RAKSHIT PHARMACEUTICALS LIMITED vs. The Income tax officer ward 3(1)

The Principal Chief Commissioner Hyderabad lT Towers AC Guard Masa

The National Faceless Assessment Delhi. Petrtion under Arlicle 226 of the Co ..RESPONDENTS stitution of lndia praying that in the ith, the High Court may be pleased to particularly one in the nature of Writ of d. 30.08.2024 for A.Y. 2018-19 passed F I 1 48A12024-25/1 0681 95945(1 )and the DIN and Notice No. ITBA/AST/S/1 48 (lst respondent) instead of FAO(3rd he provisions of lncome-tax Act and CHAITANYA KUMAR REDDY, Jr.SC for lT DEPT 1 (

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 1484. of the Act and the subsequent initiation of proceedings under Section 14g 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 *t{, ZOZ\ w.e.f., 01.04.2021 onwards, proceedings

OF INCOME TAX & OTHERS2, Gauhari High Courr in the case COMMISSIONER OE'INCOME TAX5 where the issue was in ' Tzoz+1464ITR 430 (Bom) 'l(2024) 156 taxmanacom 47g (Gauhati)l '[(2024) 165 taxmann.com 1 l5 (punjab & Haryana)] s [2024) 167 taxmann.com 4l l (Telangana)] " 12024) 166 taxr*dcom 679 (Bombay)l ' 12024) I 65 taxmann.com t t: iHimachai pradesh)l

Even though the same issue number of High Courts, we are still identical matters on daily basis r petitions. That upon the instruct Department, they have been takin decision of the Bombay High Co Technologies Ltd., (2 supra) as a decided by this Court in the case 8202q sCC online Guj 4012 '2025 SCC Online lhar 287 WARD 3(3X5)8, Jharkand High I o 12023 : RJ-JD :4984-DB l i iNCOI'IE -lA,:- (iFFICrIi. UNION OF INDIA & ORS .09.2024. ving been decided by a large onfronted with large filing of nging between 5 to l0 writ ns being sought fiom the a solitary ground that the in the case of Hexaware so the one which has been f Kanakula Ravindra Reddy '..1

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 Depar.tment to take appropriate steps to either hold back issuance of notice under Section l4gA and under Section 148 of the Act by the jurisdiuional 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 thc very same issue. The Income Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of 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 Ravindra Reddy (1 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 ,/ ,//

It appears that because ofthe Court had granted permitting the proceedings as a one-time measu Income Tax Department wants to t protracting these proceedings which limitation that would otherwise come writ petition is kept pending for a co and flnally at a laterr stage if the Hon the decision taken by this High Cou Courts in which the SLPs are stil 8 i granted to the Revenue for accordance with the amended y the Finance Act,2020 and assessee would be entitled to tions if the Revenue initiates has made no endeavour in ed for the Revenue. On the on to the stand, which this gh Courts already held to be oresald liberty that this High evenue for initiating fresh in a faceless manner, the e advantage of the same by ould enable them to meet the in the way. Likewise, if the iderable long period of time ble Supreme Court confirms as also by the other High pending, the Income Tax 1

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 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 undermines the principte 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 t should have been realized by the In should have found out via media under Sections 148-4 and 148 sho faceless manner, at least till the Ho twelve hundred (1200) odd SLPs wh least the Income Tax Department remedial steps to ensure that wh initiate proceedings under Sections faceless manner, the proceedings without precipitating the matter fu they shall initiate appropriate proce decided by the Hon'ble Supreme This again, the Income Tax Dep convincing reply, except for the fac erious questions about the the respect for judicial his Court has already provided both the Revenue's rights and be considered is that in fact it me Tax Department itself and in ensuring that proceedings ld not have been issued in a ble Supreme Court decide the ch it is already seized of or, at hould have found out somc ver the authorities intend to 48-A and 148, other than rn a should have been defened r intimating the assessee that ings only after the SLP's are ourt on the very same issue. t, has not been able to give a that such a decision if at all \

In the case of BANK O COMMISSIONE& INCOME T justifiable on the part of the Inc following an order passed by the adj ground that the appeals are pen High Court of Bombay held at Parag "

Mr. Paridwalla has rightly decision of this Court in Gommissi Godavaridevi Saraf'2 as also the ordinate Bench of this Court in Sam of which one of us (Justice G.S. Kul the Court categorically observed t "accepted" the judgment of the High treating decisions being "not acce Supreme Court. ln such decision observations made bY the SuPreme " 11zozs; 170 taxmann.com422(Bo t2 1t9281 113 ITR 589 (Bombay) " 1202+1165 taxmann.com 581i300 T to ltggzl taxmann.com 16155 ELT 431 SC) \z ", on an issue whether it was me Tax Department in not dicating authority only on the , the Division Bench of the ph No.25 as under, viz., : recent decision of the co- Furniture (P) Ltd. v. lTO13 rni) was a member, wherein t the Revenue having not ourt would not mean that till n to law, it would loose its ion of the Supreme Court in ce Corporation Ltd.14, the the officials of Revenue of ble' was criticized by the following are the relevant urt y)l 452 (BombaY) .

Sri Redciy 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 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, righfly criticized this conduct of the Assistant Collectors and the harassmenl lo 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 Appellle Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assislant 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 competenl court. lf this healthy

We have dealt with this because it has been sugg Additional Solicitor General made by the High Court, h officers. [t is clear that the o Court, seemingly vehem unpalatable to the Revenue, a a tendency in revenue ma become widespreqd, could harassment to the assesses-p to the Revenue. We woul department should take th proper spirit. The observati should be kept in mind in futu should be paid by the ad.iudi appellate authorities to the discipline and the need for gi of the higher appellate autho on them."

What is worrying this B endeavour is being made whole h further litigation on issues which ha number of High Courts all of whom that the action of the Income Tax D uit will oniy be undue chaos in administration aspect at some length, sted by the learned that the observations been harsh on the servations of the High nt, and apparently only intended to curb which, if allowed to sult in considerable blic without any benefit like to say that the e observations in the ns of the High Court and the utmost regard ting authorities and the uirements of judicial ng effect to the orders ties which are binding h more is the fact that an dly to ensure not to generate e been laid to rest by a large have taken a consistent stand ent being violative of the 15 Finance Act,2020 and Finance Act,ZO2L Now, inorderto 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.

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 reas issued and the proceedings Department is neither te The notices so issued and the per se illegal, deserves to be aside/quashed. As a conseq orders getting quashed, the co by the respondent-DePartmen issued under Section 147 quashed and it is ordered a are quashing the consequentia that when the initiation of th procedurally wrong, the subs nullified automatically.

The preliminary objection sustained and all these writ this very jurisdictional issue. Si and orders are getting qu jurisdiction, we are not inclin decide the other issues raise stands reserved to be raise appropriate proceedings-

Since the Hon'ble SuPr of Ashish Agarual, supra' exercising the Powers un Constitution of lndia, Perm under the substituted Provisio the petitions onlY on the P cedural flaw, the right y reference, is reproduced ns, the impugned notices wn by the respondent- able, nor sustainable. procedure adopted being and are accordingly set ence, all the imPugned sequential orders passed pursuant to the notices d 148 would also get ordingly. The reason we order is on the principles proceedings itself was uent orders also gets raised by the petitioner is titions stands allowed on ce the impugned notices hed on the point of to proceed further and by the petitioner which and contended in an e Court had, in the case s a one{ime measure er Article 142 of the the Revenue to proceed s, and this Court allowing

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 (1 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 Ravindru Reddy (l tryra). 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 1S concemed. As a consequence, the impugned notice under t t challenge under Sections 148-4 and 148 stands set aside/quashed.

Two CD CoPies BSK BS 19- ( I ( I ) t (