PRIMARI AGRICULTURAL COOPERATIVE SOCIETY vs. The Income Tax Officer

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 Oflicer, whereas in terrns of the amendment that was brought to the Income Tax Act by way of Finance Act, 2021 w.e.f., 01 .04.2021 onrfrffs, proceedings ?)

The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act, 202 I i.e., the impugned notices under Section 148A and Section 148 of the Act not being issued in a f'aceless manner, have already been dealt rvith and decided by this Courl in the case ol KANKANALA RAVINDRA REDDY vs. TNCOME-TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions were aliowed and the proceedings initiated under Section 148A as also under Scction 148 of the Act were held to be bad with consequential reliefs or.r the ground of it being in violation of the provisions of Section l5lA of the Act read u,ith Notification 1812022 dated29.03.2022. The said judgment passed by this Couft 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 & OTHERSz, Gauhati High Court in the case 'Tzoz+1464 ITR 430 (Bom) '- l(2024) 156 taxmann.com 478 (Gauhari)l " [(2024) 165 taxmann.com 115 (Punjab & Haryana)] ' [2024) 167 taxmann.com 4l 1 (Telangana)] " [2024) 166 taxmann.com 679 (Bombay)] ' 12024) 165 taxmann.com 1 13 (Himachal Pradesh)l 'J

To a query being put to the learned counsel fbr 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. Meanwl.rile, fresh 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 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 lncome Tax Department to take appropriate steps to cither hold back issuance of notice under Section l4gA and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions ',-,. ;.

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. The Income Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section 151.A of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up belore 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 (1 supra),.the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners

It appears that because ofthe aforesaid tiberty that this High Court had granted permitting the Revenuc for initiating fr.esh proceedings as a one-time measure in a faceless manner, the Income Tax Department wants to take advantage of the same by protracting these proceedings which would enable them to meet the limitation that would otherwise come in the way. Likewise, if the writ petition is kept pending for a considerable long period of time and finally at a later stage if the Hon,ble Supreme Couft confirms the decision taken by this High Court as also by the other High Courts in which the SLPs are still pending, the Income Tax

The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanakakr Rovindra 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 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 Depaftment'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 a 10 position. Such conduct raises serious questions about the administrative efhciency and the respect for judicial pronouncements, parlicularly when this Court has already providcd a balanced approach by preserving both the Revenue,s rights and assesses interests.

Another aspect which needs to be considered is that in fact it should have been realized by the lncome Tax Depaftn.rent 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 till the Hon,ble Supreme Courl decide the twelve hundred (1200) odd SLps which it is already seized ofor, at least the Income Tax Deparlment should have found out sorre remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections l4g-A and 14g, other than in a faceless manner, 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 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 whoie of India, and which otherwise has to be by way of a policy decision and that too at the Ievel of Central Board of Direct Taxes. Though the leamed Standing Counsel for the Income Tax Department contended that the Dethi High Court dismissed a writ petition of similar nature, on the one hand when the High Courl 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 Courl resulting in filing of hundreds of new writ petitions which in the long run not only affects the disposal 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 thc Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Suprerne Court which is seized of the matter has been reluctant in granting any interim protection to the Income Tax Department. Yet, the authorities concemed at the State level are not ready to accept the verdict passed by a majority of High Courts of different States on the same issue; and to make things further worse, the Income Tax Department is showing audacity by issuing notices continuously under Sections 148-4 and \ r :::-.a:-:r. , :ata,taatt t.. i:rtttt tttltl: High Court of Bombay held at paragraph No.25 as under, viz., :

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, righ y critrcized this conduct of the Assistant Collectors and the harassment lo the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. It cannot be too vehemenfly emphasized that it is of utmost importance that, in disposing of the quasi.iudicial 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 I I I l i i

We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. lt is clear that the observations of the High Court, seemingly vehement, and apparenfly unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assesses_public without any benefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the a judicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding %Aie=ft i.re:.:&-r*:;y-.t;:H-€ii-i1.r1l.r:rt,,:[.]*tr:i,11y1*a1,:c.]itffi w._i*itrr6,: I 5 ' what is wolTying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate furlher 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 matters which are squarely covered by the decision of this Court and which stands fortihed 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 ofas a covered matter.

So far as the interest of the Revenue is concerned, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs

The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very .lurisdictional issue. Since the impugned notices and orders are gefting quashed on the point of jurisdiction, we are not inclined to proceed further and decide 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{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 ':iizi:._-. <'_tintr.i

We would only further like to make observations that since we are inclined to dispose of the instant writ petiiion, 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 belore the Hon'ble Supreme Court 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 Kanakula Ravintlra Reddy (l supra). This, in other words, would mean that either of the paties, 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 concemed. As . a consequence, the impugned notice under challenge under Sections 148-.4 and 148 stands set aside/quashed. , t

The Chairman, Central Board of Direct Taxes, Department of Revenue, Ylllr^tty of Finance, Government of lndia, Secretariat 'Buildings, ttew Oetfri-_ 110001. 4. The National Faceless Assessment Center, lncome Tax Department, New Delhi.

The Union oJ_lndra, Represented by its Secretary to the Government, ^ Depadment of Revenue, Ministry of Finbnce, New Delhi - 110 OO1. 6 One CC to SRl. THANNERU CHA|TANYA KUMAR, Advocate tOpUCl T One CC to rvs J SUNtTftA (JUN|OR SC FOR INCOME fnXl iOpUCi 8- One CC to SRI, GADI PRAVEEN KUIMAR, DY SoLICITo( beruerinr or rNDtA IOPUC] 9 Two CD Copies BM BS