Mr. Ravinder Reddy Pashya vs. The Income Tax Officer - Ward 1

This is a writ petition rvhere the proceedings are either challenged to the notices which were issued under Section 148,4 and 148 of the Income Tax Act, 1961 (for shoft'the Act') or the 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 ofproceedings 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

The contention of the petitioner is that thc issue of proceedings being in violation of the Finance Act. 2021 i.e., the impugned notices under Section 1484. and Section 148 ofthe Act not being issued in a faceless manner, have already been dealt witl-r and decided by this Court in the case of K,\NKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICI'Rr 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 tlie Act were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section 151A of the Act read with Notification 1812022 dated29.03.2022. The said judgment passed by this Court has also been subsequently follorved in a large number of writ petitions which were allou'ed on similar telms { 'l(2023) 156 taxrann.com lT8 (Telangana)l

OF INCOME TAX & OTHERS2, Gauhati High Court in the case ' lzoz+1464 ITR 430 (Bom) ' [(2024) 156 taxrnann.corn 478 (Gauhati)] " l(2024) 165 taxmann.com I 1 5 (Punjab & Ilaryana)l ' [2024) 167 taxmann.com 4 i I (Telangana)] " [2024) i66 taxmann.com 679 (Bombay)] ' 12024) 165 taKnann.com 113 (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 tapsed, till datc, we do not find any remedial steps having been taken by the lncome 1'ax Department to take appropriate steps to either hold back issuance of notice under Section 148A 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 rvlit petition be disposed of in the teeth of the decision rendered bt' this Court in the case of Kanakoln Ravindra Reddy (1 supra), lealned Standing Counsel for the lncome Tax Departmcnt contends that those would unnecessarily burden the Incorne Tax Depaflment where they would be required to file equal number of SL,l)s before the Flon'ble Supreme Court and it would be further burdening the exchequer of the Union of India. It w,as also the contention ol the Iearned Standing Counscl 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 beforc the Hon'ble Supreme Court and the fact that the petitioner is already enjoying the benefit of interirn protection. Nonetheless, on the earlier quely of this Courl as to why the Income Tax Departrnent have not come out with a mechanism to issue appropriate instruclions or to take

As a result of which, what we are lacing 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 ISSUC 'lhe Income Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions o1- Section 151,4 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 Ravindru Reddy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kunakakr Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has aiso protected the interest of the petitioners

It appears that because ofthe aforesaid liberty that this High Court had granted permitting the Revenue for initiating fresh proceedings as a one-time rneasure in a faceless manner, the Income Tax Deparlment 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. Likeu,ise, 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 conflrrrs 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 Cour1, despite the clear precedent set in Kanakala 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 undernines the principle ofjudicial 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

Another aspect wl.rich needs to be considered is that in fact it should have been realized by the Income Tax Department 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'bte 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 148-A and 148, other than in a faceless manner, the proceedings should have been deferred without precipitating the matter furlher intimating tl.rc assessee that they shall initiate appropriate proceedings only after the SI-P's are decided by the Hon'ble Supreme Couft on the very same isstte. This again, the Income Tax Department, has not been ablc to give a convincing reply, except for the fact that such a decision if at alt r'

I\/r. Paridwalla has rightly drawn out attention to the Godavaridevi Sarafl2 as also the recent decision of the co- ordinate Bench of this Court in Samp Furniture (P) Ltd. v. lTO13 of which one of us (Justice G.S. Kulkarni) was a member, wherein the Court categorically observed that the Revenue having not "accepted" the jucigment of the High Court would not mean that till the same is set aside in a manner known to law, it would loose its binding force. Referring to the decision of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd.'4, the Court observed that the approach of the officials of Revenue of treating decisions being "not acceptable" was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. tt 11ZOZS1 170 taxmann.com 422 (Bombay)l '2 7t97811 13 ITR 589 (Bombay) t3 TZOZ+1165 taxmann.com 581/300 Taxman 452 (Bombay) 'o ]L9921taxmann.com 16155 ELT 433 (SC)

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 correotness or otheruise 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 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 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.lurisdiction 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

We have dealt with this aspect at some length, because it has been suggested by the lea.ned 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 apparently 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 adjudicating authorities and the appellate authorities to the requirements of judiciat discipline and the need for giving effect to the orders of the higher appellate authorities which are bindrng on them." I 5. What is worrying this Bench more is the lact that an cndeavour is being made whole heartedly to ensurc not to gcncratc lurther litigation on issues which have been laid to rest by a largc number of Itigh Courts all of whom have taken a cousistent stand that the action of the Income Tax Department being violative of thc

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 fortified by the decisions of the various otl.rer High Courts on the very same issue, the pendency of this High Court would further be burdened which otherwise can be decided and disposed of as a covered matter 11 . So far as the interest of the Revenue is concemed, we are of the considered opinion that the interest of the Revenue has alrcady been considered and protected, as has been observed in paragraphs ;,iee€:i .. ".xg

The preliminary objection raised by the petrtioner 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 further and decide the other issues raised by the petitioner 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 cf 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 / .!" ! I i.ss;,;.

We would only furthei 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 Ktnakola Ruvindra 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 afbresaid SLP preferred by the Revenue against the decision of this I{igh Courl in the case of Kanakala Ravindra Reddy (l supra). l'his, 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 Supleure Court in the pending SLP on the very same issue.

Accordingly, the instant writ petition stands allowed in I'avour ol the assessee so far as the issue of jurisdiction IS concerned. As. a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed.

The Principal Chief Commissioner of lncome Tax, Andhra pradesh and le-!a1gan9, Hyderabad Room No. g22,9th Floor, B Btock, I.T.Towers, 10-2-3, AC Guards, Hyderabad - 500 004, Telangana.

One CC to SRI A.V.A.SIVA KARTTKEYA, Advocate tOpUCl

One CC to SRI J.V.PRASAD, Sr. SC FOR TNCOME TAX tOpUCl

Two CD Copies BSRYBSKb. 'i-l- _ .i'