The High Court · 2025

Petition under Sectron 151 cPC praying that in the cirr;umstances stated in the affidavit fired in support of the petition, the High court rr ay be preased to suspend the order Under section 147 t.w.s 144 Date of 15_03_2024, DIN ,rBA/AST/S/14712023 -24r106 2057576 ('r) for the Assessment year 20.r8-19 determining the totar income of Rs. 1,48,7g,375/- and Demand notice u/s 156 0f the rncome Tax act 196'1 , vide DrN and Notice No. rrBA/As;-rls/15 612023-24r '106 205 7626 (1,i Dt o5-03-2024 for the assessment year lrolB-.19 pending disposal of the above Writ petition. Counset for the petitioner: SRI THANNERU CHA|TANYA KUMAR Counset forthe Respondent No.1 to 4: SRI K.SUDHAKAR REDDY, Sr. SC FOR IT Counsel for the Respondent No.5: SRI B.MUKHERJEE, SC FOR UNION OF INDIA The Courl made the following: ORDER l I I i l i I r ./) THE HONOT]RABLE SRI JUSTICE P'SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRITPE TITION No.3219 20F 2024 9RDEB, (per Hon'ble Sri Justice P Sam Koshy) Heard Mr. Thanneru Chaitanya Kumar' learned counsel for the petitioner, Mr. K'Sudhakar Reddy' learned Senior Standing CounseiforthelncomeTaxDepartmentforrespondentNos.lto4 and Mr. B.Mukherjee, leamed counsel representing the Union of India for respondent No'5' Perused the record'

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 148,4. and 148 of the Income Tax Act, 1961 (for short'the Act') 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 Officer' whereas in terms of the amendment that was brought to the Income Tax Act by way 2 of Finance Act, Z02l w.e.f., 01.04.2021 onwards, proceedings under Section 148A of the Act as also under Section 14g of the Act ought to have also been issued and proceeded ..rr a faceless manner

4. The contention of the petitioner is that tL e issue of proceedings being in violation of the Financ e Act, 21.021 i.e., the impugned notices under section l4gA and Section 11ti of the Act not being issued in a faceless manner, have already ber:r dealt with and decided by this Courr in rhe case of KA\KANALA RAVINDRA REDDY vs. INCOME_TAX OFFICI]R.T decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section 14gA as also un<rer section 148 of the Act were held to be bad with consequential reliefs on the ground of ir being in violation of the provisions of Secticn 15rA of the Act read with Notification lg/2022 dated 29.03.ZO2it. The said judgment passed by this Court has also been subsequentll.followed in a large number of writ petitions which were allowed .n similar '[Q023) 156 raxrnann.com 17g (Telangana)J ) 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 SAI{ vs' UNION OF INDIA3' Punjab and Haryana High Court 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 which is again on intemational taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs' INCOME TAX OFFICER?' Gujarat High Court in the case of MANSUKHBHAI ' Vozql464 ITR 430 (Bom) 'ilzOzil 156 taxmann.com 478 (Gauhati)l 'iizozq 165 taxmann.com 115 (Punjab & Haryana)l '12024) 167 taxmairn.com 411 (Telangana)l " 12024) 166 taxmann.com 679 (Bombay)l 'iioz+i 1 65 taxmann.com I 13 (Himachal Pradesh)l 4 DAHYABIIAI RADADIYA vs. INCoME TAx OFFICER, WARD 3(3X5)8, Jharkand High Court in the case of SHyAM SUNDAR SAW vs. TINION OF INDIAe, Rajasthan High Court in the case ol SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petiticnsr0 which stood decided on 19.03.2024. Similar views have alsc been taken by the Division Bench of Calcutta High Court in .he case of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 of 2023), decided on25.09.2024.

6. Even though the same issue having been decidec by a large number of High Courts, we are still confronted with large flling of identical matters on daily basis ranging betrveen 5 lo l0 writ petitions. 'lhat upon the instructions being sought ftom the Department. they have been taking a solitary grounl that the decision of' the Bombay High Court in the case of Hexaware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravinira Reddy 82OZq scc online Guj 4012 '2025 SCC Online lbar 287 7zoz3 : RJ-JD :49 8 4-DBl 'l 5 (1 supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 before the Hon'ble Supreme 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 Iapsed, till date, we do not hnd any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance of notice under Section 148A and under Section 148 of the Act by the jurisdictional Assessing Ofhcer' rather the authorities concemed in the teeth of series of decisions I 6 by all thc major High Courts in India are conlinuously still initiating ltroceedings under Section l4gA of the .,\ct and also initiating proceedings under Section 14g of rhe Act in contravention to the amendments brought into the Incorie Tax Act pursuant [o the Finance Act,2020 as also the Finance Acl 2021.

9. Upon a query being put as to why can,t this u,rit petition be disposed of in the teeth of the decision rendered by this Court in the case of Kanakala Ravindra Reddy (l supra), learned Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Deparlment where they would be required to file equal number of SLps before the Hon'ble Supreme Court and it would be further buidening the exchequer of the Union of India. It was also the contertion of the leamed Standing Counsel that no prejudice would be c,aused to the interest of the petitioners in case if this writ petition is irr:pt pending till the frnalization of the SLps pending before tLe Hon,ble Supreme Court and the fact that the petitioner is already enjoying the benefit of interim protection. Nonetheless, on the e,eLrlier query of this Coud as to why the Income Tax Department havr: not come out with a m,echanism to issue appropriate instructions or to take ) 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 ofthe 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 ofCBDT as any such steps would have to be taken Pan India and cannot be limited to any of these jurisdictional High Coutts'

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 concerned 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.onanissuewhichotherwisestandssquarelycoveredbythe judgment of this Court in the case of Kanakala Ravindra Reddy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners t: l ; I 8 insofar as the liberty which was granted to the Revenue for initiating fresh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Financ e Act, 2020 and the Finance Act,202l. The petitioner assessee would be entitled to challenge or raise the other legal objections if the Reve.nue initiates fiesh proceedings. The Department has made no enflsayeu1 l, availing the said liberty that was reserved for the Revc;.rue. on the contrary, they have been still sticking on to the stanri which this High Coufl as well as many other High Courts alreaclr, held to be bad.

11. It appears that because ofthe aforesaid liberty that this High Court had granted permitting the Revenue for initirting fresh proceedings as a one-time measure in a faceless rr anner, the Income Tax Department wants to take advantage of the same by protracting these proceedings which would enable them 1o meet the limitation that would otherwise come in the way. Likervise, if the writ petition is kept pending for a considerable long period of time and finally at a later stage if the Hon,ble Supreme Court confirms the decision taken by this High Court as also by the cther High Courts in rvhich the SLps are still pending, the lncome Tax t' 9 Department 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 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 setit Kanakala 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 sfiategy 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 legat 10 position. Such conduct raises serious questions about the administrative efhciency and the respect lbr judicial pronouncelnents, particularly when this Court has already provided a balanced approach by preserving both the Revenur: s rights and assesses lllterests.

13. Another aspect which needs to be considered is trat in fact it should have been realized by the Income Tax Departmr:nt itself and should have found out via media in ensuring that irroceedings under Sections 14g_A and 14g should not have been issued in a f'aceless manner, at least till the Hon,ble Supreme Cour.t decide the tweive hundred (1200) odd SLps which it is already seized ofor, at least the Lrcome Tax Department shou rd have fbund out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 14g_A and 14g, other than in a faceless manner, the proceedings shourd have been deferred without precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only after the SLp,s are decided by the Hon,ble Supreme Court on the very sare issue. This again, the Income Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all i r i 7l 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 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 Coufi resulting in hling 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-A and 72 148 through the jurisdictional Assessing Offlcer whereas it ought to have been only in the faceless manner

14. In the case of BANK OF INDIA vs. .a.SSISTANT COMMISSIONER, INCOME TAXrr, on an issue vr;tether it was justifiable on the part of the Income Tax Deparlrnent in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division Uench of the High Courl of Bombay held at paragraph No.25 as undr:r, viz., : "25. Mr. paridwalla has righfly drawn out attentiol 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. lTOr3 of which one of us (Justice G.S. Kulkarni) was a member, rvherein the Court categorically observed that the Revenue havng not "accepted' the judgment of the High Court would not mea.r that till the same js set aside in a manner known to law, it would (,ose its binding force. Referring to the decision of the Supreme C;ourt in Union of India vs. Kamlakshi Finance Corporation Ltd.14, the Court observed that the approach of the officials of Revenue of treating decisions being ,,not acceptable" was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. il tlt|, Llo rax,nam.com 422 (Bombay)l '' ll978l I I r ITR 589 (Bombay) '1 TZOZ+1 16.5 tarmann.corn 5g 1/300 Taxman 452 (Bombay) ltggZltaxrnann.com 16155ELT 433 (SC) : I i I i i I r I i i , i i I I I I I I I I i I I I I I I I I I I I l i l 73 "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 tvvo appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy lt cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasiiudicial 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 iurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the hlgher 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 subiect matter of an appeal can furnish no ground for not. following it unless its operation has by a competent court lf this healthy ?uspended .: :.. ';], ,r..-;, .' ;.:i ,',, 3.'i li l , ,.-- . x . ;4,;$.-ir ']l|" .?r .;|l|l , iLr&:i5ls t, Y' r ', .: i l : , I i I I t i I I I t i 14 rule is not followed, the result will only be un Jue harassment to assesses and chaos in administra:ion of tax laws. 12 We have dealt with this aspect at some length, the learred because lt has been suggested by Additional Solicitor ceneral that the observatic ns made by the High Court, have been harsh on the officers. It is clear that the observations of the High Cour1, seemingly vehement, and apparenfly unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assesses_public without any benefit to the Revenue. We would like to say that the department should take these observations in ll- e proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities and the apoellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are bindin{) on them." 15' what is worrying this Bench more is the tar:t that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the Income Tax Department being viola_ive of the 15 Finance Act,2020and 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 rendeied by this High Court in the case of Kankanala Ravindra Retfuly (1 supra) shall however be subject to theoutcomeofthesLPswhichwerefrledbythelncomeTax Depadment and which is pending consideration before the Hon'ble Supreme Coutt.

16. In the given facts and circumstances' this Rench 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 ofthe Revenue has already been considered and protected, as has been observed in paragraphs i I . j i I I I , i 16 36,37 and 18 ofthe order which, for ready reference, rs reproduced hereunder: 36 For all the aforesaid reasons, the impugned nltices issued and the proceedings drawn by the resporrdent_ Department is neither tenable, nor .sustainable. The notices so issued and the procedure adopted being 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 the ncttces issued under Section 147 and 14g would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the prinl ples that when the initiation of the proceedings itsell was procedurally wrong, the subsequent orders also gets nullified automatically_ :17. The preliminary objection raised by the petitionor is sustained and all these writ petitions stands allowec 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 petitioner wl- ich slanCs reserved to be raised and contended in an appropriate proceedings. of Ashish Since the Hon'ble Supreme Court had, in the c,zrse Agarwal, supra, as a one-time measure the powers under A(icle 142 exercising of the Constitution of lndia, permifted the Revenue to proceed under the substituted provisions, and this Court allowirg the petitions only on the procedural flaw, the right 17 confened 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 ol the instant writ petition' conscious of the tact that the earlier order of this High Court in the case of Kanakalu Ravindra Reddy (l supra) is subjected to challenge befbre the Hon'ble Supreme Court in SLP No'3574 of 2024' preferred by the lncome Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP prefened by the Revenue against the decision of this High Court in the case of Kanakala Ravindra Reddy (l supra)' This,inotherwords,wouldmeanthateitheroftheparties'ifthey so want, may move an appropriate petition seeking revival of this writ petition in the tight of the decision of the Hon'ble Supreme Court in the pending SLP on the very same issue' I

19. Accordingly, the instant writ petition stands allowed favour of the assessee so far as the issue of jurisdiction concerned. As-a consequence, the impugned notice under 1n IS challenge under Sections 148-4 and 148 stands set aside/quashed' 18 The consequential orders, if any, also stand set asirle/quashed in similar terrns as have been passecl by this High Court in the case of Kankanala Ravindra Redtly (l supra). There shall br: no order as to costs Consequcntly, miscellaneous petitions pending, if any, shall stand closed. //TRUE COPY/I I T: SD/- K. AMMAJI UTY REGISTRAR To,

1. The lncome Tax Veerabhadra Nagar, 502001 , Telanga na. Officer, Ward 1, Sangar New Bus Stand, Veerabhadra v SECTION OFFICER ln,:ome lJagar, Tax Office, Sangareddy 2 T.he Principal Chief Commis{oner of lncome Tax, T<:langana and A.p. Hyderabad, lT Towers, AC Guards, vasio rank,'Hy;l;;;i;d" _-6ooo)'e, Telangana. The Chairman. Central Board of _Direct Taxes, Depanment of Revenue. yili.^try of Frnance, Government of tndia, Seiretir[i"eLiOirsi, N"*"O"Jf;i"] 1 10 001. 3

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

5. The Secretarv to lhc Finance, New'Delhi, Union of tndia - i 10 Obl Government, Department of Re renue, Ministry of ' ""' .

6. One CC to SRI THANNERU CHA|TANYA KUIVIAR, Advocate tOpUCl 7. One CC to SRt B I\IUKHERJEE, SC FOR UNTON OF tNDy\ [OPUC] 8. One CC to SRI K.SUDHAKAR REDDY, Sr. SC FOR tT [OtrUC] 9. One CC to SRI GAD| PRAVFfN KU|UAR, DEpUTy SOLt(ltTOR GENERTAL OF tNDlA, High Court for the State of Telangana it UVOerabaO-[Op-UEi-"'^ '10. Two CD Copies BSR GJP o I i i i I i i i i I : I i i i i 1 I I I i ) i i I ; I I { i { I t I t i I I t , I i i i HIGH COURT DATED:0210512025 ORDER WP.No.32192 of 2024 I( iHF s O 1-o 10luL r.r * o". ',1-ir;sE. ALLOWING THE WRIT PETITION, WITHOUT COSTS ,r{