High Court · 2025

Petition under Article 226 of lhe Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith' the High Court may be pleased to issue a Writ of Mandamus or any other appropriate Writ' Order or Direction. declaring that a )the order passed by the 1st Respondent u/s 147 Ow Sec. 144 of the lncome Tax Act' 196'l' dated OB03'2024' bearing DIN and Notice No. .rBA/AST/ st147t2023_z4t1o62z4so76(1), for the Assessment year 2016 - 17 and b.)the orders passed by the 2nd Respondent, revying penarties u/s 271F,271(1)(b) and 271('lXc) of the lncome Tax Act' 1961' dated 04'092024' 24.0g'2024and24.og.2024,bearingDIN.ITBA/PNLtFl271Fl2024- 25t10o8325205(1), lrBA/PN LtFt271(1)(b)t2024-25t106s048208(1)' lrBAlPNLlFt2Tl(1)(c)t2o2a-2s/1069067141(1), respectivery, for the Assessment Year 2016 -17'as arbitrary, illegal, bad in law, barred by time, void-ab-initio, violative of the principres of naturar justice, apart from being viorative of Articres 1 ' 19(1)(g) and 265 0f the constitution of India and Sec 14BA of the rncome Tax Act' 1961' and to consequenfly set aside the same in the interests of justice. lA NO: 1 oF 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 stay all further proceedings, including any recovery, pursuant to the notice uh. 148 of the Act' dated 24 03 2023, issued by the 1st Respondent, vide DrN and Notice. ,rBA/AST/S/148-112022- 23t1051267765(1), for the Assessment year 2016 _ 17, pending disposal of the above Writ petition. Counsel for the petitioner : SRI A.V.A.SIVA KARTIKEYA Counsel for the Respondents: Ms.J.SUNITHA, Jr.SG for lT DEpT The Court made the following: ORDER i- THE HONOURABLE SRI JUSTICE P'SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITION No.3461 00F 2024 9 8, (per Hon'bte sri Justice Narsing Rao Narulikonda) Heard Mr. A.V'A'Siva Kartikeya' leamed counsel for the petitioner and Ms' J.Sunitha, learned Junior Standing Counsel for the Income Tax Department for the respondents' Perused the record.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section I48A and 148 of the Income Tax Ac[ 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 1484' of the Act and the subsequent initiation ofproceedings under Section 148 of the Act by the jurisdictional Assessing Officer, whereas in terms of the amendrrynt that was brought to the Income Tax Act by way of Finance Acr, 2021 w'e'f', 01'04'2021 onwards' proceedings 2 under Section l4gA of rhe Act as also under Section l4g of the 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 Financ e Act, 2021 i.e., the impugned notices under Section 14gA and Section l4g ofthe Act not being issued in a faceless manner, have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME_TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions were ailowed and the proceedings initiated under Section r4gA as arso under section 148 of the Act were held to be bad with consequential reliefs on the ground of it being in vioration of the provisions of Section 1 5 r A of the Act read wirh Norification lg/2022 dated2g.O3.2022. The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were alrowed on similar '[(2023) 156 taxmann.com l7g (Telangana)] ,. ,

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 HaryanaHigh Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4' and Telangana High Court in the case of SRI VENKATARAMANA REDDY PATLOOI,A VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of intemational taxation' Bombay High Court in the case of ABTIIN ANILKUMAR SIIAII VS. INCOME TAX OFFICER" INTERNATIONAL TAXATION6 which is again on international hxation and central circre, High court of Himachar case of GOVIND SINGII vs' INCOME TAX OFFICERT' Gujarat High Court in the case of MANSUKHBHAI pradesh in the , lzoz+1464 lrR 430 (Bom) , i,zoz+i 156 taxmann.com 478 (Gauhati)l 'iirt;) 165 taxmann'com 115 (Punjab &Haryana)l 'f)OZql' 167 taxmann.com 411 (Telangana)l "izozq) 166 taxmann.com 679 (Bombay)l - 'i;o;ii ii1,r*.* tom I l3 (Himachal Pradesh)l - 4-\ 4 \: DAHYABHAI RADADIYA vs. INCOME TAx OFFICE& WARD 3(3X5)8, Jharkand High Court in the case 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 petitionsr0 which stood decided oo 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 TNDIA & ORS (M.A.T I 690 ot 2023\.decided on 25.09.2024.

6. Even though the same issue having been decided by a large number of High Courts, we are still confionted with large filing of identical matters on daily basis ranging between 5 to 10 writ pehttons. That upon the instructions being sought fiom 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 Kqnakala Ravindra Reddy '2024 sCC online Guj 40tZ '2025 SCC Online lhar287 'o 72023 : RJ-JD :4984-DBl ,1 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 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 befbre 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 hasalreadybeendealtanddecidedbythisveryHighCourtitself.

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 lncome 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 n 6 by all the major High Courts in India are continuously still initiating proceedings under Section l48A of the Act and also initiating proceedings under Section 14g of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act,2020as also the Finance Act202l. 9' upon a query being put as to why can,t this wnt petition be disposed of in the teeth of the decision rendered by this Court in the case of Kanakalu Rwindm Reddy (l supra), leamed Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Department where they would be required to fire equar number of SLps before the Hon'ble Supreme Court and it would be further burdening the exchequer of the Union oflndia. It was also the contention of the leamed Standing Counsel that no prejudice would be caused to the interest of the petitioners in case if this writ petition is kept pending till the ftnalization of the SLps pending before the Hon,ble Supreme Court and the fact that the petitioner is already enjoying the benefit ofinterim 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 7 appropriate steps in ensuring that proceedings under Section 148A ofthe Act as also the assessment orders under Section 148 ofthe Act are kept in a hotd in the light ofthe 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 'I ax authorities concemed are still even now in issue. The Income 2025 also initiating proceedings in contravention to the provisions of Section 15 1A of the Act and as a result by now' more than 600 toT00petitionshavebeenalready.gotpiledupbeforethisHigh Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanukala Ravindra Redd'y (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 of the petitioners I \ 8 tnsofar as the liberty which was granted to the Revenue for initiating fresh proceedings strictry 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 legal objections irthe 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 mahy other High Courts already held to be bad. I l. It appears that because ofthe aforesaid liberty that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one_time measure in a faceless manner, the Income Tax Department wants to take advantage of the same by protracting these proceedings which would enable them to meet the limitation that would otherwise 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, nthe Income Tax L 9 Department would get the advantage o protected in favour of the proceedings from the disPosal o f the libertY that is otherwtse Revenue for initiation of fresh f these matters at a much later stage and beneficial to the Revenue and which would be advantageous would be equatly disadvantageous and detriinental 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 Kanakala Ravindra Refuty (l supra)' is a the clear Precedent set tn l 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 ofjudicial 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 perionds, rather than adhering to the established legal 10 posltion. Such conduct raises serious questions about the administrative efficiency and the respect for judicial pronouncements, particularly when this Court has alreadyprovided a balanced approach by preserving both the Revenue,s rights and assesses lnterests.

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 l4g_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 which it is already seized ofor, at Ieast the Income Tax Department should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections l4g-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 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 f,ecision if at all 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 stmggling 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 concemed at the State level are not ready to accept the verdict passed by a maj ority of HiC{r Courts of different States on the same issue; and to make worse, the Income Tax Department is showing lfurther things audacity by issuing notices continuously under Sections 148-4 and 72 '1 r-l: 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 it 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 Court of Bombay held at paragraph No.25 as under, viz., : "25' Mr. paridwara has righry drawn out attention to the decision of this Court in Commissioner of Income Tax vs. Smt. Godavaridevi Sarafr2 as also the recent decision of the co- ordinate Bench of this Cr t^ill or wh i ch o n e or us,r r.,,"'"' I l r:il:: :j:i::t; ;r'":; the court categoricary 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 lndia vs. Kamlakshi Finance Corporation Ltd.r4, the Cou( observed that the approach of the officials of Revenue of treating decisions being *not acceptable,, was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. ',1, l\}ol;t,r.t3 .r=rmann. com 422 (B ombay) ) '- t Ie78l I I3 ITR 589 (Bombay) " 12024) I65 taxmann.com 5gl/300 Taxman 452 (Bombay) 'o Tl}gZltaxmann.com 16/ 55 ELT433 (SC) I I t t3 "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 thal, 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 (Appeats) and the other of the Tribunal. The High Court has, in our view, righfly criticized this condupt 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 quasUudicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellte Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" 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. If this healthy

1.4 rule is net followed, the result will only be undue harassment to assesses and chaos in administration of tax laws. 12 We have dealt with this aspect at some length, the learned because it has been suggested by Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. lt is clear that.the observations of the High Court, seemingly vehement, and apparenfly unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespre?d, could result in considerable harassment to the assesses_public without any benefit to the Revenue. We would like to say that the department should take these observations in 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 judicial discipline and the need for giving effect to the orders 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 violative of the 75 observation/direction 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 that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanara Ravindra Reddy (r supra) shafl 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 untit we do not timely dispose of matters which are squarely covered by the decision of this Court and which stands fortihed 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 16 G\ 36,,37 and 3g of the order which, for ready reference rs reproduced hereunder:

36. For all the aforesaid n i s s ue d a n d,.,u p ro"u"i ins"r' :::;iTJTJi::il:::? Department is neither tenable' nor sustainabre. The notices so issued and Procedure adopted being per se iflegar, deserves ,othe be and are accordingly set aside/quashed. As a cons all the impugned orders getting quashed, ,n" ,uou"ntu' by the responde".r"*-r::ltT,:::::,lT: :ffi:: issued under Section 147 quashed and ir is *0",."0 .;:o"lffiT ,Jj::, ;j are quashing the consequential order is on the principtes that when the. initiation of the proceedings itself was procedurally wrong, the sub nulified automaticafly. 'sequent orders also gets

37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very jurisdictional 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-time measure exerCising the powers under Articte 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right t 17 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 ofAshish 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 KanakalaRavindraReddy(lsupra)issubjectedtochallenge before the Hon'ble Supreme Court in SLP No'3574 of 2024' preferred by the lncome Tax Department' we make it clear that allowing of the instant writ petition is subj ect to outcome of the aforesaid SLP preferred by the Revenue against the decision ofthis 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 in favour of the assessee so far as the issue of jurisdiction is concemed. As a consequence, the impugned notice under rphallenge under Sections 148-4 and 148 stands set aside/quashed' 18 q\ The consequential orders, if any, also stand set aside/quashed in similar tenns as have been passed by this High Court in the case of Kanksnala Ravindra Reddy (l supra). There shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed. //TRUE COPYII SD/-M. OSMAN ALI BAIG ISTANT REGISTRAR SECTION OFFICER To 1 iiJ:[8:;fl ltfr ;{f i"",, j_,#Jrk,Hils3sls3 S,"*,,il:fi9*r6,j,,n,*.o, ruo aoi -z"iJFi;;';,,E'H:,p,

2. The Assessment Unit lncome Tax D-epartment, National a Assessment .rawarrirrir r.rerrru ature Towers, gampally, R.R. District, 3 The Principat Chief a"rll+:g,,o1r9r_oI tncome Tax, Andhra pradesh and Telanoana Hvderabact pETtTtON ER iS R;;;i?;'. s22, gthFtoor, B Btock, LTTowers. 1b23 AC Guards, HGrrOiO""""'"

4. One CC to SRI A V A STVA KART|KEYA, Advocate. tOpUCl 5. One CC to Ms J SUNITHA, (JUN|OR SC FOR TNCOME rAX) tOpUCl 6. Two CD Copies BSK BS W ! ( ( ). 2 a '.\-l HIGH COURT DATED:28 tO4t2O2S 1HE S Ir r4- /..ct' 21 rlJE zffi ,{: r) o 't D.: ORDER WP.No.34610 of 2024 ALLOWING THE WRIT PETITION WTHOUT COSTS 4 d 9 q