Kingshuk Nag vs. Income Tax Officer

This is a writ petition where the proceedings are either chalienged to the notices which were issued under Section 148,{ and 148 olthe lncome Tax Act. 1961 (lor short 'the Act')or the assessment orders those have been passed under Section 147 of 3. This writ petition is being taken up today only on one of the grounds, that the notices issued under Section l48A of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Officer, whereas in terms of the amendment that was brought to the Income Tax Act by way of Finance Act, 2O2l w.e.f., 01.04.2021 onwards, proceedings \ the Act which have been assailed.

The contention of the petitioner ts that the issue ol proceedings being in violation of the Finance Act. 2021 i.e.. the impugned notices under Section 148,{ and Section 148 of the Act not being issued in a faceless manner, have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT dccided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section 148A as als<l under Section 148 otthe Act were held to be bad with consequential reiiefs on the ground of it being in violation of the provisions of Section l5lA of the Act read with Notification 1812022 dated 29.03.1022. 'fhe said judgment passed by this Court has also been subsequcntly tbllowed in a large number of writ petitions which were allor.r'ed on similar tc rnts ' l(2023) I 56 taxrnann.com 178 (Telangana)l

Down the line, we find that the same issue lras also been Cecicled against the R.r'\/enue hv various I Iieh Coufts i.e., by the Bombay High C-'ourt in the case ol HIIXAWARE OF INCOME TAX & OTHERS2, Gauhati High Courl in the case vs. UNION OF INDlAl, and'I'elangana High Court in the case ol ABHIN ANILKUMAR SHAH vs. INCON'IE TAX OFFICER, INTERNATIONAL TAXATION('which is again on international taxation and central circle, Lligh Court ol- I{irnachal Pradesh in the 'lzoz+1464 rrR 430 (uonr) '[(2024) 156 taxmann.corn 478 (Gauhati)l ^ [(2024) 165 taxmann.coru I I 5 (Pun jab & I laryana)l '12024) 167 taxmann.com :l I I (Tclangana)l "12024) 166 taxmann.com 679 (Bombay)l '12024) 165 taxmann.com l l3 (Hinrachal l'radesh) |

On the one hand, even though the order of this Courl that was passed as early as on 14.09.2023 and more 16 months have lapsed, till date, we do not find any rer.nedial steps having becn taken by the Income 'l ax Departrnent to take appropliate stcps to eitl-rer hold back issuance of notice under Scction l48A and under Section 148 of the Act by the .iurisdictional Asscssing Officer, rather the authorities concemed in the teeth of series of decisions In addition, there are about 1200 SLPs also liled arising out of the 6 by all the major High Courts in India are conllnuously still r:.-... .-.-.1^- C^^i:^- l4O ^C +1,^ 4^r :lnd flSC lllltl.l(lllE, PlLrLiiLlillg5 LiiiUUi JULLiUii l-iO/i ()i ii;U initiating proceedings under Section 148 of the Act in corrtlavention to the amendments brought into the Income 'lax Act pursuant to the L-inance Act, 2020 as also the Finance {.ct 2021. 9. Upon a query being put as to why can't this ulit petition be disposed ol-in tlre teeth of the decision rendered bl this Court in the case of Konaknlt Rovindru Reddy (l supra), Iearned Standing Counsel lor the Income Tax Department contends that those rvould unnecessarilv burden the Income Tax Department where they would be required to file equal number of SLPs betbre thc l lon'ble Supreme Court and it would be fulther burdcuing the exchequer of the lJnion of tndia. It was also the contention of the Icamed Standing Counsel that no prejudice would be caused to tl.rc interest olthe petitioners in case if this writ petition is kept pending Suprerne Court and the fact that the petitioner is already enjoying thc benellt o I interin-r protection. Nonetheless, on the earlier qucry ol- this Court as to why the Income Tax Depadrnent have not come out w'ith a mechanism to issue appropriate instructions or to take till the tlnalization of the SLPs pending before the Hon'ble

As a result of which, what we a|c facir-rg is stccp increase o1' litigation day in and day out even though various orders have been passed by this High Court allowing writ petitions on the very sarne issue. The Income Tax authorities concerned are stil[ even now in 2025 also initiating proceedings in contlalention to thc provisions of Section l5lA of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up befbre this lJigh Coufi on an issue which otherwise stands squarely covered by thc jr-rdgnrer.rt of this Court in the case of Kanokalu Rat,indro Redd!, (I supra). What is also surprising is the t-act that though while allowing tlre writ petitior-rs in the case ol- Kunakala Ravindru Reddy (l supra), the Division Bench while reserving the right ol the Revenue, has also E9-te_cted the interest of the petitioners

Another aspect which needs to be considered is that in fact it should havc been realized by the Incorne I'ax Deparlnrent itself and should havt: fbund out via media in ensuring that proceedirrgs under Sections 148-A and 148 should not have been issued in a faceless rnanner, at least till the Hon'ble Supreme Cor-rrt decide the trvelve hundred ( 1200) odd SLPs which it is already seized ofor. at least the Incorne lax Department should have tbund out some remedial steps to ensure that wherever the authorities intend to initiate procccdings under Sections 148-A and [4t], other than in a faceless manner, the proceedings should have been deferred witl-rout precipitating the rnatter further intimating the assessee that they shall initiate appropriate proceedings only after the SLP's are decided by the Hon'ble Supreme Couft on the vera 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 r.--:.-:....^.. .r1:.;^-^.. ^...t rL^ r^.. :,,,1:^:^l ilullllllt5ll.lLr!r !lrlLle lrL) .lllu lrlr, lusP(-L( l\rl Jlrur!1..1

In thc casc o1' BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAXrr. on an issue r.vhether it was -justifiabte on the part of the Income Tax Department in not fbllorvirrg an order passed by thc adjudicating authority only on the ground that the appeals are pending, the Division Bench of the Iligh Oourt ol'Bornbay held a1 paragraph No.25 as under, viz., : "25 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 treating decisions being "not acceptable" was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. \ " l(ZOZS) I 7() raxmann.corn 422 (Bornbay)] 12 1toz81 I l3 t fR 589 (Bombay) " 11.02+1 165 taxmann.corn 5ll l/300 'faxnran 452 (Bombav) I4 1t9e21 taxnrann.com l6155 Iil-T431 (SC)

Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing tire irrpLrgnci oideis. ihey 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 correctftess 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 Courl has, in our view, rightly criticized thrs conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to lhe 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 quasi.,udicial 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 ils operation has been suspencied by a competent court. lf this healthy \

We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that lhe 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 apparently 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-pubtic 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 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 then1." I5. What is worrying this Bench rnore is thc fact that an endeavollr i:; being made whole heartcdly to ensurc not to generate firrther litigation on issues which have bcen laid to rest by a large number of LIigh Courts all of, rvhom have taken a cor]sistent stand that the acti('n ol'the Income'fax Departrnent bcing violative of the 15 Finance Act,2020 and Finance Act, 202.l . Now, in order to protect tlra intnrnet ^f rho 12o.'^-',.'." rl.^ rh.r ^lr[.^ ir .',^',1.1 k^ tlite at this j uncture, if we dispose ol the writ petition with an obsen,ation/direction that thc disposal of the instant writ petition in tenns ol the judgrnent rendcred by this lJigh Court in the case of Kankunala Ravindra Redd.y (l supra) shall however be subject to the oulcome of thc SLPs which were filed by the lncorne Tax Depaftment and which is pending consideration before the Hon'ble Supreme Court.

In the given lacts and circumstances, this Bench is ol the considered opinion that unlcss and until we do not timely dispose oimatters which ale squarely covered by the decision of this Court and which stands fbrtifled by the decisions of the various other High Couts on the very sar.ne issue, the pendency of this High Coult would lurther be br-rrdened whicl-r otherwise can be decided and disposed ofas a covered matter. 17 . So fhr as the inte'rest of the Revenlre is concerned, we are of the considered opinion that the interest of the Revenue has already been considered arrd protectcd, as has been observed in paragraphs

Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one-time n'reasure 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

We would only lurthcr likc to rnake observations that since we are inclined to dispose of the instant writ petition, conscious of the fact that the earlier order o1' this lJigh Court in the case of Ktnakala Ravindru Reddy (1 supra) is subjected to challenge befbre the Hon'ble Supreme Courl in SLP No.3574 of 2024, pref'erred by thc Income -fax Departrncnt, we make it clear that allowing of the instant rvrit petition is subject to outcome ol the aforesaid SI-P prefer:red by the Reverrue against the decision of this High Court in tlte case of Kunakalu Ravindra Redd.y (l supra) This, in other words, would nrean tltat cither o1'the parties, il they so want, may move an appropriate petition seeking revival of this writ petition in the light o1' the decision of the Hon'ble Supreme Court in the pending SLP on tl-re very same issue.

Accordingly, the instar.rt writ petition stands allowed in favour of the assessee so fbr as the issue of jurisdiction 1S concemed. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed.

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