Venkateshwar Reddy Rachala vs. The Income Tax Officer,

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, 196 I (for short'the Act') or the assessment orders those have been passed under Section [47 of the Act which have been assailed. i. 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 ofproceedings under Section 148 of the Act by the jurisdictional Assessing Officer, whereas in terms o[the amendment that was brought to the Income Tax Act by way of Finance Act, 2021 w.e.f., 01.04.2021 onwards, proceedings

The contention of the petitioner is that the issue of proceedings being in violation of the Financ e Act, 2021 i.c.. the impugned norices under Section l4gA and Section l4g of thc Act not being issued in a faceless manner, have already been dealt with and decidccl by this courl in the case of KANKANALA RAVINDRA REDDY vs. INCOME_TAX OFI-ICERT decided on !4.09.2()23 ,"vherebv a batch of writ petitions were allow.eci and the proceedings initiated under Section 14gA as also under Section I48 olthe r\cl. wer-e held to be bad with consequential reliefs on the ground ol it being in violation of the provisions of Section I 5 I A of the Act read rvirh Notification lg/2022 d,ated 29.03.2022. The said judgrnent passed by this Court has also been subsequently followcd in a large nurnber of u,rit petitions which were alror.yed on similar '[(2023) 156 taxmann.com l7g (Telangana)] OF INCOME TAX & OTHERS2, Gauhati High Court in the case t lzot+1464 ITR 430 (Bom) ' [(2024) 156 taxmann.com 478 (Gauhati)] ' [(2021) 165 taxmann.com 115 (Punj ab & Haryana)] ' 12024) 167 taxmann.com 4 t 1 (Telangana)l '12024) [66 taxmann.com 679 (Bombay)] ' 12.024) I 65 taxmann.com I 13 (Himachal Pradesh)l \

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, titl date, we do not find any remedial steps having been takcn by the lncome Tax Department to take appropriate steps to either hold back issuance of notice under Section l48A and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series o[ decisions \

Upon a query being put as to rvhy can,t this writ petition be disposed of in the reerh of the decision rendered by this court in the case of Ktnakalo Ravintlra Redd1, ( supra), leamed Standing counsel for the Inco,re Tax Department contends that those would unnecessarii,i, burden tire lncome Tax Departrnent where they would be rcquircd to file equal number ol 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 stanrring counsel that no pre.iudice wourd be caused to the interest of thc petitioners in case irthis writ petition -rs kept pending Jill-the -finar i zat ion o f . . the.-.s Lps- pendi ng before_the_Honrbre_ Supreme Court and the fact that the petitioner is already enjoying the benefit of intcrirn protection. Nonetheless, on the earrier query of this Court as to why the Income Tax Department have not come out with a mechanism to issue appropriate instructions or to take

As a result of which, what we are facing 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 issue.'I-he lncome Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions ol Section I 5 lA of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Coun on an issue which otherwise stands squarely covered by the judgment of this Cour-t in the case of Kanakala Ravindra Redtty ( I supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravindra Redtty (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 Kaflokalt Ravindra Reddy (l supra), is a matter of grave concern. The lncome Tax Department's persistent initiation oI fiesh proceedings, disregarding the established judicial pronouncements, has lcd 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 judicial 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 nlove 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 Inconre Tax Departrnent itselfand should have found out via media in cnsurins tltat proceedings under Sections I4g_A and l4g should not have bcen issued ir.r a faceless manner, at least till thc Ilon,ble Suprc,re C.ourt ciecide the twelve hundred (1200) odd slps which it is already seized of or, at least the Income Tax Depaftment shourd have tirund oul some remedial steps to ensure that rvherevcr tl_re 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 intirnating the assessee that they shall initiate appropriate proceedi.gs onry after the SLp,s are decided by the Hon'ble supreme court on the very same issue. This again, the Income Tax Departrnent, has not been able to givs 2 convincing reply, except for the lact that such a decision if at all ,,,Y

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 etfect 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 drsposing 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 hrs 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 subiect 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 f-act thar an endeavour is being made whole heartedly to ensure not to generate lurther litigation on issues which have been laid ro rest by a large nurnber of High Courts all of whom have taken a consistent. stand that the action of the lncome Tax Department being violative ol-the Y

In the given facts and circumstances, this Bench is of the considered opinion that unless and until we do not timety 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, rhe pendency of this High Corrrt wntrld trtstherbe-burehqed whieh sfhenv ise can be decided and disposed ofas 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 sustainable. The notices so issued and the procedure adopted being pel se illegal, deserves to be and are accordingly set asrde/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 i47 and 14g woulcj 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. 37 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 jurisdiction. we are not inclined to proceed fur.ther and decrde the other issues raised by the pelitioner 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 one_time measure exercising the powers under Article 142 of the Constitution of lndia, permifted the Revenue to proceed under the substitutetj 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 Kanakala Ravindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, prefcrred by the lncome Tax Department, we make it clear that allowing of the instant writ petition is subjcct to outcome ol the aloresaid SLP pre ferred by the Revenue against the decision ofthis High Court in the case of Kanakala Ravindra Reddy (l supra) This, in other words, would mean that either oI the parties, iI they so want, may move an appropriate petition seeking revival of this writ petition in the light ol the decision of thc I{on'ble Supreme Court in the pending SLP on the very same issue t9. Accordingly, the instant writ petition stands allowcd in favour o[ thc assessee so far as the issue of jurisdiction ls concerned. As a consequence, the impugncd notice under challenge under Sections 148-4. and 148 stands set aside/quashed. ( I \