Shakunthala Bachu vs. Income Tax Officer

This is a writ petition where the proceedings are either challenged to the notices which were issued under Section l4gA and 148 of the Income Tax Act, l96t (for short ,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 l48A of the Act and the subsequent initiation ofproceedings under Section l4g 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 the issue of proceedings being in violation of the Finance Act, 2021 i.e., the impugned notices under Section t48A and Section 148 ofthe Act not being issued in a faceless rnnner, have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA 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 ofSection 15lA 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. &' 'l(2023) 156 taxmann.com 178 (Telangana)l

OF INCOME TAX & OTHERS2, Gauhati High Court in the case case of GO!'IND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKHBHAI 'zTzoz+1464 ITR 430 (Bom) '1Q024) 156 taxmann.com 478 (Gauhari)l 'l(2024) 165 taxmann.com I 15 (Punjab & Haryana)l ' [2024) I 67 taxmann.com 4 I I (Telangana)] " 12024) 166 taxmann.com 679 (Bombay)l ' 12024) 165 taxmann.com I 13 (Himachal Pradesh)l

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 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 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 l4gA and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concerned 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 of Kanakala Ravindra Reddy (1 supra), leamed Standing CounselforthelncomeTaxDepartmentcontendsthatthosewould unnecessarily burden the Income Tax Department where they would be required to file equal number of SLPs before the Hon'ble Supreme Court and it would be further burdening the exchequer of the Union of India' It was also the contention of the leamed Standing Counsel that no prejudice would be caused to the interestofthepetitionersincaseifthiswritpetitioniskeptpending tillthefinalizationoftheSLPspendingbeforetheHon'ble Supreme Court and the fact that the petitioner is already enjoying the benefrt 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 &t.,.

As a result of which, what we are facing is steep increase of litigation day in and daytrut 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 151A 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 Kanakara Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners l

It appears that because ofthe 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 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 Court 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 l l l-h,

Another aspect which needs to be considered is that in fact it should have been realized by th'e Income Tax Department itself and shouldhavefoundoutviamediainensuringthatproceedings 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 ( 1 200) odd SLPs which it is already seized of or' 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 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 lt 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 pelition 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 hling 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 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 is showing audacity by issuing notices continuously under Sections l4g_A and 1 1.2 i 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner'

In the case of BANK OF INDIA vs' ASSISTANT COMMISSIONER, INCOME TAXlr, on an issue whether it was justifiable on the part of the Income 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 Sarafr2 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 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'14' 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' " 11zozs; 170 taxmann.com 422 (Bombay)l " yt9t81 I l3 ITR 589 (Bombay) '3 lzoz+1 165 taxmann.com 581/300 'faxman 452 (Bombay) to TtSgZl taxmann.com 16155ELT 433 (SC) u

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 conctusion 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, righfly criticized this condugt 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 vehemenfly emphasized that it is of utmost importance that, in disposing of the quasuudicial issues before them, revenue offlcers 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 Coilectors 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

What is worrylng this Bench more is the fact 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 lncome Tax Department being violative of the - 15 Finance Act,2020 and Finance Act,2O2l. 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 (l 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.

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 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. ll . 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 neilher 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.grdered 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 wdt petilions stands allowed on this very jurisdictional 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 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 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 I i,,

We would only further 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 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 tlat 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 is concerned. As a consequence, the impugned notice under I I challenge under Sections 148-A and 148 stands set aside/quashed.

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 to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed D/.M OSMAN ALI BAIG STANT REGISTRAR S A //// SECTION OFFICER \ To, .l.ThelncomeTaxofficer,wardl5(1)'HyderabadlncomeTaxTowers'Masab Tank 500004 z The Principal Commissroner of lncome Tax- 4' lncome Tax Towers' Masab - Tjnk, Hyderabad 500004 1 The National Faceless Assessment Centre' lncome Tax Department Ministry " "i'Fii-tr".t" Covt of lndia New Delhi 4 One CC to SRI POLKAMPALLY PAVAN KUMAR RAO' Advocate lOPUCl

One CC to tTIs BOKARO SAPNA REDDY (Jr' SC FOR INCOME TAX) loPUCl

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