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

This is a writ petition wherq the proceedings are either challenged to the notices which were issued under Section l48A and 148 of the Income Tax Act, 1961 (for short 'the Act') or rhe assessment orders those have been passed under Section 147 of the Act which have been assailed. i. This writ petition is being take{r up today only on one of the grounds, that the notices issued undler Section l48A ol ihe Act and the subsequent initiation of procgedings under Section 148 of thc Act by the jurisdictional Assessing Ollicer, whereas in terms of the amendment that was brought tQ the Income '[ ax Act by way ol' F-inance Act, 2021 w.e.f., 01.04r20f I onrrards, proceedings

The contention ol the petitioner is that the issue of proceedings being in violation of the Finance ,\ct, 2021 i.e., the impugned notices under Section 1484 and Section 148 of the Act not being issued in a laceless manner, have already been dealt with and decided by this Court in the case ol' KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.09.2023 w,hereby a batch of writ petitions were allowed and the proceedir-rgs initiated under Section.1484. as i so under Section 148 olthe Acr lvere held to be bad with consequential reliefs on the ground ol'it hcing in violation of the provisions of Section l5lA of the Act read rvith Notification 1812022 dated29.03.2022. The said judgmcnt passed by this Court has also been subsequently followed in a large nunrbe r ol writ petitions which were allowed on similar terms '(2021) l-i6 taxrnann.corn I78 (I'elangana)] ) OF INCOME TAX & OTHERS2, Gauhati High Court in the case SRI VENKATARAMANA *TOTIY PATLOOLA vs. DEPUTY INTERNATIONAL TAXATIOIt' which is again on international te\ation and central circle, High Colrrt of Himachal Pradcsh in the ' 1:o:+1 ,164 ITR 430 (Bom) l I ( 1024 ) I 56 taxmann.com 478 (Gauhafi)l l(1011) 165 taxmann.com 115 (Punja! & Haryana)l []021) 167 taxmann.com 411 (Telang4na)l ll0l+) t66 taxmann.com 679 (Bombay)l llul-l) 165 ra\mann.com I l3 (Himaclal Pradesh)l

To a query being put to the leamed counsel for the Revenue, they have categorically accepted thq fact that there is no interim order granted by the Hon'ble Suppeme Court in any of these matters pending betbre it. Meanvlhile, fresh writ petitions of identical naturc are being pited up before this Bench on daily basis and the pendency is getting increasd on matter which otherwise has already bcen dealt and decided by this very High Court itself. E. On rhc one hand, even thoug! the order of this Court that *as passcd as carly as on 14.09.20f,3 and more 16 months have lapsecl, rill dntc, we do not find any remedial steps having been takcn bv thc [ncorne 1-ax Departmenf to take appropriate steps to either hold back issuance of notice under Section l48A and under Scction I .l[i o I the Act by the jurildictional Assessing Officer, rathcr thc authonties concemed in thg teeth of series of decisions

As a result of which, what are facing is steep increase of we litigation day in and day out even thpugh various orders have been passed by this High Court allowing writ petitions on the very same issue. The Income Tax authorities cpncemed are still even now in 2025 also initiating proceedings in dontravention to the provisions of Section t 5l A ol the Act and as al result by now, more than 600 to 700 petitions have been already igot piled up before this High Couft on an issuc rrhich otherwise $tands squarely covered by the judgment of tlris C--ourt in the case lof Kanakala Ravindra Reddy (l supra). What is also surprising is the fact that though while allowing the rvrit petitions in thei case of Kanakala Ravindra Reddy (l supra), the Division BenQh while reserving the right of the Revenue. has also protected qhe interest of the petitioners . i l l I I I t I I I L I I ;

It appears that because ofthe aforesaid lib,:rry' that this High Court had granted permitting the Revenr.re lt,r initiating fresh proceedings as a one-time measure in a lacc lcss manner, the Income Tax Department wants to take ad,,,antagc of the same by protracting these proceedings which rvould cnable them to meet the limitation that would otherwise come iu the r,'"av. Likewise, if the writ petition is kept pending for a considcrable lc,ng period of time and finally at a later stage if the llon'bte Suplenre C--ourl confirms the decision taken by this High Courr as also b,y the other High Courts in which the SLPs are still pending. the lncome Tax

The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanakalo Ravindra Reddy (l supra), is a matter of grave concem. '['he lncon]re Tax Department's persistent initiation of fresh proceedings, disregarding the established judicial pronouncements, has led to an unprccedented surge in litigation with over 600-700 petitions piting up on the same issue. This deliberate approach not only' underinines the principle of judicial precedent but also straills the,iLrdici4l resources unnecessarily. Tlre Department's strateg) ot'au'aiting tfe Supreme Court's decision on I pending SLPs w'hile continuins to initiate fresh proceedings appears to be a calculated rnove to buy time and circumvent limitation periods, rathcr thar) adhering to the established legal : . ;,_-"-4_r:: r-r1_,-..

Another aspect which needs to be consider.ed is that in lact it should have been realized by the Income Tax Deparlnrcnt itselland should have found out via media in ensuring thar proceedings under Sections 148-4 and 148 should not havt: been issued in a faceless manner, at least till the Hon'ble Supremc Court decide the twelve hundred (1200) odd SLPs which it is alre:rdv scizcd of or, at least the Income Tax Department should har.,t: lirurtrl out solne remedial steps to ensure that wherever the au-horitics intend to initiate proceedings under Sections 148-A and l18. orhcr. rhan in a faceless manner, the proceedings should ha.,.e bccn clelen.ed without precipitating the matter further intinratinq rhc essessee that they shall initiate appropriate proceedings only iLficr thc S[.p's ar.e decided by the Hon'ble Supreme Courr on rhe a \ cr\ slul'le I ssue This again, the Income Tax Department, has nor hecn uhlc to give a convincing reply, except for the fact that such ir clccisron il'at all 7t has to be taken, has to be taken for rthe who.le of India, and which otherwise has to be by way of a policy decision and that too at the level of Central Board of Direcr rTaxes. Though the leamed Standing Counsel for the lncome Tfx Department contended that the Delhi High Court dismissed a writ petition of similar nature, on the one hand when the High Couit is struggling to reduce its pendency, such notices which are petition are forcing the assessee to Court resulting in filing of hundreds under challenge in this writ it"ock the doors of this High f 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 bas Adrnittedly, in spite of the I lo S matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Suprerlc Courr which is seized of the matter has been reluctant in grantin anf interirn protection to the Income Tax Department. Yet, the authorities concemed at the State level are not ready to accept thp verdict passed by a maj ority i of High Courts of different States ori the sarne issue; and to make things further worse, the lncome ilax Department is showing slv under Sections 148-A and I .| High Court of Bombay held at paragraph No.25 as under, viz., :

Mr. Paridwalla has righfly drawn out attention to the decision of this Court in Commissioner of lncomr: Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the co_ ordinate Bench of this Court in Samp Furniture (F,) Ltd. v. lTO,3 of which one of us (Justice G.S. Kulkarni) was a mermber, wherern the Court categorically observed that the Revenue having not "accepted" the judgment of the High Court would not mean that tr lhe same is set aside in a manner known to law, it ,,vould loose its binding force. Referring to the decision of the Sugrreme Court rn Union of lndia vs, Kamlakshi Finance Corporation Ltd.,1, the Court observed that the approach of the officials rtf Revenue of treating decisions being "not acceptable,, was criticized by the Supreme Court. ln such decision, following ar€! lhe relevant observations made by the Supreme Court. ]l ttzozsl 170 raxmann.co m 422 (Bombay)l '' ltqz8l I I3 tfR 589 (Bombay) ' [2021] 165 raxmann.com 581/300 Taxman 452 (Bornbar ) 't Jtoozl raxmann.com 16/55ELT 433 (SC) I i I ! I I i I I I I I I I I I I I

Sri Reddy is perhaps riqht in saying that the officers were not actuated fY . anY mala fides in passing the impugned ordprs. TfEy 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 Re$dV overlooks is that we are not concerned here wiih the correctness or otheMise of their conclusign 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 whlch were placed before them, one of the Collector (Atpeals) and the other of the Tribunal. The High Court ,has. in our view, rightly criticized this conduct of the dssistant Collectors and the harassment to the assessfe caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. lt cannot be too vehemently einphasized lhat it is of utmost importance that, ln disOosing of the quasUudicial issues before th1m, revenue offtcers are bound by the decisions of ttie appellate authorities The order of the Appellte Cotlector rs brnding on the I Assistant Collectors working Ylthrn hrs lurisdictron and the order of the Tribunal is birfding upon the Assistant Collectors and the Appellate icollectors who f unctton under the jurisdiction of the Trlbunal The prrnciples of judicial discipline require that ithe orders of the hrgher appellate authorities should f followed unreservedly by the subordinate authoritiesr The mere fact that the order of the appellate autnonly is not -acceptabte to the department - in itself a and is the subject mafter of ground for not following it objectronable phrase - n appeal can furnish no nless its operatron has lf thrs healthy been suspended by a compelent court

We have dealt with this aspect at sorne 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 intenderd to curb a tendency in revenue mafters which, if ailowed 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 observation:; in the proper spirit. The observations of the Higrh Court should be kept in mind in future and the utmo$t regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discrptine and the need for giving effect to the orders of the higher appellate authorities which are bindrng on them." worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensur) not to generate lurther litigatiorr on issues which have been laid to rest by a largc number of High Courts all of whom have taken a consistent stand that thc action of the lncome Tax Department being violative olthe

Whar is 15 Finance Act, 2020 and Finance Act, 2021. Now, in order to protect the interest of the Revenue as also that of the assessee, it would be trite at this j uncture, if we disposp of the writ petition with an observation/direction that the dispoqal of the instant wrir petition in tenns of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (l supfa) shall however be subject to the outcome of the SLPs which r,tere filed by the Income Tax Department and which is pending cons I ideration before the Hon'ble Supreme Court.

In the given facts and circurinstances, this Bench is of the I considered opinion that unless and pntil we do not timely dispose I ol'rnatters which are squarely covergd by the decision of this Court and which stands fortified by the pecisions of ttrc various other i High Courts on the very same issYe, the pendency ol this l{igh Court would further be burdened wlhich otherrvise can bc decided and disposed of as a covered matter. 11 . So far as the interest of the Rpvenue is concerned, u,e are ol the considered opinion that the interlest of the Revcnue has already bccn considered and protected, as h4s 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 per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential onjers 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 tl-e principles that when the initiation of the proceedings; itself was procedurally wrong, the subsequent ordem also gets nullified automatically. -r"-:'i'l '"

The preliminary ob.jection 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 thL' point of lurisdiction, 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 proceedrngs. 38 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, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on lhe procedural flaw, the right / .l

We would only further like td make observarions that since we are inclined to dispose of the ins{ant writ petition, conscious of the fact that the earlier order of this High Court in the case ol Kanakala Ravindra Reddy (l supp) is subjected to challenge belore the Hon'ble Supreme Courf in SLP No.3574 ol 2024, prelerred by the Income Tax Deparfment, we make it clear that allowing of the instant writ petition is subject to outcome of the aloresaid SLP preferred by the Reve4ue against the decision ol this tligh Court in the case of Kanakall Ravindra Reddy (l supra). l'his, in other words, would mean th{t either of the parties, if they so want, may move an appropriate p[tition seeking revival of this I writ petition in the light of the dec ion of the Hon'ble Supreure Court in thc pending SLP on the very same issue.

Accordingly, the instant wri pe stands a[[ou,ed in rs i ( tition lavour of the assessee so far as the issue of jurisdiction IS cotrcemed. As a consequence, {he impugned notice undcr challenge under Sections 148-A and il48 stands set aside/quashed l I

The Ciairman, Central Board of Direct Taxes, Department of Revenue, -' ftfini.try of Finance, Government of lndia, Secretariat Buildings, New Delhi - 110 001. 4. The National Faceless Assessmenl Center, lncome Tax Department, New Delhi. 5. ihe Secretary to the Government, Union of lndia, Department of Revenue, Ministry of Finance, New Delhr - 1 10 001 .

One Cb to SRt THANNERU CHAITANYA KUMAR' Advocate [o-PU-cj -- -.

O"e CC to SRI GADI PRAVEEN KUMAR, DEPUTY SOLICITOR GENERAL OF lNDlA. Advocate (OPUC) B. One CC to N/s. J SUNITHA (JUNIOR SC FOR INCOME TAX) Advocate loPUCl

Two CD CoPtes ---7