Vision Broadband Services Private Limited vs. The Assistant Commissioner of Income Tax

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 of the grounds, that the notices issued under Section 148,{ of the Act 1l(2023) ts6 taxma,!!4o m 178 (Telangana)l

Down the line, we find that the same issue has also been decided against the Revenue by various High Courts i'e" OF INCOME TAX & OTHERS2, Gauhati High Court in the case case of GOVTND SINGH vs. TNCOME TAX OFFICERT' Gujarat High Court in the case of MANSUI(HBHAI 'pzoz+1464 ITR 430 (Bom) 'l(2024) 156 taxmann.com 478 (Gauhati)l " [(2024) 165 taxmann.com 1 15 (Punjab & Haryana)] '12024) 167 taxmanh.com 41 1 (Telangana)l "12024) 166 taxmann.com 679 (Bombay)l ' iZOZq 165 tax- uur.com 1 13 (Himachal Pradesh)l l

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 itself.

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 of notice under Section 148A and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concerned 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'l'ax authorities concerned are still even now in 2025 alsoinitiating proceedings in contravention to the provisions ofSection15lAoftheActandasaresultbynow,morethan600 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 "io protected the interest of the petitioners i i I

It appears that because ofthe afolesaid 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 lrnally at a later stage if the Hon,ble Supreme Court conhrms the decision taken by this High Court as also by the other High Courts in which the SLps are still pending, the Income Tax

The alarming trend of docket explosion in this Court' despite the clear precedent set \n' Kanukala Ravintlra Reddy (l supra)' is a matter of grave concern. The Income T6x 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 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 fresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than adhering to the established legal I i I I I i I I !

Another aspect which needs to be considered is that in fact it should ha.ve been realized by the Income Tax Department itself and should have found out via media in ensuring that proceedings under Sections l4g_A and l4g 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 Income Tax Department should have tbund out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 14g_A and l4g, other than in a faceless manner, 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 Income Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all I I I i t I i I t {

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 woutd 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 tlvo 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 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 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 thd 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 apparenfly 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 [he 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 judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." I 5. What is worrying this Bench more is the fact rhat 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 I ; l

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 fortifred 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 pr..+1cted, as has been observed in paragraphs

For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondenl Deparlment 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 142 and 14g 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 other issues raised by the petitioner which stands reserved to be raised appropriate proceedings. and contended in an 38 Since the Hon'ble Supreme Court had, in the case of Ashish exercising Agarural, supra, as a one-time the powers under Article 142 measure 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 ; I I i :

We would only further like to make observations that since we are inclined to dispose of the instant *'it peiition' conscious of thefactthattheearlierorderofthisHighCourtinthecaseof Kanakala Ravindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No'3574 of 2024' preferred by the lncome 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 (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 challenge under Se'rions 148-4 and 148 stands set aside/quashed' l, t

The Principal Commissioner of lncome Tdl 2 Hvder opp. eoi;Ia*ri#Hi. Kondapur, cyceraoao:sooflB?l' signature Towers.

The Assessment Unit. lr "A jn*:I#,ffi "b,.:riffi?1.##,Em:.:J$lrKl:i3?1",."'.Foor,E.

One CC to SRt. DUNDU TVANIMOHAN Advocate tOpUCI Consequently, miscellaneous petitions pending, if any, shall Ms. J SUNTTHA (JUNTOR SC FOR TNCoME TAX) [OPUC] Sri Gadi Praveen Kumar, Deputy Solicitor General of lndia tOpUCI pies to costs stand closed To, KK TK 1

One CC to 6. One CC to 7. Two CD Co a 1 I