PRIMARY AGRICUTURAL CO OPERATIVE SOCIETY LIMITED v. Ttrc lncome Tax Officer

$DEB, (per Hon'blc Sri Justice P.Sam Koshv) Heard Mr.Thanneru Chaitanya Kumar, leamed counsel for the petitioner, Ms.J.Sunitha, leamed Junior Standing Counsel for the Income Tax Department lor respondent Nos'l to 4 and Mr. B. Mukherjee, tearned counsel representing the Union of India for respondent No.5. Perused the record'

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 148,{ and 148 of the Income Tax Act, 196l (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 t48A of the Act and the subsequent initiation ofproceedings under Section 148 of the Act by the jurisdictional Assessing Oflficer, whereas in terms of the amendment that was brought to the [ncome Tax Act by way 2 of Finance Act, 20Zl w.e.f., 01.04.2021 onwarCs, proceedings under Section l48A of the Act as also under Ser.tion l4g of the Act ought to have also been issued and proceedr:d in a faceless manner.

4. The contention of the petitioner is that the issue of proceedings lreing in violaticn of the Finance Acr. 202i i.e., the impugneri nolices under Section 14gA and Section l4g of the Act not being issued in a faceless manner, have already been dealt with and decided by this Court in the case ol I(ANKANALA RAVINDRA REDDY vs. INCOME_TAX OIF|CERT decided on 14.09.|1fr23 whereby a batch of rvrit petitions we r.e allowed and the proccedi,gs initiated under Section l4gA as arsc trnder Sectio. 148 of the Act were held to be bad with consequentiz I relief.s on the ground oi it being in violation of the provisions of St:cr.ion l5 l A ol the Act read with Notification lgl2}2|dated 29.0i.2.)22. .lhe judgmcnt passed by this Court has also been subsequ()ntly lollowed in a large nurnber of writ petitions which were ailou ed on simirar terms. '[(2023) I56 raxmann.com 17g (Telangana)] 3

5. Down the line, we find that the same issue has also been decided against the Revenue by various High Courts i.e., by the Bombay High Court in the case of HEXAWARE TECHNOLOGTES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIAT, punjab and Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the case of SRI \.ENKATARAMANA REDDY PATLOOLA 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 intemational taxation and central circle, High Court of Himachal pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI 'lzoz+1464 ITR 430 (Bom) '[(2024) 156 taxmann.com 478 (Gauhati)] 'l(2024) 165 taxmann.com I l5 (Punjab & Haryana)l '[2024) 167 taxmarur.com 4l I (Telangana)] " 12024) 166 taxmann.com 679 (Bornbay)l ' [2024) 165 taxmarur.com t l3 (Himachal Pradesh)] 4 DAHYAIIHAI RADADIYA vs. INCOME TAX OFFICER, WARD 3(3)(5)8, Jharkand High Court in the case of SHYAM STINDAR SAW vs. UNION OF INDIAe, Rajasthal I{igh Court in the case of SHARDA DEVI CHHAJER vs. II{COME TAX OFFICER & ANOTIIER and batch of writ petitionsro which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court n the ca-se of GIRDHAR COPAL DALMIA vs. UNION OF I\DIA & ORS (M.A.T 1ti90 of 2023), decided on25.09.2024.

6. Even though the same issue having been dec ded by a large number ol- I{igh Courts, we are still confronted witt large filing of identical matters on daily basis ranging between 5 to 10 writ petitions. That upon the instructions being sot glit from the Department, they have been taking a solitary ground that the decision of the Bombay High Court in the case ol- H acaware Technologies Ltd., (2 supra) as also the one wrich has been decided by this Court in the case of Kanakala Rtrvindra Reddy s2024 SCC Online Guj 4012 "2025 SCC Online Jhar287 12023 : RJ -JD :4984-DBl I o 5 (l supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 before the Hon'ble Supreme Court and the Hon'ble Supreme Court is seized of the matter. In addition, there are about 1200 SLPs also filed arising out ofthe same issue being decided by various High Courts.

7. To a query being put to the learned counsel for the Revenue, they have categorically accepted the fact that there is no interim order granted by the Hon'ble Supreme Court in any of these matters pending before it. Meanwhile, fresh writ petitions ol identical nature are being piled up before this Bench on daity basis and the pendency is getting increased on matter which otherwise has alreadybeen 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 rnore 16 months have Iapsed, 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 1484. and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions 6 by all the rnajor High Courts in India are co ntinuously still initiating proceedings under Section 148,4. of thr: Act and also initiating proceedings under Section 148 oI tLre Act in contravention to the amendments brought into the ILrcorne Tax Act pursuant ro the Finance Act,2020 as also the Finance Act20Zl

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 ctl Kanakala Ravindra Reddy (l supra), le amed Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Departme nt where they would be required to file equal number of St ps before the Hon'ble Supreme Coutt and it would be further burdening the exchequer ot'the Union of India. It was also the cc ntention of the leamed Standing Counsel that no prejudice would be caused to the interest of the petitioners in case if this writ petition s kept pending till the finalization of the SLps pending befon: the Hon,bte Supreme (lour1 and the fact that the petitioner is al:eady enjoying the benefit of interim protection. Nonetheless, on the earlier query of this Court as to why the lncome Tax Department have not come out rvith a mechanism to issue appropriate instruct,ons or to take /({ 7 appropriate steps in ensuring that proceedings under Section 14EA of the Act as also the assessment orders under Section 148 of the Act are kept in a hold in the light ofthe decisions dedcided by the various High Courts, it was submitted by the leamed Standing Counsel that the said steps can only be taken at the level of CBDT as any such steps would have to be taken Pan [ndia and cannot be limited to any of these jurisdictional High Courts.

10. As a result of which, what we are facing is steep increase ol litigation day in and day out even though various orders have been passed by this High Court allowing writ petitions on the very sarne issue. The Income Tax authorities concerned are still even now in 2025 atso initiating proceedings in contravention to the provisions of Section 15lA of the Act and as a result by now, more than 600 tt-r 700 petitit-tns have been alreatly got pilcd up bclurc 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 Division Bench while reserving the right of the Revenue, has also protected the interest ol the petitioners 8 insofar as the liberty which was granted to th: Revenue for initiating fresh proceedings strictly in accordance w.th the amended provisidns of the Act, as amended by the Finance Act, ZO2O and the Financc Act,202l. The petitioner assessee would be entitled to challenge or raise the orher legat objections if the R,:venue initiates fresh pror:eedings. The Department has made n(r endeavour in availing the said libcrty that was reserved for the Rrvenuc. On the contrary, they have been still sticking on to the stand, which this I{igh Court as well as many other High Courts alreacly held to be baci. I l. It appears that because ofthe aforesaid libertl that this High Court had granted pennitting the Revenue for iritiating fresh proceedin6ls as a one-time measure in a facelesr, manner, the Income Tax Depaftment wants to take advantage of the same by protracting these proceedings which would enable tht:m to rneet the limitation lhat u,ould otherwise come in the way. L.kewise, if the u,rit petition is kept pending for a considerable long teriod of time and hnally 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 9 Department would get the advantage of the liberty that is otherwise protected in favour of the Revenue for initiation of fresh proceedings fiom the disposal ofthese matters at a much later stage which would be advantageous and beneficial to the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concemed. As a consequence, the Income Tax Department gets an extended period of time for initiation of fiesh proceedings

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Kflnakala Ravindra Reddy (l supra), is a matter of grave concern. The Income Tax Department's persistent initiation of [resh proceedings, disregarding the established judiciat 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 10 position. Such conduct raises serious questions about the administrative effrciency and the respect for judicial pronouncements, particularly when this Court has already provicied a balanced approach by preserving both the Reverrue's rights and assesses interests.

13. Anr>ther aspect which needs to be considered is that in fact it should have been realized by the Income Tax Deparrnent itself and should have lbund out via media in ensuring that proceedings under Sections 148-A and 148 should not have bt:en issued in a faceless manner, at least till the Hon'bte Supreme Court decide the twelve hundred (1200) odd SLps u,hich it is already seized of or, at least the [ncome Tax Department should have fc und out some remedial steps to ensure that wherever the autholities intend to initiate proceedings under Sections 148-A and l4g, 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 ve:y same issue. This again. the Income Tax Department, has not beerL able to give a convincing reply, except fcr the fact that such a de:ision if at all f ( t1 has to be taken, has to be taken for the whole of India, and which otherwise has to be by way of a policy decision and that too at the level of Central Board of Direct Taxes. Though the leamed Standing Counsel for the Income Tax Department contended that the Delhi High Court dismissed a writ petition of similar nature, on the one hand when the High Court is struggling to reduce its pendency, such notices which are under challenge in this writ petition are forcing the assessee to knock the doors of this High Court 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 matters again and again on daily basis. Admittedly, in spite of the matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the matter has been reluctant in granting any interim protection to the Income Tax Department. Yet, the authorities concerned at the State level are not ready to accept the verdict passed by a majority of High Courts of different States on the same issue; and to make things further worse, the Income Tax Department is showing audacity by issuing notices continuously under Sections 148-A and t2 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 TAXrr, on an issue u,herher it was justiflable on the part of the [ncome Tax Depirrlment in not ioliowing an order passeci by the adjudicating autho-ity only on the ground that the appeals are pending, the Divisior Bench of the High Court of Bombay held at paragraph No.25 as uLrder, r,iz., : "25. ivir. Paricjwaila has rightly cirawn out aiienrion to the decision of this Court in Commissioner of lncome T:rx vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Coud in Samp Furniture (p) Lid. v. lTO13 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 nean that till the same is set aside in a manner known to law, it wor ld Ioose its binding force. Referring to the decision of the Suprerre Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.'4, the Court observed that the approach of the offlcials of flevenue of treating decisions being "not acceptable" was critici;led by the Supreme Court. ln such decision, following are tf e relevant observations made by the Supreme Cou(. " [(202S) 170 iaxmann.com 422 (Bombay)] '' U9781 I | 3 ITR 589 lBonrbay) '1 120241165 taxmann.com 581/300 Taxman 452 (Bombry) 'o ltggZl raxmann.com 16/55 ELT 433 (SC) 13 "6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correclness or otherwise 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 iurisdiction 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 .-, -, '14 rule is not followed, the result will only be Jndue harassment to assesses and chaos in adminis lration of tax laws.

12. We have dealt with this aspect at some l:ngth, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh cn the officers. it is ciear that the observations of th< High Court, seemingly vehement, and appa r.ent!;- unpalatable to the Revenue, are only lntended t() curb a tendency in revenue matters which, if allor,r ed to become widespread, could result in considi)rable harassment to the assesses-public without any t enefit t^ tlt(.1 lll(i department should take these observations ir the proper spirit. The observations of the High Court should be kept in mind in future and the utmost r-.gard should be paid by the adJudicating authorities ar d the appellate authorities to the requlrements of jt dicial discipline and the need for giving effect to the r,rders cf the higher appellate authorities which are brnding ..,^,.1,J t:1,^ r^ ^^., rrNs rU sdy th6 A^r,^^' t /^ '^ on them." 1 5. What is worrSring this Bench more is thc fact that an endeavour is being made whole heartedly to ensure itot to generate further litigation on issues which have been laid to rest by a large number o1'High Courts all of whom have taken a ctnsistent stand that the action of the Income Tax Department being iiolative of the 15 Finance Act,2020 and Finance Act,202l. Now, inorder 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 Reddy (l supra) shall however be subject to the outcome of the SLPs which were filed by the Income Tax Department and which is pending consideration before the Hon'ble Supreme Court.

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 Court and which stands fortified by the decisions of the various other High Courts on the very sarne issue, the pendency of this Iligh Court would further be burdened which otherwise can be decided and disposed ofas a covered 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 L6 36,37 and 38 ofthe order which, for ready reference, is reproduced hereunder:

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the re.. pondent_ Department is neither tenable, nor sur;tainable. The notices so issued and the procedure adop ed being per se illegal, deserves to be and are accorc ingly set aside/quashed. As a consequence, all the i.npugned orders getting quashed, the consequential orders passed by the respondent-Department pursi:ant to tho notices issued under Section 142 and 14g would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the t rinciples that when the initiation of the pioceedings it;eif was procedurally wrong, the subsequent orders also gets nullified automatically.

37. The preliminary objection raised by the pet tioner is sustained and all these writ petitions stands all{)wed on this very iurisdictional issue. Since the impugnec notices and orders are getting quashed on the t)oint of _urisdiction, we are not inclined to proceed furlher and ,lecide the other issues raised by the petition(,r which :;tands reserved to be raised and contenderl in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in tne case of Ashish Agarwal, supra, as a one-time r.teasure exercising the powers under Article 142 of the Oonstitution of lndia, permifted the Revenue to t)roceed under the substituted provisions, and this Court itllowing the petitions only on the procedural flaw, fl- e 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 of Ashish Agarwal, supra.

18. We would only further like 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 challenge before the Hon'ble Supreme Court ln SLP No.3574 of 2024, preferred by the lncome I'ax Deparlment, we make it clear that t I allowing of the instant writ petition is subject to outcome of the aforesaid SLP prelened by the Rcvenue against the decision of this I{igh Court in the case ol Kanakala Ravindra Reddy (l stryra) 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 ls concemed. As a conscquence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed 18 The corrsequential orders, if any, also stand set iLside/quashed in similar l.erms as have been passed by this High Corr( in the case of Kankanala Ravindra Reddy (l supra). There shall be no order as to costs. Consequently, miscellaneous petitions pendirrg, if any, shall stanci cklsed. i/TRUE COPY// 7* i) Q/.P.GOWRI SHAi.tKAR qEPUw REGTSTRAR I SEcTIoN oFFIcER The lncome Tax Officer, Ward 1, Adilabad/AdUa Hyderabad, Hyderabad 504106. Telangana. T.he Principal Chief Commissioner of lncome Tax - Telangana and A.p., lyderabad, lT Towers, AC Guards, fr,frsaO"fani HyOeratia --S-Odfiig, Telangana, 'i Hyder-abad, A.dilabad, The Chairman, Central Board .of .Direct Taxes, D.rpartment of Revenue, yjfi.^ry of Finance, Government of lnOia, S.crltr r,, i'ririf O ings, Ne\.Oetii.-i 110 001 The.National Faceless Assessment Center, lncome Tax Department, New Delhi. The Secretary to the Government, Department o Revenue, tvlinistry of Finance, New Dethi, Union of tnAia - i f O bbl One CC to SRI THANNERU CHAITANYA KUMAR Advocate tOpUCl One CC to Ms. J.SUN|THA, Jr. SC FOR |NCOTVE rA)t [OPUC] 9lq C_C to SRI GADI PRAVEEN KUMAR, DEpUTy ;OLIC|TOR GENERTAL oF tNDtA, [oPUCI Two CD Copies o To, 1 ) 3 4 5 6 7 8 I BSR GJ HIGH COURT DATED:2810412025 ORDER WP.No.33450 of 2024 zlu: ,4.!.7 i\ie e' ) 15 S:P 206 i -a:a" 6 t. .! i ALLOWING THE WRIT PETITION, WITHOUT COSTS Es