NALA RAVINDRA REDDY v. INCOME-TAX OFFITIIERT decided on

Mr. B. Mukherjce, leamed counscl representing the Union of India for rcspondent No.5. Perused the record

2. This is a writ petition where the proceedings are eithcr challenged to the notices which were issued under Section 148A and 148 of the Income 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 thc subsequent initiation of proceedings 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 l I 2 of Financc Act, 2021 u,.e.f., 01.04.2021 onwards;. proceedings 't under Scction l48A of rhe Act as also under Secticn l4ll of the Act ought to lravc also been issucd and proceedec in a facelcss manner

4. The contention of the pctitioner is that thc issue of proceedings being in violation of the Finance Act 2O2t i.e., the impugned notices under Scction l48A and Section 14g of the Act not being issued in a faceless nranncr, have already been dealt with and decided by this Courl in the case of Ir._{NK{NALA RAVINDRA REDDY vs. INCOME-TAX OFFITIIERT decided on 14.09.2(123 whereby a batch of writ petitions werc allowed and the proceedings initiated under Section l48A as alsc undcr Section 148 of the r\ct were hetd to be bad with consequentizrl lrqlicls on the ground of ir being in violation of the provisions of Sr.:ction l51A of the Act read with Norification l8l2o22 dated 29.03.2022. .Ihe judgment passed by this Court has also been subsequ:ntly Ib[orved in a large number of writ petitions which were allor,,.ecl on similar terms. 'l(2023) 156 taxmann.com 178 (Telangana)l J

5. Dou,n the line, wc tlnd that the same issue has also been decidecl against the Revenue by various High Courts i.e', by the Bombay High Courr in the casc of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTAIIT 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 international taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH VS. INCOME TAX OFFICER' INTERNATIONAL TAXATION6 which is r again on intemational taxation and central circle, High Court of Himachal Pradesh in the case of GOWND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBIIAI 'Tzoz+1464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauhati)l ^ [(2024) 165 taxmann.com 115 (Punjab & Haryana)] ' 12024) 167 taxmann.com 4l I (Tetangana)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(3X5)8, Jharkand High Court in the ca,;c of SHI'AM SUNDAR SAW vs. UNION OF INDIAe, Rajastlran High Courl in the case of SHARDA DEVI CHHAJER vs. I\COME TAX OFFICER & ANOTHER and batch of writ pctitionsro which stood decided on 19.03.2024. Similar views have rrlso been taken by the Division Bench of Calcutta High Courl in the case of GIRDHAR GOPAL DALMIA vs. UNTON OF INDIA & ORS (M.A.T 1690 of 2023), dccided on25.09.2024.

6. Evcn though thc same issuc having been dcc ded by a large number of High Courts, we arc still confronted witlr large filing of identical matters on daily basis ranging between 5 to l0 writ petitions. That upon the instructions being sorght fiom the Department, they have been taking a solitary g; ound that the decision of the Bombay High Courl in the case ol' Ilexaware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Rlvindra Reddy t2024 SCC Online Guj 40 l2 '2025 SCC Online Jhar 287 'o 12023 : RJ-JD : 4984-DBl 5 (1 supra) has becn subjccted to challenge in a Special Leave Petition i.c., SLP No.3574 of 2024 before the Hon'blc Supreme Courl and the Hon'ble Supreme Courl 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, thcy have categorically accepted the fact that there is no interim order granted by thc Hon'ble Supreme Court in any of these matters pending before it. Meanwhile , fresh writ petitions of identical nahrre arc 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. I 8 On the one hand, even though the order of this'Court that was passed as early as on 74.09.2023 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 148-.{ 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 Courts in India are co:rtinuouslv still initiating proceedings under Section 148,4. of thr:: Act and also tnrtratrng proceedings under Section l4g of the Acl in contravention to the amendments brought into the Irrcome Tax Act pursuant tc, the Finance Act,2020 as also the Financ,: Actl),021

9. Upon a query being put as to why can,t this rvrit petition be disposed o[ in the teeth of the decision rendered bi, this Court in the case of Kanakala Ravindra Retldy (l supra), lerrmed Standing counsel for: the Income Tax Department conte,ds that those would unnecessarily burden the Income Tax Deparlmer rt where they would be required to file equal number of. SLI)s before the Hon'ble Supreme Courl and it would be further hurdening the exchequer of the Union of India. It was also the contL4tion of the learned Standing Counsel that no prejudice would b<: caused to the interest of the petitioners in case if this writ petition ir kcpt pending till the finalization of thc SLps pending before the Hon,ble Supreme Court and the fact that the petitioner is alr,.:ady enjoying the benefit of interim protection. Nonetheless, on th<: earlier query of this Coun as to why the Income Tax Department lave not colne out with a mechanism to issue appropriate instructions or to take 7 appropnate steps in ensuring that proccedings under Section l48A of the Act as also the assessment orders under Section 148 of the Act are kept in a hold in the tight of thc decisions dedcided by the various High Courts, it was subrnittcd by the leamed Standing Counsel that the said steps can only bc taken at the level of CBDT as any such steps would have to bc taken Pan India and cannot be limited to any of these jurisdictional High Courts.

10. As a result of which, what wc are facing is steep increase of litigation day in and day out even thor-rgh various orders have been passed by this High Court allowing writ petitions on the very same issue. The Income Tax authorities conccrned are still even now in 2025 also initiating proceedings in contravention to the provisions of Section l51A of the Act and as a rcsult by now, morl than 600 to 700 petitions have been already got pilcd 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 (l supra). What is also surprising is rhe fact that though while allowing the writ petitions in thc case of Kanakala Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected thc interest of the petitioners 8 insofar as the liberty which was granted to th u Rer.enue lor initiating liesh proceedings strictly in accordance \.,,, th thc amended provisions of the Act, as amended by the Financc Act. 2020 and the Finance Act,202l . The petitioncr assessee wou d bc cntitled to challenge ,tr raise the other lcgal objections if the R--vcnue initiatcs fresh proceedings. The Departmcnt has made n,.) endcavour in availrng the said liberfy that was reserved for the R,.rvenue. On the contrary, they have been still sticking on to the strrnd, u.hich this Hrgh Court as well as many other High Courts alr(rady held to be I l. It appears that because of the aforesaid libeft.,,that r.his lligh Court had granted permitting the Revenue for initiating fresh proceedings as a one-time measure in a faceles s \ manner, the Income Tax Department wants to take advantage r,f the same by protracting these proceedings which would enable them to meel the limitation that would otherwise come in the way. I rkewise,, if the writ petition is kept pending for a considerable long periocl of time and finally at a later stage if the Hon'ble Supreme (_ourt confirms the decision taken by this High Court as also by rhe other High Courts in which the SLPs arc still pending, tht. Income 'Iax 9 Dcparlmcnt would gct thc advantage of the libcrty that is otherwise protected in favour of the Revenue for initiation of fresh proceedings from the disposal ofthcse tnatters at a much later stage which would be advantagcous 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 tbr initiation of fresh proceedings.

12. The alarming trcnd of docket explosion in this Cour1, despitc 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 su.g. ln 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 Coutt'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 questic,ns about the administrative efficiency and the respect fbr j udioial pronouncements, particularly when this Court has aiready provided a balanced approach by preserving both the Reveruc's rights and assesses rnterests.

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 har.e found out via media in ensuring that proceedings under Scctions 148-4 and 148 should not have bt:en issued in a faceless manner, at least titl the Hon'ble Supreme Ccurt clecide the hvelve hundred (1200) odd SLPs which it is already seized ofor, at least the Income Tax Department should have fc,und out some remedial sleps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-4 and 148, rther rhan in a faceless manner, the proceedings should have been deferteil without precipitating the matter further intimating th: assessee that they shall initiate appropriate proceedings only after the SLp,s are decided by the Hon'ble Supreme Court on the very same tssue. This again, the Income Tax Department, has not beerL able to gir.e a convincing reply, except for the fact that such a der:ision if at all 11 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 Dcpartmcnt 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 bqcn taken on many occasions, the Hon'ble Supreme Courl 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 maj ority 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 L2 1 148 throu6lh the jurisdictional Assessing Offrcer wtrereas it ought to have ber:n only in the faceless manner.

14. In lhe case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXrr, on an issue whether it was justifiable on thc part of the Income Tax Deparlmcnt ln not follor.ving an order passed by the adjudicating author rty only on the ground that the appeals are pending, the Division Bench of the Higli Court of Bombay hcld at paragraph No.25 as urrder, viz., : "25. Mr. Paridwalla has righfly drawn out atten:ion to the decision of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision lf the co- ordinate Bench of this Court in Samp Furniture (p) Ltd. v. lTO13 of which one of us (Justice G.S. Kulkarni) was a memb::r, wherein the Court categorically 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 lobse its binding force. Referring to the decision of the Suprenre Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.14, the Court observed that the approach of the officials of Ftevenue of treating decisions being "not acceptable,, was criticizild by the Supreme Court. ln such decision, following are thir relevant observatrons made by the Supreme Court. I I 11202S) I 7rl raxmrnn.com 422 tBombay)l 'il9781 Ill ITR 589 1Bopgay) " lZOZll 165 taxmann.com 581/300 Taxman 452 (Bombay) 'o TtggZl taxmann.com l6155 ELT 433 (SC) 13 "6. Sn 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 lhg 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 t4 1 rule is not followed, the result will only be undue harassment to assesses and chaos in adminis tration of tax laws.

12. We have dealt with this aspect at some i:ngth, because it has been suggested by the karned Additional Solicitor General that the observations rnade by the High Court, have been harsh <in the officers. lt is clear that the observations of tht:, High Oourt, seemingly vehement, and apparently Lrnpalatable to the Revenue, are only intended tc curb ;r tendency in revenue matters which, if allouied to trecome widespread, could result in considr:rable l-rarassment to the assesses-public withoul any t:enefit to the Revenue. We would like to say thi;rt the cepartment should take lhese observations ir the proper spirit. The observations of the High Court should be kept in mind in future and the utmost r:gard should be paid by the adjudicating authorities and the appellate authoritres to the requirements of jt.rdicial discipline and the need for giving effect to the orlers of the higher appellate authorrties which are b nding on them."

15. What is worrying this Bench more is tht,r fact that an endeavour is being made whole heartedly to ensure rlot 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 c()nsistent stand that the action of the lncome Tax Department being .iziolative of the i l I l I I I I i l 15 Finance Act,2020 and Finance Act,202l . Now, in order to protect the interest of the Revenue as also that of the assessee, it would be tritc at this juncture, if we dispose of the writ petition with an obserwation/direction that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (l supra) shall however be subject to the outcome of the SLPs which were filed by the Income Tax Department and which is pending consideration before the Hon'blc Supreme Court.

16. In the given facts and circumstances, this Bench is of the considered opinion that unless and until we do n.ot 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 16 36,37 ancl38 olthe ordcr which, for ready referenr:e, is rt:procluced hereunder:

36. For all the aforesaid reasons, the impugnerd notices issued and the proceedings drawn by the re:;pondent_ Department is neither tenable, nor sustainable. .fhe notices so issued and the procedure adopted being per se illegal, deserves to be and are accorclingly set aside/quashed. As a consequence, all the irnpugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to thr: notices issued under Section 147 and 14g would a iso get quashed and it is ordered accordingly. The re:lson we are quashing the consequential order is on the p rinciples that when the initiation of the proceedings itr,;elf was procedurally wrong, the subsequent orders a so gets nullified automatically_

37. The preliminary objection raised by the peti:ioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned rlo{ces and orders are getting quashed on the p,6int 6f jurisdiction, we are not inclined to proceed furflrer 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 tire case of Ashish Agarwal, supra, as a one_time m easute the powers under Article 142 exercising r.rf the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, tht: right 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 of Ashish Agarwal, supra.

18. We rvould only further like to make observations that since we are inclined to dispose of the instant writ petition, conscious of the fact that thc earlier order of this High Courl in the case of Kunakala Ravindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, f prcferred by the Income Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP pref'ened by the Revenue against the decision of this High Court in thc case of Kanakala Ravindra Reddy (l stpra). This, in othcr words, would mean that either of the paSties, 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 asscssee so far as the issue of jurisdiction IS concerned. As a conscquencc, the impugned notice under challenge undcr Sections 148-4 and 148 stands set aside/quashed. 18 Thc consequential orders, if any, also stand set a,iide/quashed in similar tenns as have been passed by this High Court in the case of Kankanala Ravindra Redcty (l supra). There shall be no order as to costs. Consequently, miscellaneous petitions pendin1l, if any, shall stand close<l //TRUE COPYII \\ To i l

1. The lncome fax Officer Ward .1 a 2 ,TE la rgana r: Towers, .B otanical Gard ens, 1 1), Hyderabad Sy.No.6 (P) of Ko nda pur, Sy.37(P ) of Kotha guda, Serlin sampalty(M ),n R District Hyderabad 5000 The Pnncipa lCo mmissioner of I ncome Tax. Telangana and A.p , Hyderabad, lT To wers, AC Guards, Masab Tank, H yderabad -500028, Telan gana. The Chairma n, Central Board of Direct Taxes, Department of Re VCNUE, Minislry of Fina nce, Governme nt of lndi a, Secret ariat Builrlings, New Delhi - 110 001 4. The National F Income Tax [)epartment, New 5. The Secreta ry, to the Government Union of India Departn.t enl of Revenue, 6. One CC to SRt THANNERU C HAITANYA KU MAR, Advoca te [OPUC 7. One CC to [vt/s. J SUNITHA, J UNIOR SC FO R INCOME ] AX IOPUC B. Two I MinistryofF rnance New Delhi - 1 10 001 aceless Assessment Center CD Copies Delhi PSK G HIGH COURT DATED:2810412025 d ORDER WP.No.35361 of 2024 ---a':= .1.i- t '^t { I 1o sl P $' a- :, ,'./ St,a :=:a/- ALLOWING THE WRIT PETITION WITHOUT COSTS