The High Court · 2025

Counsel for the Petitioner: SRI' THANNERU CHAITANYA KUMAR Counsel for the Respondent Nos' 1to4: Ms' J' SUNITHA Counsel for the Respondent No'S: SRI GADI PRAVEEN KUMAR' (JUNIOR SC FOR lNcoME TAX) DY. SOLICITOR GENERAL OF INDIA The Court made the following: ORDER ?) THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOI]RABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITION No .31428 of 2024 ORDER, (per Hon'ble Sri Justice P.Sam Koshy) Heard Mr. T.Chaitanya Kumar, learned counsel for the petitioner and Ms.J.Sunitha, learned 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 14gA and 148 of the Income Tax Act, 1961 (for short ,the Act,) or the assessment orders those have been passed under Section 147 of the Act which have been assailed.

3. This writ petition is being taken up today only on one of the grounds, that the notices issued under Section 148A of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Oflicer, whereas in terrns of the amendment that was brought to the Income Tax Act by way of Finance Act, 2021 w.e.f., 01 .04.2021 onrfrffs, proceedings I 2 under Section 148,{ of the Act as also under Section 148 of the Act ought to have also been issued and proceeded in a laceless manner

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 of the Act not being issued in a f'aceless manner, have already been dealt rvith and decided by this Courl in the case ol KANKANALA RAVINDRA REDDY vs. TNCOME-TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions were aliowed and the proceedings initiated under Section 148A as also under Scction 148 of the Act were held to be bad with consequential reliefs or.r the ground of it being in violation of the provisions of Section l5lA of the Act read u,ith Notification 1812022 dated29.03.2022. The said judgment passed by this Couft has also been subsequently followed in a large number of writ petitions which were allowed on similar '[(2023) 156 taxmann.com 178 (Telangana)] 'J ..,

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 IIEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERSz, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIAT, punjab and Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the case of SRI VENKATARAMANA REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of intemational taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICER, INTERNATIONAL 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 'Tzoz+1464 ITR 430 (Bom) '- l(2024) 156 taxmann.com 478 (Gauhari)l " [(2024) 165 taxmann.com 115 (Punjab & Haryana)] ' [2024) 167 taxmann.com 4l 1 (Telangana)] " [2024) 166 taxmann.com 679 (Bombay)] ' 12024) 165 taxmann.com 1 13 (Himachal Pradesh)l 4 DAHYABHAI RADADIYA vs. INCOME TAX OFFTCER, WARD 3(3Xr8, Jharkand High Court in the case of SHYAM STINDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vS. TNCOME TAX OFFICER & ANOTHER and batch of writ petitionsro which stood decided on 19.03.2024. Similar views have also been taken by the Dir.ision 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. Even though the same issue having been 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 w,rit petitions. That upon the instructions being sought from the Department, they have been taking a solitary ground that the decision o1' the Bombay High Courl in the case of Hexawtre Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy SCC online Guj 4012 '2025 SCC Online Jhar287 to y2023, RJ -.ID:4984-DBl 1 5 (1 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'bre 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 Courrs.

7. To a query being put to the learned counsel fbr 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. Meanwl.rile, 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 lncome Tax Department to take appropriate steps to cither hold back issuance of notice under Section l4gA and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions ',-,. ;. {::rjLtEE:l- -di> ri- , 6 by all the major High Courts in India are continuousiy still 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 Acr,2020 as also the Finance Act 2021.

9. Upon a query being put as to why can't this writ petition be disposed of in the teeth of thc decision rendered by this Court in the case of Kanukala Ravindra Reddy (l supra), leamed Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Department where they would be required to file equal number of SLps before the Hon'ble Supreme Court and it would be furlher 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 ofthe 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 fact that the petitioner is already enjoying the benefit of interim protection. Nonetheless, on the eariier query of this Couft as to why the Income Tax Department have not come out with a rnechanism to issue appropriate instructions or to take ,t 7 appropriate steps in ensuring that proceedings under Section l4gA of the Act as also the assessment orders under Section 14g 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 ievel ofCBDT as any such steps would have to be taken pan India and cannot be Iimited 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 Income Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section 151.A of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up belore this High Couft 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 Kanakala Ravindra Reddy (1 supra),.the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners I 8 insofar as the Iiberty which was granted to the Revenue for initiating fresh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Finance Act, 2020 and the Finance Act, 2021. 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 ir-r availing the said liberly that was reserued 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.

11. It appears that because ofthe aforesaid tiberty that this High Court had granted permitting the Revenuc for initiating fr.esh proceedings as a one-time measure in a faceless manner, the Income Tax Department wants to take advantage of the same by protracting these proceedings which would enable them to meet the limitation that would otherwise come in the way. Likewise, 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 Couft 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 a 9 Department would get the advantage of the liberty that is otherwise protected in 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 concemed. As a consequence, the Income 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 set in Kanakakr Rovindra 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 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 position. Such conduct raises serious questions about the administrative efhciency and the respect for judicial pronouncements, parlicularly when this Court has already providcd a balanced approach by preserving both the Revenue,s rights and assesses interests.

13. Another aspect which needs to be considered is that in fact it should have been realized by the lncome Tax Depaftn.rent itself and should have found out via media in ensuring that proceedings under Sections 148-4 and 148 should not have been issued in a faceless manner, at least till the Hon,ble Supreme Courl decide the twelve hundred (1200) odd SLps which it is already seized ofor, at least the Income Tax Deparlment should have found out sorre remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections l4g-A and 14g, 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 11 has to be taken, has to be taken for the whoie of India, and which otherwise has to be by way of a policy decision and that too at the Ievel of Central Board of Direct Taxes. Though the leamed Standing Counsel for the Income Tax Department contended that the Dethi High Court dismissed a writ petition of similar nature, on the one hand when the High Courl 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 Courl 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 thc Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Suprerne 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 \ r :::-.a:-:r. , :ata,taatt t.. i:rtttt tttltl: L2 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 vs. ASSISTANT COMMISSIONER, INCOME TAXII, on an issue whether it was justifiable on the part of the Income Tax Department in not fotlowing an order passed by the adjudicating authority only on the ground that the appeals are pending, the I)ivision Bench of the High Court of Bombay held at paragraph No.25 as under, viz., : "25. Mr. Paridwalla has righfly drawn out attention to the decision of this Court in Commissioner 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. lTO13 of which one of us (Justice G.S. Kulkarni) 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.1!, 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. I i ttzOzs I I 70 raxmann.com 422 (Bombay) '' [19781 I l3 ITR 589 (Bombay.1 '.'.7202+1165 taxmann.com 581/300 Taxman 452 (Bombay) 'a Ttg}2ltaxmann.com 16155 ELT433 (SC) | I I I l i i L3 "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 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, righ y critrcized this conduct of the Assistant Collectors and the harassment lo the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. It cannot be too vehemenfly emphasized that it is of utmost importance that, in disposing of the quasi.iudicial 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,, 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 -:'::-t'. L4 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, seemingly vehement, and apparenfly unpalatable to the Revenue, are only intended to curb a tendency in revenue 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 should be paid by the a judicating 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 i.re:.:&-r*:;y-.t;:H-€ii-i1.r1l.r:rt,,:[.]*tr:i,11y1*a1,:c.]itffi w._i*itrr6,: I 5 ' what is wolTying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate furlher litigation 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 %Aie=ft 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) shatl 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 fortihed 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 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 't-6 36,37 and 38 of the order which, for ready reference, is reproduced hereunder: ,"..:#I;EE4*F:}?8..i{,.:. C; For-all-the.aforesaid rsasons; the: impugned: notices:r . ... " ':iizi:._-. <'_tintr.i =_;3..6:-" issued and the proceedings drawn by the respondent_ Department is neither tenabje, 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 149 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 writ petitions stands allowed on this very .lurisdictional issue. Since the impugned notices and orders are gefting quashed on the point of jurisdiction, we are not inclined to proceed further and decide the other issues raised by the pelitioner 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 Agarwal, supra, as a one{ime measure 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, the right , l 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 further like to make observations that since we are inclined to dispose of the instant writ petiiion, 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 belore 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 of this High Court in the case of Kanakula Ravintlra Reddy (l supra). This, in other words, would mean that either of the paties, 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. , t 18 The consequential orders, if any, also stand set aside/quashed in similal terms as have been passed by this High Courl in the case of Konkanala Ravindro Reddy (l supra). There shall be no order as to costs Consequently, miscellaneous petitions pending, if any, shall stand closed To, //TRUE COPY// SD/-B.G. VYJAYANTHI ASSISTANT REGISTRAR secrr#trrrcen I I I Ylllr^tty of Finance, Government of lndia, Secretariat 110001. 1 . The lncome Tax Officer, _ Ward 1 , Sangareddy lncome Tax Office, Veerabhadra Nagar, New Bus Stand, Veeiabhadra ttagar, SangaredAy, Telangana. 2 The Principal_Chief Commissioner of lncome Tax - Telangana and A.p., Hyderabad, lT Towers, AC Guards, Masab Tank, HVaeiaOaO_-S-OO(jZA, Telangana. 3. The Chairman, Central Board of Direct Taxes, Department of Revenue, 'Buildings, ttew Oetfri-_ 4. The National Faceless Assessment Center, lncome Tax Department, New 5. The Union oJ_lndra, Represented by its Secretary to the Government, ^ Depadment of Revenue, Ministry of Finbnce, New Delhi - 110 OO1. 6 One CC to SRl. THANNERU CHA|TANYA KUMAR, Advocate tOpUCl T One CC to rvs J SUNtTftA (JUN|OR SC FOR INCOME fnXl iOpUCi 8- One CC to SRI, GADI PRAVEEN KUIMAR, DY SoLICITo( beruerinr or rNDtA IOPUC] 9 Two CD Copies Delhi. BM BS HIGH COURT DATED:01 10512025 ORDER WP.No.31428 oI 2024 .,, E l^S $2 AUE 20u5 :) .i ,,i ,-./ ' :'':. +^ ..r.'.i."'. ;,.' I .\ ALLOWING THE WRIT PETITION WITHOUT COSTS \\ €