Kakkirala Ramesh vs. The Assistant Commissioner of Income Tax

Perused record

This is a writ paition where the proceedings are either challenged to the notic€s whiqh were issued under Section l48A and 148 of the [ncome Tax Apt, 1961 (for short 'the Act') or the assessment orders those have been passed under Section 147 of the Act which have been assat

This writ petition is beirig taken up today onty on one of the grounds, that the notices issued under Section l48A of th€ Act and the subsequent initiation of proceedings under Section [48 of the Act by the junsdictional Ilr.ssessing Offi0Er;-rvhereas in terms of the amendment that was brc ught to the Income Tax Act bY waY

The contention of the petitioner is that the issue of proce€dings being in violation of the Financr: Act, 2021 i.e., the impugned notices under Section l48A and Se,:ti,cn l4g of the Act not being issued in a faceless manner, have alnz<iy been dealt with and decided by this Court in r,he case ,rf KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.09.2023 whereby a barch of writ petitions rvere allowed and the proceedings initiated under Section l48A 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 I 5 lA of the Act rcad with Noti fi catio n lB/2022 dated 29.0i,.2022. The said judgmcnt passed by rhis Court has also been subse<luently followed in a largc number of writ petitions which were :rll,rwed on similar terms. '[(2023) I-5(, (axrnann com 178 (Telangana)]

Even though rhe same issue having been tlecided by a large number of High Courts, wc are still confrontecl u,ith large filing of identical matters on daily basis ranging between 5 to I 0 writ petitions. That upon the insrructions being sought liom the Department, they have been taking a solitary ground rhat the decision of the Bombay Ii igh Court in the r:ase of Hexawore Technologies Ltd., (2 supra) as also the on<: ,,vhich has been decided by this Court in the case of Kanakala Ravin&a ftslly 8202+ SCC Online Cuj 40 t 2 '2025 SCC Online Jhar 2g7 t o 12023 : RJ - ! L-l :a984_t)B I \t (

To a query being put to the leamed counsel for the Revenue, they have categorically accegted the fact that there is no iriterim order granted by the Hon'ble Supreme Court in any of these matters pending belore it. identical flature are being pil Meanwhile, fresh writ Petitions of up before this Bench on dailY basis and the pendency is getting ihcreased on matter which otherwise has already been dealt and deqided by this very High Court itself.

On the one hand, even though the order of this Court that was passed as early as on [4 .09.2023 and more 16 months have lapsed, till date, we do not find any remedial steps having been taken by the lncome Tax Delartment to take appropriate steps to either hold back issuance of Section 148 of the Act by otice under Section l4EA and under e jurisdictional Assessing Offrcer, rather the authorities concemgd in the teeth of series of decisions \

As a result of which, wfrat we are facing is steep increase of litigation day in and day out though various orders have been passed by this High Court all wing writ petitions on tle very same issue. The Income Tax autho ties concemed are still even now ln 2025 also initiating proceedings in contravention to the provisions of Section 15lA of the Act and as a result by now, more than 600 to 700 petitions have been alieady got piled up before this High Court on an issue which otherfwise stands squarely covered by the judgment of this Court in the'case of Kanakala Ravindra Reddy ( I supra). What is also su rising is the fact that though while allowing the writ petitions the case of Kanakala Ravindra Reddy (l supra), the Divisi onl Bench while reserving the right of the Revenue, has also protected the interest of the petitioners

The alarming trend of d cket explosion in this Court, despite the clear precedent set in.l(az kala Ravindra ReddY (l suPra), is a matter of grave concem. The fncome Tax Department's persistent initiation of fresh proceedings, disregarding the established judicial pronouncements, has led to with over 600-700 Petitions deliberate aPProach not onlY unprecedented surge in litigation piting up on the same issue' This undermines the principle of judicial precedent but also strains the ludicial resources unnecessarily' The Department's strategy of awaiting the Supreme Court's decision on pending SLPs while conti4uing to initiate fresh proceedings appears to be a calculated move to buY time and circumvent limitation penods, rather t n adhering to the established tegat

Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax l)epartment itselfand shou.ld have found out via media in ensuring that proceedings under Sections I48-A and. l4g should not have been issued in a faceless manner, at least till the Hon,ble Supre.mr, Court decide the twelve hundred (1200) odd SLps which it is alr,:ady seized of or, ar least the Income Tax Department should have lound out some remedial steps to ensure that wherever the arrthorities intend to initiate proceedings under Sections l4g_A and l4[i, other than in a faceless manner, the proceedings should havo been deferred without precipitating the matter further intimating lhc assessee that they shall initiate appropriate proceedings only aftt:r the SLp,s are decided by the Hon'ble Supreme Court on the vcry sanre issue_ This again, the Income Tax Department, has not been ablc ro give a convincing reply, except for the fact that such a dt:cisron rf. at all Y

In the case of BANK OF INDL{ vs ASSISTANT COMMISSIONE& INCOME TAXrr, on arr issue wherher it was lustifiable on the paft of the Income Tax l)epartment in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Di,risrion Bench of the High Court of Bombay held at paragraph No.2j; as under, viz., :

Godavaridevi Sarafr2 as also the recent decision of the co- ordinate Bench,of this Court in Samp Furniture (p,r Ltd. v. tTO,j of lvhich one of us (Justice G.S. Kulkami) was a nlernber, wherein the Court cztegorically observed thal the Revenue having not "accepted' the iudgment of the High Court would rrol mean that tifl the same is set aside in a manner known to law, it would loose rls binding force. Referring to the decision of the Supr?me Court in lrealing Cecisions being "not acceptable" was critioized by the Supreme Court. ln such decision, following are lhe relevant observations made by the Supreme Court. I I ltlo"r":,, lt*:T1T:"o. 422 (Bombay)l ' tte78l il3 rTR 589(Bombay) t,',1202I1I65 taxnrann.com 5g I/300 .faxman 452 (Bomt,ay) '' 1 t9921 raxnunn.com I 6/55 ELT 433 (sc) ,\ .,.

Reddy le perhl onioe.rs were not aJ passing the inrpugnl genuinely felt that the i 13 Eps rlght in ssying that lhe u6t€d by 6ny mela fid€s in >d orders. They perhaps ,aim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. 8ut what Sri Reddy overlooks is that we are not concemed hpre with the correctness or the Tribunal. The High Court has, in our view, nghtly criticized this conduct df the Assistant Collectors and otherwise of their c( malafkjes but with the fi in their conclusbn, by-t regard to the same iss them, one of the Collec lnclusion or of any factual [ct that the ofiicers, in reaching [asseO two appellate orders in ltre which were placed before Itor (Appeals) aM the other of te Collector is binding on the fting within his iurisdiction and I i. oinoi* upon the Assistant [ll"r. Coll""to.. who func{ion In" trlor*t. The principles of rities. The mere fact that the uthority is not "acceptable' to )lf an objectionable phrase - r of an appeal can furnish no the harassment tro the I of these offrcers o I authorities hbher to thel cannot be roo uenem! utmost impo(ance ( ssessee caused by the failure live effect to the orders of n in the appellate hierarchy. lt ntly emphasized that it is of hat, in disposing of the quasi.iudicial issues before them, revenue oficers are bound by the decisbn$ of the appellate authorities. The order of the Appell Assistant Collectors wor the order of the Tribuna Collectors and the Appr under the iurisdiction of 1 by the subordinate auth,i order of the aOOefrate a] the department - in it1 and is the subiect mattd judicial discipline require that the orders of the hrgher appellate authorities sheuld @ followed unresenredly ground for not following it unbss its operalion has been suspended by a competent court. lf this healthy

What is worq,ing this llench more is the lact that an endeavour is being made whole heartedly to ensurr: not to geoerate further litigation on issues which have been laicl trt rest by a large number of l{igh Courts all of whom have taken a consistent stand that the actron of the [ncome Tax D€partment beinp; violative of the Finance Act, 2020 and Financr the interest of the Revenue as trite at this juncture, if we < observation /direction that the terms of the judgment renderr Kankanala Ravindra Reddy ( the outcome of the SLPs wt Department and which is pend Supreme Court. 16. [n the given facts and considered opinion that unless of matters which are squarely and which stands fortified by High Courts on the very sam Court would further be burder and disposed ofas a covered m

So far as the interest of the considered opinion that th€ been considered and protected, 15 ! Act, 2021. Now, in order to protect also that of the assessee, it would be fispose of the wdt p€tition with an [isposat of the instant writ petition in [d by this High Court in the case of I supra) shall however be subject to fich were filed by the Income Tax ing consideration before the Hon'ble fircumstarrces, this Bench is of the I and until we do not timely dispose fovered by the decision of this Court I the decisions of the various other e lssue, the pendency of this l{igh [ed which otherwise can be decided latter. [he Revenue is concerned, we are o[ finterest of the Revenue has already I as has been observed in paragraphs

For all the aforesairl reasons, the impurSned notices issued and tlle proeeedings drawn by the respoMent- Department is neither tenabb, nor sustainable, The nolices so issued-and-lhe procedure acopted being per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all tho impugned orders getting quashed, the consequential orders passed by the respondent-Departrnent pursuant to the notices issued under Section 1-47 and 1.4A would also get quashed and itr is ordered accordihgly. The reason we are quashing the consequential order is on the principles that when the initiation of the proceedirgs itself was procedurally w-ong, lhe subsequent ordr:rs 3;5e gslt nullified automatically. 37. fhe pretiminary objection raised.by the petitioner is sustained and all these wi-it petitions slands allowed on this very jurisdictional issue. Since the imprgned notic€s and orders are gefting quashed on lhe point of jurisdiction, we are not inclined to proceed further and decide the other issues raised by the petitioner which slands reserved to be raised and contenced in an appropriate proceedings.

Since the Hon'ble Supreme Cou( ha(|, in the case of Ashish Agarwal, supra, as a one{ime measure exercrsing the powers under A(icle 1.12 of the Constitution of lndia, permifted the Revenue to proceed under the subslituted provisions, and this Courl allowing the petitions onty on lhe procedural flavy, the right - t ,,

We would only furth€r I we are inclined to dispose of the the fact that the earlier order o Kanakala Ravindra ReddY (l before the Hon'ble SuPreme preferred by the Irrcome Tax allowing of the instant writ Peti aloresaid SLP preFerred bY the High Court in the case ol Kan This, in other words, would mea so want. may move an approprl writ petition in the light of the Court in the pending SLP on the 19. AccordinglY, the instant iavour of the assessee so concemed. As a consequen challenge under Sections 148-A 1 would remain reser\red to want frorn ttE stage of tt|e in tte case of Ashish to make observations that since stant writ petition, conscious of this High Court in the case of pra) is subjected to challenge ourt in SLP No.3574 of 2O24' partment, we make it clear that ion is subject to outcome of the venue against the decision of this la Ravindra ReddY (l suPra} that either of the Parties, i[ theY te petition seeking revival of this ecision of the I-Ion'ble SuPreme ery same tssue. writ petition stands allowed in as the issue of jurisdiction ( IS the impugned notice under and 148 stands set aside/quashed- j I i I I (