Sri Venkatesh Vorsu 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 l48A of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Officer' whereas in terms ofthe amendment that was brought to the InSm6 Tax Act by way of Finance Act, 202l w'e'f ' 01'04'2021 onwards' proceedings TITION No.28535 of2024 _=.g4* l

The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act,202l i.e., the impugned notices under Section l48A and Section 148 ofthe Act not being issued in a faceless malner, have already been dealt with and decided by this Court in the case of KANKANALA RAWNDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section l48A as also under Section 148 of the Act were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section l5 I A of the Act read with Notification 1812022 dated29.03.2022. The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were allowed on similar terms. \r-- 'l(2023) 156 taxmann.com 178 (Telangana)l

Even though the same issue having been decided by a large number of High Courts, we are still confronted with large filing of identical matters on daily basis ranging between 5 to 10 writ petitions. That upon the instructions being sought from the Department, they have been taking a solitary ground that the decision of the Bombay High Court in the case of Hexaware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy 82024 sCC online Guj 4012 '2025 SCC Online Jhar 287 '012021, RJ-JD:4984-DBl

To a query being put to the leamed 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, 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 rnore 16 months have lapsed, till date, we do not find any remedial sreps having been taken by the Income Tax Department to take appropriate steps to either 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

Upon a query being put as to why can't this writ petition be disposed of in the teeth of the decision rendered by this Court in the case ol Kanakala Ravindra Reddy (l supra), leamed Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the lncome Tax Department where they would be required to file equal number of SLPs before the Hon'bte Supreme Court and it would be further burdening the exchequer of the Union ol lndia. 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 Hon'ble Supreme Court and the fact that the petitioner is already enjoying 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 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. The Income Tax authorities coflcemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section l5 I A 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 Kanakala Ravindra Reddy (l 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 Kanakaln Ravindra Reddy (l 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 ofjudicial precedent but also strains the judicial resources ulnecessarily. 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 \

Another aspect which needs to be considered is that in fact it should have been realiz:ed by the lncome Tax Department itself and should have found out via media in ensuring that proceedings under Sections l4g_A and I4g 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 least the Income Tax Department should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections I4g-A and l4g, other than in a faceless manner, the proceedings should have been defened 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 'a has to be taken, has to be taken for the whole of India, and which otherwise has to be by way ofa policy decision and that too at the level of Central Board of Direct Taxes. Though the learned Standing Counsel for the lncome Tax Department contended that the Delhi High Court dismissed a writ petition of similar nature, on the one hand when the High Court 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 Court resulting in fiting 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 the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the matter has been reluctant in granting any interim protection to the Income Tax Departmenr. Yet, the authorities concerned 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 l4g-A and 12 148 through the jurisdictional Assessing Officer whereas it ought COMMISSIONE& INCOME TAXrr, on an issue whether it was justifiable on the part of the lncome Tax Department in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division Bench of the High Court of Bombay held at paragraph No.25 as under, viz., :

Mr. Paridwalla has rightly drawn out attention to the decision of this Court in Commissioner of lncome Tax vs- Smt. Godavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Court in Samp Furniture (P) Ltd. v. lTOl3 of which one of us (Justice G.S. Kulkarni) was a member, wherein the Court categorically observed that the Revenue having not "accepted' the iudgment of the High Court would not mean that till treating decisions being "not acceptable" was criticrzed by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. " 11zozs1 170 taxmaon.com 422 (Bombay)l '' 1t9281 113 ITR 589 @ombay) " 12Oz+1165 taxmann.com 581/300 Taxman 452 (Bombay) 'o 119921taxmann.com 16/55 ELT 433 (SC) I'

Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They peftaps genuinely felt that the claim of the assessee was not trenable 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 offrcers, 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 criticized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failwe of these officers to give effect 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 disposing of the quasijudicial issues before them. revenue officers are bound by the decisions of the appellate authorities. The order of the Appeltte Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunat is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction oF the Tribunat. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreserrredly 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 ,l

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 ofticers. lt is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue mafters 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 Cou( should be kept in mind in future and the utmosl regard should be paid by the adjudicating 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 on them."

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, 2OZl. Now, in order to protect the interest 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/direction 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 (1 supra) shall however be subject to the outcome of the SLPs which were filed by the Income Tax Department and which is pending consideration before the Hon,ble Supreme Court. 16. [n 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 fortified 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 ard 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 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 147and 148would 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 subsequenl orders also gets nullified automatically.

The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very iurisdictional issue. Since the impugned 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 conlended in an appropriate proceedings.

Since the Hon'ble Supreme Court had, in the case of Ashish Agatwal, supra, as a one-time measure exercising the powers under Article 142 of the Constitution of lndia, permifted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right .>-- .) I I

We would only further like to make observations that since we are inclined to dispose of tlre 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, 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 ofthis High Court in the case of Kanakala 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 ls concerned. As a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed ( ( ;,

Ass Hvderabad - 500004 essment Unit, National Faceless Assessment Centre, lncome Tax Department, N4inistry of Finance, Room No. 401' 2nd Floor, E-RamP, Jawaha rlal Nehru Stadium' Delhi - 110 003 One CC tc Sri A V Raghu Ram, Advocate ucl The consequential orders, if any, also stand set aside/quashed in similar terms as have been passed by this High Court in the case of Kankanala Ravindra Reddy (l supra). There shall be no order as 3 4 5 karo Sapna ReddY (Jr. S toP Cfor lncome Tax) [OPUC] One CC to N4s Bo Two CD CoPies TJ GJ I l I I I