The High Court · 2025

Counsel for the Respondent No.5: SRI GADI PRAVEEN KtJMAR, DEPUTY SOLICITOR GENERAL OF INDIA The Court made the following: ORDER THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITION No.33698 Ol- 2024 ORDER, (per Hon'ble Sri Justicc Narsing Rao Nandikonda) Heard Mr.Thanneru Chaitanya Kumar, learned counsel for the petitioner, Ms.J.Sunitha, leamed Junior Standing Counsel for the Income Tax Department for respondent Nos.l to 4 and Mr. B. Mukherjee, learned 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 148A and 148 of the Income Tax Act, l96l (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 l48A of the Act and the subsequent initiation ofproceedings under Section 148 of the Act the jurisdictional Assessing Officer, whereas in terms of the amen dment that was brought to the Income Tax Act by way fV \ 2 of Finanr:e Act, 2021 w.e.f., 01 .04.2021 onwards, proceedings under Ser:tion I48A of the Act as also under Secrion 148 of the Act ought. to have also been issued and proceede,l in a laceless manner

4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act. 202 I i.e., rhe impugned notices under Section l48A and Section 148 of the Act not being issued in a faceless manner, have already:rcen dealt with and decided by this Court in the case of h.ANKANAI.A RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions wer-e allowed and the proceedings initiated under Section 148A as also under Section 148 of the r\ct were held to be bad with consequential tcliefs on the ground of it being in violation of the provisions of Se ction l5lA ol the Act read with Notification 1812022 dated 29.03.2t)22. l'he said judgment passed by this Court has also been subsequr)nrly followed in a large number of writ petitions which were alloq ed on similar terms. '[(2023) [56 taxmann.com 178 (Telangana)] I .'t

5. Down the line, we frnd that the same issue has also been decided against the Revenue by vanous High Courts i.e ., by the Bombay High Court in the case ol HEXAWARE TECHNOLOGIES LTD., vs. ASSISTAN'I' COMMISSIONER OF INCOME TAX & OTHERS2, Cauhati 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 VENKATARAMANA REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICE& INTERNATIONAL TAXATION6 which is again on,international taxation and central circle, High Court of Hirnachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBIIAI '7zoz+1464 rrR 430 (Bom) ' [(2024) 156 taxmann.com 478 (Gauhati)] 'l(2024) 165 taxmann.com 115 (Punjab & Haryana)l '12024) I t7 thxmann.com 41 1 (Telangana)l " 12024) 166 taxmann.com 679 (Bombay)l '12024) 165 taxmann.com I l3 (Himachal Pradesh)l 4 DAHYABHAI RADADIYA VS. INCOME TA.X OFFICER, WARD 3(3)(5)3, Jharkand High Court in the ca.ie of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan t{igh Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ pt:titionsr0 which stood decided on 19.03.2024. Similar views have llso been taken by the Division Bench of Calcutta High Court in the case of GIRDI{AR 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 dec ded by a largc number of High Courts, we are still confronted witl large filing ol identical matters on daily basis ranging between 5 to l0 writ petitions. That upon the instructions being sotrght from the Department, they have been taking a solitary gtound that the decision of the Bombay High Court in the case ol- Hexaware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakals Rotvindra Reddy 8202q scc ()nl-ine Guj 4012 '2025 SCC Online Jhar287 'o 72023 : RJ- ID :4984-DBl 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 fited arising out ofthe same issue being decided by various High Courts

7. To a query being put to the learned counsel lor the Revenue, they have categorically accepted the fact that there is no interim order granted by the Hon'ble Supreme Court in any of these matters pending before it. Meanwhile, fresh writ petitions of identical nahlre are being piled up before this Bench on daily basis and the pendency is getting incrOased on matter which otherwise has already been dealt and decided by this very High Court itsetf.

8. On the one hand, even though the order of this' Court that was passed as early as on 14.09.2023 and more l6 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 l48A 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' major High Couris ir, India are corrtinuously still initiating proceedings under Section l48A of the Act and also initiating proceedings under Section 148 of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act,2020 as also the Financt: Act202l. g. Upon a query being put as to why can't this rvrit petition be disposed oi in the teeth of the decision rendered by this Court in the case of Kanakalu Ravindra Reddy (l supra), leirmed Standing Counsel for the Income Tax Department contends thrt those would unnecessarily burden the Income Tax Depaftment where they would be required to file equal number of SLI)s before the Hon'ble Strpreme Court and it would be further turdening the exchequer of the Union of India. It was also the corrlention of the learned Standing Counsel that no prejudice would be caused to the interest ol the petitioners in case if this writ petition i:, kept pending till the finalization of the SLPs pending before the Hon'ble Supreme Courl and the fact that the petitioner is alrt:ady enjoying the benefit of interim protection. Nonetheless, on tht, earlier query of this Court as to why the [ncorhe Tax Deparlment have not come out with a mechanism to issue appropriate instructi<,ns or to take 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 concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section l51A of the Act and as a result by now, mbre than 600 r' 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 Kanskala Ravindra Reddy (l 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 of the petitioners 8 insofar as the liberty which was granted to tht: Revenue for initiating fresh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Finance Act,2020 and the Financr: Act,202l. The petitioner assessee would be entitled to challenge or raise the other legal objections if the Rcvenue initiates fresh procr:edings. 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 aiready held to be bad.

11. It appears that because ofthe aforesaid liberty that this High Court had granted permitting the Revenue for ilitiating fresh proceedings as a one-time measure in a faceless lr4anner, ? Income Tax Department wants to take advantage ol the same by protracting these proceedings which would enable the:m to rneet the limitation that would otherwise come in the way. Lrkewise, if the writ petition is kept pending for a considerable long period 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 ttLe other High Courts in rvhich the SLPs are still pending, the Income Tax I \ 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 the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concemed. As a consequence, the Income Tax Department gets an extended period of time for initiation of fresh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in 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 surget 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 questiorls about the administrative efficiency and the respect lor judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revenuc's nghts and assesses lnterests

13. Another aspect which needs to be considered is that in fact it should have been realized by the lncome Tax Depanment rtself and should have found out via media in ensuring thlt proceedings under Sections 148-,4. and 148 should not have bten issued in a faceless manner. at least till the Hon'ble Supreme Court decide the twelve hundred (1200) odd SLPs which it is already seized ofor, at least the lncome Tax Department should have fcLrnd out some remedial steps to ensure that wherever the author ilies intend to initiate proceedings under Sections 148-A and 148, rrther 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 vey same issue. This again, the lncome Tax Department, has not been able to give a convincing reply, except for the fact that such a drcision if at all \ 17 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 learned Standing Counsel for the Income Tax Department contended that the Delhi High Courl dismissed a writ petition of similar nahrre, 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 bgen 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 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 148-A and I It

1.2 148 through the jurisdictional..Assessing Officer wtereas 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 wherher it was justifiable on the part of the Income Tax Depa rtnrent in not following an order passed by the adjudicating author ty, only on the ground thal the appeals are pending, the Division Bcnch of the High Court of Bombay held at paragraph No.25 as undcr, r,iz., : "25. Mr. Paridwalla has rightty drawn out attentiln to the decision of this Court in Commissioner of lncome Ta): vs. Smt. Godavaridevi Sarafl2 as also the recent decision (f the co_ ordinate Bench of this Court in Samp Furniture (p) Ltcl. v. lTOr3 of which one of us (Justice G.S. Kulkarni) was a membe-, wherein the Court categorically observed that the Revenue having not "accepted" the judgment of thq High Courl would not meah that till the same is set aside in a manner known to law, it woulcl loose its binding force. Referring to the decision of the Supremr, Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.14, the Court observed that the approach of the officials of Revenue of treating decisions being,,not acceptable" was criticizeC by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. ',t_[12025) I 70 taxmann.com 422 (Bombay)] '' il9781 Il3 tTR 589 (Bombay) t3 1ZOZ41 165 taxmann.com 5gl/300 Taxman 452 (Bombay) 'o ll9921taxmann.com 16155ELT 433 (SC) ( ( i3 "6. Sri Reddy ls 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 Revpnue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness 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 \he Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding Lipon 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 ils operation has been suspended by a competent court. lf this healthy t 74 r'Jle is not followed, {he result will only be trndue 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 leerned Additional Solicitor General that the observations made by the High Court, have been harsh on lhe officers. lt is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to trecome widespread, could result in considerable harassment to the assesses-public without any benefit to the Revenue. We would like to say the,t the department should take these observations ir the proper spirit. The obgervations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of j(ldicial cliscipline and the need for giving effect to 16s,r1Jers of the higher appellate authorities which are b nding on them."

15. What is worrying this Bench more is th,: 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 violative of the. 15 Finance Act,2020 and Finance Act,2021. Now, in order to protect the interest of the Revenue as also that of the assesseo, it would be trite at this junchrre, 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 Kunkanala Ravindra Reddy (l supra) shall however be subject to the outcome of the SLPs which were flled by the lncome 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 ofthis Court I and which stands fortified by the decisions of the lrarious 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 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

1.6 36,37 and 38 ofthe order which, for ready referenct:, is reproduced hereunder: l]6. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the resoondent- Department is neilher tenable, nor sustarnable. The notices so issued and the procedure adopt,3d beinq per se illegal, deserves to be and are accord ngly set asrde/quashed. As a consequence, all the irrpugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to the notices issued under Section 147 and 148 would a so get cluashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders a so gets nullified automatically. a. i)7. The preliminary objection raised by the pet tioner is -s,ustained and atl these writ petitions stands allowed on this very jurisdictional issue. Since the impugnect rlotices and orders are getting quashed on the Doint of jurisdiction, we are not inclined to proceed furlher and decide the other issues raised by the petitionr;r which stands reserved to be raised and contended in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in .he case of Ashish Aganval, supra, as a one{ime rneasure exercising the powers under Article 142 of the Oonstitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, trre right -h 17 conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of lhe 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 Kunakala Ravindra Reddy (1 supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, preferred by the Income Tax Department, we make it clear that I I allowing of the instant writ petition is subject to outcome of the aforesaid SLP prefened by the Revenue against the decision of this High Court in the case of Kanakala Ravindra Reddy (1 supra) \ This, in othtr words, would mean that either of the parties, if they t 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 ln favour of the assessee so far as the issue of jurisdiction ls concemed. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed. 18 1'he consequential orders, if any, also stand set aside/quashed in similar teEns as have been passed by this High Cou.t in the case of Kankanalu Ravindra Reddy (1 supra). There shall be no order as to costs. Consequently, miscellaneous petitions pendinr:, if any, shall sland closed. //TRUE COPYII SD/. K. AMMAJI PUTY REGISTRAR 1 rp 'sEcloN oFFtcER Hyderaba,J 504'101 , Telangana. 1- The lncome Tax Officer Ward '1 , Nirmal/ lncome Tax Crffice, Nirmal, Nirmal, 2. The Principal Chief Commissioner of lncome Tax - Telangana and A.p., Hyderabad, lT Towers, AC Guards, Masab Tank, Hydcra6ad - 50002g, Telangana. Delhi.

3. The Central Board of Direct Taxes, Repr-esented by its Chairman, Department 9f Reyqlqe, tt/i1i9!ry of Finance, Government of lndia, Secretariat Buildings, New Ddlhi - 1 10 001

4. The Ndlional Faceless Assessment Center, lncome Tax Department, New 5. The Union of lndia, Represented by its Secretary to thr: Government, Department of Revenue, Ministry of Finance, New Delhl- 110 00.1 . 6. One CC tc, Sri Thanneru Chaitahya Kumar, Advocate IOPUCI 7. One CC tc, Ms. J. Sunitha (Junior SC for lncome Tax) tOPUCi 8. One CC tc Sri Gadi Praveen Kumar, Deputy Solicitor (ieneralbf lndia[OPUC] 9. Two CD Copies To, T J GJ + I ( HIGH COURT DATED:2810412025 1 HE.s ils-.".r),, \.\ ORDER ai 1E sEP ?ffi WP.No.33698 of 2024 -t f) SS r,^ (: - (. ,/7 t t ALLOWING THE WRIT PETITION WITHOUT COSTS o