Mr. Naveen Reddy Thadisina vs. The Income Tax Officer

This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 148A and 148 of the Income Tax Act, 1961 (flor short 'the Act') or the assessment orders those have been passed under Section 147 ol the Act which have been assailed.

This writ petition is being taken up today oniy on one of the grounds, that the notices issued under Section 148,4. 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 Act, 2021 w.e.f., 01.04.2021 onwards, proceedings THE HONOURABLE SRIJUSTICE P.SAM KOSHY AND THE IIONOURABLE SRI JUSTICE NARSING RAO NANDTKONDA \\'.P.No.5894 OF 2025

The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act. 2021 i.e., the impugned n,)tices under Section l48A and Section 148 of the Act not being issued in a faceless manner, have already been dealt with and deciderl by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICERT decided on 14.09.20113 whereby a batch of writ petitions were allowed and the proceedings initiated under Section l48A as also under Section 148 of the Ar:t were held to be bad with consequential reliefs on the ground of it lrcing in violation of the provisions of Section 151A of the Act read with Notification 1812022 dated 29.03.2022. The said judgment passed by this Court has also been subsequently followed in a large nuaber of writ petitions which were alloq,ed on similar terms. '[(2023) 15(r tirxrnann.com 178 (Telangana)]

Down the line, we find that the same issue has also been decided against the Revenue by vanous High Courls i.e., by the Bornbay Fligh Court in the case of HEXAWARE 'TECIINOLOGIES L]'D., r,s. ASSIS'IAN'I CON{MISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case SRI VENKATARAI\IANA REDDY PATLOOLA vs. DEPUTY 'yzoz+1464 ITR 430 (Bom) '1Q024) 156 taxmann.com 478 (Gauhati)l " l(2024) 165 taxmann.com I l5 (Punjab & Haryana)l ' [2024) I 67 taxmann.com 4l I (Telangana)] " [2024) 166 taxmann.corn 679 (Bombay)] '[2024) 165 taxmann.com 113 (Himachal Pradesh)] WARD 3(:tx5)r3, Jharkand I{igh Court in the case of SHYAM the case of SI{ARDA DF] CHI{AJER vs. I\COME TAX OFFICEIT & ANOTHER and batch of writ pctitionsro which stood decide d on 19.03.2024. Similar views ha,ue also been taken by the Division Bench ol Calcutta High Court in the case of GIIIDI{,\R GOPAL DAI.N{IA vs. UNION Oli INDIA & ORS (M.A.T 169C of 2023), decided on25.09.2024. 6. Ilr,cn though the same issue having been decided by a large number ol H gh Courts, we are still confronted rvith large filing of identical malters on daily basis ranging between 5 to l0 writ petitions. That upon the instructions being souqht lrom the Department, they have been taking a solitary gr,rund that the decision ol the Bombay High Court in the case ctf l{exaware Technologies Ltd., (2 supra) as also the one which has been decided by this Court in the case of Kanskala Rorindra Reddy '2024 SCC onl-ine Guj 4ol2 '2025 SCC On-ine Jhar287 ' o y2023, RJ-J D : 4984-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, ffesh writ petitions of 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 rernedial steps having been either hold back issuance of notice under Section 1484. and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities conccrned in the teeth of series of decisions -ra- identical nature are being piled up before this Bench on daily basis taken by the Income Tax Department to take appropriate steps to 6 by all the major High Courts in India are continuously still initiating p'oceedings under Section 1484. of thc Act and also initiating proceedings under Section 148 ol the Act in contraventic,n to the amendments brought into the lncome Tax Act pursuant to the Irinance Act,2020 as also the Financ:e Act202l .

Upon a query being put as to why can't this rvrit petition be disposed ol in the teeth of the decision rendered by this Court in the case ol A'anakala Ravindra Reddy (l supra), learned Standing Counsel lbr the Income Tax Department contends that those would unnecessarill burden the Income Tax Department where they would be required to file equal number of SLPs before the Ilon'ble Sr"rpreme Court and it would be further burdening the exchequer of the Union of India. [t was also the contention of the leamed Stand ng Counsel that no prejudice would be caused to the intercst olthe petitioners in case if this writ petition is kept pending titl the flnalization of the SLPs pending before the Hon'ble Supreme Court and the fact that the petitioner is already enjoying the benefit of interim protection. Nonetheless, on the earlier query olthis Court a:; to why the Income Tax Department have not come out with a mer:hanism to issue appropriate instructions or to take a 7 I appropriate steps in ensuring that proceedings under Section 1484 of the Act as also the assessment orders under Section 148 of the Act are kept in a hotd in the light ofthe decisions dedcided by the various High Courts, it was submitted by the learned Standing Counsel that the said steps can only be taken at the level of CBDT as any such steps would have to be taken Pan India and cannot be limited to any of these jurisdictional High Courts.

As a result of which, what we are lacing 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 concemed 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 before this High Court on an issue which otherwise stands squarely covered by the judgment of this Cour-t in the case of Kanakalu Ravindra Reddy (1 supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kunakalu Ravindrs Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners I I

It appeirrs that because of the aforesaid liberly that this High C'ourt had granted permitting the Revenue for irrrtiating fresh proceedings as a one-time measure in a faceless manner, the Income l'ax tlepartment wants to take advantage of the same by protracting these proceedings which would enable thent to meet the limitation that would otherwise come in the way. Lihewise, 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 Ccurt confirms the decision ta<en by this High Court as also by the other High Courts in rvhir:h the SLPs are still pending, the lncome Tax

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 Departrnent'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 V

Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fldes 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 correetness 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, 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 offlcers are bound by the decisions of .the appellate authorities. The order of the Appellte Collector is binding on the Assistant Collectors working within his .iurisdiction 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 .iudicial discipline require lhat 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 Acrditional 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 Cc urt, seemingly vehement, and apparently uncalatable to lhe Revenue, are only intended to curb a 'endency in revenue matters which, if allowed to be,:ome widespread, could result in considerable harassment to the assesses-public without any benefit to the Revenue. We would like to say that the del)artment should take these observations in the proper spirit. The observations of the High Court shc,uld be kept in mind in future and the utmost regard shculd be paid by the adjudicating authorities and the apf,ellate authorities to the requirements of judicial dis(:ipline 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 that an endeavour is being made whole heartedly to ensure not to generate further litigat on on issues which have been laid to rest by a large number of tligh Courts all of whom have taken a consistent stand that the actior of the [ncome Tax Department being r,'rolative of the 15 Finance Act, 2020 and Finance Act, 2021. Now, in order to protect thc intercst of the Revenue as aiso that olthe assessee, it would be trite at this juncture, if rve dispose of the writ petition with an observationidirection that the disposal of the instant writ pctition in terms ol the judgment rendered by this High Court in the case of Kankanala Ravindrq Reddlt (1 supra) shall however be subjcct to the outcome of the SLPs which were filed by the Income Tax Department and which is pending consideration belore the Hon'ble

In the given facts and circumstances, this Bench is ol the considered opinion that unless and until we do not tirnely 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 Courl 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 Supreme Cour1. 16 36,37 and.l8 ofthe order which, for ready reference, is reproduced hereunder: 3€. 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 pe'se illegal, deserves to be and are accordiigly set aside/quashed. As a consequence, all the impugned orcers gefting quashed, the consequential orders passed by the respondent-Department pursuant to the notices issr:ed under Section 147 and 148 would also get queshed 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 pror;edurally wrong, the subsequent orders also gets nullified automatically.

The preliminary objection raised by the petitioner is sustrined and all these writ petitions stands allowed on this 'rery jurisdictional issue. Since the impugned notices and orders are getting quashed on lhe point of juris<liction, we are not inclined to proceed further and decicle the other issues raised by the petitioner which stancls reserved to be raised and contended in an appft ,priate proceedings.

Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one{ime measure exerc sing the powers under Arlicle 142 o1' the Constitution of lndia, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the p3titions only on the procedural flaw, the right I \ i

We would only fuflher 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 ofthis 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 ol 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-A and 148 stands set aside/quashed. / I

Assessment Llnit, lncome Tax Department,, Nationa I e-t\ssessment Center, 3 New Delhi, Rc,om No.. 401,2nd Floor, E-Ramp, Jawaharlal Nehru Stadium, New Delhi - 1'0 003. The Principal rlornmissioner of lnccme Tax- 4, HyderabaC, l.T. Towers, 10-2- 3, AC Guards, Hyderabad - 500 004, Telangana One CC to Sr A. V. A. Siva Kartikeya, Advocate [OPUCI One CC to Ms Bokaro Sapna Reddy (Jr. SC for lncome -fax) [OPUC] Two CD Copies GJ To, TJ 4 5 c, SDI.B. REKHA RANI ASSIdTANT REGISTRAR SECTION OFFICER