High Court · 2025

Petition under Article 226 of the 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 of Mandamus, declaring the order passed by the lncome Tax Authorities (Nationar Faceress E-Assessment centre) completed the assessment U/S 147 r.w.s 144 24t10627s7826(1)ror,^";,'::J'""iill,iZil,r:,ilHffi of Rs. 10,11,97,570/_. as arbitrary, iltegal, bad in law initio, viorative of the principres of naturar justice i Artictes 1a, 19(1Xg) and 265 of the Constitu,,", "r'i.Trt:T:::trH.:;lJ Tax Act, 1961, and consequen,y set aside the same in the interests of ff,",:" ::::::l:::" without jurisdiction, void-ab- IANo; 10F 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 14lt.w.s 141 rrBAp\sr/s/I 4 7 t 2o23'24t 1 0627 st 826(1 ) ror the'^:.:il:":' Jj;i'il, Jl I rhe ncome rax act,#: Iff J,'i' lli',J"'l::"i,:TilT:X i:r;::r:: 241106279T842(1) Ot. 1t_O3-2O24 for the assessr disposal of the above writ petition. nent year 2018-19 pending determining the total incor : SRI THANNERU Counsel for the petitioner Counsel for the Respondents No.1to4 : Ms.J.SUNITHA, Jr.SG for lT DEpT Counsel for the Respondent No.S : SR! MUKHERJEE, rep., "rO,rO""O KUMAR sRr cADr pRAVEEN kunaan, Dy.so.cEN The Court made the following: ORDER 1 THE HONOURABLE SRI JUSTICE P'SAM KOSITY rrrE HoNouRAB"u'fili"ICE NAR.ING RAo NANDIKONDA TITIONN o.335300 2024 F WRI TPE ORDER' (per Hon'ble Sri Justice Narsing Rao Nandikoada) Heard Mr'Thanneru Chaitanya Kumar' learned counsel for the petitioner, Ms'J'sunitha' learned Junior Standing Counsel forthelncomeTaxDepartmentforrespondentNos.lto4and Mr. B. Mukherjee, learned counsel representing the tlnion 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.A and 148 of the Income Tax Act' 1961 (for short 'the Act') or the assessment orders those have been passed under Section l4'7 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 148,{ of the Act and the subsequent initiation ofproceedings under Section 148 of the Acf by the jurisdictional Assessing Officer' whereas in terms of the amendment that was brought to the Income Ta1 Ac1 by way ( I I 2 of Finance Act, 2021 w.e.f., 01.04.2021 onwards, proceedings under Section 14gA ofthe Act as also under Section 14g ofthe 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 l4gA and Section l4g ofthe Act not being issued in a faceless maRner, have already been dealt with and decided by this Court in the case of KANKANALA RAVINDR{ REDDY vs. INCOME_TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedi,gs initiated under Section 14gA 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 Section 15lA of the Act read with Notification lg/2022 dated29.03.2022. The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were allowed on similar terms. '[Q023) 156 raxmann com 178 (Telangana)l \ 1 J

5. Down the line, we find that the same issue has also been decided against the Revenue by various High Courts i'e" by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD., VS. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2' Gauhati High Court in the case of RAM NARAYAN SAH vs' UNION OF INDIA3' Punjab and Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the case of SRT 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 SHATI 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 ' eozql464 ITR 430 (Bom) 'llzoz+1 156 taxmann.com 478 (Gauhati)l 'lQO24b 165 taxmann.com 115 (Punjab & Haryana)l '12024) 167 tdxmann.com 41 1 (Telangana)l " 12024) 166 taxmann.com 679 @ombay)l ' iZOZqj 1 65 taxmann.com 1 1 3 (Himachal Pradesh)l 4 DAHYABITAI RADADIYA vs. INCOIT{E TAX OFFTCE& WARD 3(3Xr8, Jharkand High Court in the case of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEW CHHAJER vs. INCOME TAX OFFICER & ANOTIIER and batch of writ petitions,0 which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court in the case of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & 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 filing of identical matters on daily basis ranging between 5 to I0 writ petitions. That upon the instructions being sought Ilom the Department, they have been taking a solitary ground 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 Ravindra Reddy '202q SCC online Guj 4012 "2025 SCC Online thar 2g7 72023 : RJ-JD :4984-DB l I 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 of the 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 identicar nature are being piled up before this Bench on daily basis and the pendency is getting increased odl matter which otherwise has arready 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 atdmore 16 months have lapsed, till date' we do not f,rnd any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance ofnotice under Section 1484 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 major High Courts in India are continuously still initiating proceedings under Section l4gA of the Act and also initiating proceedings under Section l4g of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act,2020 as also the Finance Act2021 . 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 Kanukala Rqvindra Reddy (l supra), leamed Standing counsel for the Income Tax Department contends that those wourd unnecessarily burden the lncome 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 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 beneflt 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 ,"/ ./ , I 7 appropriate steps in ensuring that proceedings under Section 148A of the Act as also the assessment orders under Section 148 of the Act are kept in a hold in the light of the decisions dedcided by the various High courts, it was submitted by the-learned Standing Counsel that the said steps can only be taken at the level of CBDT as any such steps would have to be taken Pan India and cannot be limited to any of these jurisdictional High Courts' 10. As a result of which' what we are facing is steep increase of litigation day in and day out even though various orders have been passed by this High Court allowing writ petitions on the very same issue' The Income Tax authorities concerned are still even now in 2025 also initiating proceedings in contravention to the provisions of Section 1514 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 Ravindra Red'dy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakula 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 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,2021. The petitioner assessee would be entitled to challenge or raise the other legar objections if the Revenue 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

11. It appears that because ofthe afolesaid liberty that this High Courl had granted permitting the Revenue for initiating fresh proceedings as a one_time measure in a faceless manner, the Income Tax Depaftrnent wants to take advantage of the same by protracting these proceedings which would enable them to meet the Iimitation that would other.wise 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 i I '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 would be equally disadvantageous and detrimental so far as interest the Income Tax of the assesses are concemed' As a consequence' Department gets an extended period of time for initiation of fresh Revenue and -the proceedings'

12. The alarming trend of docket explosion in this Court' despite the clear precedent set\n Kanakala Ravindra Reddy (l supra)' 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 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 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 i ! I I I 10 administrative position. Such conduct raises serious questions about the respect for judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revenue,s rights and efficiency and the assesses interests.

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 14g_A and l4g should not have been issued in a faceless manner, at least till the Hon,ble Supreme Court decide the twelve hundred (1200) odd SLps whichit is already seized ofor, at Ieast the Income Tax Department should have fbund out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections l4g_A and 14g, other than in a faceless manner, the proceedings should 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 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 I 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 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 Court resulting in frling 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 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 Income Tax Department' Yet' the authorities concerned at the State level are not ready to accept the verdict passed by a maj ority 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 \ L2 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 issue whether ir was justifiable on the part of the Income Tax Department in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division Bench of the High couft of Bombay herd at paragraph No.25 as under, viz., : "25. Mr. paridwa[a ''nnt', drawn out attention to the decision of this court ,n 'mmissioner of lncome Tax vs' smt' "o't Godavaridevi Sarafl2 as the recent decision of the co- ordinate Bench of this cour or which one or us (r,,,,"" : : ?ililil:'J:J::ill, IrJ,l" the court categoricafly 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 India vs. Kamlakshi Finance Corporation Ltd.r4, the court observed that the approach of the officiars of Revenue of treating decisions being .not acceptable,, was criticized by the Supreme Court. In such decision, following are the relevant observations made by the Supreme Court. i] Itr^r_Tt tZo,axmann.com 422 (Bombay)l " [978J I I3 ITR 589 (Bombay) '' 120241 165 taxmann.com 5gl/300 Taxman 452 (Blmbay) 'o llOgZytaxmanr.com 16155 ELT 433 (SC) t3 ;"' "6. sri Reddv is perhaps risht in saving t:::^tt': ;";; not actuated bY any mala rides tn ;;;' o".o.n *"''o**:-,: l"IT; ::;" ",,'1""'"" genuinelY felt that the claim tenable and that' if it was accepted' the Revenue Butwhat Sri Reddv overlooks is thatwe ;;; are not concerned here with the correctness or otherwise of their conclusion or of any factual but with the iact that the officers'.in ::::1": ;;;;"t in their conclusion' by-passed h^/o appellate orders ln regard to the same issue which were placed before them' one of the Collector (Appeals) and the other of the Tribunal' The Hlgh 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 dlposing of the luasijudicial 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 iudicial discipline require that the orders of the hiQher appellate authorlties 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 obiectionable 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 74 rule is not followed, the res harassment," of tax laws. "r;; witt onrv be undue chaos in administration ;sult asPect at some length, by the rearned

12. We have dealt with because it has been ,this Additionar Soricitor o"n.'nnut'"d llru o, the Hish "",-j",:1"1"^::T::,,ilj officers_ lt is clear that th oot"r't,ons of the High cou(, seemingry ,"n," and apoarenfly unparatabre ,o ,n" *"r"nr.'unt' a rendency in revenue ;;lil #ll,lil",ffiI: become widespread, could result in considerable harassment to the assesses to rhe Revenue *" ,,",l,Joll;"-,:"::;";::T: department should take these observations in the proper spirit. The observations .of the High Court should be kept in mind in futL shourd be paid by the ".,,.,:::*il;#[i::"Jil: appellate authorities to the disciptine and rhe need n,l,i"1''l?J"',":;::::: ",. of the higher appellate authorities which are binding 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 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 vioiative of the , 15 Finance Act, 2020 and Finance Lct'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 that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (lsupra) shall however be subject to the outcome of the SLPs which were frled by the Income Tax Department and which is pending consideration before the Hon'ble observation/direction Supreme Court'

16. In the given facts and circumstances' this Bench is of the considered opinion that unless and until'we do not dmely 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 covorod matter'

17. So far as the interest of the Revenue is concerned, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs I I l l 76 36,37 and3g ofthe order hereunder: .which, for ready reference, rs reproduced r :6 For all the aforesaid *t imPugned n6116gt issued and ,n" ,r";:^"lont' -;;;"t:^::1: o, the respondenr- Deparrment ,. -.d (v' rdurcr nor sustainabie The notices so issued the Procedure adopted being per se illegal, deserves ,o and are accordingty sei aside/quashed. o. " "on.j-" att the impusned orders settins orr.n;,;;:"-ouence, bv tne responoe;a*;;:""equential orders passed pursuant to the notices issued ,n0.,. s""r,ol""^"€nt would also get 'no '48 quashed and it is oro"r"o cordingly' The reason we " are quashing the consequenti thar when tne initiation o-r.i:T::ffiJ:",:;.:,: procedurally wrong, the subr sequent orders also gets nullified automaticaly.

37. The preliminary objecfion raised by the petitioner is sustained and all these writ petitions stands allowed on thi6 very jurisdicrionat 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 exer0ising the powers under Articte 142 of the Constitution of lndia, permitted the Revenue to proceed llowing under the substituted provisions' and this Court a the petitions only on the procedural flaw' tl e right 17 conrerred on the Rev.enue .::i ffii:: J,"ir"J:: J: proceed {urther if they so wa''' '-rn" order of the Supreme CoL Agarwal' suPra' "u"" of Ashish I l I I I I I I Ilr \ !

18. We would only further like to make observations that srnce 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 challenge before the Hon'ble Supreme Court in SLP No'3574 ol 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 prefened by the Revenueagainst the decision of this High Court in the case of Kanakala Ravinilru 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 lssue'

19. Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction ts concemed. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed' 18 The consequential srmilar terms as have been passed by th Kankanala Ravindra Reddy (1 supra). to costs. orders, if any, also stand set aside/quashed in is High Court in the case of There shall be no order as Consequently, stand closed. miscellaneous petitions pending, if any, //TRUE COPYII SD t,5,lli.,aIli,YAXI To, 1 The lncom e Tax Officer Ward 1, Khammam/l Rajiv Chowk, Near Kinnerasani Theatre , Kham Telangana n SECTION OFFICER e Tax Office , Raje mam, Hyderaba d 507 001 ev Gunt 'i!,i{,at#i,,.#tri":H.dt"i}:::[lls:r;,,,a,,lsg:g::1ffi a3 j 'I1?.l8*ula3,%m",,T"?T;:::s:"y.,[,;yf,j,.,Ji]il:",i"?b?fl l.iiB, 4 The National Faceless Assessment Center, Income Tax Department, New 5. The Secretary to the Go Finance, Unirjn or r^di",KJilBJll ?:qffi?:, or Revenue, Ministry or 6. One CC to SRt THANNERU CHAITANYA KUMAR, Advocate. tOpUCl 7. One CC to Ms.B.SAPNA REDDY, SC for lncome Tax Department. [OPUC] B. One CC to SRt GAD| pF Hish c;; id;ilJli;i" HYE,=,Ir:HyltJo',sg[Yot?383r Generar of rndia), Two CD Copies I BSK LS HIGH COURT DATED:28 tO4t2O2s r I i I I i ORDER WP.No.33530 of 2024 AL-LOWING THE WRIT PETITION WITHOUT COSTS :==:\ 14 TIiE S n( o t-.Q :a .:).i * 14ruEm 1\ ;. ,i -r+ .2' ,. rO /,,2 // ,/l ) /4) /