PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LIMITED TEKMAL vs. The Income Tax Officer

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, 1961 (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 1484 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, 2021 w.e.L, 01.04.2021 onwards, proceedings ::,t&:iarr*&1::. 1

The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act,2O2l ie, the impugned notices under Section 148A 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 casc ol KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.09.2023 whereby a batch ol'writ petitions were allowed and the proceedings initiated under Section 148A as also under Section 148 olthe Act were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section l51A of the Act read with Notification l8l2o22 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 telms '[(2023) 156 taxmann.com 178 (Telangana)] OF INCOME TAX & OTHERS2, Gauhati High Court in the case vs. UNION OF INDIA4, and Telangana I{igh Court in the case of '7zoz+1464 rrR 430 (Bom) '[(2024) 156 taxmann.com 478 (Gauhati)] ^ [(2024) 165 taxmann.com I l5 (Punjab & Haryana)] '12024) 167 taxmann.com 41i (Telangana)l "[2024) 166 taxmann.com 679 (Bombay)] '12024) 165 taxmann.com I 13 (Himachal Pradesh)l 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 tl.re 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 deoided by a large number of High Courts, we are sti1l confronted 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 He:caware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kmakala Ravindra Reddlt 8z0zq SCC online Guj 4012 '2025 SCC Online Jhar287 'o 12023, RJ-JD :4984-DBl I

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, fiesh 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.

On the one hand, even though the order of this Cout that was passed as early as on 14.09.2023 and more I 6 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 148A and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions ;1

Upon a query being put as to why can't this writ perition be disposed of in the teeth of the decision rendered by this Court in tlre case of Kanakalo Rsvindra Reddy (l supra), learr-rcd 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 belore the Hon'ble Suprerne Couft and it would be furlher burdening tl.re 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 petitioners in case if this writ petition is kept pending till the finalization of the SLPs pending before the Ilon'ble Supreme Court and the fact that the petitioner is already enjoying the benefit of interim protection. Nonetheless, on the earlier query of this Courl as to why the Income Tax Department have not come out with a mechanism to issue appropriate instructions orJo take ;

As a result of which, what we are facing is steep increase ol litigation day in and day out even though various orders have been passed by this High Court allowing writ petitions on the very same ISSUC The Income Tax authorities conceryred are still even now ln 2025 also initiating proceedings in contravention to the provisions of Section 1 5 1A of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before 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 (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners ..... f' ')

The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanakala Ravindru Reddy (1 supra), is a matter of grave concern. The Income Tax Deparlment'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. lhis 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 reaiized by the Income Tax Depafttnent 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 titl the Hon'ble Supreme Court decide the twelve hundred ( 1200) odd SLPs which il is already seized of or, at least the Income Tax Depaltment should l-rave found out some remedial steps to ensure that whet'ever the authorities intend to initiate proceedings under Sections 148-A and 148, other than in a faceless mannel', 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 Deparlment. has not been able to give a convincing reply, except for the fact that such a decision if at all I l l l

I\/r. Paridwalla has righfly drawn out attention to the 'accepted" the judgment of the High Court would not mean that ttll ',t.,lQO2sl 1 70 raxmann.corn 422 rBombay)l '' I t978] I t3 ITR 589 lBornbay) '.'.1202+1165 raxrnann.com 581/300 Taxman 452 @ombay) 'a ltggzltaxmann.com 16/55 ELT433 (SC) :t 1 :i......1,,

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, righfly critrcized 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 jn the appellate hrerarchy. It cannot be too vehemenfly 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 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 its operation has been suspended by a competent court. lf this healthy

What is woffying 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 ('t-

In the given facts and circumstances, this Bench is of the considered opinion that unless and until we do not timely dispose of mattem which are squarely covered by the decision of this Courl and which stands fortified by the decisions of the various other High Courts on the very same issue, the pendency of this High Courl 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- Department is neither tenable, nor sustainabte. 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 148 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.

The preliminary 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 jurisdrction, 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 the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a onetime 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 / ./ a I ! I I I I a II I I I II t I

We would only fufther 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 (l supra) is subjected to challenge before the Hon'ble Supreme Courl 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 of this High Court in the case of Kan&kula 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

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