High Court · 2025

Judgment

4. 5 +r*ca:13%,?ffi :ffi :i",11"31,"|v"#aiffi ,9[3'&31]+"':13:l*"0' 18333,1il0-5l;dHi"'uouo' If t#SS:nt"A#H::fi:::S'+::?1",JSL#f The Central Board of Direct Taxes' Representedby- its^Chairman' Department of Revenue, Ministry ot t'n''il"l"boi5i"'it"ni of lhdia' Secretariat Buildings' New Delhi - 1'10 001 ' The National Faceless Assessment Center' lncome Tax Department' New o'"'n'"n'' ;U,m:n .$.'J,*x, Jffi ffi '3,0.,?l"X: fi str$siil' -'?' $30 f Delhi. ...RESPONDENTS

PetitionunderArticle226oflheConstitutionoflndiaprayingthatinthe circumstances siated in the affidavit filed therewith' the High Court may be pleased to issue an appropriate writ' order or direction more particularly one in the nature of Writ of Mandamus' declaring the order passed by the lncome Tax Authorities (National Faceless E-Assessment Centre) completed the assessment l)ts 147 r.w.s 144 read with section 't 44B of the lncome-tax Act Date of 1 9-02-2024, ITBA/AST/S/1 4 7 t 2023-241 1 061 1 35 1 04( 1 ) for the Assessment Year 2o15-16 determining the total income of Rs 1'17'26'0931 as arbitrary' illegal' bad in law, without jurisdiction, void-ab_initio, violati justice apart from being viorative of Articres .r;u "t constitution of India ,io a".. 14BA of the In consequenty set aside rhe same in the interests "rJil: IA NO 10F 2024 the principles of naturar 19(l)(g) and 265 of the Tax Act, 1961, and petition under Sr i 51 CpC praying that in the circumstances stated in the affidavit nfeO in se Hish court mav be pru".uo to suspend the order r;::1r-,I1"".? Act Date of 19_02_2024, ITBA/AST/.i.4 ,,rol""r,on 1448 of the rncome_tax Assessment v u^, zo t s-- t o;.,:.:::'L"''t 4 t t 2023 -24 t 1 oo 1 1 3s 1 o 4(1 ) for the ,,,",,,1xL"1,;'#ff .",,*H:T:J::JiJii".ll-i;^l::;l::::l: y e a, 2 o 1 s - 1 6p e n d i n s ., fi::l ;'#:(j1,il,i,' rZi,:,il j, .,., i,.. ",,, ",, "* ;li" Counsel for the petitioner: SRt THANNERU CHAITANYA KUMAR Counsel for the Respondent No.l to 4: Ms. B.SAPNA REDDY, Jr. SC FOR lT Counset for the Respondent No.5: SRI B.II/IUKHERJEE, REp. FOR 3 Ei8+? !#,llx [,=ffi *^. oF, ND'A The Court made the following: ORDER & / t THE HONOURABLE SRI JUSTICE P'SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETTTION No.3511 30 F 2024 ORDER, (per Hon'ble Sri Justice Narsing Rao Nandikonda) Heard Mr. Thanneru Chaitanya Kumar' leamed counsel for the petitioner, Ms' B'Sapna Reddy' leamed Junior Standing CounselforthelncomeTaxDepartmentforrespondentNos.lto4 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 andl48oftheIncomeTaxAct,lg6l(forshort.theAct,)orthe 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 by the jurisdictional Assessing Officer' whereas in terms of the amendment that was brought to the Income Tax Act by way 2 ',.] of Finance Act, 2021 w.e.f., 01.04.2021 onwards, proceedings under Section 14gA of the Act as also under Section l4g of the Act ought to have also been rssued 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, 2O2l i.e., the impugned notices under Section l4gA 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 l4gA as also 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 I 5 l A of the Act read with Notification lgl2)22 dated 29.03.2022. The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were alrowed on simirar teIms ' l(2023) I 56 taxmann.com l7g (Telangana)l .,

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 COMMTSSTONER OF INCOME TAX & OTIIERS2' Gauhati High Court in the case of RAM NARAYAN SAH vs' UNION OF INDIAs' Punjab and Haryana High Court in the case of JATINDER SINGII BANGU vs. IINION OF INDIA4' and Telangana High Court in the case of SRT VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation' Bombay High Court in the case of ABHIN ANILKUMAR SIIAH VS' INCOME TAX OFFICER, INTERNATIONAL TAXATION6 which is again on international taxation and centrar circre, High court of Himachal pradesh in the case of GOVIND SINGH vs' INCOME TAX OFFICEd' Gujarat High Court in the case of MANSUKHBHAI ' Tzoz+1464 ITR 430 (Bom) ' ifzozil 1 56 taxmann'com 478 (Gauhati)l ^l(2024) 165 taxmann.com 115 (Punjab & Haryana)l 'izOzq 1 67 taxmannrcoa 4 1 I (Telangana)l "12024\ 166 taxmann.com 679 (Bombay)l 'iiozqi 165 taxmann.com ll3 (Himachal Pradesh)l Ij 4 DAHYABHAI RADADIYA vs. INCOME TAx OFFICER, WARD 3(3Xr8, Jharkand High Court in the case of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Courr 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 of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & 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 confronted with large filing of identical matters on daily basis ranging between 5 to l0 writ petitions. That upon the instructions being sought from 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 Kanakula Ravindra Reddy t20z+ scc onLine Guj 4012 'g2025 SCC Online Jhar287 o;2023, RJ-JD:4984-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' In addition, there are about 1200 SLPs also filed arising out ofthe same issue being decided by various High Courts' To a query being put to the leamed counsel for the Revenue' 7 . 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 daily basis and the pendency is getting increased on matter which othenvise 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 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 Ofhcer' rather the authorities concemed in the teeth of series of decisions ,|'..rt!tdrii:$n . . - ..1 6 bY all the major High courts in India are contrnuously still rnrtrating proceedings under Section l4gA of the Act and also initiating proceedings under Section l4g of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act, 2020 as also the Finance Act 2021 . 9' Upon a query being put as to why can,t this writ perition be disposed of in the teeth of the decision rendered by this Court in the case of Kunakala Ravindra Reddy (I 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 file equal number of SLps before the Hon'ble Supreme Court and it would be further burdening the exchequer of the Union of India. It was also the contention of the learned Standing counser that no prejudice wourd be caused to the interest of the petitioners in case if this writ petition is kept pending till the finalization of the SLps pending before the Hon,ble Supreme Court and the fact that the petitioner is already enjoying the 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 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 ofCBDT 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 I 5 1A of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakala Ravindra 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 of the petitioners I .t insofar as the riberty which was ;ranted to the Revenue for initiating fiesh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Financ e Act, 2020 and, the Finance Act,2021 . The petitioner assessee would be entitled to challenge or raise the other legal objections if the Revenue initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was reserved for the Revenue. on the contrary, they have been still sticking on to the stand, which this High Court as well as many other High Courts already held to be bad.

11. 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 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 otherwse 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 equalty disadvantageous and detrimental so far as interest of the assesses are concemed' As a cohsequence' the Income Tax Department gets an extended period of time for initiation of fresh proceedings. lZ. The alarming trend of docket explosion in this Court' despite the clear precedent set n Kanakala Ravind'ta Reddy (l supra)' is a matter of grave concern' The Income Tax Department's persistent initiation of fresh proceedings, disregarding the estabrished 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 white 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 70 position. Such conduct administrative efficiency and the raises serious questions about the respect for judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revenue,s rights and assesses interests. 13' Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Department itself and should have found out via media in ensuring that proceedings under Sections 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 least the Income Tax I)epartment should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 14g_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 decision if at all \L 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 levet 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 irundreds 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 Statelevelarenotreadytoaccepttheverdictpassedbyamajority of High Courts of dift'erent States on the same issue; and to make things funher worse, the Income Tax Department is showing audacity by issuing notices continuously under Sections 148-4 and 72 148 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 TAXn, on an issue whether it was justifiable on the part of the lncome Tax Department in not following an order passed by the adjudicating authonty 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. paridwalla has righfly drawn out attention to the decision of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Saraflz as also the recent decision of the co_ ordinate Bench of this Court in Samp Furniture (p) Ltd. v. lTOr3 of which one of us (Justice G.s. Kurkarni) was a member, wherein the Court categorically observed that the Revenue having not "accepted" the judgment of the High Court would not mean that ti 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 court observed that the approach of the officiars 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. ','rl.(.r^o:^t-lrr}raxmann.com422(Bombay)l '" [978] I I3 ITR 589 (Bombay) " 12OZ+1 I 65 taxmann.com 5g l /300 Taxman 'o 7l9921taxmaru1.com 16/55 ELT 433 (SC) 452 (Bombay) N 73 "6- Sri Reddy is perhaps right in saying that the *'""r, *"r" not actuated by any mala fides in passing the impugned orders They perhaps genri*ty felt that the claim of the assessee was not tenable ana 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 tt'em, 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 quasiiudicial 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 lf this healthy 74 rule is not followed, the rer harassment to assesses ,not'" of tax laws. *"' only be undue chaos in administration aspect at some length, by the rearned

12. We have dealt with because it has been sthis Additionar soricitor o"n."n"tt"o made by the Hish ""rn,'T'",ll";"r::T::"il: officers. lt is clear that th oo""tut'ons of the High cou,.,, seemingry ,un." and apparenfly unparatabre ,o ,n" *"r"nru'unt' a tendency in revenue ,;;lil*lrtli1i,ffi'i| become widespreqd, coulc, result in considerable harassment to the assesses to the Revenue *" *rr',Jol;"'":"::;";::',:tj department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in futl shourd be paid by the ".,,r,:::,il'"1;",,ffI"Jil: appellate authorities to the disciptine and the need r",. n,r,il'l"Jj,":;::::': of the higher appellate authorities which are binding on them."

15. What is worry.ing this Bench more is the f-act 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 observation/direction Finance Act, 2020 and Finance Lct'2021' Now' in order to protect the interest of the Revenue as also that of the assessee' it would be trite at this juncture' if we dispose of the writ petition with an that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Ksnkanara Ravindra Redd.y (r supra) shall however be subject to the outcome of the SLPs which were frled by the Income Tax Department and which is pending consideration before the Hon'ble SuPreme Court'

16. In the given facts and circumstances' thrs 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 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 F L6 36,37 and,3g ofthe order hereunder: 'which, for ready reference, ts reproduced ! ;"^11'ence' For all the aforesaid .36 issued and *" ,..;:^"sons' Departmenr ,, The notices ,";rr;;'re; .,renabre, per se iflegar, deserves ," ;;;.^:" the impugned notices '';;;*t-o1wn ov the respondent- nor susrainabre adopted being 1:".""0"" and are accordinsly ser asrde/quashed. ^. ali the impusned orders setins rrr*; tv tnu r".po]no;;;;";#""'sequentiar orders passed Pursuant to the notices rssued under section ,o.ent quashed and it is *r"oo j^1no]48 would also set cordingly. The reason we are quashing thu oto"' is on the principles "orr"qrunt' that when the .initiation o, ,'"' o'o"""o,ngs itserf was procedurafly wrong, the .ron" sequent orders afso gets nullified automaticary. 37 The preriminary objection raised by the petitioner is sustained and all these wril petitions stands allowed on this very jurisdictional issue. and orders ". s"fti; q::;l.ilTrJ"ffi":; jurisdiction, we are not incli decide the otn", ir"ru",ji:j ; :Jffi,j:::il:; 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 A(icle 142 of the Constitution of lndia, permifted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw' the right 17 \ that since Agarwal' supra' x:t*u?H],tI"L'*:i[.:i 18. We would only further like to make obseryations 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 Ravinilra Reddy (l supra) is subjected to challenge Court in SLP No'3574 of 2024' before the Hon'ble ""t*" we make it clear that preferred by the Income Tax Department' 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 Ravintlra fteddy (1 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 ts the imPugned notice under concemed. As a consequence' challenge under Sections 148-A and 148 stands set aside/quashed 18 The consequential srmilar terms as have Kankanala Ravindrs to costs. orders, if any, also stand set aside,,quashed in been passed by this High Court in the case of Reddy (1 supra). There shall be no order as \ Consequently, stand closed. misc:ellaneous petitions pending, ifany, shall //TRUE COPYII ,.,.il[yJH?#IH To, X Central Go

3. The Chairman SECTION OFFICER 1 . The Assistant Commi9SIoner, of Income ta le9(1), Hyderabad lT TOWER, A C Guards Masab Tank, HYDERA BAD-50000 4, Telangana 2. The principal Commiss toner of lncom e Tax Tela ngana and A.p. Hyderabad, lT Towers , AC Guards, Masab Tank Hyderabad - 500028, Tetangana Board of Direct Taxes Department of Revenue, Ministry of Finance vernment of lndia Secreta nat Buildings, New Delhi 110 001 4 The National Faceless Assessment Center, lncom e fax Depaftment, New The Secretary_ to the Govemment, Department of Revenue, Ministry of Finance. New Delhi, Union of tnaia - i lo oE - - ' "' One CC to SRI THANNERU CHA|TANYA KUMAR, Advocate tOpUCI One CC to lr/s. B.SApNA REDDY, Jr. SC FOR IT [OPUC] one cc to SRI GAD| PRAVEEN KUMAR, DEpury solrcrroR GENERTAL OF INDIA, High Court for the State of Tetanganaii HVOeraOaO lOpUEi Two CD Copies 5 t, 7 B I BSR LS HIGH COURT DATED:2810412025 ORDER WP.No.35113 of 2024 ALLOWING THE WRIT PETITION, WITHOUT COSTS ,?i \ ^Y* 14 ilEBtu . .'i i' oEH ,\ '^ r'l) il' ). _-, t/ /