Sri Veerender Reddy Kura vs. The Income Tax Officer

In these notices r'vhich Section 14BA of the tnlo-. Tax Act, 196 1 (hereinafter referred to as' "the Act")' or to the assessment orders which have been passed under Section 147 of the Act'

Learned counsel for the parties' during the course of hearing, fairly submit that the issue involved in these writ petitions was considered by a Division Bench of this Court in W.P.No.2 6304 of 2024' uide order dated 28'04'2025' and the said order squarelY covers the Present wrlt petitions as well

The relevant extract of the order d'ated 2B'O4 '2025 assed in W.P.No.263O 4 of 2024 reads as under: lp , \

What is worrying this Bench more is the fact.i that an endeavour is being made whole heartedly to ensLrre not to generate lurther litigation on issues I which have been laid to rest by a High Courts all of whom have ta large nbtite. or ker1,:5,6onsistent stand that the actlon of the [ncome .I.ax Department being violative of Finarrce Act, 2O2l the Finance Act, Nolr., in order to 2O2O and protect the interest of the Revenue as also that of the assessee, it would be trite at this juncture, if we dispose of the vvrit petition with an observation/direction that the disposal of the instant u,rit petition in terms of the judgment rendered by this High Court in the case of Kankanalq. Rauindra Reddg a. Income_ Tqx OfJicer 12023) 156 taxmann.com ITB (Telangana)] shafl howevcr be subject to the outcome of the SLps u,hich u.ere liled by the [ncome Tax Department and u,hich is pending consideration before the Hon,ble S upreme Court.

In the given facts and circumstances, this Bench is of the considered opinion that unless and until u.e 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 thc vcry same issue, the per-rdency of this High Court u.ould further be burdened q,hich otherwise can be decidecl and disposcd of as a covered matter.

So concerne far as the interest of thc Revenue ls d, we arc of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed tn paragraphs 36. 37 and 38 of the ordcr which' for ready referencc, is rcproduccd hereuuder:

For all the aforesaid reasorrs' the Lornn.a ltoliccs issucd and the o.J."-"ai"*. drawn by the respondent- b"prrt-"n, is ncither tenable nor ".,Ja-""bf.. The notices so issued and the ;;;;i"..' adoprcd being per s9 i.llesal, a"."ru." to bc and are accordingly set aside/quashed. As a consequence' all the tr";;il;J ordcrs gctting quashed' fre .oi".tr"",i"f ordeis Passed bY thc .""po,-,d",-tt- D,'pa rl mcnt pursuant to the ;.J;" issued undcr Section -iii-^.a 148 would also get quashed and it- is ordercd accordingly The reason rve are ;;;;;.* thc consequential order is on the Jri""f pf"t that when thc iniiialion of the nroceedines itself was procedurally wrong' il;'";;",';,,,..1 orders also gets nullified automaticrallY' 3?."' ia,, p-reliminary'' objection raised by the nclitrr)ncr ts sustained and aU these r-ir 'p.ririon. 311nds i[erved on this very t"r*i.li."rl issue since the impugned '.rotl""" and orders are getting quashed on it. poi"t of jurisdiction; we ar9 lot i;;r"'J to procled further ald decide the ;;;;'; i""t.s raised bv the petitioner whicn slands reservcd lo -he ralsed aro contended in an appropriatc proceedin-gs' aA. Since the Hon'ble Supreme Court had, in thc case ofAshish Agarwal ' supra' as a one time measure exercising the rrowers unclcr Article 142 of the E.,.rstlrurion of India. permilted the n"r"rr]-," lo proccecl under the subslituted provisions, Lnd this Court allowing the ietitio.r" only ou the procedural flzrw' the iilr.t .o,-tt".i"d on the Revenue would

We would obse.ations ,r_ru, "r.o"'' further like to make rhe insrant *.,, ;,;;r:;ilH: ;..;::ffiri the earlier order of I Kankanara aorrri. High court in the case of orJi c e r K2 o 2 3), r.,1;.:; o !!*,," -, " r n c.o m e. r qx is subjected to ch " ltctangana)J supreme Court in art"t'*t belore the Hon'ble by the Income Tax Dt No 3574 of 2024' preferred that alowing o, ,h" ,n'ot '^r, , wt: r,akc it crear to outcome of the aJ nt writ petition is subject Revenue against dr. o,ll,".1l SLP. preferred bv the the case of *or,oor=t'"ton of this High court in ,,:".o ^o ro* "fir; ;;;;; "X) :;'I:^,: ::: r r"; (Telangana) j. This, in ot. either of the parties, ,r,ntt *oto"' rvould mean that appropriate petition ""tn"' "o u'a,t' may move an petitr'on in the right or,tu'tt revi'al of this writ supreme court in ,n. 'nt decision of the Hon'ble same issue- Pending SI-P on the very L9 . Accordingly, the i ariowed in favour of ,h. t"t writ petition s[ands ofjurisdiction r, "o.raaaou"""ssee so far as the issue impugned notice underLed' As a consequence, the r4g-A and r4g stands challenge under sections set aside/quashed. The I 1 I l I Ii \ I

In view of the consensus arrived at' these writ petitions are also disposed of in terms of the order dated 2a.O4.2O25 passed in W'P'No'26304 of 2024' However' there shall be no order as to costs' Miscellarreousapplicationspending,ifany,shall stand closed. D/.P. Pcitttla rRtsuua STANT REGISTRAR /,// SEGTION OFFICER To, The Secretary Finance Department' Union of lndia' North Block' New Delhi. The Principal Chief Commissioner of Incometax' Andhra Pradesh and i"irng"ni' strte, HYderabad 1 2 4. ! 5.' 6 The lncome-tax Officer, Ward-2('l)' Hyderabad' il:",,Xini.ilx},3[l"it##d - 10(1)' rr rowers' Ac Guards' E:?"..:roil':?'i"t?i,^ffi"8,,":n, Iito ???'n'ent' Ministry or Finance' lng$Ep;u*:*ti,l1:t1,#ffifu iA;*13tki"A#' hydera-bad. d cit8. 1 @ i ncome

One CC to SRt A.V.RAGHU RAM, Advocate. [OPUC] '10.One CC to SRt y.RATNAKAR, Advocate. [OPUC] i 1. One CC to Ms.J.SUNITHA, SC for Income Tax Department IOPUC] " ,o&r3," to Ms B.sAPNA REDDY, sc for rncome Tax Department. " 33tr33.rti#'rB,*"HA YADAV (sc FoR .ENTRAL Gow 14 Two CD CopieJ $!"1?"Yi1:,3.333,' " the order, dated 2a'04-2025 in w p No 26304 or BSK BS

This is a writ petition where the proceedings are either challenged to the notices which were issued under Section l48A and 148 of the Income Tax Act' 196t (for short 'the Act') or the assessment orders those have been passed under Section 147 of the Act which have been assailed'

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 Officer' whereas in terms of the amendment that was brought to the Income Tax Act by way of Finance Lct, 2021 w'e.f', 0l'04'2021 onwards' proceedings Standing

The contention of the petitioner is that the issue of proceedings being in violation of the Financ e Act, 2021i.e., the impugned notices under Section 14gA and section I4g 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. TNCOME_TAX O}FICERT decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section l4gA as also under Section 148 of the Act were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section l5lA of the Act read with Notificarion lg/2022 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 similar terms. under Section I4gA oft Act ought to have arso t Act as also under Section 148 of the manner. reen issued and proceeded in a faceless '(2023) 156 taxmann com 178 (Telangana)l

Down the line, we hnd that the same issue has also been decided against the Revenue by various High Cour-ts i'e ' oFINCoMETAx&OTHERS2,GauhatiHighCourtinthecase of RAM NARAYAN SAH vs' UNION OF INDIA3' Punjab and respect of international taxation' Bombay High Court in the case of ABHTN ANILKUMAR SHAH vs' INCOME TAX OFFICER' INTERNATIONAL TAXATION6 which is again on intemational taxation and central circle' High Court of Himachal Pradesh in the case of GOVIND SINGH vs' TNCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKTIBHAI ' yzoz+1 464 ITR 430 (Bom) 'i1Ozi) 156 taxmann.com 478 (Gauhati)l ^iizozql165 taxmann.com 115 (Punjab & Haryana)l ' 12024) 167 taxmann.com 41 1 (Telangana)l " 12024) 166 taxmann.com 679 (Bombay)l 'iioiqi 165 ru*-u*."om I13 (Himachal Pradesh)l

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 remedial steps having been taken by the Income 'fax Department to take appropriate steps to either ho'ld back issuance of notice under Section 148,\ and under Section 148 of the Act by the jurisdictional Assessing Officer' rather the authorities concerned in the teeth of series of decisions

The alarming trend of docket explosion in this Court' despite the clear precedent set io Kanakala Ravindra 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 withover600-T00petitionspilinguponthesameissue.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 white 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

Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Department itself and should have found out via media in ensuring that proceedings under Sections 14g_A and l4g should not have been issued in a faceless manner, at least till the Hon,ble Supreme Court decide the twelve hundred (1200) odd SLps which it is arready seized ofor, ar least the Income. Tax Department shourd have tbund out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections l4g_A and l4g, other than in a faceless manner, the proceedings should have been deferred without precipitating the matter further intimating the assessee that they shall initiate appropriare 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 whole of India' and which otherwise has to be by way of a policy decision and that too at the tevel of Central Board of Direct Taxes Though the leamed Standing Counsel for the Income Tax Department contended that the Delhi High Courl dismissed a writ petition of similar nature' on the one hand when the High Cou( 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 disposat 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 matterhasb€enreluctantingrantinganyinterimprotectiontothe Income Tax Depaftment' Yet' the authorities concerned 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 fuither worse, the [ncome Tax Department is showing audacity by issuing notices continuously under Sections 148-A and 12 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner.

In the case of BANK OF INDIA r.s. ASSISTANT COMMISSIONER, INCOME TAXil, on an issue wherher it was justifiable on the part of the Income Tax Department in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division Bench of the High Court of Bombay held at paragraph No.25 as under, viz., : "25 Godavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Cc of wh ch one of us (rr..*':.':.til:rilT]J:j::::1, ;r::; the Court categorically observed that the Revenue having not "accepted,, the judgment of the High Court would not mean that till r^o_r"?t,,, 1r. l.l maru,. com 422 ( B omba y | | '' [978] I I] ITR 589 (Bombay) '' [2024] 165 raxmann.com 5g l/300 Taxman 452 (Bombay) t' ltggZl taxmann.com 16/55 ELT 433 (SC)

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 wo 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 vehemently emphasized that it is of utmost importance that, in disposing o{ the quasi.ludicial 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 ilpon the Assistant Cdllectors 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 authoritles 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 sub.iect 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

What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate further 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 by the 15 Finance Act,202}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 observatiorVdirection 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) shall however be subject to the outcome of the SLPs which were hled by the Income Tax Department and which is pending consideration before the Hon'b1e Supreme Court.

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 fortifled 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'

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

For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent_ Departmenl is neither tenable, 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 1 47 and .l4g would also get quashed and it is erdered accordingly. The reason we are quashing the consequential order is on the principles that when the iniliation of the proceedings itsetf was procedurally wrong, the subsequent orders also gets nullified automatically.

The pretiminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are getting quashed on the point of jurisdiction. we are not inclined to proceed further and decide the other issues raised by the petitioner which stands reserved to be raised and contended in an appropriate proceedings.

Since ttre Hon'ble Supreme Court had, in the case of Ashish Aganval, 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

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 Kanakalu Ravindra Reddy (1 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 atlowing of the instaot 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 Kanakala Ravindra Reddy (1 supta)' This,inotherwords,wouldmeanthateitheroftheparties'ifthey 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'

Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction t7 1S concemed. As a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed