Andhra Pradesh Church Of South India Provident Fund vs. The Income Tax Officer

This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 148,4. 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 of the grounds, that the notices issued under Section 1484, 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 Income Tax Act by way of Finance Ac| 2021 w.e.f., 01.04.2021 onwards, proceedings

The contention of the petitioner is thirl the issue ol proceeding s being in violation of the Financ e Ac: , 2021 i.e., the irnpugned notices under Section l48A and Section 148 ofthe Act not being ir;sued in a laceless manner, have alreadv been dealt with and decid,:d by this Court in the case of tr.{NKANALA RAVINDR.A REDDY vs. INCOME-TAX OFI;l(tEItr decided on 14.09.2023 whereby a batch of writ petitions \\,3r'c allowcd and the proceedings initiated under Section l48A as alsc under Section 148 of the lr.ct were held to be bad with consequenlri,l relieis on the ground of it being in violation of the provisions of lir.:ction I 5 1A ol the Act read with Notifrcation 1812022 dated 29.03.2t)22. -l'he said judgment passed by this Court has also been subseclrr,.:ntly,fi-rllowed in a large number of writ petitions which were allou, ed on similar terms. 'l(2023) I56 taxrnann.com 178 (Telangana)l

OF INCOME TAX & OTHERSz, Gauhati High Court in the case 'pozql464 ITR 430 (Bom) ' [(2024) 1 56 taxmann.com 478 (Gauhati)] ' l(2024) I 65 taxmann.com I I 5 (Punjab & Haryana)l '[2024) 167 taxmann.com 4l I (Telangana)] "[2024) 166 taxmann.com 679 (Bombay)] '[2024) 165 taxmann.com I 13 (Himachal Pradesh)]

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 ol 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 older 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 148.4 and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions -// ..i. ,///

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 15lA of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up belore 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 Kanakalu Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners

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 principle of judiciat 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 fiesh 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 considercrL is that in fact it shoulcl havt: becn realized by the lncome Tax Depar nrent jtself and should have lbund out via media in ensuring t rirr proceedings under Sections 148-A and 148 should not have l:c:n issued in a faceless manner, at least till the Hon'ble Supreme (' rurt decide the twelve hun<lred (1200) odd SLPs which it is alreadl. seized of or, at Ieast the Ir come Tax Depaftment should have I I und out some remedial shrps to ensure that wherever the authrtrties intend to initiate proceedings under Sections 148-A and 14ti. rther than in a faceless manncr, the proceedings should havc -reen deferred without pre<;ipitating the matter further intimating 1h,., assessee that they shall initiate appropriate proceedings only aflcr the Sl-P's are decided by the F{on'ble Supreme Court on the vtrv same issue. This again, the Income Tax Department, has not becr able to give a convincing reply, except lor the lact that such a dr:r;ision if at all LL 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 petition 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 filing 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 concemed at the State level are not ready to accept the verdict passed by a majority 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 148-A and ' -.f.:

In the case of BANK OF INDIA vr. ASSISTANT COMMISSIONER, INCOME TAXrr, on an issuc,whether it was justifiable on the part of the Income Tax Depudment rn not following an order passed by the adjudicating authtrity only on the ground that the appeals are pending, the Divisicr Bench of the High Court of Bombay held at paragraph No.25 as tnder, viz., :

Mr. Paridwalla has rightly drawn out atterlion to the decisiorr of this Courl in Commissioner of lncome "ax vs. Smt. Godavaridevi Sarafl2 as also the recent decisior of the co- ordinatt: Bench of this Court in Samp Furniture (P) _td. v. lTO13 of whiclr one of us (Justice G.S. Kulkarni) was a men b r:r, wherein the Corrt categorically observed that the Revenue naving not "accept3d" the judgment of the High Court would not Iean that trll Court o5served that the approach of the officials of [tevenue of treating decisions being "not acceptable" was critic i:ted by the Supreme Court. ln such decision, following are he relevant observations made by the Supreme Court. " ]1ZOZ} l7C raxmann.com 422 (Bornbay)l '' Jt9z81 I l-? ITR 589 (Bombay) " 12OZ+1165 taxmann.com 581/300 Taxman 452 (Bomtr.rv) 'o TtggZltaxrnann.com l6155 ELT433 (SC) r" .i

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 conclusion or of any factual malafides but with the fact that lhe 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, 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 emphasized that it is of ulmost 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 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 l)1gth, because it has been suggested by the errned Additional Solicitor General that the obserr" ations nrade by the High Court, have been harsh c - the officers It is clear that the observations of tf ( High Court, seemingly vehement, and apl;:-ently u lpalatable to the Revenue, are only intended tr; curb a tendency in revenue matters which, if allo,r,,:d to b:come widespread, could result in const(j,rrable hrrrassment to the assesses-public without any t,-.nefit tc the Revenue. We wouid like to say tlr: t the d()partment should take these observations rr the proper spirit. The observations of the High Court should be kept in mind in future and the utmost r.::gard should be paid by the adjudicating authorities : r,J the appellate authorities to the requirements of L Jicial discipline and the need for giving effect to the c,-ders of the higher appellate authorities which are lrr.rding orl them." I 5. What is worrying this Bench more is tl t fact that an cndeavour is being made whole heartedly to ensul.e .rot to generate further litigrrtion on issues which have been laid trr r.e st by a large number of lligh Courts all of whom have taken a ,) usistent stand that the actir)n of the Income Tax Department being'.,iolative of the 15 Finance Act,2020 and Finance A,ct,2021. 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 (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

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 impugn;: notices issued and the proceedings drawn by the resl.rondenl Department is neither tenable, nol sLsiainable. The notices so issued and the procedure adotrrted being p-.r se illegal, deserves to be and are accorl lgly set aside/quashed. As a consequence, all the irnpugned o'ders getting quashed, the consequential order:;passed by the respondent-Department pursuant to tle notices issued under Section 147 and 148 would a so get q Jashed and it is ordered accordingly. The r )aLson we a'e quashing the consequential order is on the p rinciples tl- at when the initiation of the proceedings t-celf was pfocedurally wrong, the subsequent orders a so gets nullified automatically.

The preliminary objection raised by the pet tioner is sustained and all these writ petitions stands a l':wed on th is very jurisdictional issue. Since the impugn(,d notices and orders are getting quashed on the ;:oint of jurisdiction, we are not inclined to proceed furlher and decide the other issues raised by lhe petitiorrer which stands reserved to be raised and contend,)'t in a r'l agrpropriate proceedings.

Since the Hon'ble Supreme Court had, ir tl.re case ol Ashish Aganval, supra, as a one{ime rneasure exercising the powers under Article 142 of the Cxstitution of lndia, permitted the Revenue tc croceed under the substituted provisions, and this Cour. ellowing the petitions only on the procedural flaw, tle 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 Ruvindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, preferred by the Income Tax Deparlment, we make it clear that allowing of the instant writ petition is subject to outcome of the aloresaid SLP prefened by the Revenue against the decision ofthis High Court in the case of Kanakala Ravindra Reddy (l supta) 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 lar as the issue of jurisdiction is concemed. As a consequence, the impugned notice under ( ( ! challenge under Sections 148-4 and 148 stands set aside/quashed.