Mrs. Qudsia Rasheed v. Telangana

Counsel for the Respondents: Ms. B.SAPNA REODY, Jr iG FOR INCOME TAX The Court made the following: ORDER THE HONOTJRABLE SRI JUSTICE P.SAM KOSEY AND THE HONOT]RABLE SRI JUSTICE NARSING RAO NAIIDIKONDA WRIT PETITION No.36I4l OF ?024 ORDER (per Hon'ble Sri Justice Narcing Rao Nandikonda) Heard Mr. A.V.A.Siva Kartikeya, leamed counsel for the petitioner and Ms. B.Sapoa Reddy, leamod Junior Standing Counsel for the Income Tax Department for the respondents. Perused the record.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section l48A and l4E of the Income Tax Act, 196l (for short 'the Act') or the assessment orders tlrose have been passed under Section 147 of the Act which have been assailed.

3. This writ petition is being takeo up today only on one of the grounds, that the notices issued under Section 148,{ of the Act and the subsequent initiation ofproceedings under Section 148 of the Act by the jurisdictional fusessing Officer, whereas in terms of the anrendment that was brought to the Income Tax Act by way of Finanoe Act, 202-l w.e.f., 01.04.2021 onwards, proceedings 2 under Section l48A of the Act as also under Se :tion l4g of the Act ought to have also beeu issued and proce€c d in a faceless manner

4. The contention of the petitioner is th Lt the issue of proceedings being in violation of the Finance A *", 2021 i.e., the impugned notiees under Section l4gA and Sectio r lu$g of the Act not being issued in a faceless manner, have alrea<[. .b€en dealt with and decided by this Court in the case of KANKANALA RAVIM)RA R-EDDY vs. INCOME-TAX OFt ICER' decided on 14.09.2023 whereby a batch of writ petitions rv:re allowed and the proceedings initiated under section t4gA as ars r under Section 148 of the Act were held to,be bad with consequent al reliefs on the ground of it being in violation of the provisions of I ection l5lA of the Act read with Notification lgDOZz dated}g.O3.\022. The said judgment passed by this Court has also been subse<j ently followed inr a large uumber of writ petitions which were ail,r ved on simirar ' [(2023) I 56 taxmann.com I 7g (Telangana)]

5. Down the lile, we find thal the same issue has also ireer. decided against the Revenue by various High Cours i.e., by the Bombay High Court in the case of HEXAWARE TECIINOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTEERS2, Gauhati High Court in the case of RAM NARAYAN SAE vs. LMON OF INDIA3, Punjab and Haryana High Court in the case of JATINDER SINGH BANGU vs. LINION OF INDIA4, and Telangana High Court in the case of SRI VENKATARAMANA REDDY PATLOOLA VS. DEPUTY COMIVtrSSIONER OF INCOME TAX5 where the issue was in respect of international taxation, Bombay High Court in the case of ABHIN ANILI(rMAR SHAII vs. INCOME TAX OFFICER" INTERNATIONAL TAXATIOf which is again on intemational taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICER?, Gujarat High Court in the GIse of MANSUKHBIIAI 21zoz+1ut64 ITR 430 (Bom) '[(2024) 156 taxmann.com 478 (Gauhati)] '[Qfi24) 165 taxmaqn-com 115 (Punjab & Haryana)] ' 12024) 167 tarmann?om 4l I (Telangana)l " [2024) I 66 taxmann.com 6?9 (Bombay)] ' [2024) I 65 taxmann.corrr 1 13 (Flimachal Pradesh)] 11: tL D.l,ijCYABlEA? i F.*, *,irADIyA - ;. *_{COME 1,1,X OFMC.r,F. ar. WARD 3(3)(5)8, Jharkand High Courr in rhe r ase of SEyAM SLNDAR SAW vs. UMON OF INDIAe, Rajasrt an High Court in the case of SHARDA DEW CHIIAJER vs. NCOME TAX OFFICER & AIYOTHER and batch of writ l,etitionsro which stood decided on 19.03.2024. Similar views hav: also been taken by the Division Bench of Calcutta High Court in the case of GIRDHAR GOPAL DALMTA vs. trMON OF TNDIA & ORS (M.A.T 1690 of 2023),decided on 2S.OI.ZOZ4.

6. Even though the same issue having been drr ided by a large number of High Courts, we are still conftonted wit r large filing of identical matters on daity basis ranging betwer,r 5 to l0 writ petitions. That upon the instructions being so, rght from the Deparhent, they have been taking a solitary iI ound that the decision of the Bombay High Court in the cas: of Hsawsre Techno[ogies Ltd., (Z supra) as also the one lr fch has been decided by this Court in the case of, Kanakala tr|r,vindra Reddy Ezozc SCC OnLine Guj 4012 '2025 SCC Online Jhar 287 'o 72023 : RI-JD:4984-DBl 5 (l 'supra; has beil subjected to challenge in a Special {rave Petition i.e., SLP No.3574 of 2024 before the Hon'ble Supreme Court and the Hon'ble Supreme Court is seized of the matter' In addition, there are about 1200 SLPs also filed arising out ofthe same issue being decided by various High Courts.

7. To a query being put to the learned counsel for the Revenue, they have categorically accepted the fact that there is no interim order granted by the Hon'ble Supreme Court in any of these matters pending before it. Meanwhile, fresh writ petitions of identicat 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 mooths have tapsed, till date, we do not find any remedial steps having been taken by the lncome Tax D€partment to take appropriate steps to either hold back issuance ofnotice under Section t48A and under Section 148 of the Act by the jurisdictional Assessing Officer, ralher the authorities concerned in the teeth of series of decisions \ 6 by all the major High C.ourts in India are nntinuously still initiating proceedings under Section l4gA of he Act and arso initiating proceedings under Section l4g rf, the Act in contravention to the amendments brought into th< Income Tax Act pursuant to the Finance Act, 2OZA as also the, Fin t oe Act 2021 . 9' Upon a query being put as to why canl thi r writ petition be disposed of in the teeth of the decision rendererl by this Court in the case of Kanakala Rqvindra Reddy (l supra), eamed Standing Counsel for the Income Tax Department contends hat those would unnecessarily burden the Income Tax Departnr :nt where they would be required to file equal number of Ii .ps before the Hon'ble Supreme Court and it would be furthr:r burdening the exchequer of the Union of, India. [t was also the r: rntention of the leamed Standing Counsel that no prejudice would t e caused to the interest of the petitioners in case if this writ petitiorr s kept pending till the finalizarion of the SLps pending befor : the Hon,ble Supreme Court and the frct that the petitioner is al eady enjoyrng the benefit of interim protection. Nonetheless, on tt : earlier query of this Court as to why the [ncorne Tax Departmenl rave not come out with a mechanism to issue appropriate instmcri )ns or to take 7 appropriate steps in ensuring that proceedings under Section l48A of the Act as also the assessment orders under Section 148 of the Act are kept in a hold in the light oftle decisions dodcided 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 tndia and cannot be limited to any of these jurisdictional High C-ourts.

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 concerned are still even now in 2025 also initiating proceedings in contravention to the provisions of Section t51A 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 Kanakda Ravindra Reddy (l supra), the Division Bench white resewing the right of the Revenue, has also protected the interest of the petitioners '..l -,, -.-" 8 ,-{ insofar as the liberty which was granted to .he Revenue for initiating fr,esh proceedings strictly in accordanq rith the amended provisions of the Act, as amended by-the Finarr, e Act, 2fi20 a,,d the Finance Act,2O2l. The petitioner assessee wc :ld be entitled. to challsng... raise the other legal objections if the (evenue initiates fresh. proceedings. The Departuent has made Lo endeavour in availing the said liberty that was resewed for the I.evenue. on ttre contrary, they have been still sticking on to the s and, which this High Court as well as many other High Courts al eady held to be bad. I l. It appears that because of the aforesaid liberr y, that this High Court had $anted permitting the Revenue for initiating fresh proceedings as a one-time measure in a f,aceltr s manner, the Income Tax Dbpartuent wants to take advantage rf the 5ams !y protractiag these proceedings which would enable lt em to meet the Iimitation that would otherwise come in the way. I ikewise, if the writ petition is kept pending for a considerable lonl; period of tirne and finalty at a. tater stage if the Hon,ble Supreme ( )ourt confirms the decision taken by this High Court as also by t re other Higb Courts in which the SI_ps are still pending, the Income Tax 9 Deparment would get the advantage of the liberty ffat'isr€fiherwise protected in favour of the Revenue for initiati'on 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 equally disadvantageous and detrimental so far as interest of the assesses are concemed. As a consequence, the lncome Tax Department gets an extended period of time for initiation of fresh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent setin Kanakala Ravindra Reddy (l supra), is a matter of grave concem. The Income Tax Department's persistetrt 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 unnocessarily' The Department's strategy of awaiting the Supreme Court's decision oo pending SLPs white contiouing to initiate fresh proceedings appean to be a calculated move to buy time and circumveot limitation periods, rather than adhering to th€ €stablished 10 a' positior Such conduct raises serious ques ions about the administrative efficiency aad the respec for judicial pronouncements, particularly when this Court has already provided a balanced approach by preserving both the Rev:nue,s rights and assesses tnterests.

13. Another aspect which needs to be corrsiden: I is that in fact it should have been realized by the Income Tax Depi rtment itself and should have found out via media in ensuring r rat proceedings under,Sections 148-4 and l4g should not have leen issued in a faceless m.nner, at least till the Hon,ble Supreme r lourt decide the twelve hundred (1200) odd SLps which it is alreacl, seized of or, at least the lncome Tax Department shoutd have I tund out some remedial steps to ensure that wherever the authc rities intend. to initiate proceedings under Sections l4g-A and l4ti. other than in a faceless man-ner, the proceedings should have been deferred without precipitating the matter further intimating J e assessee that they shall initiate appropriate proceedings only aft,: the SLp,s are decided by the Hon'ble Supreme Court on the ve y same issue. This again, the Income Tax Department, has not ber:r r able to give a convincing reply, except for the fact that such a de :ision if at arl 11 has to be taken, has to be taken for.the whole of India, and w.hich otherwise has to be by way of a policy decision and that too at the tevel of Central Board of Direct Taxes. Though tre learned Standing Counsel for the lncome 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 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, io 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 boen reluctant in granting any interim protection to the lncome Tax Department. Yet, the authorities concemed at the State level are not ready to acc€pt the verdict passed by a majority of High Courts of diffurent Stat€s on the same issue; and to make things further worse, the lncome Tax Department is showing audacity by issuing notices continuously under Sections 148-.{ and 7:2 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner.

14. In the case of BANK OF INDIA v;. ASSISTAIIT COMIIflSSIONE& INCOME TAXrr, on an isr;r e whether it was justifiable on the part of the Income Tax D: )artmetrt in not following an order passed by the adjudicating autt trity only on the ground that the appeals are pending, the Divisic n Bench of the High Court of Bombay held at paragraph No.25 ar rnder, viz., : "25. Mr. Paridwalla has righfly drawn out afte ttion to the decision of this Court in Gommassioner of lncome - ax vs. Smt. Godavaridevi Saraft2 as also the recent decisior of the co_ ordinate Bench of this Court in Samp Furniture (p) I td. v. lTOr3 of which one of us (Justice G.S. Kulkami) was a merr rer, wherein the Court categorically obseryed that the Revenu,r having not "aepted' the judgment of the High Court would not r rcan that till the same is set aside in a manner knorivn to law, it w,: lld loose its binding force. Refening to. the decision of the Supn: ne Court in Union of lndia vs. Kamlakshi Finance Corporatio I Ltd.r4, the Court obsen ed that the approacfr of the officials of levenue of keating decisions being .not acceptaUe" was critioi :ed by the Supreme Court. ln srch decision; folowing are fl e relevant obsen/ations made by the Supr_eme Courf. i)y9l31t .r, o *9'.com 422 @ombay)l " [l978] I l3 ITR 589 @ombay) '.t.1202+116S taxmann.com 5g l/300 Taxman 452 (Bombr y) 'o ltggZltaxmarn.com l6155 ELT 433 (SC) 13 "6. Sri Reddy is perhaps right in saying that the officos u/ere not actuated by any mala frdes in passing the impugned orders. They perhaps genuinely felt that ttle daim of the ass€ssee was not tenable and that, if it was accepted. the Revenue uould suffer. But what Sri Reddy overlnoks is that u/e are not concemed here with ttle correctness or othenirdse of their condusion or of any factual mahfides but with the fact that the officers, in reacfling in their condusion, by+assed two appellate orders in regard to the same issue whict were placed before them, one of the Coflector {Appeals) and the other of the Tribunal. The High Court has, in our view, rQhtly caiticized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of hese officers to give eftect to the orders of autprities higher to them in the appellate h'rerarcfiy. lt cannot be tm vehemenfly emphasized that it is of utrnost importancc 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 Assbtant Colbctors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant flis &pellate Collectors who function Colledors under the lurisdiction of ttre Tribunal. The princides of judicial discipline require that the orders of the higher appellate authoritbs should be folbwed unreservedly by tre subordinate authorities. The mere fact that the order of ttre appellate authority is not 'acceptabb" to the department - in itself an objectionable phrase - and is the subiect matter of an appeal can fumish no ground for not following it unless its oPration has been suspended by a competent court. lf this healthy "n6 14 lt . ';l: .1 :'iile is ,i.t::rir,tie+,:t,, i:.jrii: wilt only Lt unrJue harassment {o assesses and cfEos in admin stration of tax laws.

12. We have dealt with this aspecd at somr: length, because it has been suggested by the :amed Additional &llicitor General that the obs€x /ations made by the Hgh Cour! have been harsh )n the officers. lt is dear tiat the obsenrations of th ) High Court, seemingly rrehement and apc lrenfly unpalatable to the Revenuq, are only lntended ) curb a tendenry in revenue matterc whicfr, if alk,l ,ed to become widespread. muld result ift consic :rable harassrnent to the assesses?ublic withor.rt any I enefrt to the Revenue. We would lke to say th rt the department should take these observations I the proper spirit. Tte observations of the Higf Court should be kept in mind in future and the utmost r :gard sftould be paid by the adjudicating ar{horities err d the appellate authorities to the requ?rernents of t dicial discipline and the need for gi\frng efiect to, the < .ders of the tigher appeltate authorities rvhict are tri rding on them."

15. What is worrying this Bench more is the fact ttrat an endeavour is being made whole heartedly to ensure r ot to generate further titigation on issues which have been laid to rest by a I arge number of High Coufrs all of whom have taken a cc nsistent stand that the action of tlre [ncome Tax Department being .r olative of the 15 Finance Act,2020.and Finanop.AcE 2021.- Now; in,onder to protect the interest ofthe Revenue as also that ofthe assessee, it woutd be trite at this juncture, if we dispose of the writ petition with an obsewation/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 Rendy Q supra) shall however be subject to the outcome of the SLPs which were filed by the lncome 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 timety 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 ofas 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 t6 t 36, 37 and 38 of the order which, for ready referer ce, is reproduced hereunder

36. For all the aforesairJ reasons, the impu€ I ed notices issued and the proceedings drawn by the l sponden! Oepartment is nefther tenable, nor ; rstainable. The notices so issued and the procedure ad,) )ted being per se illegal, deserves to be and are acq) Cingty set aside/quashed. As a coniequence, all the impugned orders gefting quashed, the consequential orcr s passed by the respondent-Department pursuant to :l e notices issued under Section 147 and lzl8 would rlso get quashed and it is ordered accordingly. The r lason we are quashing the consequential order is on tho )rinciples that when the initiation of the proceedings self was procedurally wrong, the subsequent orders Llso gets nullified autornatically.

37. The preliminary objection raised by the pe itioner is sustained and all these writ petitions stands € I )wed on this very iurisdictional issue. Since the impugn,: I notices and orders are getting quashed on the rcint of jurisdictbn, we are Rot inclined to proceed fur her and decide the other issues raised by the petition !r which stands reserved to be raised and eoritend3l in an appropriate proceedings.

38. Sinca the Hon,ble Supreme Court had, ir le case of Ashish Agarwal, supra, as a one_tjme I leasure exercising the powers under Affcle 142 of the Constituffon of lndia, permitted the Revenue to )ro@ed under the substitqted provisions, and this Courl ,llowing the petitions only on the procedural flaw, t -. right 17 confened on the Revenue would remain resemed to proceed further if they so want from the strage of the order of the Sr.preme Court in ttre case of Ashish Aganirrdl, supra.

18. We would only further like to make observations that since we arc 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 Ratindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, preferrod by the lncome Tax Departmenti 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 ofthis High Court in the case of Kanakala Ravindra Reddy (l supra). This, in other words, would mean that either of the parties, if tley so waot, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Suprerne Court in the pending SLP on the very same issue.

19. Accordiogly, the iastant writ petition stands allowed in favour of the assessee so far as tbe issue of jurisdiction is concemed. As a conseqtreace, the impugned notice under chaltenge under Sections 148-4 and 148 stands set aside/quashed. 18 The consequeutial orders, if any, also stand set a ride./quashed in simil6l f6165.6s have been passed by this High Cot rt in the case of Kankanala Rwindra Reddy (l supra). There shal be no order as to costs. Consequently, miscellaneous petitions pendir g, if any, shall stand closed. SO', A I .S. GOYI'R] SHANKAR AS SISTANTREGISTRAR /rG: SECTION OFFICER ,,TRUE COPY/' To,

1. The Assessment UniL lncome Tax Oep3rttnelt'.- 'lational e'Assessment ' tskilN6 o.rhi, C6o, rlo.-+ol' zna Floor, E-ll'mp' JawaharlalNehru 2. Ttie lncome Tax Officer, Ward 9(1). Hyderabad, T Towers' 1{F2-3' AC Stadium, New Delhi - 110 003. Guards, Hyderabad - 500 0O4, Telangana

3. The Principal Chief Connmissioner of lncome Tax - i;;";;;;."HvoErauad. R;; t.l;. 922' gth Floor, E llock, l'T Towers' 10-2- 3, Ac-Guaids; Hyderabad - 500 004' Tdangana -.Andhra Pradesh and

4. One CC to SRI A.V.A.SIVA KARTKEYA Advocate [( PUCI 5. One CC to Ms. 8.SAPt'lA REDDY, Jr. SC FOR tNC()l {E TAX IOPUCI 6. Two CD CoPies BSRw HIGH COURT DATED:28lO4l2O2S ORDER WP.No.36141 ot 2024 /' I ir: j t.'ii. 21JAtt 2026 z C) >. t * I :g:E/ ALLOWING THE WRIT PETITION, WITHOUT COSTS q dp(Q^h ,&-"