High Court · 2025

Petition under Artrcre 226 0f the constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be preased to pass an order or direction, especiary one in the nature of wRrr oF MANDATVUS hordinq that the notice dated 21 .03.2023 issued by 2nd Respondent under section 148 0f the Act with DrN and Notice No.rrB ArAsrrstl4S_112022- 2311051033155('1 ) as being without jurisdiction, arbitrary, iregar, bad in raw, void ab initio, apart from being violative of provisions of section .14gA and section 14g of the Act and arso contrary to the circurar issued by GBDT and provisions of section '151A of the Act, and consequenfly set aside the notice under section 14g daled 21 .03.2023 and the assessment and penalty orders by 1st Respondent for asst. year 2016_17 under section 147 t.w.s 144 r.w.s 1448, uls.271(1)(b), uls.271(1)(c), uts.271A and urs.271F of the Act, respectivery passed IANO:'! OF 20 24 Petition under liection 151 CPC praying the affidavit filed in st pport of the petition' the of tax and penalty demands tn" "off""tlon Ay.2016-17 ' that in the circumstances stated in High Court may be Pleased to staY raiseO UY lSt ResPondent for the Counsel for the Peti :ioner: SRI A' V' RAGHU RAM co u n s e I f o r th e R e s p o n d e nts : 1vl S' B' s P"ttt Ett'*"; E P ARr M E Nr The Court made th€ following: ORDER THE HONOURABLE SRIJUSTICE P.SAM KOSHY rnE HoNouRABLE TtrT'r.rr"a NARSTNG RAo TPETITION No.3 27360F 2024 NANDIKONDA ORDER, (per Hon,ble Sri Ju5tice Narsing Rao Nandikonda) Heard Mr. A.V.Raghu Ram, learned counsel for the petitioner, Ms. B.Sapna Reddy, learned Junior Standing Counsel for the Income Tax Department for the respondents. perused record.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 14gA 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 l4gA of the Act and the subsequent initiation of proceedings under Section l4g of the ,4ct by the jurisdictionar Assessing officer, whereas in terms of the amendment that was brought to the Income Tax Act by way of Finance AcL 2021 w.e.f., 01.04.2021 onwards, proceedings \1\t I 2 n 1,18A of the Act as also under Section 148 of the hrve also been issued and proceeded in a faceless under Sectloll Act ought to mannef

4. The c() ltention of the petitioner is that the issue of proceedings boing in violation of the Finance Act' 2021 i'e'' the impugned notices under Section 148.4 and Section 148 ofthe Act not being issued in a faceless manner' have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA RIIDDY vs' INCOME-TAX OFFICERT decided on 14.09.20r.j whereby a batch of writ petitions were alrorved and the proceedi ngs initiated under Section i48A as also under Section 148 of the A-ct were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section 1 5 I A of the Act rea(l with Notification l8l2l22 dated 29'01'2022' The said judgment passed by this Court has also been subsequently lollowed in a large rtumber of wnt petitions rvhich were allorved on similar terms. ' l(2021) i 5 6 taxmann.com 178 (Telangana)l TECHNOLOGIES

5. Down the line, we find that the same issue has also been decided against the fteysnus by various High Courts i.e, by the Bombay High Courr in the case of HEXAWARE LTD., vs. ASSISTANT COMMISSIONER oF INcoME TAx & oTHERs2, Gauhati High courr in the case of RAM NARAYAN SAH vs. UNION OF INDIAT, punjab and Haryana High Courr in rhe case of JATINDER SINGH BANGU vs. UNION OF |NDIA4, and Telangana High Court in the case of REDDY PATLO0LA vs. DEPUTY COMMISSIONER OF INCOME TAX5 where rhe issue was in respect of international taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAx OFFICER, INTERNATIONAL TAXATION6 which is again on intemarional 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 SRI VENKATARAMANA '.tzozlt464 ITR 430 (Bom) '.19?20)r l56 laxmann.com 478 (Cauhati)l ^,:?:::L,:: raxmann.com I t5 (punjab a Haryana)l '[2024)167 raxmann.com 4l I (Telangana)] "[2024) 166 taxmaruft& 679 (Bombav)] ' [2024) 165 taxmann.com t f : iHimactrai pradesh)] 4 DAiIYABHAT R-ADADIYA vs' INCOME TAX OFFICER' WARD 3(3X5)8, Jharkand High Court in the case of SHYAM SUNDAR SA\V vs' UNION OF INDIAe' Rajasthan I{igh Court in the case of SIIARDA DEVI CHHAJER vs' INCOME TAX OFFICER & ANOTHER and batch of writ petitionsro which stood decided on 19'03 2024' Similar views have also been taken by the Divis on Bench of Calcutta High Court in the case of (IOPAL DALMIA vs' UNION OF INDIA & ORS GTRDIIAR (M.A.T 1690 o12023)' decided otZ5'09'2024' 6. Even rl.rough the same issue having been decided by a latge number of tligh Courts' we are still confronted with large trling of identicalnllttersondaitybasisrangingbetween5tol0writ petitions. 1'hat upon the instructions being sought from the Department , they have been taking a solitary ground that the decision crJ' the Bombay High Court in the case of Hexaware Technologies Ltd-, (2 supra) as also the one which has been decided b1 this Court in the case of Kanskala Ravindra Reddy 8zoz4 scc )nl-ine Guj 4012 " 2025 SCC. Online lhar 287 72023 : Rr- JD:4984-DBl t o 5 (1 supra) has been subjected to challenge in a Special Leave Petirion 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 ansing out ofthe same issue being decided by various High Courts. 7. To a query being put to the Ieamed 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 ol 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 rhis 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 lapsed, till 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 l4gA and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concerned in the teeth of series of decisions 6 by all the ma or High Courts in India are continuously still initiating proceedings under Section l48A of the Act and also initiating plo< eedings under Section 148 of rhe Act in contravention tr the amendments brought into the Income Tax Act pursuant to the Finance Act' 2020 as also the Finance Nct 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 Courl in the case of Kunakala Ravindra Reddy (l supra)' learned Standing counsel for tt,e Income Tax Department contends that those would unnecessarilyburdenthelncomeTaxDepartmelrtwherethey would be required to file equal number of SLPs before the Hon'ble Supreme Court and it would be further burdening the exchequer ol tbe Union oflndia' lt was also the contention of the leamed Stan'ling Counsel that no prejudice would be caused to the interest of th o petitioners in case if this writ petition is kept pending till the tini.lization of the SLPs pending before the Hon'ble Supreme Ccurt and the fact that the petitioner is already enjoying the benefit t,f interim protection' Nonetheless' on the earlier query of this Cour: as to why the Income Tax Department have not come out with a rrechanism to issue appropriate instructions or to take 7 appropriate steps in ensuring that proceedings under Section l4gA of the Act as also the assessment orders under Section t4g 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 leamed Standing counsel that the said steps can onry be taken at the lever of GBDT 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 issue. The Income Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section l5lA of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakala Ravirulra Reddy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakara Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners 8 insofar as tiie liberty which was granted to the Revenue for strictly in accordance with the amended initiating fresh 1'roceedings provisions of tlre Act' as amended by the Finance Act' 2020 and the Finance Ac ',2021'The petitioner assessee would be entitled to challenge or ra se the other legal objections if the Revenue initiates fresh proceedi rgs' The Department has made no endeavour in availing the sa 'd liberty that was reserved for the Revenue' On the contrary, they have been still sticking on to the stand' which this Iligh Court as r'vell as many other High Courts already held to be bad.

11. It apperrrs that because of the aforesaid libertl' that this High Court had sranted permitting the Revenue for initiating fresh proceedings as a one-time measure in a faceless manner' the lncome Tax Department wants to take advantage of the same by protracting tlrese proceedings which would enable them to meet the limitation th rt wouid otherwise come in the way' Likewise' if the writ petition is kept pending for a considerable long period of time and finally iLt a later stage if the Hon'ble Supreme Court conltrms the decisior taken by this High Court as also by the other High Courtsin.vhichthesLPsarestillpending,thelncomeTax I J 9 Department wourd get the advantage of the liberty that is otherwise protected in favour of the Revenue for initiation of fiesh proceedings from the disposal ofthese matters at a much later stage which would be advantageous and beneficial to the Revenus 4n6 would be equally disadvantageous and detrimenta[ so far as interest of the assesses are concerned. 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 Kqnuksla Ravindra Reddy (lsupra), is a matter of grave concem. 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 peritions piring 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 strategy of awaiting the supreme court,s decision on pendrng 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 positlon. administratrve Such conduct raises serious questlons about the efficiency and the respect 1br judicial pronouncemen.s, particulariy when this Court has already provided a balanced approach by preserving both the Revenue's rights and assesses interests 1 3 . Anothe ' aspect which needs to be considered is that in fact it should havc been realized by the Income Tax Depafiment itself and should have found out via media in ensuring that Proceedings unCei Se'-rtio rs 1'"8-A and 148 shouid not have bcen issued in a l'aceless nia0ner' at least till t'he Hon'bie Supreme Couft decide the twelve huLril ed (1200) odd SLPs which it is alreadl' seized of or' at ieast the i;.t:ome Tax Department snould have ibund out some rernedial sti)ps to ensure that rvherever the authorities intend to initiate prc< eedings under Sections 148-A and 148' other than in a faceless mannei, the proceedings should have been deferred without pr<cipitating the matter further intimating the assessee that they shall jnitiate appropriate proceedings only after the SLP's are decided bl the Hon'ble Supreme Court on the very same issue' This agairr, 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 t 11 has to be taken, has to be taken for thb whole ofrlridia,, and.whicir otherwise has to be by wayof 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 lligl 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 court resulting in filing of hundreds of new writ petitions which in the long run not only affects the disposal of the wnt 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 occasi,ns, 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 r4g-A and - 12 COMMISSIC'NER' 148 through thr: jurisdictional Assessing Officer whereas it ought to have been or lY tn the faceless manner' 14. In the case of BANK OF INDIA vs' A'SSISTANT INCOME TAXrr' on an issue \vhether it was justifiable otr the part of the lncome Tax Department in not folrowing an .rder passed by the adjudicating authority only on the ground that lhe appeals are pending' the Division Bench of the High Cour-t rllBombay held at paragraph No 25 as under' viz'' : -25. \ilr' Paridwalla has rightly drawn out attention to the decision of this Court in Commissioner of lncome Tax vs' Smt' Godava'idevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Court in Samp Furniture (P) Ltd' v' lTO13 ofwhicl^oneofus(JusticeG.S.Kulkarni)wasamember,wherein the Cotrrt categorically observed that the Revenue having not "accept id" the ludgment of the High Court would not mean that till the sanre 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'14' the Court rrbserved that the approach of the officials of Revenue of treatin{l decisions being "not acceptable" was criticized by the Suprerne Court. ln such decision' following are the relevant obsenations made by the Supreme Court' |" ttzozs) t70 taxmann.com 422 (Bombay)l ,'' I1e78l I t3 ITR 589 (Bombay) ,'" t2o24l l6; taxmann.con : ''irsez1,^,,i,inn;':;:;',:;;;t;:::rTl#r452(Bombay) 13 "on""rrurnu, "6. Sri Reddy is right in saying that the officers were no '"'n'ot utt'utto by any mala fides in passing the ,rnrt '':nn"o o'ot" They perhaps genuinery ,",, ,n", tenabre and,r",, i::,":I ::H::?':"_Til: would suffer. But v Sri Reddy overlooks is that we are not here with lhe Qorrectness or otherwise o, ,nu,,o conclusion or of any factual matafides out witn tr n rhe r conc us o" ;ilT:::lff :T;nli.1:l: regard to the same rssue which were placed before them, one of the Cc (Appears) and the other of the Tribunar. ,n" ;"""to' court has, in our view, righfly criticized this condur the Assistant corectors and the harassment to th bv the railure or these orricers tc ::::':: :a:sed grve effect lo the orders of authorities higher to t) in the appellate hierarchy. rt cannot be too ,"t u,h nently emphasized that it is of utmost imporlance 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,, 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 been suspended by a competent court. lf this healthy \. \ 14 rule is not followed' the result will only be undue and chaos in administratlon ;;"r,";;' of tax aws to "t""""t

12. rVe have dealt with this aspect at some length' becarlse it has been suggested by the learned Solicitor General that the observations ;;t;;r' the High court' have been harsh on the ;,,";; otficr;rs. lt is clear that the observations of the High Cou t, seemingly vehement' and apparently unprtlatable to the Revenue' are only intended to curb in revenue matters which' if allowed to I * "o*., ;":r;" widespread' could result in considerable har lssment to the assesses-public without any benefit to the Revenue We would like to say that the Ou1,"rtrn"nt should take these observations in the prt per spirit The observations of the High Court sh;uld be kept in mind in future and the utmost regard shculd be paid by the adiudicating authorities and the at pellate authorities to the requirements of iudicial Oi;cipline and the need for giving effect to the orders ol the higher appellate authorities which are binding ,l.i them'" I 5. Wha ' is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate further liti lation on issues which have been laid to rest by a large number o{ High Courts all of whom have taken a consistent stand that the aciion of the lncome Tax Department being violative of the I 15 /enue Finance Act,2020 an rhe interesr of rh. R.: trite at this juncfure, observation/direction ,,'' terms of the judgment Finance Act' 202l Now' in order to prorecr as also that of the assessee' it would be *" o"oo.e of the wrir petition with an iat the disposal of the instant writ petition in rendered by this High Court in the case of Kankanala Ravindra Reddy (l supra) shall however be subject to the outcome of the SL *n"n were filed by the Income Tax Department and which ,ro' pending consideration befbre the Hon,ble Supreme Court.

16. In the given facts and circumstances, this tsench 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 of the Revenue has already been considered and protected, as has been observed in paragraphs ii. fal ready reference' is reProduced ii,-. .-tler "i''i"ii' hereundet: 36 For all the aforesaid ::::t;:Tr,::t::j:::::: issue d and the proceedinss;;;,; -'""r sustainable Dep,rriment is neither , ^ti"';;;".*" adopred being The notices so issued and th ; ", ;;; ;, o*" *"'-':- :;,:::" :':,, l":':l;J, :": asrc e/quashed As a const orC:rs getting quashed' the consequential orders passed pursuant to the notices *.r"0 under Section 147 and 148 would also get Orrrn"O and it is ordered accordingly The reason we at r quashing the consequential or-der is on the princlples tl rt when the initiation of the proceedings itself was procedurally wrong' the subsequent orders also gets n'rllified automatically' b), the respondent-Department i7. The prelirninary obiection raised by the petitioner is s.rstained and ali these writ petitions stands allcwed on Since the imPugned notices t ris very iurisdictional issue quashed on the Point of rLnd orders are getting iurisdiction, we are nct inclined to proceeci further and iecide the other issues raised by the petitioner which itands reserved to be raised and contended in an appropriate Proceedings'

38. Since the Hon'ble Supreme Court had' in the case of Ashish AganJval, supra, as a one{ime measure exercising the powers under Arlicle 142 0f the Sonstitution of lndia, per.mitted the Revenue to pi.oceed , tnder the substituted provisic r,e oeririons .";;;; ;;;'r's' and this couft attowing vocedural naw, the right t L7 confered on the Revenu e would remain .reserved to if they so want from tn. "t,s" or r; :::::":,,;;tjr"r- court in the case of Ashish Agarwal, "rora.t'o'"'" I

18. We would only furlher Iike to make observations that since we are inclined to dispose of the instant writ petition, conscious of the fact that the earlier order of this High Court in the case of Kanakala Ravindra Reddy (l supra) is subjected to charenge before the Hon,ble Supreme Court in SLp No.3574 of 2024, preferred by the Income Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision of this High Courl in the case of Kanakala Ravindra Reddy (1 supra). 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 ' Accordingry, the instant writ petition stands allowed favour of the assessee so far the issue of jurisdiction ls concemed. As a consequence, the impugned notice under challenge under Sections 14g_A and 148 stands set aside/quashed. AS 1n L8 The consequen ial orders' if any' also stand set aside/quashed in similar terms al' have been passed by this High Court in the case of Kankanala Ravindrt Redtly (l supra)' There shall be no order as to costs. Conseqrently, miscellaneous petitions pending' if any' shall stand closed //TRUE COPY// ,'#'k"'.,lt:l!'-Ht[ a SECTION OFFICER to',o.,"..."rty.rit.-[?tli?iL::::1"fr :A:'':]X'."i'r??"I3;l?T:#: DeDartment Ministry j^ilnlrrrr IJehru Siadium' Delhi -1.'10 003; . . o .'ho rn'nm. r'* ofii3;;:W;i- i' in"otn" Tax office B-1-22 1st Floor' ;S'.'"'.s*trsJo"$:'&:!'r:'f i'l',^p;991y-^l-orL.*ro"o,nmenrropUCr ; 5;; 66 i. J" e saPn5 ReddY' SC for lncome 5- Two CD Cc Pies TJ GJP r @ HIGH COURT DATED:2810412025 I ORDER WP.No.32736 of 2024 2 0 sEP 2025 r',,Y'\r i'1" ' ' ALLOWING THE WRIT PETITION WITHOUT COSTS q J 0\. .