Mr. Srinivas Palde vs. The Income Tax Officer, Ward -1

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 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 ofthe grounds, that the notices issued under Section l48A of the Act and the subsequent initiation of proceedings under Section 14E 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,202l w.e.L, 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 148,4' 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 ot 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 l5 1A of the Act read with Notihcation 18/2022 dated 29.03.2022. 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) I 56 taxmann.com I 78 (Telangana) l -/t/ OF INCOME TAX & OTHERS2, Gauhati High Court in the case ABHIN ANILKUMAR SHAH vs. INCOME TAX OTTICE& 'lzoz+1464 ITR 430 (Born) 'l{2024) 156 taxmann.com 478 (Gauhati)l 'l(2O24) 165 taxmann.com I l5 (Punjab & Haryana)l ' [2024) 167 taxmann.com 4 I I (-l'elangana)] " 12024) 166 taxmann.corn 679 (Bombay)l '12024) 165 taxmann.corn t l3 (llimachal Prade sh)l ,^l

On the one hand, even though the order of this Court that was passed as early as on 14.0g.2023 and rnore 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 jurisdicrional 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 ofthe 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 Department where they would be required to file equal number of SLPs before the Hon'bte Supreme Court and it would be further burdening the exchequer of the Union of India. It was also the contention of the teamed Standing Counsel that no prejudice would be caused to the interest of the petitioners in case if this writ petition is kept pending till the finalization of the SLPs pending before the Hon'ble Supreme Court and the fact that the petitioner is already enjoying the bene[rt of interim protection. Nonetheless, on the earlier query of this Court as to why the lncome Tax Department have not come out with a mechanism to issue appropriate instructions 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 concerned are still even now in 2025 also initiating proceedings in contravention to the provisions of Section l51A of the Act and as a result by now, more than 600 to 700 petitions have been already got pitcd up befbre this High Court on an issue which otherwise stands squarely covered by the judgment of this court in the case of Kanakara Ravindra Reddy (l supra). What is also surprising is the lact 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 II..

The alarming trend of docket explosion in this Court, despite the clear precedent setin 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 oljudicial 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 lirnitation periods, rather than adhering to the established tegat

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-,{ 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 lncome Tax Departmeflt 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 mannet, 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 lncome Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all I

In the case of BANK OF INDIA vs' ASSISTANT COMMISSTONER, INCOME TAXIr, on an issue whether it was justifiable on the paft 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 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 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't4' 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 observalions made by the Supreme Court' It (2025) [70 taxmann.com 422 (Bombay)] " 119281 I Ii ITR 589 (Bombay) tt 7zOZl1 165 taxmann.com 58 l/300 Taxman 452 (Bombay) 'o 1t99Z1tar,(mann.com t6155 ELT 4ll (SC)

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 mafters 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 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 latge 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 liinance Aet. 2020 and Finanee Act, 2tt2 l . Now, in order to protect the interest of the Revenue as also that ofthe assesse€, it would be trite at this juncture, if we dispose of the writ petition with an observationy'direction that the disposar 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 ttre 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 olas a covered matter.

So far as the interest of the Revenue is concerned, we are of the considered opinion that the interest ofthe 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 acmrdingly set aside/quashed. As a consequence, all the impugned orders gefting 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 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 olher 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 the aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravindra Reddy (1 stpra). This, in other words, would mean rhat 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 concemed. As a consequence, the impugned notice under challenge under Sections 148-,4 and l4g stands set aside/quashed. ( I ( ! i l I I i I l I I I I I

One CC to SRl. A. V. A. SIVA KARTIKEYA, Advocate IOPUCI

One CC to Ms. B. SAPNA REDDY, (JUNIOR SC FOR INCOME TAX) loPUCl 6, Two CD Copies M JP