Mr.Rajasekhar Jonnavithula vs. The Income Tax Officer

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, 196l (for short'the Act') or the assessment orders those have been passed under Section 147 of the Act which have been assailed. l. 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 of the amendment that was brought to the lncome Tax Act by way of Finance Act, 2021 w.e.f., 01.M.2021 onwards, proceedings PSS,

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 manner, have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICER1 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 ol'the provisions of Section 151A of the Act read with Notification 18/2022 dated29.03.2022. The said judgment passed by this Court has also been subsequently followed in a large number ol writ petitions which were allowed on similar terrns. '[(2021) 156 taxmann.corn I 78 (Telangana)]

OF INCOME TAX & OTHERS2, Gauhati High Court inthe case '7zoz+1464 ITR 430 (Bom) 'l(2024) [ 56 taxmann.com 478 (Gauhati)] 'l(2024) 165 taxmann.com I l5 (Punjab & Haryana)l '12024) 167 taxmann.com 4l I (Telangana)l " [2024) 166 [axmam.com 679 (Bombay)] '[20241 165 taxmann.com I l3 (Himachal Pradesh)]

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, cven 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 hnd any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuancc of notice under Section l48A 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 of Kanakala Ravindra Reddy (l supra), leamed Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Departme nt 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 learned Standing Counsel that no prejudicc would bc caused to the interest of the petitioners in case if this writ petition is kept pending till the finalization of the SLPs pending belore the I{on'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 tnstructions 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 concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section l5lA of the Act and as a result by now, more than 600 to 700 petitions have been alrcady 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 alamring trend of docket explosion in this Court, 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 piting up on the same issue. This deliberate approach not only undermines the principle of judicial 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 lresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than adhering to the established Iegal

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-A 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 [ncome 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 deflerred 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 att

Mr. 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. 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,udgment 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 ' 1l9zal l ll ITR 589 (Bombay) t IZOZ+1 [65 taxmann.com 581/300 Taxnat 452 (Bombay) t ]'9eZltaxmann.corn 16155ELT 433 (SC)

Sri Reddy is perhaps r(,ht in sayirg that the officers were not actuated by any mala fldes in passing the impugned orders. They perhaps genuinely felt that the clairn 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 concemed here with the correctn€ss or otherwise of their conclusion or of any factual malafrdes 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, 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 efiphasized 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 biMing 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 "acceptabte" to the department - in kself an objectionable phrase - and is the subject matter of an appeal can fumish no ground for not following it unless its operation has been suspended by a cornpetent court. lf this heatthy

We have dealt with this aspect at some length, because it has been suggested by the leamed 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 lo the assesses-publie 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 Courl 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 iudicial 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 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 ol High Courts all ol 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,202l. Now, in order tb 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 (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.

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 of as a covered matter. 17 - 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 Sectron 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 the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically.

The preliminary oblection raised by the petitioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned rrctices 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 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 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 th€ 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 is concerned. As a consequence, the impugned notice under I I challenge under Sections 148-A and 148 stands set aside/quashed.

A;d;rid'ni unitltn"ome Tax Department, National e-Assessment Center' - r.iEw -oeini Coom'No. 4o1 , 2nd Fldor Ramp, Jawaharlal Nehru Stadium' New Delhi 1'10 003. +. O[i itbsisit iOffi"", Ranga Reddy Ro, Moosapeta 5-20311. Bavani Nagar Balanagar HYderabad - 500 018. 5. One Ci to Sri Kailash Nath P S S, Advocate [oPUC] 6. on; CC io t t". rioiiio Sapna Reddv (Jr SC fdr lncome Tax) [OPUC]

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