls i.e., by the Bornbay High Court in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NAIIAYAN SAH vs. UNION OF INDIA3, Punjab and Ilaryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Courl in the case of SRI VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where lhe issue was in respect ol international 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 OFFICERi, Gujarat High Court in the case of MANSUKHBHAI 'lzoz+1464 IT'R 430 (Bom) '1Q024) 156 laxmann.com 478 (Gauhati)l " [(2024) 165 taxmann.com 115 (Punjab & I laryana)] ' 12024) 167 taxrnann.corn 41 I (Telangana) l " 12024) 166 taxrnann.com 679 (Bombay)l '[2024) i65 taxmann.com 113 (Hirnachal Pradesh)] I DAHYAIIIIAI RADADIYA vs. INCOME TAX OFFICBR, WARD 3(3X5)8, Jharkand High Court in the case of SIIYAM SUNDAR SAW vs. UNION OF INDlAe, Rajasthan High Court in the case ol'SHARDA DEVI CHHA-IER vs. INC()ME TAX OFFICUR & ANOTHER and batch of writ petitionsr0 which stood decidr:d on 19.03.2024. Sirnilar views have also been taken by the I)iv sion Bench of Calcutta High Court in '.he case ol GIRDHAR (;OPAL DALMIA vs. UNION OF INDIA & ORS (M.A.'f I 69t) of 2023), decided on 25.09.2024.

6. E,ven rhough the same issue having been decide<l by a large nurnber o1- t tigh Courts, we are still conlronted u,ith lalge filing of identical nriLtt3rs on daily basis rar-rging betwcer 5 to l0 rvrit petitions. 'l hat upon the instructions being sougl.rt liom the Depanmcnt. they have been taking a solitary ground that the decision ol tlie Bombay High Court in the casc ol' Hexuwore Technoloilics Ltd,, (2 supra) as also thc one ulrich has been t2024 sCC O r[.ine Guj 4012 '2015 Si('L Crrrl ine Jhar 287 12023 : R.r-.r I ) : 1984-DBl "1 5 (l supra) lras 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 Suprerne Courl is seized of the matter. In addition, there are about 1200 SLPs also filed arising out ofthe same issue being decided by various High Coutts.

7. To a query being put to the learned counsel for the Revenue, they have categorically accepted the lact that there is no interim order granted by the Hon'ble Suprerrre Courl in any of these nlatters pending belore it. Meanwliile, 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 I{igh Courr itself^

8. On the one hand, even though the order of this Court that u,as passed as early as on 14.09.2023 and more I 6 rronths have lapsed, tilt date, we do not llnd any rernedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance of notice under Seclion 148A and under Section 148 of the Act by the jurisdictional Assessing Officer, t'ather the authorities concerned in the teeth of series of decisions -=-_.- 6 by all the major High Courts in India are cortinrously still initiating pror e edings under Section 148.4 of thr: A,:t and also initiating proceedings under Section 148 o1' the Act ir.r contravention to the amendments brought into thc Irrco le Tax Act pursuant to thc Finance Act, 2020 as also the Financt: A:t 2021 .

9. Upon a query being put as to why can't this rvril pctition be disposed of in the teetir of the decision renderecl t,'l this Cou( in tlrc ca:;c c:f Ka nakola Rtvindrn ReCr$ (1 supra). Ie rrn,:d Stand ing Counsel for the Income Tax Department contends that those would unneccssarily burden the Income Tax Departr-nent where they would be required to file equal nurnber of SI.Ps befbre the Hon'ble Suuremc Cor.ul and it would be further buldening the exchequer oI the Union of India. It was also the contertion o1- the learned Standing Counsel that no prejudice would b,: caused to the interest of the petitioners in case if this writ petition is k:pt pending till the fin:lization of the SLPs pending before, the Hon'ble Supreme Court and the fact that the petitioner is a, rea<ly enloying the benefit ol rnterim protection. Nonetheless, or-r the earlier query of this Court as to why the Income Tax Departmcnt have not come out witl-r zr nrechanism to issue appropriate instructions; or to take 't 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 hotd in ttre light ol thc decisions dedcided by thc various High Courls, it was subrnitted 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 Courls.

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 allowir.rg rvrit petitions on the very same issr.rc. 'I-he Income Tax authorities concerned are still even norv in 2025 also initiating proceedings in contravention to the provisions ol'Section l5lA of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this Lligh CoLrrt on an issue which otherwise stands squarely covered by the judgment ol this Court in the case of Kanakula Ruvindra Reddy (l supra). What is also surprising is the fact that though while aliowing thc writ petitions in the case of Kunukala Ravindra Reddy (l supra), the Division Bench while reserving the light of the Revenue, has also protected the interest of the petitioners IJ insofar as tre liberty which was granted to the R,:venue for initiating fier;h proceedings strictly in accordance u'ith ttre amended plovisions o l' the Act, as arnended by the Finance A.ct, 2020 and tlre Finance .\ct, 2021. The petitioner assessec wor.rlc[ b<' entitled to challenge or raise the other legal objections if the Rcverue initiatcs fi'esh proceedings. The Departrncnt has made no endeavour itt availing the ,raid liberty that rvas reserved for the Re'venue. On thc contlar),, thel have been still sticking on to the stand, u'hich this l-ligh Oourt rrs rvell as rnany other High Couds alre;rdy hclcl to bc bad. ll. It appear's that bccause of the aforesaid liberty thzrt this High Court hacl rlrented permitting thc Revenue for i ritilting fi'csh proceedings as a one-tirne rlleasure in a faceless nranrter. tlte Ir-rcorne Tax Depaftmcnt wants to take advantage r-'f the same bv protracting these proceedings which would enable them to meet the limitation th,rt would otherwisc corne in the wav. I-ikewise. if the writ petition is kept pending for a considerable long period of time and lrnalll' at a later stage if the Hon'ble Supreme (louft conflrrns the decision taken by this l{igh Court as also by the other High Courts in rvhich the SLPs are stitl pending, the Irrcome Tax E-EY 9 Depaftrllent would get the advantage olthe liberty that is otherwise protected ln lavoul of the Revenue for initiation o1' fresh ploceedings liom the disposal ofthese matters at a rnuch later stage rvhich would be advantageous and beneficial to the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concerned. As a consequence, the Income Tax Depaftmenl gets an extended period of time fbr initiation of frcsh ploceedings.

12. Thc alarming trcnd of docket explosion in this CoLrrt, despitc thc clear preccdenl set it Kantkalu Ravindru Reld-y (1 supra), is a mattcr of grave concern. The Income Tax Deparlment's persistent initiation of tiesh proceedings, disregarding the established judicial pronounccments, has led to an unprecedented surge in litigation ri ith over 600-700 petitions piling up on the same issue. This deliberate approach not only undennines the principle of judicial precedent but also strains the judicial resources unnecessarily. ' re Deparlment's strategy of awaiting the Supreme Court's decision on pending SLPs while continuing to initiate fresh proceedings apllcars to bc a calculated move to buy tirne and circumvent lir.nitation periods, rather than adhering to the established legal I 10 I position. Srrch conduct raises serious questions about the adrninistratii'e efficiency and the respecl for juclicial llrollouncem lnts, particularly whe n this Coult has aiready provicled a balancccl :ptrroach by preserving both the Revenue's, rights ancl assesscs lnte[ests

13. Anothcr aspect which needs to be considered is ttrat in lact it should have bcen realized by the lncorne Tax Depart,nent itself and should have ibund out via media in ensuring that proceedings under Secticns 148-A and 148 should not have been issued in a faceless n.ranncr, at least till the Hon'ble Supreme Cour. decide the twelve htrndle,l (1200) odd SLPs rvhich it is already ;ei;:ed of or, at least the Incorne Tax Departnrcnt should have founcl out sonrc remedial steps to ensure that wherever the authorities intend to initiate procr'edings under Sections I 48-A and 148. ,tth,:r than in a thceless ma rr,er, the proceedings should have leen defen'ed without prec ipitating the matter lurther intimating the ar;sessee that they shall in tiate appropriate proceedings only after tht: SLP's are decided b1, the Hon'blc Supreme Couft on the yery s,ame issue. This again, the Income Tax Department, has not been able to give a convincins r:ply, except for the lact that such a dccision il at all 7 r 11 has to be taken, has to be taken for the whole of India, and which othcnvise has to be by rvay ofa policy decision and that too at the level of Central Board of Direct Taxes. Though the leamed Standing Counsel for the Inconre Tax Departrnent contended that the Dethi High Court dismissed a writ petition of similar nature, on tlle one hand when the High Court is struggting to reduce its pcnder-rcy, such notices which are under challenge in this r.r,r'it petition are ftircir-rg the assessce to knock the doors of this High Court resulting in filing o1'hundreds of new writ petitions which in the long run not only affects the disposal of the writ petitions but also consurnes substantial time of the Bench in hearing these mattcrs again and again on daily basis. Admittedly, in spite of the rrrattcr belbre the llon'ble Suprerne Court having been laken on many occasions, the Hon'ble Supreme Court which is seized olthe mattcr has been reluctant in granting any interim protection to the Incorne Tax Department. Yet, the authorities concemed at the State level are not ready to accept the verdict passed by a majority ol High Courts of diff'erent States on the same issue; and to make things furllrel worse, the Income Tax Departrnent IS showing audacity by issuing notices continuously under Sections 148-,4. and 72 r- 148 through the jurisdictional Assessing Officer u'lterr:as it ought to have beer only in the faceless manner.

14. In tlr: case ol BANK OF INDIA vs. AI]SISTANT COMMISSI()NER, INCOME TAXr', on an issr.re' whetlier it was justifiable c n the part of the Income Tax DeplrrtnLent in not fotlowing ar order passed by the adjudicating atrthor ity only or.r the ground that the appeals are pending, the Divisiorr Bt:nch o1' the High Court of Bombay held at paragraph No.25 as t:rtder, viz.. : "25. Mr. Paridwalla has rightly drawn out attenlion to the decision of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Court in Samp Furniture (P) Ltd. v. lTO13 of which one of us (Justice G.S. Kulkarni) was a member, tvherein the Cout categorically observed that the Revenue havng not "accepteJ" the judgment of the High Court would not nrean thal till the same, is set aside in a manner known to law, it would loose its binding f rrce. Referring to the decision of the Suprenre Oourt in Union o' lndia vs. Kamlakshi Finance Corporation Ltd.14, the Court observed that the approach of the officials of Revernue of treating Jecisions being "not acceptable" was criticized by the Supreme Court. ln such decision, following are the r,rlevant observations made by the Supreme Court. 't 11ZOZS1 170 taxmann.com 422 (Bombay)l '' 1tezt1 I l3 ITR 589 (Bombay) " 12OZ+1 I 65 laxrnann.corn 581/300 Taxman 452 (Bombuy) 'o llgOZltaxn'rann.com 16i55 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 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. It 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 lhe 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 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 furnish no ground for not following it unless its operation has been suspended by a competent court. lf this healthy L4 rul€ is not followed, the result will only be undu,-. harassment to assesses and chaos in administratio-r of t rx laws.

12. We have dealt with this aspect at so,Jne lengtl-, because it has been suggested by the learne,J Ad<litional Solicitor General that the observation s ma,ie by the High Court, have been harsh or th,-. offir:ers. lt is clear that lhe observations of the Hig r Court, seemingly vehement, and apparently unt alatable to the Revenue, are only intended to curll a t{)ndency in revenue matters which, if allowed t,: become widespread, couid result in considerabl,-. harassment to the assesses-public without any benef t to lhe Revenue. We would like to say that th,-. det artment should take these observations in th,: proler spirit. The observations of the High Court shculd be kept in mind in future and the utmost regar,l should be paid by the adjudicating authorities and th,: appellate authorities to the requirements of jLrdicizrl dis<;ipline and the need for giving effect to the orders of lhe higher appellate authorities which are bindinr; on thern."

15. What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate further litigat ion on issues which have been laid to iest by a large numbel' of High Courts all of whom have taken a consisterlt stand that the actio,r of the Income 1'ax Depaftment being i iolative olthe --EE 15 Finance Ac12020 and linance Acf,2021. Now, in order to protect the interest of the Revenue as also that of the assessee, it would be trite at tl.ris juncture, if we dispose of the writ petition with an observation/d irection that the disposal olthe instant writ petition in temrs of the judgmcnt rendered by this High Court in the case ol Kankanalo Rovindru Reddy (l supra) shall however be subject to thc outcorre of thc SLPs which were filed by the Incorne Tax Departrnent and which is pending consideration before the I{on'ble Suprcme Court

16. In the given lbcts and circurnstances, this Bench is of the considered opinion that unless and until we do not timely dispose of matters whicl-r are scluarely covered by the decision of this Court and r.vhich stands foflified bv the decisions of the various other High Courts on the very sarre issue, the pendency of this High Court would furthcr be burdened which otherwise can be decided and disposed of as a covered mattcr.

17. So far as the interest of the Revenue is concemed, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs ^16 t- 36,37 ancl38 ofthe order which, lor rcady referetrcc, is reproduccd hereunder 36 For all the aforesaid reasons, the impugnec no,:ices issued and the proceedings drawn by the responclent- De partment is neither tenable, nor sustainable. The notices so issued and the procedure adopted being pe..se illegal, deserves to be and are accordirgly set as de/quashed. As a consequence, all the irrrpul;ned or(lers getting quashed, the consequential orders pa:;sed by the respondent-Department pursuant to the nolices rssued under Section '147 and 143 would also get qu ashed and it is ordered accordingly. The reasor we arer quashing the consequential order is on the principles th€ t when the initiation of the proceedings itself was proce6rrr',, wrong, the subsequent orders also gets nu'lified automatically.

37. The preliminary objection raised by the perrtion3r is sur;tained and all these wi'it petitions stands allc,wed on thi:; very jurisdictional issue. Since the impugned notices anrl 616"o are getting quashed on the poinl of junsdiction, we are not inclined to proceed furtler and de,:ide the other issues raised by the petition=r which stands reserved to be raised and contended in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in the <;ase of ,\shish A.garwal, supra, as a one-time nlea:;ure ext:rcising the powers under Article 142 of the Co rstitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allovving the petitions only on the procedural flaw, ti-e r ight ,,

1.7 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 tu(her like to make observations that since we are inclined to dispose of the instant writ petition, conscious ol the lact that the earlier order ol this High Courl in the case of Konokalo Rtt,indro Reddy (l supra) is subjccted to challenge ) before the llon'ble Supreme Court in SLP No.3574 ol 2024, prelerred by the Income Tai Dc.partrnent, 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 casc of Kanokols Ruvirtdro Reddy (l supra). This, in other words, would nrean that either of the parlies, if they so want, may move an appropriate petition seeking revival of this writ petition in the light ol the decision o{'the Hon'ble Supreme Courl in the pending SLP on the very same issirc.

19. Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction 1S concerned. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed. ( { 18 The conseqtrential orders, if any, also stand set asider'quashed ir.r simiiar term:; as have been passed by this High Court in the case of Kankonah t?uvindra Reddy (l supra). There shall be no order as to costs. ConselLently, miscellaneous petitions pendini. if any, shall stand closed. SD/- AH q EI) ABDULLAH KHAN ISTAIIT REGISTRAR //TRUE COPY' \\ $ecroru oFFrcER ax Otfice, ar, Sangareddy

1. The lncome T,rx Officer, Ward t, Sangareddy lnco Veerabhadra I'lagar, New Bus Stand, Veerabhadra Telangana.

2. The Principal (lhief Commissioner of lncome Tax - Telangana and A-P, Hyderabad, IT Towers, AC Guards, Masab Tank, Hyderabad - 500028, Telangana.

3. The Chairman Central Board of Direct Taxes, Departmerrt ol Revenue, IVlinistry of Frn;rnce, Government of lndia, Secretariat Burldint;s, New Delhi - 110 001.

4. The National Faceless Assessment Center, lncome Tax Department, New Delhi.

5. The Secretary to the Govemment, Union of lndia, Departrnert of Revenue, Ministry of Finzrnce, New Delhi - 1 '10 001 .

6. One CC to SR THANNERU CHAITANYA KUMAR, Advocate tOPUCl 7. One CC to lt4s J.SUNITHA (JUNIOR SC FOR INCOME TAX) Advocate loPUcl

8. One CC to SR' GADI PRAVEEN KUMAR, DEPUTY SOLICITOR GENERAL OF lNDlA, Advocate (OPUC)

9. One CC to SRI P.SHASHIDHAR REDDY, Advocate (OPLTC) 1 0. Two CD Copie ; l To SA (i ,3 Irl!: SIr o ,t ,.) 23 tr[I 6 .JA (i HIGH COUF"I DATED:01 l05l?-025 ORDER WP.No.31417 of 2024 ALLOWING T I-IE W.P WITHOUT CC,STS. &1