PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LIMITED CHANDAMPET vs. The Income Tax Officer Ward 4(1)

This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 148,4. and 148 of the Income Tax Act, 1961 (for short'the Act') orthe 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 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, 2021 w.e.f., 01.04.2021 onwards, proceedings ) *.s#ifiilg$i' )

The contention of the petitioner is that the issue ol proceedings being in violation of the Finance Act, 2021 i.e., the impugned notices under Section l48A and Section 148 of the Act not being issued in a laceless maruter, have alreadv been dealt with and decided by this Court in the case ol KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided ot 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section I48A as also under Section 148 of the Act were held to be bad with consequential reliels on the ground of it being in violation ofthe provisions of Section l5lA of the Act read rvith Notification 1812022 dated.29.03.2022. The said judgment passed by this Court has also been subsequentty followed in a large number of wlit petitions which were allowed on sirnilar term s. '[(2023) 156 taxrnann.corn 178 (Telangana)]

OF INCOME TAX & OTHERS2, Gauhati High Court in the case INTERNATIONAL TAXATION6 which is again on inter-national '7zoz+1464 ITR 430 (Bom) '[(2024) 156 taxmann.com 478 (Gauhati)] " [(2024) 165 taxmann.com I l5 (Punjab & Haryana)] '[2024) 167 taxmahn.com 4l I (Telangana)] " [2024) 166 taxmann.com 679 (Bombay)] ' [2024) 165 taxmann.corn I 1 3 (l{imachal Pradesh)]

To a query being put to the learned counsel for the Revenue, they have categorically accepted the lact that there is no interim ordel granted by the Hon'ble Supreme Court in any of these matters pending before it. Meanwhile, fi'csh 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 lJigh Court itself.

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 Income Tax Department to take appropriate steps to either hold back issuance of notice under Section 1484. and under Section 148 of the Act by the jurisdictional Assessing Offlrcer, s concemed in the teeth of series of decisions rather the authoritie

Upon a query being put as to why can't tl.ris r.vrit petition be disposed of in the teeth of the decision rendered bv this Court in the case of Kanakala Ravindra Reddy (l supra), leamed Standing Counsel for the Income Tax Department contends that tl-rose would unnecessarilv burden the Income Tax Department where they would be required to flle equal number of SLps before the Hon'ble Supreme Court and it would be further burdening the exchequer of the Union of India. It was also the contention of the learned Standing Counsel that no prejudice would bc caused to the interest of the petitionels in case if this writ petition is kept pending titl the finalization of the SLPs pending before the Hon'ble Supreme Court and the fact that the petitioner is already enioying the benefit of interim protection. Nonetheless, on the earlier query of this Court as to why the Income Tax Department have not come out with a mechanism to issue appropriate instructiqgg or to take

As a result of which, what we are l-acing 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 lssue The Income Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section l51A of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakalu Ravindra Redtly (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

The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanokula Ravindra Rettdy (l supra), is a matter of grave concern. The Income Tax Department's persistent initiation of lresh 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 judiciat precedent but also strains the judicial resources unneCessarily. The Department'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 I ; I

Another aspect which needs to be considered is that in lact it should have been realized by the Income Tax Deparlrnent itself and should have found out via media in ensuring that proceedings undel Sections 148-,{ and 148 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 already seized ofor, at Ieast the Income Tax Deparlment should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 148, other than in a laceless mauner, the proceedings should have been deferred without precipitating the matter further intimating the assessee that they shatt 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 t.Ls

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, 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 hlerarchy. lt cannot be too vehemently 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 worrying this Bench more is the lact 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 15 Finance Act,2020 and Finance Act, 2021. Now, in order to protect the intcrest 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/dilection 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 SI-Ps which were filed by the Income Tax Depanment and which is pending consideration before the Hon'ble Supreme Court.

In the given f-acts 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 fortified by the decisions of the various other High Courts on the very same issue, the pendency of this High Coun would further be burdened which otherwise can be decided and disposed of as a covered matter. 17 . So fal 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 tmpugned notices issued and the proceedtngs drawn by the respondent- Department is neither tenable, nor sustalnable. The notrces 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 rmpugned 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 rn an appropriate proceedings.

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, permlfted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right 7.'

We would only further like to make observations that since we are inclined to dispose of the instant wlit petition, conscious of the fact that the earlier order of this High Court in the case of Kanakah Rqvindra 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 preferred by the Revenue against the decision of this High Court in the case of Kunakala 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 IS concerned. As a consequence, the irnpugned notice under challenge under Sections 148-A and 148 stands set aside/quashed \

The Principai C'niet Commissioner of lncome Tax Telangana 1lq &i' Hyderabail, lT Towers, AC Guards, Masab Tank, Hyderabad 500028, Telangana.

The Ciairman, Central Board of Direct Taxes, Department of Revenue, IVinistry of Finance, Government of lndia, Secretariat Buildings, New Delhi - 110001. 4. The National Faceless Assessment Center, lncome Tax Department, New Delhi.

The Secretary to the Government, Union of lndia, Department of Revenue, Ivlinistry of Finance, New Delhi - 1 10 001 . 6. one cb to sRt THANNERU CHAITANYA KUIVAR, Advocate [oPUC]

One CC to Ms. BOKARO SAPNA REDDY (Jr. SC FOR INCOME TAX) Advocate [OPUC]

ONE,CC tO SRI bADI dRRVCEU KUMAR, DEPUTY SOLICITOR GENERAL OF lNDlA, Advocate (OPUC)

Two CD Copies To SA GJ G t I