High Court · 2025

Petition Under Article 226 of lhe Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith' the High Court may be pleased to issue an appropriate writ' order or direction more particularly one in the nature of Writ Mandamus' declaring the order passed by the income tax authorities National Faceless E-Assessment Centre completed the assessment uls 147 r.w.s 144 read with section 1448 Date of 1gro3r2o24, DrN ITBATAST/S/ 14712023-2411062 940966(1) for the Assessment year 2018-19 determining the total income of Rs. 3,26,38,4651 as arbitrary, i,egal, bad in law, without jurisdiction, void-ab-initio, viorative of the principres of naturar justice apart from being violative of Articles 1a, 19(1)(g) and 265 of the constitution of India and Sec l4gA of the rncome Tax Act, 1g61, and consequenay set aside the same in the interests of justice. l.A.NO:1 OF 2024 Petition Under Section 151 cpc praying that in the circumstances stated in the affidavit fired in support of the petition, the High court may be preased to suspend the order Under section 147 r.w.s 144 read with section .144B Date of 1g 03-2024, DrN rrBA/ ASTrs 114zr2o23 2411062940966(.r ) for the Assessment year 2018-19 determining the totar income of Rs. 3,26,3g,465/- and Demand notice u/s 156 0f the rncome Tax act 1g61, vide DrN & Notice No:,rBA/AST/ st156/2023-24 11062541191(1) Dt: 19-03-2024 for the assessment year 2018-1g pending disposal of the above writ petition. Counsel for the petitioner : SRI THANNERU CHAITANYA KUMAR 9:^rl:"_l for the Respondent Nos.l & 2 : Ms. J.SUN|THA (JUN|OR SC FOR rNcoME TAX) Counsel for the Respondent No.3 : SRI GADI PRAVEEN KUMAR, DEpUry SOLICITOR GENERAL OF INDIA counser for the Respondent Nos.4 to 5 : sRt p.sHAsHrDHAR REDDy The Court made the following ORDER TIIE HONOURABLE SRI JUSTICE P'SAM I(OSHY rrrE IroNo ,RABL1;$#X5X E NAR'TN G RAo ETT ONNo.32158 of 2024 TI P ORDER, (per Hon'ble Sri Jttstice P'Sam Koshy) Heard Mr. T.Chaitanya Kumar, learned counsel for the petitioner and Ms'J'sunitha' leamed Junior Standing Counsel for for the resPondents' Perused the the lncome Tax DePartment record.

2. This is a writ petition where the proceedings are either chalienged to the notices which were issued under Section 148A and 148 of the Income Tax Act' t961 (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 1484. of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Officer' whereas in terms oftheamendmentthatwasbroughttothelncomeTaxActbyway of Finance Act, 2021 w'e'f'' 01'04'2021 onwards' proceedings 2 under Section l4gA of the Act as also under Section l4g 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 14gA and Section l4g ofthe Act not being issued in a faceless manner, have already been dealt with and decided by this Courr in the case of KANKANALA RAVINDRA REDDY vs. TNCOME_TAX OFFICEI{T decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section r4gA as arso under Section 148 of the Act were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Secrion 15 tA of the Act read with Notification 1gl2}22 d,ated.29.03.2022_ The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were aflor,ved on similar terms. ' [(2023) 1 56 raxmann.com 17g (Telangana)] I ' ., , : 'r.: I ..r:.. .a 'fr,. i}il{ .la*^:t 'jffss .-, ., 5 Down the line, we find that the same issue has also been decided against the Revenue bY various High Courts t'e" the case of IIEXAWARE by the BombaY High Court tn TECHNOLOGIES LTD'' vs' ASSISTANT COIVIMISSIONER OF INCOME TAX & OTIIERS2' Gauhati High Court in the case of RAM NARAYAN SAII vs' UNION OF INDIA3' Punjab and Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION oF INDIA4, and Teiangana High court in the case of SRI VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER Ot'' INCOME TAX5 where the issue was in respect of international taxation, Bombay High court in the case of ABHIN ANILKUMAR SIIAH VS. INCOME TAX OFFICER' INTERNATIONAL 1'AXATION6 which is again on intemational taxation and central circre, High courl of Himachar case of GOVIND SINGH vs' INCOME TAX OFFICER?' Gujarat High Court in the case of MANSUKTIBIIAI pradesh in the 'lzoz+1464 ITR 430 (Bom) 'ifrozil l56 taxmann.com 478 (Gauhati)l ^ l(2024) 165 taxmann.com 115 (Punjab & Flaryana)l 't)OZq 167 taxmann'com 411 (Telangana)l :1zoz+l 166 taxmann.com 679 (Bombay )l '\1oi+l tOs taxmann'com I l3 (l'limachal Pradesh)l 4 '.i..1.;.. .,.:.. ' DAIIYABHAI RADADIYA vs. INCOME TAx OFFICER, WARD 3(3Xr8, Jharkand High Courr in the case of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasrhan High Courl in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of wrir petitionsr0 which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Courl in the case of GIRDHAR GOPAL DALMIA vs. UNION OF TNDIA & ORS (M.A.T 1690 of 2023), decided on25.09.2024.

6. Even though the same issue having been decided by a large number of High Courts, we are still confronted with large liling of identical matters on daily basis ranging between 5 to I 0 rvrit petitions. That upon the instructions being sought frorn the Department, they have been taking a solitary grouncl that the decision of the Bombay High Court in the case of He:iaware Technologies Ltd-, (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy 82024 SCC Online Guj 4012 '2025 SCC Online lhar287 to p2023 : RJ-JD:4984-DBl ( '1 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' ln addition, there are about 1200 SLPs also filed arising out ofthe same issue being decided by various High Coutls'

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 tapsed, titl 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 1484 and under Section 148 of the Act by the jurisdictional Assessing Oflicer' rather the authorities concemed in the teeth of series of decisions 6 by all the major High Courts in India are continuously still initiating proceedings under Section 14gA of the Act and also initiating proceedings under Section 14g of the Act in contravention to the amendments brought into the lncome Tax Act pursuant to the Finance Act;2020 as also the Finance Act 2021. 9. Upon a query being put as to why can,t this writ petition be disposed of in the teeth of the decision rendered by this Court in the case of Kanakula Ravintlra Reddy (1supra.), Ieamed Standing Counsel for lhe Inccme Tax Deoarlment contends tl_rat those would umecessarily burden the Income Tax Deparlment where they wouid be required to file equal number of sl-ps befor.e trre Hon'ble Supreme Court and it would be further burdening the exchequer of the Union of India. It was also the contention olthe leamed Standing counser that no prejudice would be caused to the interest of the petitioners in case if this writ petition is kept pending till the finalization of the SLps pending before the Hon,ble Supreme Court and the fact that the petitioner is already enjoying the benefit of interim protection. Nonetheless, on the earlier query of this Court as to why the Income Tax Department have not come out with a mechanism 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 tevel of CBDT as any such steps would havg 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 issue. The Income Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section 151A of the Act and as a result by now' more than 600 to ?00 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 Kanukala 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 Divisiqn Bench while reserving the right of the Revenue, has also protected the interest of the petitioners 8 insofar as the liberty which was granted to trre 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, 2021 . The petitioner assessee would be entitred to challenge or raise the other legal objections if the Reve,ue initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was reserved for the Revenue. On the contrary, they have been still sticking on to the stand, which this High Court as well as many other High Courts already held to be bad.

11. It appears that because ofthe aforesaid liberty that this High Court had grantcd pemtitting the Revenue for initiating fresh proceedings as a one-time measure in a faceless manner, the Income Tax Department wants to take advantage ol.the same by protracting these proceedings which would enable them [o meet the limitation that would otherwise come in the way. Likewise, 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 confimrs the decision taken by this High Court as also by the other High Courts in which the SLps are still pending, the Income Tax d,_ 9 Department would get the advantage of the tibeny that is otherwise protected in favour of the Revenue lor initiation of fresh proceedings from the disposal ofthese matters at a much later stage which would be advantageous and benefrcial 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 Kanakalo Rovindra Reddy l1 supra)' is a matter of grave concern' The Income Tax Department's persistent initiation of fresh proceedings' disregarding the established iudicial 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 Deparlment'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 \:, 10 position. Such conduct raises serious questions about the administrative efficiency and the respect fbr judicial pronouncements, particularly when this Couil has alreadv provided a balanced approach by preserving both the Revenue,s rights and assesses lrlterests.

13. Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Deparlment itself and should have found out via media in ensuring that proceedings under Sections i4g_A and i4g should not have been issued in a faceless manner, at least till the Hon,ble Supreme Court decide the twelve hundred (r200) odd slps which it is arready seized of or., at least the Income Tax Department should have tbund out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 14g_A anci 14g, other than in a faceless lnanner, the pr.oceedings shourd have becn defe*ed 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 same 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 1 11 has to be taken, has to be taken for the whole oflndia' 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 lncome Tax Department contended that the Delhi High Court dismissed a writ petition of similar nature' on theonehandwhentheHighCourtisstrugglingtoreduceits pendency, such notices which are under challenge in this writ petition are forcing the assessee to knock the doors of this High Courl 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 rnatters again and again on daily basis' Admittedly' in spite of the matterbeforetheHon,bleSupremeCourthavingbeentakenon 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 High Courts of different States on the same issue; and to make things further worse, the lncome Tax Department is showing audacity by issuing notices continuously under Sections 148-A and 12 .t 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXil, on an isru" wherher it was justifiable on the part of the Income Tax Departrnent in not following an order passed by the adjudicating authority only on the ground that the appears are pending, the Divisio, Bench of the High Court of Bombay held at par.agraph No.25 as under, viz., : "25. Mr. paridwalla has righfly drawn out attention to the decision of this Court in Commissioner of lnccme Tax vs. Smt. Godavaridevi Sarafl2 as also the recent declsion of the co_ ordinate Bench of this Court in Samp Furniture (p) Ltd. v. ITO13 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 mean 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 Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd. court obseryed that the approach of the officiars 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, j4, ',) 11zl32t .t.t '.'11978) I l3 ITR 589 (Bombay) t,j,7ZOZ41l65 o yax mann.com 422 ( B ombay \ l taxmann.com 5gl/300 Taxman 452 (Bombay) 'a llegZl raxmann.com L6/55 ELT 433 (SC) l 13 "6. Sri Reddy is perhaPs right in saying that the not actuated bY anY mala fides in officers were impugned orders. TheY PerhaPs passing the 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 otheruvise 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' lt cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasijudicial issues before them, revenue officers are bound by the decisions of the appellate authorities- The order of the Appellte Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal The 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 '<. .n l 14 rule is not followed, the result will only be undue harassment to assesses and chaos in administration of tax laws.

12. We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Courl, have been harsh on the officers. lt is clear that the oot"t"t'ons of the High court, seemingry ,un", unpatatabre to rhe Revenue,:::'"",;;:".::ff:,.,J 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 the proper spirit. The observations of the High Court should be kept in mind in futu shourd be paid by rhe ,.,".,jil:liltf""::'iil: appellate authorities to the disciptine and the need r".. n,r#'"",[:,':;:':::: of the higher appellate authorities which are binding on them."

15. What is worrying this Bench more is the tact 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 Depaftment being violative of the l ! I I I t I I 15 Finance Act, 2020 and Finance Act,2021' Now' in order to protect the interest of the Revenue as also that of the assessee' it would be trite at this juncture, if we dispose of the writ petition with an observation/direction that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Retldy (1 supra) shall however be subject to the outcome of the SLPs which were hled by the Income Tax Department and which is pending consideration before the Hon'ble Supreme Coutl.

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 Coutt 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 furlher 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 L6 [ ... 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 respondent_ 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 notices issued under Section 147 and l4gwould also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically.

37. The preliminary objection raised by the petitloner ls sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are getting quashed on the point of jurisdiction, we are not inclined to proceed further and decide the other issues raised by the petitioner which stands reserved to be raised and contended in an appropriate proceedings.

38. Since the Hon,ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one{ime measure exercising the powers under Article 142 of the Constitution of lndia, permifted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the 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 ofAshish Agarwal, supra

18. We would only fuither like to make observations that since we are inclined to dispose of the instant writ petition' conscious of thefactthattheearlierorderofthisHighCourtinthecaseof Kunakala Ravindra Redcly (l supra) is subjected to challenge before the Honrbte Supreme Court in SLP No'3574 of 2024' preferred by the lncome Tax Department' we make it clear that atlowing 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 (1 supta)' This, in other words, would mean that either of the parties' if they so want, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Supreme Court in the pending SLP on the very same issue'

19. Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction is concerned. As a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed' { ( 18 t'i, The consequential orders, if any, also stand set aside/quashed in similar terms as have been passed by this High Courl in the case of Konkanalo Ravintrra Redcy (r supra). There shau be no order as to costs Consequently, miscellaneous petitions pending, if any, shall stand closed. ,TRUE COPY// SD/. M.NAGAMANI ASSISTANT REGISTRAR ( l; To SECTION OFFICER HA';,&.r iJfl?,.ff# 1 . The tncome Tax Officer Ward 1 , giddipet lncome Tax Office, 8-1_22, .lst ^ Iloor. Subhash Road, Siddipet 60205, i;iil;"; 2. The principal Chief commi*ioner ofi"t".i"'ii^'?"rangana and A.p, rr rowers, nc criios]r'ra# ;r"11 Hyoeibaa s060)b, 3. The Chairman, Central Board of Direct Taxes, Department of Revenue, Finance, covernment oi r,i,lirls".rJtIlilt Buldinss, New Dethi - 4 The National Faceless Assessment Center, lncome Tax Depa(ment, New 5. The Secretarv to the Government, Union of lndia. Department of Revenue, ^ Ministry of Finance, New Dethi _ i f OOOi' o. Une CC to SRI THANNERU, CHAITAN'A KUMAR, Advocate toPUCI 7 .ne cc to r\,4s J.suNrrHA (JUNidR'56'iO"d'iilbbrr,,e rAX)Advocdre 8. One CC to SRt GAD| PRA.VEEN KUMAR, DEpUTy SOLTCITOR GENERAL ^ OF lNDIA, Advocate (OPUC) 9. One CC to SRt p.SHASHIDIIAR REDDY, Advocate (OPUC) 10. Two CD Copies loPUCl " SA T G t :i:-,hic\ oR THE. i^ ? ur.t \ ii' \i . ,.,/ 10 sEP 206

4. .+ L; HIGH COURT DATED:01 l0st2O2S ORDER WP.No.32158 of 2OZ4 ALLOWING THE W.P WITHOUT COSTS.