Writ Petition No. 36842 of 2024 · The High Court · 2025

petitioner and Ms. B.Sapna Reddy, leamed 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 148A and 148 of the Income Tax Act, 196l (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 148.4 of the Act and the subsequent initiation ofproceedings under Section 148 of the Acf, by the jurisdictional Assessing Officer, whereas in terms \ of the amendment that was brought to the Income Tax Act by way of Finance Act, 2021 w.e.f., 01.04.2021 onwards, proceedings 2 { under Section l48A of the Act as also under Section 148 of the Act ought to have also been issued and proceeded in a faceless ma nner

4. The contention of the petitioner is that the issue: of proceedings being in violation of the Finance Act, 202 I i e.. the impugned notices under Section 148A and Section 148 ofthe Act not being issued in a faceless manner, have already tleen dealt u'ith and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICIIRT decided on 14.09.2023 whereby a batch of writ petitions werc allou'ed and the proceedings initiated under Section 148A as also under Section 148 of the Act were held to be bad with consequentiirl reliefs on the ground of it being in violation of the provisions of Scction 151.A of the Act read with 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 sinrilar terms. I 'l(2023) 156 taxmann.com 178 (Telangana)l 3

5. Down the line, we find that the same issue has also been decided against the Revenue by vanous 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 IJigh Courl in the case ol 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, INTBRNATIONAL TAXATION6 which is again on international taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI 'pozql464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauhati)l '[(2024) 165 taxmann.com 115 (Punjab & Haryana)] ' {2024) 167 taxmang.cgm 4l I (Telangana)l " 12024) 166 taxmann.com 679 (Bombay)l '12024) 165 taxmann.com 113 (Himachal Pradesh)l 4 DAIIYABHAI RADADIYA vs. INCOME TAX OFF'ICER, WARD 3(3X5)8, Jharkand High Court in the case o1'SIfYAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Courr in the case ol SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitionsro which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court in the case ol GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 o12023), decided o125.09.2024.

6. Even though the same issue having been decided by a lar.ge number of High Courts, we are still confionted with large filing of identical matters on daily basis ranging between 5 to l0 writ petitions. That upon the instructions being sought from the Department, they have been taking a solitary ground that the decision of thc Bombay High Court in the case of Hexaware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy '2024 SCC Online Guj 4012 '2025 SCC OnLine Jl'nr 287 12023 : RI-J D : 49 84- DB l o ' 5 ,' (l supra) has been subjected to challenge in a Special Irave 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 of the 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 vely High Court itself.

8. On the one hand, even though the order of this Court that was passed as early as on 14.09.2023 and more 16 months have lapsed, till date, we do not find any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance of notice under Section l48A and under Section 148 ol the Act by the jurisdictional Assessing Officer, rather the authorities concerned in the teeth of series of decisions 6 by all the major High Courts in India are continuously. still initiating proceedings under Section 148,4. of the Act and also initiating proceedings under Section 148 o l- the Act in contravention to the amendments brought into the Income Tax Act pursuant to thc Finance Lc|2020 as also the Finance Lct2021

9. Upon a query being put as to why can't this writ petiti()n be disposed of in the teeth of the decision rendered by this Court in the case of Kanakala Ravindra Reddy (l supra), learned Standing Counsel for the Income Tax Department contends that those u,ould unnecessarily burden the Income Tax Departurent where they would be required to file equal number of SLPs before the Hon'ble Supreme Court and it would be further burdening the exchequer of the Union of India. It was also the contention of the learned Standing Counsel that no prejudice would be caused to the interest of the petitioncrs in case if this writ petition is kept pending till the finalization of the SLPs pending before the Hon,ble Supreme Court and the fact that the petitioner is already enjoying the benefit 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 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 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 Iitigation 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 151A 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 (l 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 as the I iberty which was granted to the Rcvenue for initiating fresh proceedings strictly in accordance u ith the amended provisions of the Act, as amended by the Finance Act. 202() and the Finance Act,202l. The petitioner assessee would be entitled to challenge or raise thc other Iegal objections if the Revenue initiates fresh proceedings. The Department has made no endeavour in availing the said liberty that was reserved for the Revenue. On the contrary, they have been still sticking on to the stand, which this High Court as well as many other High Courts already held to be bad. 1 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 faceless manner. the Income Tax Depaftment wants to take advantage ,cf the same by protracting these proceedings which would enable them to meet the limitation that would otherwise come in the way. I-ikewise, if the writ petition is kept pending for a considerable long period 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 l.'ome Tax 9 Department would get the advantage of the liberty that is otherwise protected 1n favour of the Revenue for initiation of fresh proceedings from the disposal ofthese 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 concerned. As a consequence, the Income Tax Department gets an extended period of timp for initiation of fiesh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanakala Ruvindra Reddy (1 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 surge in litigation with over 600-700 petitions piling up on the same issue. This deliberate approach not only undermines the principle of judicial precedent but also strains the judicial resources unnecessarily. The Department's strategy of awaiting the Supreme Court's decision on pending SLPs while continuing to initiate fresh proceedings appears to be a calculated move to buy time and circumvent limitation pfiriods, rather than adhering to the established legal 10 [. ! position. Such conduct raises serious questions aboul. 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 lnterests

13. Another aspect which needs to be considered is that in {act it should have been realized by the Income Tax Deparlment itself and should have found out via media in ensuring that proceedings under Sections 148-A and 148 should not have been issued in a faceless manner, at lcast till the Hon'ble Supreme (lotrrt decide the twelve hundred (1200) odd SLPs which it is already seized ofor, at least the Income Tax Deparlment should have found 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, the Income Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all Jl 77 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 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, in spite of the rnatter bclore the Hon'blc 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 majority 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 148-4 and

1.2 I' 148 through the jurisdictional Assessing Officer u,hcreas it rtught to have been only in the faceless lnanner.

14. hr the case of BANK OF INDIA vs. ,\SSISTANT COMMISSIONER, INCOME TAXIT, on an issr.rc u.hether it was justifiable on the part of the Income Tax Deparlment in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division Ilench ol the High Court of Bornbay held at paragraph No.25 as uncler, viz., : .25. Mr. Paridwalla has righfly drawn out atter tion to the decision of this Court in Gommissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co_ ordinate Bench of this Court in Samp Furniture (p) Ltd. v. lTOr3 of which one of us (Justice G.S. Kulkarni) was a memb,er, wherein the Court categorically observed that the Revenue having not "accepted" the judgment of the High Court would not nrean that till the same is set aside in a manner known to law, it woutd loose its binding force. Referring to the decision of the Suprerne 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 critici;:ed by the Supreme Court- ln such decision, following are fl- e relevant observations made by the Supreme Court. I 70 taxmann.com 422 (Bombay)J t,t_l(2025) '" fl9781 ll3 ITR 589 lBombay) " 120241 165 taxrnann.com 58 1/300 Taxman 452 (Bombay) " 1t99z1taxmann.com l6155 ELT 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 correetness 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 lo 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 the Assistanl 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 aulhorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. lf this healthy \ 74 rule is not followed, the result will only be undue harassment to assesses and chaos in administration of tax laws.

12. We have dealt with this aspect at some tength, because it has been suggested by the l,larned Additional Solicitor General that the obsen/ations made by the High Court, have been harsh on the officers. lt is clear that the observations of thr: High Court, seemingly vehement, and appilrelfly unpalatable to the Revenue, are only intended t: curb a tendency in revenue matters which, if allowed to become widespread, could result in consid3rable harassment to the assesses-public without any irenefit to the Revenue. We would like to say that the department should take these observations in lhe proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them."

15. What is wonying this Bench more is thc fact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been laid to resr by a large number of High courts all of whom have taken a ccnsiste nt stand that the action of the Income Tax Department being violative of the 15 Finance Act., 2020 and Finance Act,2021 . Now, in order to protect the interest of the Revenue as also that of the assessee, it would be trite at this juncture, if we dispose of the writ petition with an 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 (l supra) shalt 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'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 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 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 75 36,37 and 38 of the order which, for ready referenc:c, is reprorluced hereunder:

36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent- Depa.lment is neither tenable, nor suita nable The notices so issued and lhe 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 thr: notices issued under Section 147 and 148 would erlso 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 sustarned and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are getting quashed on the l)oint of jurisdiction, we are not inclined to proceed furlher and decide the other issues raised by the petitioner which stands reserved to be raised and contended i1 an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one{ime r-teasure exercising the powers under Article 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, t-e 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 ofAshish Agarwal, supra.

18. We would only further 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 prefened 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 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 I 9. Accordingly, the instant writ petition stands allowed 1n favour of the assessee so far as the issue of jurisdiction ls concerned. As a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed. I 18 The consequential orders, if any, also stand set aside/quashed in similar terms as have been passed by this High Courl in the case of Kankanala Ravindra Reddy (1 supra). There shal. be no order as to costs Consequently, miscellaneous petitions pending, if any, shalt stand closed. //TRUE COPY// SD/- T. JAYASREE DEPUTY REGISTRAR (-l': SECTION OFFICER To

1. The lncome Tax Officer, Ward-'1 , D.No.1-8-610,3rd Floor, lVayur Complex, Opp. TSNPDCL Bhawan, Nakkalagutta, Hanamkonda Warangal - 506001.

2. Assessment Unit, Natronal Faceless Assessment Centre, lncome Tax Department, Ministry of Finance, Room No. 4O1 ,2nd Floor, E-Ramp, Jawaharlal Nehru Stadium, Delhi - 110 003.

3. One CC to SRI A.V.RAGHU RAIvl, Advocate IOPUC] 4. One CC to M/s. BOKARO SAPNA REDDY, Jr. SC FOR INCOME TAX loPUcl

5. Two CD Copies PSK GJ o HIGH COURT DATED:2810412025 ORDER WP.No.36842 of 2024 I d .-,:i,5Xi\, BB SIPM :r* DF i:l ALLOWING THE WRIT PETITION WITHOUT COSTS ,{