SRI A v. RAGHU RAM

Judgment

1. Z Ilq]t"glp Tax Officer, Ward - i, tncome Tax Office, Near Rait Under Bfldge, Nalgonda _ 50800.1. Assessment Unit, National Faceless Assessment Centre, lncome Tax Lrepartment, Ministrv of Finance, Roo; Iri;. ;b],);x'Fioor, e_namp, Jawahartat Nehru Siadium, oeini _ iiii'ooi; -" " ' ' r' ...RESPONDENTS Petition under Articre 226 0f the constitution of rndia praying that in the circumstances stated in the affidavit fired therewith, the High court may be pleased to pass an order or direction, especiafly one in the nature of wRrr oF MANDAMUS hording that the order passed by lst Respondent u/s.14BA(d) of the Act, dt.07.04.2023 with DtN and Notice No |TBA/AST/F t14BAt2O23_ 2411051934102(1) and the notice dated 07.04.2023 issued under section .r4B the Act with DrN and Notice No.rrBA/AST/s/148 1t2023-24t1051934154(1) for the assessment year 2016-17, as being ilegar, arbitrary and passed in gross vioration of principres of naturar justice without apprication of mind, and consequenry set aside the same. I i I I l , l I F lA NO: 1 OF 2024 /

Petition r-nrk;'Siectron 15'l CPC praying that in the oircrmstances stated in the affidavit filed in support of the petition, the High Court rnay be pleased to suspend the op:raiicr of the notice issued by the 1't Respondenj u/s.148 of the Act, dt.07 04.2t)23 'or the assessment year 20i6'17 with DIN and Notice No.ITBAJAST/5t14, 112023-2411051934154(1) and ail consequental proceedings the reto. Counsel for the Petitioner: SRI A. V. RAGHU RAM Counsel for the Res,;nndents: MS. BOKARO SAPNA REDDY (Jr. Sc FOR INCOME TAX) The Court made, the 'ollowing: ORDER -[ i I L I I l t TTIE HONOTIRABLE SRT JUSTICE P'SAM KOSITY rHE H,N,,RABL5HXWE NAR'TNG RAo PETIT ION No.3 6l 23 0F 2024 ORDER, (per Hon'ble Sri Justice Narsing Rao Nandikonda) Heard Mr. A'V'Raghu Ram' leamed counsel petitioner and Ms' B'Sapna Reddy' leamed Junior Standing Counsel for the Income Tax Department for the respondents' for the Perused the record'

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 148A and 148 of the Income Tax Act' 1961 (for short'the Act') 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 148A of the Act and the subsequent initiation ofproceedings under Section 148 of the Act by the jurisdictional Assessing Officer' whereas in terms of ttte aieiament that was brought to the Income Tax Act by way of Finance Lct' 2021w'e'f'' 01'04'2021 onwards' proceedings 2 under l;erli(rr I4gA of the Act as also under Section l.:.g of the Act ou11hL lt have also been issued and proceeilecl n a faceless manner

4. on 14.09.20.1-t .rhereby l'he r:,trtention of the petitioner is that trre rssue of proceediri s L cing in violation of the Finance Ar:t, 2021 i.e., the impugne,l iot rres under Section l4gA and Section l4g of the Act not being ir s : r rl in a faceless manner, have already been de alt with and decijed by this Court in the case of KAN{KANALA RAVINDR.{ REDDY vs. INCOME_TAX OFFICIIRi r:ecided a batch of writ petitions were arlow,:d and the proceerlirrlls initiated under Section l4gA as also uncer Section 148 of the,\r,t ..i t,re held to be bad with consequential rel,ef! ,rn the ground of ir l:eing rn violation of the provisions of Sectio, I5lA of the Act reac r,.irl Nodfication lg/2022 dated 29.03.2()22, Tht, said judgment pas-ser ry this Court has also been subsequently, foiiowed in a large nLn.bcr c1- writ petitions which were allowt:d on sir.rilar terms. '[Q023) 156 taxrnrnn.com l7g (Telangana)] t t a - *t I I l 3

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 Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the case of SRI \.ENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of intemational taxation, Bombay High Court in the case of ABHIN ANTLKUMAR SHAH VS. INCOME TAX OFFTCER' INTERNATIONAL TAXATION6 which is again on intemational taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGII vs' INCOME TAX OFFICERT' Gujarat High Court in the case of MANSUKHBHAI ' Tzoz+1 464 ITR 430 (Bom) 'i}Ozq 156 taxmann.com 478 (Gauhati)l " l(2024) 165 taxmann.com I l5 (Punjab & Haryana)l ' [2024) I 67 taxmann.com 41 I (Telangana)] "12024) 166 taxmann.com 679 (Bombay)l - .- 'izOzqj 165 taxmann.com 113 (Himachal Pradesh)l 4 DAIII.TTiUIIAI RADADIYA vs. INCOME ,r.AX ()FFICER, WARI) 3t.:it(5)s, Jharkand High Court in the case o1 SHyAM SUND4tt S,\W vs. TINION OF INDIAe, Rajasthan Hiph Court in the care ot SHARDA DEVI CHIIAJER vs. INCOI,yIE TAX OFFICER S: ANOTIIER and batch of writ pebtionrr0 which stood d:cirl:J on 19.03.2024. Similar views have also br:en taken by the Dr.i:;ion Bench of Calcutta High Court in the. case of GIRDHAR r,OPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T t69()cf 2023), decided on25.09.2024.

6. llerr tlcugh the same issue having been decided b,.,a large number c,J. Fr rir Courts, we are still confronted with large iling of identical rr atr j -s on daily basis ranging betweeu 5 to I0 writ petitions. '-ha t upon the instructions being soughr from the Departmc rt, .lrr:y irave been taking a solitary grourrd that the decision rr1' 1lr,: Bombay High Court in the case ol_ He:arsare Technolog.it,s i.td., (2 supra) as also the one which hair been decided b1. his Court in the case of Kanakala Ruvindro Reddy tZOZ+ SCC,)il1 r,,, Cui 4012 1 Y2025 SCC,)rrt ,rrr. .thir2g7 ' "[202j: RJ_ rt,:.+e64_DB l t 5 (i 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 fiied arising out ofthe same issue being decided by various High Courts.

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

8. On the one hand, even though the order of this Court that was passed as early as on 14.09.2023 and more 16 months have lapsed, till date, we do not find any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance ofnotice under Section 148A and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concerned in the teeth of series of decisions 6 by all th: rnajor High Courts in India are continu,>usiy still lnrtlatli,s ',,r c ceedings under Section 14gA of the Act and also rnltlaturg proceedings under Section I4g of the Act in contravelti,l0 to the amendments brought into the In,:omi: Tax Act pursuar t c tre Finance Act, 2020 as also the Finance Act 2021.

9. frprn I qucry being put as to why can,t this r,vrit potition be dispose,l li rr the teeth of the decision rendered by this Court in the case cf ,4'd,nakala Rqvintlra Reddy (1 supra), learned Standing Counsel 1l l t re Income Tax Department contends thar tho se rvould unneces ;a Li [y burden the Income Tax Departntent rvh ere they would bc required to rrle equar number of SLps. before the Hon'ble Suprt:me Court and it would be further brrrdening the exchequr:r o 1' llte Union of India. It was also the ,:ont,:nti<.,n of the leamed [lti nrl rLg C]ounsel that no prejudice would be causr:d to the interest of ,hr: petitioners in case if this writ petition is [:ept pending till the [irLelization of the SLps pending before the lfon,ble Supreme Corrt and the fact that the petitioner is already e,njoying the benef't rt' jrtcritn protection. Nonetheless, on lhe earlit:r query of this Ccurt a; to rvhy the Income Tax Depaftment have n()t come out with ir rrx;hanism to issue apgiopriate instructions or to take I 7 appropriate steps in ensuring that proceedings under Section l48A ofthe Act as also the assessment orders under Section 148 ofthe 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 of CBDT as any such steps would have to be taken Pan India and cannot be limited to any of these jurisdictional High Courts'

10. As a result of which, what we are facing is steep increase of litigation day in and day out even though various orders have been passed by this High Court allowing writ petitions on the very same issue. The [ncome Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section 151.4 of the Act and as a result by now, more than 600 to 700 petitions have been aiready 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 Kanakalu 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 8 insofar rs t3 liberty which was granted to the ler,t:nue for initiating 1''c:ir proceedings strictly in accordance rvith thr: i.mended , provisions c.-1hc.Act, as amended by the Finance A,;t. 2020 and the Financ: r\ct, 2021. The petitioner assessee worrld be ertitled to challeng,: or rr.sc the other legal objections if the ltercnue initiates fresh ploc :rr1ings. The Deparlment has made no ender rvour in availing Ji: :i,id liberty that was reserved for the Revenue. On the contrary, trrt: y trave been still sticking on to the stanc, which this High Co:r, ;: well as many other High Courls already held to be bad.

11. It rrpp:ars that because ofthe aforesaid liberty ttLat tlris High Court hr.d :ranted permitting the Revenue for initiatilg fresh proceedings t s a one-time measure in a facekrss ,nanner, the Income --ax [),:pn66snt wants to take advantage of lhe rame by protractirL-e t re se proceedings which would enable t.her to rneet the limitatiorL thlt ,vould otherwise come in the way. Lik,:rvis e, if the writ petition : kept pending for a considerable long period of time and final y at r later stage if the Hon'ble Supreme Court c:onfirms the decistor tirken by this High Court as also by the oth,:r High Courts irr v.hi,:h the SLPs are still pending, the Incolne Tax 1 9 Department would get the advantage of the liberty that is otherwise protected in favour of the Revenue for initiation of ftesh proceedings from the disposal of these matters at a much later stage which would be advantageous 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 for initiation of fiesh proceedings

12. The alarming trend of docket explosion in this Courl, despite the clear precedent set in Kanakala Ravindra Reddy (l supra), is a matter of grave concem. The Income Tax Department's persistent initiation of fresh proceedings, disregarding the established judicial pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions piling up on the same issue. This deliberate approach not only undermines the principle of judicial precedent but also strains the judicial resources unnecessarily. The Depaftment's strategy of awaiting the Supreme Court's decision on pending SLPs while continuing to initiate fresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than adhering to the established legal 10 positiol . _a LLr:h conduct raises serious questions altout the adrninistrrrtrr e cfficiency and the respect fo: judicial pronour corrc rrts, particularly when this Court has alre.ady provided a balan<:erl rrll troach by preserving both the Revenur:,s r ghts and assesses tr t lr I lts 13 Arcth:r aspect which needs to be considered is that in fact it should har e teen realized by the Income Tax Departmenl i:self and should I a.t, firund out via media in ensuring that pro,.:eedings under Sectiors 148-A and 14g should not have been issrred in a faceless rnirr11 lr'. at least till the Hon'ble Supreme,lort rle,cide the twelve hrLnIi:l (1200) odd SLps which it is alread,r seized cf or, at least the Ltr,) nle Tax Department should have lbun I or t some remedial stells to ensure that wherever the authc,ritie .s ir tend to initiate pro< e.rlrngs under sections l4g-A and r4g othcr tl.an in a faceless .l;urner, the proceedings should have been clefered without p'er:ir:itating the matter further intimating the arrses:.ee that they shall iliriate appropriate proceedings only after thc SLp,s are decided by th: Hon,ble Supreme Court on the very same issue. This again, th: rrcome Tax Department, has not been abie to give a convincinp rer,ly, except for the fact that such a decisirtn it.at all a IL has to be taken, has to be taken for the whole oflndia, and which otherwise has to be by way ofa 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 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 Coufi 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 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 t2 148 thro,rgh tre jurisdictional Assessing Officenvhet'eas it ought to have bet'n only in the faceless manner .a

14. In th: oase of BANK OF TNDIA vs. ,A'SSIIJTANT COMMISSt()\ER, INCOME TAXrr, on an issue wreth,.:r it was justifiabl: C I] the part of the Income Tax Deltarlrnenl in not followinll iLr crder passed by the adjudicating authcritl'only on the ground thr t Jr,: appeals are pending, the Divisic,n E enclr of tire I{igh Cour of'}}ombay held at paragraph No.25 as uncl:r, v 2., : "25. l,/r Paridwalla has rightly drawn out attentiorr to the decir;ic n o' :his Court in Commissioner of lncome Tax us. S mt. Godavar clervi Sarafl2 as also the recent decision of the co- ordir ale ll : rch of this Court in Samp Furniture (P) Ltd. v. lT Ol3 of wlrich or1,) of us (Justice G.S. Kulkarni) was a menlber, wherein the l( ur: 0ategorically observed that the Revenur: havrng not "acc ]p le (l' the judgment of the High Court would not mean tte t till the s arn'; rs set aside in a manner known to law, it wculd loose its bind n1 1orce. Referring to the decision of the Supreme Cou 1 in Union of rrdia vs. Kamlakshi Finance Corporation Ltd.r4, the Courl rt,r;r>rved that the approach of the ofJicials o-' Re'renur': of treat n1; rlor;isions being "not acceptable" was criticizetl by the Suprerrr: 3ourt. ln such decision, following are the relevant obs€irvalil-r: made by the Supreme Court. " 11zOZS1 I 70 raxmann.com 422 (Bombay)l '' 119281 113 --1589 (Bombay) " 7ZOZll [65 rermann.com 581i300 Taxman 452 (Bonrbay) " 719921:a)lrarn.com 16155ELT 433 (SC) _] 13 "6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otheruise of their conclusion or of any factual malafides but with the fact that the officers, in reaching in their conclusion, by-passed hvo 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 vehemenlly emphasized that it is of utmost importance that, in disposing of the quasijudicial issues before them, revenue officers are bound by the decisions of the appellate authorities' The order of the Appellte Collector is binding on the Assistant Collectors working within his 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 L4 ( 1rl3 is not followed, the resutt will only be ,Lndue h a -rrssment to assesses and chaos in administration o. ax laws. 1:a We have dealt with this aspect at some lengtt, L0(iztuse it has been suggested by the lea.ned I (i(litional Solicitor General that the observalions nraJ3 by the High Court, have been harsh on the oflir:ers. lt is clear that the observations of the l_ligh Court, seemingly vehement, and apparenfly u rpalatable to the Revenue, are only intenderj to r;urc a t(|r)dency in revenue matters which, if allowerj to br-.: I re widespread, could result in considerable ra'.tsisment to the assesses-public without an,r' benefrt o tte Revenue. We would like to say lhat ther Je ,prl lment should lake these observations in th€) rrr:per spirit. The observations of the High Courl r;horrlJ be kept in mind in future and the utmost regar0 trhc r I,j be paid by the adjudicating authorities and the a pp,e,llate authorities to the requirements of judioial c is r;it ine and the need for giving effect to the, ord,:rs r f the higher appellate authorities which are bind ng c n tlrr:rn."

15. \\'liar i.r worying this Bench more is the lact rhat an endeavou r s being made whole heartedly to ensuro no1 to ! lenerate fufiher litiga' ()n on issues which have been laid to rest by a large number ol ligh Courts all of whom have taken a consistent stand that the ar;tir I tFthe Income Tax Department being rrio.ativr: of the 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 trite at this juncture, if we dispose of the writ petition with an observation/direction that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (1 supra) shall however be subject to the outcome of the SLPs which 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, this 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 andwhichstandsfortilredbythedecisionsofthevariousother 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 concerned, 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 36,31 rd I 8 of the order which, for ready reference i-. r:produced hereunrler ilr; For all the aforesaid reasons, the impugned notic es i;sred and the proceedings drawn by the resp,)nde,rt- L)llanment is neither tenable, nor suslirin.rb e. l lr,; notices so issued and the procedure adcpte(j bei.tg , (, se illegal, deserves to be and are accordingly. s,et as ijr:/quashed. As a consequence, all the, impugn,:)d crCers getting quashed, the consequential orcjers irassr,rd bt tlre respondent-Department pursuant to the roticr::s rss;rre:d under Section 147 and l4gwould alst g3t q-ashed and it is ordered accordingly. The reason \r',e a r) c uashing the consequential order is on the priDcipl<:s ti zr1 when the initiation of the proceedings itself wz:s p oix:durally wrong, the subsequent orders alsr> qels nu I fied automatically. 37 The preliminary objection raised by the pretitione: s ;r:;lained and all these writ petitions stands allowed o-r h l; very jurisdictional issue. Since the impugned notrce s rTrj orders are getting quashed on the pont of lu isl ction, we are not inclined to proceed further anj rle c;ij: the other issues raised by the petrticner whrc r l,tzrris reserved to be raised and contended n a l .rpf ,rcpriate proceedings. il€. Since the Hon'ble Supreme Court had, ir the casr., c f r,s hish Agarwal, supra, as a one{ime me lsLlr(, €xir'l)ising the powers under Article 142 of the (;or s t tution of lndia, permitted the Revenue hl prc ceecl unrler the substituted provisions, and this Courl allowinE tlre )etitions only on the procedural flaw, the righ, -t- I I , 77 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 would only fufther like to make observations that since we are inclined to dispose of the instant writ petition, conscious of the fact that the earlier order of this High Court in the case of Kanakala Ravindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, preferred by the Income Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision olthis 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 challenge under Sections 148-4 and 148 stands set aside/quashed. 18 t The cons,:qurrtial orders, if any, also stand set asideiquar;hed in similar terrs ari have been passed by this High Court in the case of Kankanala Ru,,indra Retldy (1 supra). There shall be no cr.der as to costs. Con;eqtrrtly, miscellaneous petitions pending, if anv, shall stand closed //TRUE COPY// SD/-K. SREE RA'MA MURTHY \oepurt' REGtSTRAR \-...-...'--.--.-._--._-..- SECTLON OFFICER To,

1. The lncome T;> Jfficer, Ward - 1, lncome Tax O , l{ear Rai Under Bridge, Nalg,rnda 508001, Assdssmeni Lln t National Faceless Assessment Centre, lnconre Tax Department, Il4rrristry of Finance, Room \9 401 , 2nd Floor. E-R amp, Jawaharla lrle hr r- Siadium, Delhi - 1 '10 003. One CC tc tiri l\ V. Raghu Ram, Advocate [OPUC] One CC tc [,'ts. l]ckaro Sapna Reddy (Jr. SC for lncome Tax) [()PUC] Two CD Ccp ies 2

4. 5 TJ BS \ t I ) -<'a ./-t o1' 17.. ' rrE ST.l t" {i' 2 E JuN 2p5 t. _/ 'i I ; 'i -t :! .,,. il .!. t HIGH COURT DATED:28 ntl;2025 ORDER WP.No.361?3 of 2024 ALLOWING T]{E WRIT PETITION WITHOUT COIJTS AA b lD{-