NKANALA RAVINDRA REDDY v. TNCOME-TAX OFIICERI decided on

Mr. B. Mukherjee, leamed counsel representing the Union of India for respondent No.2 . Perused the record.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section l48A and 148 of the lncome 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 l48A of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Offlrcer, whereas in terms of the amendment that was brought to the Income Tax Act by way 2 of Finance Act, 2021 w.e.f., 0l .04.2021 onwarrls. proceedings under Section 1484. ofthe Act as also under Section 148 ofthe Act ought to have also been issued and proceeded in a faceless mannel'.

4. l'he contention of the petitioner is thar the issue of proceedings being in violation of the Finance Act, 2021 i.e., the impugned notices under Section l48A and Sectior 148 ofthe Act not being issued in a faceless manncr, have already bccn dcalt with and decided by this Court in the case of 'K,{NKANALA RAVINDRA REDDY vs. TNCOME-TAX OFIICERI decided on 14.09.2023 whereby a batch of writ petitions w,jre allowed and the proceedings initiated under Section l48A as alsrt undcr 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 S,ection l51A of the Act read with Notification 1812022 dated 29.03.2t)22. The said judgrnent passed by this Court has also been subseqrrently,lollowed in a large number of writ petitions which were allowed on similar terms. '[(2023) 156 taxmann.com 178 (Telangana)] ) 3

5. Down the line, we find that the same issud has also,been decided against the Revenue by vanous 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 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 SRI 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 ABHTN 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) 'l(2024) 156 taxmann.com 478 (Gauhati)l " [(2024) 165 taxmann.com 115 (Punjab & Haryana)] ' 12024) 1 67 taxmann.com 41 1 (Telangana)l " 12024) 166 taxmann.com 679 (Bombay)l '12024) 165 taxmann.com 113 (Himachal Pradesh)l 4 DAIIYABHAI RADADIYA vs. INCOME TAX OFFTCER, WARD 3(3)(08, Jharkand High Court in the ceLse of SHYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA 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 Division Bench of Calcutta High Court in the case ol GIRDHAR GOPAL DALMIA vs. UNION OF TNDIA & 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 10 rvrit petitions. That upon the instructions being sought from the Department, they have been taking a solitary 6lround that the decision of the Bombay High Court in the cast: of Hexaware Technologies Ltd., (2 supra) as also the one v,,hich has been decided by this Court in the case of Kanakula Ravindra Reddy *2024 scc online Guj 4012 ' 2025 SCC Onlinb Jhar 287 'o 72023 : RJ-JD : 49 84-DBl . , ?.,! 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. ln 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 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 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 more 16 months have lapsed, till date, we do not find any remedial steps having been taken by the Income Tax Depa(ment 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 concerned in the teeth of series of decisions Fr<+A- I 6 by all the rnajor High Courts in India are continuously still initiating proceedings under Section l48A of the Act and also - the Act in initiating proceedings under Section 148 o contravention to the amendments brought into the ncome Tax Act pursuant to the Finance Act,2020 as also the Finance Lct202l

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 Coun in the casc of Kunakala Ravindra Reddy (l supra), lt:arned Standing Counsel for the Incorne Tax Department contends t[at those would unnecessarily burden the Income Tax Departn-re nt 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 leamed Standing Counsel that no prejudice would t,e caused to the interest of the petitioners in case if this writ petition is kept pending till the finalization of the SLPs pending befor: the Hon'ble Supremc Court and the fact that the petitioner is already enjoying the benefit 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 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 ofthe decisions dedcided by the various High Courts, it was submitted by the leamed Standing Counsel that the said steps can onlybe 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 t5lA of the Act and as a result by now, more than 600 to 700 petitions have been already got pited 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 Reddy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakula Ravindra Reddy (1 supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners I [* I insofui es rh;; i.ioe-r1., rvh,:ii was granted to tiLe F.evenuc i,rr: initiating fresh proceedings strictly in accordance with the amended provisions of the Act, as arnended by the Financc Act. 2020 and the Finance Act,202l. The petitioner assessee would be entitled to challenge or raise the other legal objections if the R evenue initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was reserved for the Rer.,enue. On the contrary,, they have been stilI sticking on to the stand, which this High Court as well as many other High Courts already held to be 1 1. It appears that because of the aforesaid liberty that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-time lneasure in a facele:;s manner, the Income Tax Department wants to take advantage tf the same by protracting these proceedings which would enable them to meet the limitation that would otherwise come in the way. I-ikeu,ise, 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 rhe other High Courts in which the SLPs are still pending, th, : 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 beneficiai 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 Ravindru Reddy (l supra), is a matter of grave concern. 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 10 position. Such conduct raises serious questitns about the administrative effrciency and the respect for judicial pronouncements, particularly when this Court has a lready provided a balanced approach by preserving both the Revelue's rights and assesses lnterests

13. Another aspect which needs to be considered is that in fact it should have bcen realized by the Income Tax Deparlment itself and should havc lbund out via media in ensuring that proceedings under Sections 148-A and 148 should not have been issued in a faceless manncr, at lcast till the Hon'ble Supreme (lourt decide the twelve hundred ( I 200) odd SLPs which it is alreadl seized of or, at least the lncome Tax Department should have f,tund out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 148, 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 thc Hon'ble Supreme Court on the very sarne issue. This again, the Income 1-ax Deparlment, has not been able to give a convincing reply, except for the fact that such a d,:cision if at all t / 11 has to be taken, has to be taken for the whole of India, and which otherwise l.ras 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 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 I L2 148 through the jurisdictional Assessing Officer rvhereas it ought to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs. .ASSISTANT COMMISSIONER, INCOME l'AX'r, on an issu: whether it was justifiable on the part of the Income Tax Defrartmcnt in not following an order passed by the adjudicating auth()rity only on the ground that the appeals are pending, the Divisio I Bench of the High Court of Bombay held at paragraph No.25 as rrnder, viz., : "25. I\,,1r. Paridwalla has rightly drawn out atte rtion to the decision of this Court in Commissioner of lncome lax vs. Smt. Godavaridevi Saraf'2 as also the recent decision of the co- ordinate Bench of this Court in Samp Furniture (P) t-td. v. lTOl3 of which one of us (Justice G.S. Kulkarni) was a mem ter, wherein the Court categorically observed that the Revenue having not "accepted" the judgment of the Hrgh Court would not rnean 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 Suprer-ne Court in Union of lndia vs. Kamlakshi Finance Corporatiorr Ltd.r4, the Court observed that the approach of the officials of Revenue of treating decisions being "not acceptable" was critic zed by the Supreme Court. ln such decision, following are lhe relevant observations made by the Supreme Court. 11ZOZS; 170 raxrnann.com 422 (Bombay)l " 1t9787113 ITR 589 (Bombay) " IZOZ+1165 taxmann.com 581/300 Taxman 452 (Bomhay) 'o ltggZl taxrnann.com 16/55 ELT 433 (SC) (

1.3 "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 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 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 ludicial 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 I i i I I I r t i i i I I r i 74 .-\ rule is not followed, the result will only be undue harassment to assesses and chaos in admini:itration of tax laws.

12. We have dealt with this aspect at some ength, because it has been suggested by the loar.led Additional Solicitor General that the obsen,ations made by the High Court, have been harsh on the officers. lt is clear that the observations of thr: High Court, seemingly vehement, and appitrently unpalatable to the Revenue, are only intended t, curb a tendency in revenue matters which, if allovred to become widespread, could result in considerable harassment to the assesses-public without any trenefit to the Revenue. We would like to say that the department should take these observations n the proper spirit. The observations 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 jrrd,cial discipline and the need for giving effect to the orders of the higher appellate authorities which are b ndrng on them." I 5. What is worrying this Bench more is thr: 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 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 (1 supra) shall however be subject to the outcome of the SLPs which rvere 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 timety 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

1.6 36, 37 trnd 38 of the order which, lor ready referenc e, is reproduced hereunder:

36. For all the aforesaid reasons, the impugn(rd notices issued and the proceedings drawn by the respondent- Department is neither tenable, nor sustarnable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to th? notices issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The r€,ason we are quashing the consequential order is on the t)rircioles lhat when the initiation of the proceedings iself was procedurally wrong, the subsequent orders also gets nullifled automatically.

37. The preliminary objection raised by lhe peritioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugne I 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 petition3r' whrch stands reserved to be raised and contended n an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one{ime reasure exercising the powers under Article 142 of the Constilution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on lhe procedural flaw, tre right l I I I i i I t I I I t L7 conferred on the Revenue would remain reserved to proceed fu(her 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 in SLP No.3574 of 2024, I preferred by the Income Tax Depaftment, 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 Court in the case of Kanakala Ravindra Reddy (l 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. Accordingly, the instant writ petition stands allowed favour of the assessee so far as the issue of jurisdiction rs concerned. As'a consequence, the impugned notice under challenge under Sections 148-4. and 148 stands set aside/quashed' The consequential ori;rs, i, arry, also stand set aside/quashe;t 1,, similar terms as have been passed by this High Court in the case of Kankanala Ravindra Reddy (l supra). There shal be no order as to costs Consequently, miscellaneous petitions pendir g. if any, shall stand closed. //TRUE COPY' SD/. ASSISTANT A. PRATHIMA REPISTRAR ,/ /,/ SEC ),{ ION OFFICER I t To Block. New Delhi - 1 10 001 Botanical Garden, Hyderabad, Telangana, 500084. 'l . Assistant Commissioner of lncome Tax, Circle - 3(1), Sittnature lowers, opp. 2. The Secretary, Union of lndia, Ivlinistry of Finance, Gc,vernment of lndia, North 3. One CC to SRI VENKATRAM REDDY MANTUR, Advocate [OPUC] 4. One CC to M/s BOKARO SAPNA REDDY, Jr. SC FOR TNCOI\,4E TAX [OPUC] 5. One CC to SRI B MUKHERJEE, SC FOR CENTRAL GOVT [OPUC] 6. Two CD Copies PSK GJP o i I i I I I I I I I I I i i I t t t x t I I I i Ii I I I ---.=-=:=-=-. 1 t'r'- s 1., "(' '--- ' -, a ''' f_" >l 'l ,!-,/ .:' / ,,, O9sEPffi ..::. .. -- - HIGH COURT DATED:2810412025 ORDER WP.No.36328 o12024 Ill 'ia .') .) ,,) '\.. ALLOWING THE WRIT PETITION WITHOUT COSTS { a