KANKANALA RAVINDRA RITDDY v. INCOME-TAX O TFICER' decided on

ORDER, (per Hon'ble Sri Justice Narsing o Nandikonda) Heard Mr. Thanneru Chait ya Kumar, leamed counsel for the petitioner and Ms. J.Suni learned Junior Standing Counsel for the [ncome Tax Dep rtment for the respondents Perused the record.

2. This is a writ petition whe the proceedings are either challenged to the notices which w issued under Section l48A and 148 of the Income Tax Act, 19 1 (for short 'the Act') or the assessment orders those have been assed under Section 147 of the Act which have been assailed.

3. This writ petition is being tak up today only on one of the grounds, that the notices issued un er Section 1484. of the Act and the subsequent initiation of p edings under Section 148 of the Act by the j{risdictional Assess ng Ofhcer, whereas in terms of the amendment that was brought t the lncome Tax Act by way of Finance Act, 2021 w.e.f., 01.0 2021 onwards, proceedings 2 under Section 148,4 ol the Act as also under Section 148 of the Act ought to have also been issued and procecded in a faceless manner.

4. -lhe contention of the petitioner is that the issue of proceedings being in violation of the Finance Act,202l i.e., the impugned notices under Section l48A and Section 148 of the Act not being issued in a faceless manner, have already been dealt with and decidcd by this Court in the case o1' KANKANALA RAVINDRA RITDDY vs. INCOME-TAX O|TFICER' decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiared under Section I48A as also under Section 148 of the Act were hetd to be bad with consequential reliefs on the ground of it being in violation of the provisions ofscction l51A ol tlre Act read rvith Notification 1812022 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 allowed on similar terms. 'l(2023) [56 taxmann.com 178 (Telangana)] 3

5. Down the line, we find that e same issue has also been decided against the Revenue by vanous High Courts i.e., by the Bombay High Court in e case of HEXAWARE TECHNOLOGIES LTD., vs. ASS TANT COMMISSIONER OF INCOME TAX & OTHERS2, auhati High Court in the case of RAM NARAYAN SAH vs. UNI N OF INDIA3, Punjab and Haryana High Court in the case ol J TINDER SINGH BANGU vs. UNION OF INDIA4, and Telan a High Court in the case of SRI VENKATARAMANA REDD PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME AXs where the issue was in respect of international taxation, Bo ay High Court in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICER, INTERNATIONAL TAXATION6 hich is again on international taxation and central circle, High Co of Himachal Pradesh in the case of GOVIND SINGH vs. COME TAX OFFICERT, Gujarat High Court in the se of MANSUKHBHAI '7202t1464 ITR 430 (Bom) ' l(2024) 156 taxmann.com 478 (Gauha ^ l(2024) 165 taxmann.com 115 (Punj ' [2024) I 67 taxmann.com-Al L(Telang "[2024) 166 taxmann.com 679 (Bomba '12024) 165 taxmann.com 113 (Himac D] & Haryana)l )l l I Pradesh)l ,l 4 ;1 :i:"",' DAHYABTIAI RADADIYA vs. INCOME TAx OFFICER, WARD 3(3X5)6, Jharkand High Courl in rhe case of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTIIER and batch of writ petitionsro which stood decided on 19.03.2024. Sirnilar views have also been taken by thc Division Bench of Calcutta High Court in the case of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 of 2023), decided on25.09.2024.

6. Iiven though the samc issue having beer.r 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 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 decidpd by this Court in the case of Kanakala Ravind.ra Reddy ) 82024SCC Online Guj 4012 '2025 SCC Online Jhar 287 12023, RJ-JD :4 9 84-DBl o ' . ./, 5 (1 supra) has been subjected to c allenge in a Special Leave Petition i.e., SLP No.3574 of 2024 efore the Hon'ble Supreme Court and the Hon'ble Supreme C urt is seized of the matter In addition, there are about 1200 SL s also filed arising out of the same issue being decided by various igh Courts

7. To a query being put to the lea ed counsel for the Revenue, they have categorically accepted th fact that there is no interim order granted by the Hon'ble Sup me Court in any of these matters pending before it. Mean hile, fresh writ petitions of identical nature are being piled up b ore this Bench on daily basis and the pendency is getting increas ctn matter which otherwise has already been dealt and decided b this very High Court itself.

8. On the one hand, even thoug the order of this Court that was passed as early as on 14.09.20 3 and more 16 months have tapsed, till date, we do not find an remedial steps having been taken by the Income Tax Departm t to take appropriate steps to either hold back issuance of notice nder Section 1484. and under Section 148 of the Act by the ju sdictional Assessing Oflicer, rather the authorities concemed in e teeth of series of decisions

1.,1' :,il ':ie nrai,ri '.:-i' .l.luir:i il lndia are ctintinuously stili initiating proceedings under Section 148.4 of the Act and also initiating proceedings under Section 148 of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act,2020 as also the Finance Act2021.

9. Upon a query being put as to why can't this i,vrit petition be disposed of in the teeth of the decision rendered by this Court in the case of Kanakala Ravindra Reddy (l supra), learrred Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Departrrent where they would be required to hle equal number of SLPs before the Hon'ble Suprerne Court and it would be further. burdening the exchequer of the Union of India. It was also the contention of the learned 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 finalization of the SLPs pending before the Hon'ble Supreme Court and the {act 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 .', 7 appropriate steps in ensuring that p ceedings under Section 148,4' of the Act as also the assessment o ers under Section 148 ofthe Act are kept in a hold in the light of the decisions dedcided by the various High Courts, it was submi ted by the leamed Standing Counsel that the said steps can only e taken at the level of CBDT as any such steps would have to be aken Pan India and cannot be limited to any of these jurisdictional igh Courts. t'I i I

10. As a result ol which. what we are facing is steep increase o[ litigation day in and day out even th ugh various orders have been passed by this High Court allowing t petitions on the very same issue. The lncome Tax authorities ncerned are still even now in 2025 also initiating proceedings in ontravention to the provisions of Section I 5 I A of the Act and as result by now, more than 600 to 700 petitions have been already got piled up before this High Court on an issue which otherwise tands squarely covered by the judgment of this Court in the case of Kanakala Ravindra Reddy ( I supra). What is also surprisin is the fact that though while allowing the writ petitions in th case of Kanakala Ravindra Reddy (l supra), the Division Ben h while reserving the right of the Revenue, has also protected he interest of the petitioners 8 i;--:]: insofar as the liberty which was granted to the Revenue lor initiating fresh proceedings strictly in accordance rvith the amended provisions of the Act, as amended by the Finance' Act, 2020 and the Financc Act,202l. 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 rvas reserved for the Revenue. On the contrary, they have becn still sticking on to the stand, which this High Courl as well as rnanv other High Courts already hcld to be I 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 measure in a facelcss manner, the Income Tax Department wants to take advantage o1' the same by protracting these proceedings which would enable them to meet the Iimitation that would otherwise come in the way. Likewise, if the writ petition is kept pending for a considerable long pcriod 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, the Income Tax u, r I I I : I I I I 9 Department would get the advantage of the liberty that is otherwrse protected in favour of the Rev nue for initiation of fresh proceedings from the disposal ofthe e matters at a much later stage which would be advantageous and neficial to the Revenue and would be equally disadvantageous a d detrimental so far as interest of the assesses are concemed. As a consequence, the Income Tax Department gets an extended perio of time for initiation of fiesh proceedings.

12. The alarming trend of docket xplosion in this Court, despite the clear precedent set irt Kanakalu avindra Reddy (l supra), rs a matter of grave concem. The Inco e Tax Department's persistent initiation of fresh proceedings, disre arding the estabtished judicial pronouncements, has led to an un recedented surge in litigation with over 600-700 petitions pilin up on the same issue. This deliberate approach not only und ines the principle of judicial precedent but also strains the judici I resources unnecessarily. The Department's strategy of awaiting e Supreme Court's decision on pending SLPs while continuing initiate fresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than a ring to the established legal 10 position. Such conduct raises serious questions about the administrative efficiency and the respect for judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Revenue'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 Deparlrnent itself and should have lound out via media in ensuring tirat proceedings under Sections 148-4 and 148 should not have bcen issued in a faceless manner, at least till the Hon'ble Supreme (-ourl decide the twelve hundred (1200) odd SLPs whichit is alreadl seizcd ofor, at Ieast the Income Tax Department should have lound 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 the Hon'ble Supreme Court on the very same issue. This again, tlie lncome Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all 11 has to be taken, has to be taken for t whole of India, and which otherwise has to be by waY of a Polic decision and that too at the level of Central Board of Direct xes. Though the leamed Standing Counsel for the Income T Department contended that the Delhi High Court dismissed a writ petition of similar nature, on the one hand when the High Cou is struggling to reduce its pendency, such notices which are nder challenge in this writ petition are forcing the assessee to nock the doors of this High Court resulting in filing of hundreds f new writ petitions which tn the long run not only affects the dis sal of the writ petitions but also consumes substantial time of he Bench in hearing these matters again and again on daily bas Admittedly, in spite of the matter before the Hon'ble SuPreme Court having been taken on many occasions, the Hon'ble SuPre Court which is seized of the matter has been reluctant in grantin any interim protection to the Income Tax Department. Yet, the authorities concemed at the State level are not ready to accept t verdict passed by a majoritY of High Courts of different States o the same issue, and to make things further worse, the Income Tax Department is showing audacity by issuing notices continuo sly under Sections 148-4 and 12 t :-_." 148 through the jurisdictional Assessing Officer s,hereas it ouglrt to have been only in the laceless manner.

14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAX|', on an issue whether it was justifiable on the part of the Income Tax Department in not fotlou,ing 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. tr.4r. Paridwalla has rightly 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. lTO13 of which one of us (Justice G.S. Kutkarni) was a member, 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 loose its binding force. Referring to the decision of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.14, the Court observed that the approach of the officials of Revenue of treating decisions being "not acceptable,, was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. 'l ItZOZSl 170 taxmann.com 422 (Bombay)l '' [978J I I3 ITR 589 (Bombay) " 720241165 taxmann.com 5g1/300 Taxman 452 (Bombay) 'n 1t9921taxmann.com l6155 ELT 433 (SC) 13 "6. Sri Reddy is PerhaPS righ officers were not actuated b passing the imPugned orde genuinely felt that the claim of tenable and that' if it was ac would suffer. But what Sri Red are not concerned here wl otherwise of their conclusio malafides but with the fact that in their conclusion, bY-Passed regard to the same issue whi them, one of the Collector (AP the Tribunal. The High Court criticized this conduct of the the harassment to the assess of these officers to give e authorities higher to them in th cannot be too vehemently e utmost imPortance that, quasiiudicial issues before th bound bY the decislons of t The order of the APPellte Co Assistant Collectors working the order of the Tribunal is bi Collectors and the APPellate under the jurisdiction of the T iudicial disciPline require tha appellate authorities should by the subordinate authoritie order of the appellate autho the department - in itself a and is the subiect matter of ground for not following it been susPended bY a comp ,\1 in saying that the any mala fides in . TheY PerhaPS e assessee was not epted, the Revenue y overlooks is that we the correctness or or of anY factual e officers, in reaching o appellate orders in were Placed before eals) and the other of as, in our view' rightly sistant Collectors and caused bY the failure ect to the orders of appellate hierarchY It phasized that it is of n disPosing of , revenue officers are e appellate authorities' lector is binding on the ithin his jurisdiction and ding upon the Assistant Collectors who function ibunal. The Principles of the orders of the higher followed unreservedlY The mere fact that the ity is not "accePtable" to objectionable Phrase - an appeal can furnish no unless its oPeration has tent court. lf this healthy . I i I I I I I I i I i) t, 74 rule is not 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, because it has been suggested by the learned 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, seenringly vehernent, and apparenfly unpalatable to the Revenue, are only intended to curb a tendency in rsvenue matters which, if allowed to become widespread, 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 shouid be paid by the adiudicating authorities end the appellate authorities to the requirements of jucjicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them."

15. W}at is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure llot to generate further titigation 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 ) I I I I 15 Finance Act,2020 and Finance Act, 021 . Now, in' order to protect the interest of the Revenue as also at of the assessee, it would bc trite at this juncture, if we dispos of the writ petition with an observation/direction that the dispos 1 of the instant writ petition in terms of the judgment rendered by his High Court in the case of Kankanala Ravindra Reddy (l sup ) shall however be subject to the outcome of the SLPs which e hled by the Income Tax Department and which is pending c sideration before the Hon'ble Supreme Court.

16. In the given facts and circ stances, this Bench is of the considered opinion that unless and til we do not timely dispose of matters which are squarely cov by the decision of this Court and which stands fortified by the isions of the, various other High Courts on the very same rss e, the pendency of this High Court would further be burdened ich otherwise can be decided and disposed of as a covered matter.

17. So far as the interest ofthe enue is concemed, we are of the considered opinion that the int t of the Revenue has already been considered and protected, as h been observed in paragraPhs 76 . -xn 36,37 and 38 of the order lvhich, for ready reference. is reproduce,l hereunder:

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent- Department is neither tenable, nor sustainable. 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 the notices issued under Section 147 and 14g would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically.

37. The preliminary objection raised by the petitioner is sustained and all these wnt petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are getting quashed on the point of jurisdrction, 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 Aganval, supra, as a one{ime measure exercising lhe oowers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed under lhe substituled provisions, and this Court allowing the petitions only on the p:.ocedural flaw, the right L7 conferred on the Revenue proceed further if they so w order of the Supreme Cou n uld remain reserved to t from the stage of the in the case of Ashish Agarwal, supra.

18. We would only further tike t make observations that sinoe we are inclined to dispose of the ins ant writ petition, conscious of the fact that the earlier order of t is High Court in the case of Kanakala Ravindra Reddy (l ) is subjected to challenge belore the Hon'ble Supreme Co in SLP No.3574 of 2024, \ t preferred by the Income Tax Dep ent, we make it clear that allowing of the instant writ petitio is subject to outcome of the aforesaid SLP prefened by the Reve ue against the decision of this High Court in the case of Kanaka a Ravindra Reddy (l supra). This, in other words, would mean t t either of the parties, if they so want, may move an appropnate ition seeking revival of thrs writ petition in the light of the d sion of the Hon'ble Supreme Court in the pending SLP on the v same lssue

19. Accordingly, the instant t petition stands allowed in favour of the assessee so far the issue of jurisdiction ls concerned. As a consequence, the impugned notice under challenge under Sections 148-A an 148 stands set aside/quashed 18 The consequential orders, i1- any, also stand set aside/quashed in similar terms as have been passed by this High Court in the case of Kankanala Raviwlra Reddy (1 supra). There shall be no order as to costs Consequently, miscellaneous petitions pending, if any, shail stand closed ,s I SD/-K'AMMAJI IDEPUTY REGISTRAR //TRUE COPY// To, 1 The Assessment Unit, National Faceless Asse-9sTV D;;;i-;;i, Ministrv of Finance, Room No 401^' 2nd Jr-'irnJrtit Nehru Sladium' New Delhi - 1 10 003' \ SECTION OFFTCER "i t Gentle, lncome Tax FIoor, E-RamP,

2. The lncome tax officer, ward 8(1), Hydera6ad Signature Towers' Sy.No'6(P) - K;;,];il;, sv sziP) xtlhig')ot, dpp Botanic-al Gardens' serlingampallv (M), Telangana, lndia "t

3. One CC to SRI THANNERU CHAITANYA KUMAR' Advocate lOPUCl 4. One CC to Ms.J.SUNITHA, SC for lncome Tax Department [OPUC] 5 Two CD Copies BSK LS 1 ( ..-. z/ti^ €4:iEt1 ./.,.4 j ii,3 'tt tttE zffi I .'^ \i'- " i': :e t'tw--;.' :\.: ., -:' /,' -,- * .y' _.:=::---:_:_:i ' HIGH COURT DATED:2810412025 ORDER WP.No.35233 ot 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS 7 1.4 7 /, ,