Lansum Etania Developers LLP. vs. The 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, 196l (for short .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 l4gA of the Act and the subsequent initiation of proceedings under Section l4g 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 Acl, 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,202l i'e', the impugned notices under Section 1484. 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 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 I 5 1A 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 manner. terms. '[(2023) 156 taxmann.com 178 (Telangana)]

OF INCOME TAX & OTHERS2, Gauhati High Courr in the case ' yzoz+1464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauhati)l ^ [(2024) 165 taxmann.com 115 (Punjab & Haryana)] ' 12024) I 67 taxrsa$r.com 4 I I (Telangana)l " 12024) 166 taxmann.com 679 (Bombay)l '12024) 165 taxmann.com 113 (Himachal Pradesh)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 fiom the Department, they have been taking a solitary ground that the decision of the Bombay High Court in the case of Heraware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanakala Ravindra Reddy '2024 SCC Online Guj 4012 '2025 SCC Online lhar 287 ' o 12023 : RJ- JD :49 84-DBl

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 itsetf.

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 ofnotice under Section l4gA and under Section 148 of the Act by the jurisdictional Assessing Ofhcer, ,. 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 oirt even though various orders have been passed by this High Cdurt 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 1514. 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 Kanukala 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 (1 supra), the Division Bench while reserving the right of the Revenue, has also 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 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

The alarming trend of docket explosion in this Court, despite the clear precedent set'in Kanakala Ravindra Reddy (l supra), is a matter of grave concem. 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 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 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 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 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 repty, except for the fact that such a decision if at all '..1

In the case of BANK OF INDIA vs' ASSISTANT COMMISSIONER, INCOME TAXI1, 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 Couit 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' 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 lo 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 Cou( 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. " 71zozs1 170 taxmann.com 422 (Bombay)l '' 1t9781 113 ITR 589 (Bombay) " Tzoz+1165 taxmann.com 581/300 Taxman 452 (Bombay) 'o ltggzltaxmann.com 16/55 ELT 433 (SC) F

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 otherwise of their conclusion the or correctness 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 conduct of the Assistant Collectors and the harassmenl 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 quasijudicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellte Co ector is binding on the Assistant Colleclors 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' because 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 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 Reverue. 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."

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 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, 2A20 and Finance Act, 2021. Now, in order to protect the interest ofthe Revenue as arso that ofthe assessee, it wourd be trite at this juncture, if we dispose of the writ petition with an observation/direction that the disposal ofthe 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 filed 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 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.

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 the proceedings itself was proceduratly wrong, the subsequent orders also gets nullified automaticallY'

The preliminary objection raised by the petitioner is sustained and ali these writ petitions stands allowed on this very .iurisdictionat issue Since the impugned notices and orders are getting quashed on the point of .lurisdiction, 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 tc 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 Jax 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 Ruvindra Reddy (l stpra). 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 concemed. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed.

One CC to SRI A V'RAGHU RAM' Advocate [OPUCI

One CC to Ms B'SAPNA REDDY' Jr' SC FOR lT [OPUCI sECTlo OFFICER - {aaer::__ 1