Mr. Ramesh Reddy Gaddam, vs. Assessment Unit, Income Tax Department,

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, 1961 (for shod'the Act') orthe 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 148,4. of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the julisdictional Assessing Officer, whereas in terms olthe amendment that was brought to the Incorne Tax Act by way of Finance Ac! 2027 w.e.f., 01.04.2021 onwards, proceedings . .: :r'..1:::.l .n

The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act, 2021 i.e., the impugned notices under Section 148,4. and Section 148 of the Act not being issued in a faceless manner, have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT dccided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section 148,4. as also under Section 148 olthe Act were held to be bad with consequential reliels on the ground of it being in violation of the provisions of Section I 5 1 A of the Act read with Notifrcation 1812022 dated29.03.2022. The said judgurent passed by this Court has also been subsequently followed in a large number of writ petitions which were allowed on similar tenns. '[(2023) 156 taxrnann.com I 78 (Telangana)]

OF INCOME TAX & OTHERS2, Gauhati High Court in the case Haryana l-ligh Court in the case of JATINDER SINGH BANGU ABHIN ANILKI]MAR SHAH vs. TNCOME TAX OFFICtrR, ') lzoz+1464 ITR 430 (Bom) '[(2024) 156 taxmann.com 478 (Gauhati)] ^ l(2024) 165 taxmann.com 115 (Punjab & Haryana)l '[2024) 167 taxmann.com 411 (Telangana)] "[2024) 166 taxmann.com 679 (Bombay)] ' 12024) 165 taxmann.com I t3 (Himachal Pradesh)l n

To a query being put to the learned 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 rnatters 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 atd more 16 months have lapsed, till date, we do not find any remedial steps having been taken by the Income Tax 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

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 ISSUC The Income Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions ol Section l5lA 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 other-wise stands squarely covered by the judgrnent of this Court in the case of Kanakala Ravindra Redtly (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakala Ravintlra Reddy (l supra),.the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioner.s ,,' a 8 insofar as the liberty which was granted to the Revenue for initiating fresh proceedings strictty in accordance with the amended provisions of the Act, as amended by the Finance Act, 2020 and the Finance Act.,2021. The petitioner assessee would be entitled to challenge or raise the other legal objections if the Revenue initiates fresh proceedings. The Deparlment has made no endeavour in availing the said liberty that was reserved for the Revenue' On the contrary, they have been still sticking on to the stand, which this High Court as well as many other High Courts already held to be bad. 1 l. It appears that because of the aforesaid liberty that this High Court had granted permitting the Revenue for initiating fresh 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 enabte them to meet the Iimitation that would otherrvise 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 Court confirms the decision taken by this High Couft as also by the other High Courts in which th-e SLPs are still pending, the Income Tax

The alanning trend of docket explosion in this Cour1, despitc the clear precedent set in Kunakalo Ravindra Reddy (l supra), is a matter of grave concem. The Income Tax Department's persistent initiation ol 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 unnebessarily. The Deparlment's strategy of awaiting the Supreme Court's decision on pendir.rg 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 - :-'--rt$t*11ti:::a-:

Another aspect which 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'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 sornc 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 defen'ed 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 Couft 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 1l has to be taken, has to be taken for the whole of India, and which otherwise has to be by way of a policy decision and that too at the level of Central Board of Direct Taxes. Though the leamed Standing Counsel for the Income 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 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 the Hon'ble Supreme Court having been taken on n'rany occasions, the Hon'ble Supreme Court which is seized of the matter has been reluctant in granting any interim protection to the Income Tax Department. Yet, the authorities concerned at the State level are not ready to accept the verdict passed by a maj ority of High Courts of different States on the same issue; and to make things further worse, the Income Tax Department 1S showing audacity by issuing notices continuously under Sections 148-4 and '-':tttryaxn ,r.a-

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 judgment of the High Court would not mean that till treating decisions being "not acceptable" was criticized by the Supreme Court. ln such decision, following are the relevant observations made by the Supreme Court. " 11zozs) 170 taxmann.com 422 (Bombay)l 12 Jt9z81 l 13 ITR 589 (Bombay) '3 7ZOZ|1165 taxmann.com 581/300 Taxman 452 (Bombay) 'o lt9921taxmann.com 16/55ELT 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 whdt 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 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 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

We have dealt with this aspect at some length, becausc 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 apparently unpalatable to the Revenue, are only inlended 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 judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." I 5. What is wonying 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 iaid to rest by a large nutnber 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 Ac| 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 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 Kankunala Ravindra Reddy (l supra) shall however be subject to the outcome of the SLPs which were flled by the Income Tax Deparlment and which is pending consideration before the Hon'ble Supreme Court

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 Courl 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 of as 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

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 147 and 148 would 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 lhe proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically.

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 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{ime measure exercising the powers under Adicle 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 \

We would only fufther like to make observations that since we are inclined to dispose of the instant writ petition, conscious of the lact that the earlier order of this High Courl in the case of Kanakala Ruvindra Reddy (l supra) IS subj ected to challenge beforc 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 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 Supreme Court in the pending SLP on the very same issue. 1 9. Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction ls concemed. As. a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed.