ANKANALA RAVINDRA REDDY v. INCOME

THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITION No.3l44l of 2024 ORDER: @er I[on'ble Sri.lttsrice P.Som Koshy) Heard Mr. T.Chaitanya Kumar, learned counsel for the petitioner and Ms.J.Sunitha, leamed Junior Standing Counsel for the lncome Tax Department lor the respondents. Perused the record

2. This is a writ petitiou where the proceedings are either challenged to the notices which were issued under Section 148A and 148 of the lncome -l-ax Act, 196 I (for short 'the Act') or the assessment orders those have been passed under Section 147 of the Act which have been assailed

3. This wlit petition is being taken up today only on one of the grounds, that the notices issued under Section 148,{ of the Act and the subsequent initiation olproceedings under Section 148 of the Act by the jurisdictional Assessing Officer, whereas in terms ol'the arnendrnent that was brought to the lncome Tax Act by way of Finance Acr, 2021 w.e.f., 01.04.202l'-oE-wards, proceedings 2 under Section l4gA of the Act as also under Se:tion l4g of the Act ought to have also been issued and proceeded in a faceless manner

4. The contention of the petitioner is thrrr the issue of proceedings being in violation of the Finance A<,r. 202 I i.e., the impugned notices under Section l4gA and Sectiorr I4g of the Act not bein5g issued in a faceless manner, have a,.eadl been dealt with and decided by this Court in rhe case of I{ANKANALA RAVINDRA REDDY vs. INCOME_TAX OPFTCERT decided on 14-09.2023 whereby a batch of writ petitions w(,r.c alrowed and the proceedings initiated under Section l4gA as als. rrnder Section 148 of the Act were held to be bad with consequenti{rl reliefs on the ground of it being in violation of the provisions of s,rction r5rA of the Act read with Notification lil2L22datcd 29.03.2()22. .Ihe judgment passed by this Court has also been subsequ,:ntly lollowed in a large number of writ petitions which were alrov.,:d on sirnilar ' K2023) 156 raxnrann.corn I 7g (1-elangana).1 3

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 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 Coun 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 OFFICER, INTERNATIONAL TAXATION6 rvhich is again on international 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 ' Tzoz+1464 ITR 430 (Bom) ' [(2024) I 56 taxmann.com 478 (Gauhati)] ' [(2024) 165 taxmann.com I I 5 (Punjab & Haryana)] ' 12024) I67 taxmann.com 4 I t ('l elangana)l " [2024) 166 taxmann.com 679 (Bombay)] '12024) 165 taxmann.com I l3 (Himachal Pradcsh)l ) 4 DAHYABHAI RADADIYA vs. INCOME TITX OFFICER, WARD 3(3X5)8, Jharkand High Court in the case of SHyAM SUNDAIT SAW vs. UNION OF INDIAe, Rajasthar_. I{igli Court in the case of SHARDA DEVI CHHAJER vs. IJ\C9114p ,O" OFFICER & ANOTHER and batch of wrir peritionsr0 which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court in the case of GIRDHAR GOPAL DALMIA vs. UNTON OF I\DIA & OIIS (M.A.T lti90 of 2023). decided on25.09.2024.

6. Even though the samc issue having been decicled by a large number o1'High Courts, we are still confronted with large filing ol identical rnatters on daily basis ranging betrveen 5 to l0 q,rit petitions. That upon the instructions being sousht fiorn the Department, they have been taking a solitary gr,tund that thc decision of the Bombay High Court in the case ol Hcxnware Technologies Ltd., (2 supra) as also the one which has been decided by this Courl in the case of Kanakalo Ravindra Reddy 8202+ SCC (Jnt.ine Guj 4012 " 2025 SCC nLine Jhar 287 [2023: RJ-ID:4984-Dg] ./ ',r4.2-i;+-:<L itrrE?,ir€.s!.6q+:.€y]jr?6 !1?:srE ar1:}|J,,i\,:!'!r. j: <i_ti,T! */i:r?:tii.,..i#f,-{,:4r: 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 Couft and the Hon'b le Supreme Court 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 lo the Iearned counsel for the Revenue' they have categoricatly accepted the f'act that there is no interim 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 belore 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 Coun itself'

8. On the one hand, even though the order of this Court that was passed as early as on 14.09.?023 and more I 6 months have lapsed, till date, we do not find any remedial steps having been taken by the Income Tax Deparlment to take appropriate steps to either hold back issuance 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 L 5 .l by all the major High Courrs in India are conrinuously still initiating proceedings under Section l4gA of rhe .Act and also initiating proceedings under Section l4g of the Act in contra,zention to the amendments brought into the Income Tax Act pursuant to the Finance Act,2020 as also the Finr:uce Act 2021 . 9' IJpon a query being put as to why can,t this writ petition be disposed of in the teeth of the decision renderec by this Court in the case of Kanakala Ravindro Reddy (l supra), leamed Standing counsei lor the Income Tax Deparlment contends that trrose would unnecessarily burden the Incorne Tax Depaftnrent where tliey wou [d lte required to file equal number of S l_ps before the IJon'ble Supreme Court and it would be further burclening rhe exchequr:r of the Union of India. It was also the contention of thc leamed Standing Counsel that no prejudice would :e caused to the interest of the petitioners in case if this writ petition rs kept pending till the hnalization ol the SLps pending beforc, the Hon,ble Supreme Courl and the fact that the petitioner is a r.eady enjoying the bcnefit of interim protection. Nonetheless, on the earlier query of this court as to why the Income 'rax Department lrave not co*e out u ith zt mechanism to issue appropriate instruct ons or to take - ,r. t ,// 7 appropriate steps in ensuring that proceedings under Section 148A of the Act as also the assessment orders under Section 148 of the Act are kept in a hold in the light of the decisions dedcided by the various High Courts, it was submitted by the learned Standing Counsel that the said steps can only be taken at the level of CBDT as any such steps would have to be taken Pan India and cannot be limited to any of these jurisdictional High Courts

10. As a result of which, what we are facing is steep increase of litigation day in and day out even though various orders have been passed by this High Court allowing writ petitions on the very same ISSUC The Income Tax authorities concemed are still even now rn 2025 also initiating proceedings in con{.ravention to the provisions of Section l51A of the Act and as a result by now, more than 600 !(, orrJ Ut LrrwDr7.rurrJ\rr\,LrL,rtar r rrt+r \?\r!rr rr. -.:: {}rf3!X&8ffi,a- to 700 petitions have been already got piled up before this High Courl on an issue which otherwise stands squarely covered by the judgment of this Courl 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 Kanakalo Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners 8 .l insofar as thc liberty which was granted to thc Revenue for initiating lresh proceedings strictly in accordance u ith the amended provisiorLs of the Act, as amended by the Finance Act, 20?0 and the Finance Act,202l. The'petitioner assessee would be entitled to challenge or raise the other legal objections if the Revenue initiates fresh proceedings. The Department has made nr endeavour in availing the said libefty that was rese.ed for the R,:venue. c)n the contrary, they have been stilr sticking on to the strrncl, wrrich this High Court as well as many other High Courts alrcady held to be bad. 1l It appears that because of the aforesaid libertl. that this High Courl hacl granted permitting the Revenue for initiatins lresh proceedings as a one-time measure in a facelesrr rnanner, the Income Tax Department wants to take advantage cf.the same by protractinp; thesc proceedings which would enable th,rrn to meet the limitation ihat n,ould otherwise come in the way. Likewise, if the writ petition is kept pending for a considerable long period ol.time and finally at a iater stage if the Hon'ble Supreme Courl confirms the decision takcn by this High Court as also by the other High Courls in which the SLps are stilt pending, tl.re Income Tax 9 Depafiment would get the advantage of the liberty that is otherwise protected in favour of the Revenue for initiation of fresh proceedings from the disposal of these matters at a much later stage rvhich would be advantageous and beneficial to the Revenue and rvould be equally disadvantageous and detrimental so far as interest of the assesses are concemed. As a consequence, the Income Tax f)epaftment gets an extended period of time lor initiation of fresh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Ktnakola Rsvindra Reddy (l supra), is a rnatter of grave concern. The Income Tax Department's persistent initiation of fresh proceedings, disregarding the established judicial pronouncements, has led to an unprecederited surge in litigation rr ith over 600-700 petitions piling up on the same issue. This cleliberate approach not only undermines the principle of judicial precedent but also strains the judicial resources unnecessarily. The Deparlment's strategy of awaiting the Suprerne Court's decision on pending SLPs while continuing to initiate fresh proceedings appears to be a calculated move to buy time and circumvent lirnitation periods, rather than adhering to the established legal \ \ 10 ..1 posltron. Such conduct raises serious questions about the administ:ativc elficiency and the respect fbr judicial pronoun()cnreuts, paflicularly when this Court has e iready provided a balanct:d approach bv preserwing both the Reve ruc,s rights and assesses lnterests

13. Another aspect which needs to be considered is that in facr it should have becn realizcd by the Income Tax Depar,nrent itself and should have lirund out via rnedia in ensuring that proceedings under Sections I4g-A and l4g should not have bcr:n issued in a faceless manncr., at least till the Hon,ble Supreme Crr-rr1 decide the twelve hundred ( I200) o<rd Sr-ps which it is arready seized of or. ar least the lncorne T'ax l)cpartment shourd have fbuntr ort some remedial steps to ensurc that wherever the ar.rthor lies intend to initiate proceedings under. Sections l4g_A and l4g, or.lrer than in a faceless ,,ranucr, the proceedings should have t,cen deferrcd without precipitating the rnatter further intimating the assessee that they shall initiate appropr.rate proceedings only after Lhc SLp,s are decided by thc l{on,ble Supreme Court on the verl. same issue. This again, the Incorne 1'ar Deparlment, has not been rble to give a convincing reph,. c1gsp1 lbr the fact that such a decision il.at ali '-7,. 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 Department contended that ttre 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 lbrcing the assessee to knock the doors of this High Court resulting in filing of hundreds of new writ petitions which in the Iong run not only affects the disposal of the writ petitions but also consumes substantial time of the Bench in hearing these rnatters again and again on daily basis. Admittedly, in spite of the matter befbre the Hon'ble 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 concemed at the State level are not ready to accept the verdict passed by a majority of t{igh Clourts 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-A and \ 72 I 148 through the jurisdictional Assessing Officer rvhereas it ousht to have been only in the faceless ffranner.

14. In the case ot- BANK OF INDIA vs, ASSISTANT COMMISSIONER, INCOME TAXrr, on an issut: u.hether it was justifiabk: on the part of the Income Tax Depaftment in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Divisiorr Bench of the High Coutt of Bombay held at paragraph No.25 as under, viz., : "25. lvlr. Parrdwalla has righfly drawn out atter t on to the decision of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Saraf,2 as also the recent decision of the co_ ordinate Bench of this Court in Samp Furniture (p) Ltd. v. lTOr3 of which one of us (Justice G.S. Kulkarni) was a member, wherein the Court categorically observed that the Revenue having not "accepted" the Judgment of the High Court would not rnean that till the same is set aside in a manner known to law, it would loose its binding force. Referring to the decision of the Suprenre Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.r4, the Court observed thal the approach of the officials of Flevenue of treating decisions belng,,not acceptable,, was critici2ed by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. ',',lr..r:f^2, t /0 Iaxrnann.corn 422 (Bonrbay)l '' [ 19781 I l3 It R 589 r Bombay r '" 120241 165 taxnrann.com 5g l/300 .l.axrnan TtOSZl taxmann.con.r l6155 ELT 43t (SC) 452 (Bombal ) ,/ - 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 wrth 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 otficers 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 Assrstant 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 discrpline 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 t I ..1 rule is not followed, the result will only b€ undue harassment to assesses and chaos in admin stration of tax laws.

12. We have dealt with this aspect at some length, because it has been suggested by the earned Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. lt is clear that the observations of the High Court, seemrngly vehemenl, and apparenfly unpalatable to the Revenue, are only tntended :o curb a tendency in revenue matters which, if allorved to become widespread, could result in consicerable harassment to the assesses_public without any :enefit to the Revenue. We woutd like to say that the department should take these observations n the proper spirit. The observatrons of the High Court should be kept in mind in future and the ulmosl regard should be paid by the adjudicating authorities and the appellate authorjties to the requirements of jrrdicial discipline and the need for giving effect to the orders of the higher appellate authorities whrch are brnding on them." 15' what is wonying this Bench rnore is the ract that an %ioemerJ,*r4oh*eagedqE{.,,"nq,fi olehto€enemtfu further litigation on issues which have been laid to -est by a large number of High Courts all of whom have taken a corlsistent stand that the action of the Income .fax Departmenr being violative of the ./ -/ ,/ --.- Finance Act,2020 and Finance Act,202l. Now, in order to protect the interest of the Revenue as also that ofthe assessee, it would be trite at this j unctule, if we dispose of the writ petition with an observation/d irection [hat the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Konkanslu Ravindru Retldy (l supra) shall however be subject to the outcome of the SLPs which were filed by the Income Tax Depaftment and which is pending consideration before the Hon'ble Supreme Cou11.

16. In the given lacts and circumstances, this Bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarell' covered by the decision of this Court and which stands lortifred by the decisions of the various other High Courts on the very sarne issue, the pendency of this High Courl would turther be burdened which otherwise can be decided and disposed of as a covered rnatter. I7 . So lar as the interest ol 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 \ 76 \ 36,37 and 38 of the order which, for ready reference, is reproduced hereunder:

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the r€spondent- Department is neither tenable, nor s(lstainable. h%4.The?1o1i6eiss6.isSU.dand.the-pro-cedUrg.ddoJ)tecl.b€ing;r6l'rj{:..1-{.ii*!*'i=j}ir.r;g: per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to fl-e notices issued under Section 147 and l4gwould tlso get quashed and il is ordered accordingly. The ()ason we are quashing the consequential order is on the orinciples that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders illso gets nullifled automatically. 37 The preliminary objection raised by the petitroner is sustained and all these writ petitions stands aj cwed on this very jurisdictional issue. Since the impugne 1 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 petition,r - which stands reserved to be raised and contendeJ in an appropriate proceedings. 38 of Ashish Since the Hon'ble Supreme Court had, in he case Agarwal, supra, as a one{ime rneasure the powers under Article 142 exercising of the ,3onstitution of lndia, permitted the Revenue to lroceed under the substituted provisions, and this Court l,lowing the petitions only on the procedural flaw, ti e right 77 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 lurther like to make observations that since we are inclined to dispose of the instant writ petition, conscious of the lact that the earlier order ol 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 Incomc Tax Dcpartment, we make it clear that \ \ t I altowing of the instant writ petition is subject to outcome of the -.ua,-;jgzurE BEJA. aforesaid SLP preferred by the Revenue against the decision of this High Court in the case ol Kantkala Ravindra Redcly (l supra). I t 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 ol the dccision of the Hon'ble Supreme Court in the pending Sl-P on the very same issue

19. Accordingly, thc instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction IS concemed. As a consequence, thc impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed. *F-?-ii \-_ \\ \ I i.l - 18 The consequential orders, if any, also stand set rside'/qlrashed in similar lenns as have been passed by this l{igh Cctrrt in the case of Kankanala Ravindra Reddy (1 supra). There shz,ll be uo orcleL as to costs Consequently, miscellaneous petitions pcnding, il any, shall stand closed ,/TRUE COPY/' /\, \i\r d.]fi f fl.."""1xyo[:?ff, SD/ TY p ISMAIL STRAR SECTION OFFICER Tax Office, agar, SangareddY, l To 1 2 3

4. 6 7 8 I r he r nco me rax orricer w a:X Veerabhadra Nagar, New u iffi :lo["J;3]t';fl,:::'J:::il?J"ill?iJ'"?':11t"i'E: ff 3t'.Xl,her,-""Iysl,?:;'ff1?[ff il:t?:,33?,?'E;,il:11",{31,'3;,n,' Ministry of Finance, Goverr 1L3R0"1a"r, Faceless Assessment center' lncome rax Department' New The Secretary to the uovernment' Unlon of lndia' D':partment of Revenue' H[Taf ffi jIffi i#b'e'trs,em.t*irTii,RI,.']" Delhi. t"[%'i to SRt GAD. PRAVEEN KUMAR' DEPUr\ sollclToR GENERAL 6il r.r-orn, Advocate (oPUC) Two C;D Copies 'l SA GJP +r4 _-t.-.- lrtE , r< t6. o({ 11 SEP 206 f,r(r\ \ ::, HIGH COURT DATED:0110512025 ORDER WP.No.31441 of 2024 ALLOWING THE W.P WITHOUT COSTS. o\