TECIINOLOGIES LTD., vs ASSISTANT COMMTSSIONER

2. This is a writ petition w\ere the proceedings are either challenged to the notices which wrcre issued under Section l48A and 148 of the Income Tax Act, i96t lfot short 'the Act') or the assessment orders those have befn passed under Section 147 of the Act which have been assailed.

3. This writ petition is being Tken up today only on one of the grounds, that the notices issued under Section 14EA of the Act and the subsequent initiation olqroceedings under Section l4Eof the Act by the jurisdictional Asspssing Offrcer, whereas in terms of the amendment that *u, broulht to the tncorrc Tax Act by way of Finance Act, 2021 w-e.i, 0 fr .Oq.ZOZt onwards, Proceedings 2 { under Section l48A ofthe Act as also under Section l4g ofthe Act ought to have also been issued and proceeCed in a faceless manner

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance A,ct, 2021 i.e., the impugned notices under Section 14gA and Sec.tion l4g of the Act not being issued in a faceless manner, have alre,ady been dealt with and decided by this Court in the case ol KANKANALA RAVINDRA REDDY vs. INCOME_TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petition:i v/ere allowed and the proceedings initiated under Section l4gA as alr;o under Section 148 of the Act were held to be bad with consequr:nlial rcliels on the ground of it being in violation of the provisions .f rsection l 5 r A of the Act read with Notification lgl2122 dated 29.r)3 2022 The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were allcwed on similar terms. '[(2023) 156 taxmann.com 178 (Telangana)] -v ?

5. Dou'n tlie ltne, we l-rntl tir i the sat c issue hal also r,i'c'l t by v&flous High Courts i.e., decided against tlte Revenuc ty the Bombay High Court iln the case of HEXAWARE TECIINOLOGIES LTD., vs. ASSISTANT COMMTSSIONER OF INCOME TAX & OTHERSP, Gauhati High Court in the case of RAM NARAYAN SAH vs. flxION oF INDIA3, Punjab and Haryana High Court in the case jf JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the case of SRI VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMI\{ISSIONER OF INCOYE TAX5 where the issue was in respect of international taxation, Eombay High Court in the case of ABITIN ANILKUMAR SHAH VS. INCOME TAX OFFICE& INTERNATIONAL TAXATION6 which is again on intemational taxation and central circte, High Court of Himachal Pradesh in the case of GovrND SINGH nl. lxcoue TAx oFFrCEil, Gujarat High Court in ,h$ case ol MANSUKIIBHAI 2 lzoz+1 464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauhati)l 'l(2024) 165 taxmann.com I l5 (Pupjab & Haryana)l '12024) 167 taxmann.com 4l I (Telhngana)l 612024) 166 taxmann.com 679 (Bonbay)l '12024) 165 taxmann.com I l3 (Hirirachal Pradesh)l DdIIYABh'AI LAr,,a,lIYr{ ys. TNCOME TAX OFFICER, WARD 3(3X5)8, Jharkand High Court in th,: r:ase of SItryAM SUNDAR SAW vs. IJMON OF Ii\DIAe, Rajasthan High Court in the case of SHARDA DEVI CHIIAJER vs. INCOME TAX OFFICER & ANOTIIER and batch of writ iretitionsro which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Corrrt in the case of GIRDHAR GOPAL DALMIA vs.IINION OF rNDrA & ORS (M.A.T 1690 of 2023), decided on25.09.2024.

6. Even though the same issue having been rle,:ided by alarge number of High Courts, we are still confronted r.vith large frling ol identical matters on daily basis ranging betwceu 5 ro l0 writ petitions. That upon the instructions being soughr from rhe Department, they have been taking a solitary ground that the decision of the Bombay High Court in the case of Hacaware Technologies Ltd, (2 supra) as also the one which has been decided by this Court in the case of Kanakala Rovindra Reddy '2oz+ SCC Online Guj 4012 " 2025 SCC OnLine Jhar 287 72023 : RI -JD :49 g4-DBl o ' 5 (l supra) has beon subjeeted to challenge in a Special L"cave Petition i.c., SLP No.3574 of 20p4 belbre thc llon'blc Supreme Court and the Hon'ble Supremq Court is seized of the matter' In addition, there are about 1200 $LPs also filed arising out ofthe same issue being decided by variops High Courts'

7. To a query being put to the learned counsel for the Revenue' they have categorically accepted lthe fact that there is no interim order granted by the Hon'ble fupreme Court in any of these matters pending before it. Mehnwhile, fresh writ petitions of identical nature are being piled u{ before this Bench on daily basis and the pendency is getting incrbased on matter which otherwise has alreadybeen dealt and decidef by this very High Court itself'

8. On the one hand, even th ugh the order of this Court that t was passed as early as on 14.09.2023 and more 16 months have lapsed, till date, we do not fin any remedial steps having been d taken by the lncome Tax Department to take appropriate steps to either hold back issuance of noti e under Section l48A and under I Section 148 of the Act by the jurisdictional Assessing Offrcer, rather the authorities concemed [n the teeth ol series of decisions j-.:.r .:i-. -. 6 by all the major High Courts .in India are ,:ontinuously still initiating proceedings under Section l48A of r:he Act and also initiating proceedings under Section 148 rf the Act in contravention to the amendments brought into l.he, Income Tax Act pursuant to the Finance Act,2020 as also the Finance ActZ02l.

9. Upon a query being put as to why can't this writ petition be disposed of in the teeth of the decision rendend by this Court in the case of Kanakab Ravindra Rendy ( supra), learned Standing Counsel for the lncome Tax Department conten<ls that those would unnecessarily burden the Income Tax Department where they would be required to file equal number of SLps before the Hon'ble Supreme Court and it would be further burdening the exchequer of the Union of India. It was also the contention of the learned Standing Counsel that no prejudice would be caused to the interest of the petitioners in case ifthis writ petiti,rn is kept pending till the finalization of the SLPs pending betbre the Hon'bte Supreme Court and the fact that the petitioner is a ready enloying the benefit of interim protection. Nonetheless, on the earlier query olthis Court as to why the lncome Tax Department have not come out with a mechanism to issue appropriate instmctions or to take ^/ apptopriate steps in ensuring tha( procccdings under Scction l48A of the Act as also the assessmerf orders under Soction 14g of the Act are kept in a hold in the light of th€ decisions dedcided by the various High Courts, it was supmitted by the leamed Standing Counsel that the said steps can odly be taken at the level of CBDT as any such steps would have to taken Pan India and cannot be limitedto anyof these jurisdictio ;", High Courts.

10. As a result of which, what are facing is steep increase of Fe litigation day in and day out even though various orders have bern passed by this High Court allowing writ petitions on the very same issue. The lncome Tax authoritie] *n."*"0 are still even now in 2025 alsrc initiating proceedings i4 contravention to the provisions of Section 151A of the Act and ul u r"rult by now, more than 600 to 700 petitions have been already got piled up before this High Court on an issue which otherwis{ stands squarely covered by the judgment of this Court in the cas€ of Kanakala Ravindra Retldy (l supra). What is also surprisirig is the flact that though while allowing the writ petitioos in thp case of Kanakab Ravindra Reddy (l supra), the Division Be ch while reserving the right of the Revenue, has also protected the interest of the petitioners + I insotbr as the iii:;rty which was granted to the Revenue for initiating fresh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Finance Act, 2020 and the Finance Act,2O2l. The petitioner assessee w'luld be entitled to challenge or raise the other legal objections if the Revenue initiates fresh proceedings. The Department has made n'c endeavour in avaiting 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 I l. lt appears that because ofthe aforesaid libr:rty that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a face'less manner, the Income Tax Department wants to take advantae;e of the same by protracting these proceedings which wrruld enabfu: them to 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 confirms the decision taken by this High Court as also by the other High Courts in which the SLPs are still pending, the Income Tax Jr' I f)cpanrncnt would get the advan c ol'thc liberty that ls otherwisc protected in thvour of the Revenue for initiation of fresh proceedings fromthe disposal of]lhese rnatters at a much later stage which would be advantageous afrd beneficial to the Revenue and would be equally disadvantageouD and detrimental so far as interest of the assesses are concemed Als a consequence, the Income Tax Department gets an extended proceedings. *l- of time for initiation of fresh

12. The alarming trend of doc explosion in this Court, despite the clear precedent get it Kanakdla Ravindra Reddy (1 supra), is a matter of grave concem. The In me Tax Department's persistent initiation offresh proceedings, di ing the established judicial pronouncements, has led to an rlnprecedented surge in litigation with over 600-700 petitions pil ng up on the same issue. This deliberate approach not only un nes the principle of judicial precedent but also strains the judicial resources unnecessarily. The Department's strategy of awai the Supreme Court's decision on pending SLPs while co to initiate fresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than J*n ng to the established legal 10 position. Such conduct raises serious questions about the administrative efficiency and the respect for judicial pronouocements, particularly when this Court has already provided a balanced approach by preserving both the Revenue's rights and assesses rnterests

13. Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Department itself and should have found out via media in ensuring that proceedings under Sections 148-.4 and 148 should not have been issued in a faceless manner, at least till the Hon'ble Supremr: Court decide the twelve hundred ( I 200) odd SLPs rvhich it is alreadl' seized of or, at least the Income 'fax Department should have fcund out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 12t8, other than in a faceless manner, the proceedings should hal'e been deferred without precipitating the matter further intimating t.[e 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 lncomc Tax Department, has not been able to give a convincing reply, except [or the fact that such a d,:cision if at all r 11 has tr-r be taken, has ttl be taken for the wtole ol'India, and which otherwrse has to be by way of a policy decision aM that too at the level of Central Board of Diroct Taxes. Though the leamed Standing Counsel for the Income Tax Department contended that the Delhi High Court dismissed q writ petition of similar nature, on the one hand when the High f,oun i, struggling to reduce its pendency, such notices which ge under challenge in this writ petition are forcing the assessee to knock the doors of this High Court resulting in filing of hundreds of new writ petitions which in the long run not only affects the pisposal of the writ petitions but also consumes substantial time of the Bench in hearing these matters again and again on daily hasis. Admittedly, in spite of the matter before the Hon'ble Su Court having been taken on many occasions, the Hon,ble Suprpme Court which is seized of the matter has been reluctant in grandng any interim protection to the lncome Tax Department. V"t, L" autborities corrcerned at the State level are not ready to accept the verdict passed by a majority of High Courts of different States oo the same issue; and to make things further worse, the Incomp Tax Department is showing audacity by issuing notices contin ously under Sections 148-4, and 72 r-\ 148 through the jurisdictional Assessing Officer qhereas it ought to have been only in the faceless manner'

14. In the case of BANK OF INDIA vs' ASSISTANT COMMISSIONER, INCOME TAXr', on an issue' whether it was justifiable on the part of the Income Tax Dr'partment in not following an order passed by the adjudicating authority only on the ground that the appeals are pencling, the Division Bench of the High Court of Bombay held at paragraph No'25 as tnder' viz'' : "25. Mr. Paridwalla has rightly drawn out altelltion to the decision of this Court in Commissioner of lncome f ax vs' Smt' Godavaridevi Saraf'2 as also the recent decision of the co- ordinate Bench of this Court in Samp Furniture (F) l-td' v' lTOr3 of which one of us (Justice G.S. Kulkami) was a member' wherein the Court categorically observed that the RevenLle having not 'accepted" the.iudgment of the High Court would not mean that till the same is set aside in a manner known to law' it wc'uld loose its binding force. Relerring to the decision of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd'11' 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 Gourt' " 11ZOZS; 170 taxmann.com 422 (Bombay)l t'1197s1 I l3 ITR 589 (Bombav) '3 1ZOZI1l65 taxmann.com 581/300 Taxman 452 (Bonbay) 'o lt}SZltaKmann.com l6155 ELT 413 (SC) l3 '6. S riai,dy is p€rhapg rl€ht ;in saytFg .thet thF of{icers were not actuatbC by any mala fldos ln passing the impugned o{ders. Th€y porhaps genuinely felt lhat the claiin of the assea€ €e was not tenable and that, if it was accepbd, the Revenue would suffer. But what Sri Reddy overlooks is lhat we are not cpncerned here with the correctness or otherwise of their concbskrn or of any factual malafides but with the fact lhat the officers, in reachirB in their concfusion, bV+aspd two appellate orders in regard to the same issue which r €t€ placed before them, one of the Collector 1(Appeals) and the other of the Tribunal. The High CgJrt has, in our view, rbhfly criticized this conduct of ttle Assistant Collectors and the harassment to the assqssee caused by the failure of these of{icers to givei effect to the orders of authorities higher to them irl the appellate hierarchy. lt cannot be too vehemenfly] emphasized that it is of utmost importance that, in disposing of the quasijudicial issues before them, rev,enue ofii@rs are bound by the decisions ol the appefiate authorities. The order of the Appeltte QoHector is binding on the Assistant Collectors working withh his jurisdiction and the order of the Tribunal is pinding Lpon the Assidant Collectors and the Appellaf" Cott""too who function under the jurisdiction of the tribunal. The principles of iudicial disciptine require that the orders of the higher appellate authorities should be followed unreseruedly by the subordinate arlhoriti$s. The rnere {act that the order of the appe ate authdrity is not "acceptable" to the depa(ment - in itself 4n objectirnabb ?hrdse - and is the subject matter of an appeal can fumish no ground for not following it unless its operation has been suspended by a competent court. lf this healthy .iI', r;;i.':.:; , a ,-ule i- i:i,: ,i,,lcr'reo, tle , --iL,t wiil only D "1 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 obsr.nations made by the High Court, have been harsh on the officers. It is clear that the observalions of the High Court, seemingly vehement, and app;rrently unpalatable to the Revenue. are only intende'l to curb a tendency in revenue matters which, if allovred to become widespread, could result in con:;iderable 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 future and the utmost 'egard should be paid by the adiudicating authorities' and the appellate authorities to the requirements of judicial discipline and the need for giving effect to tl^e orders of the higher appellate authorities which are t'inding on them. "

15. What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been taid tc rest by a latge number of High Courts atl of whom have taken a rlonsistent stand that the action of the lncome Tax l)epartment being violative of the '\.,^ / ( 1 Finance Act. 2020 and Finance Act, 2021. Now, in order to protect the interest ot the Revenue as alse that of the assessee, it would be trite at this juncture, if we distlse of the writ petition with an observation/direction that the disp[sal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (l supra) shall however be subject to the outcome of the SLPs whic were filed by the lncome Tax Department and which is pending consideration before the Hon'ble Supreme Court

16. In the given facts and cirqumstances, this Bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarely co vlered by the decision of this Court and which stands lortified by thLe decisions of the various other High Courts on the very same tssue, ttre pendencY of this High Court would further be burdenedl which otherwise can be decided and disposed ol as a covered matter.

17. So far as the interest of th! Revenue is concerned, we are of the considered opinion that the in terest of the Reveoue has alreadY been considered and protected, a! has been observed inParagraPhs l5 f -., 36,37 and,38 ofthe order which, for ready refercnce, is reproduced hereunder:

36. For all the aforesaid reasons, the impugrred notices issued and the proceedings drawn by th€ respondent_ Department is neither tenable, nor sustainable. The notices so issued and the procedure ado;:led being per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orders gefting quashed, the consequential orders passed by the respondent-Department pursuant to the notices issued under Section 141 and l48would atso get quashed and it is ordered accordingly. The rrrason we are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent ordert itlso gets nullified automatically.

37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands altowed on this very jurisdictional issue. Since the impugne,J notices and orders are getting quashed on th() point of jurisdiction, we are not inclined to proceed further and decide the other issues raised by the petitirnrrr which stands reserved to be raised and contendeC in an appropriate proceedings_

38. Since the Hon'ble Supreme Court had, n lhe case of Ashish Agarwal, suprEl, as a one-time rneasure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue lo f,roceed under the substituted provisions, and this Court irllowing the petitions only on the procedural flaw, ttre right 17 oonfened on the Revenue would remain resen€d proceed further if they so Want from the stage of the urt in the case of Ashish order of the Supreme Co Aganval, supra.

18. We would only further like to make observations that since we are inclined to dispose olthe iustant writ petition, conscious of the fact that the earlier order of this High Court in the case of Kanakala Ravindra Reddy (l s ra) is subjected to challenge before the Hon'ble Supreme Co in SLP No.3574 of 2024, preferred by the Income Tax Dep t, we make it clear that I ( allowing of the instant writ petitidn is subject to outcome of the aforesaid SLP preferred by the RevBnue against the decision ofthis High Court in the case of Kanakpla Ravindra Reddy (l sryra). This, in other words, would mean hat either ol the parties, ifthey so want, may move an appropriat e 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 ulrit petition stands allowed in favour of the assessee so lar as the issue of jurisdiction is concerned. As a consequence, the impugned notice under challenge under Sections 148-A and [48 stands set aside/quashed. 18 r\ The consequential orders, if any, also stand sot asideiquashed in similar temrs as have been passed by this High (lourt in the case of Kankanala Ravindra Reddy (l supra). There shall be no order as to costs Consequently, miscellaneous petitions perrding, if any, shall stand closed. \ To, //TRUE COPY// iSD/- L. VIJAYA LAXMI \s$rsrarur REGTSTRAR 'i seclor.r oFFtcER -7

1. The Assistant Commissioner of lncome Tax, Circle - 6(1), I T Towers, A.C Guards, Masabtank, Hyderabad - 500004.

2. One CC to SRI A.V.RAGHU RAM, Advocate. [OPLC] 3. One CC to MS.BOKARO SAPNA REDDY, (Jr. SC FOR INCOh/E TAX) loPUCl

4. Two CD Copies. .r BSK JP HIGH COURT DATED:2810412025 1 1HE S r,.r zrt A|JEM .t/ /,' 'l .r .) It -t l.) \ i. tr. :.1 . k \ ORDER WP.No.33257 of 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS o