Sri Jagadeshwar Rao Madhavaram vs. The Income Tax Officer

This is a writ pctition where the proceedings are either challenged to the notices which were issued under Section l4gA and 148 of rhe Incorne Tax Act, 196l (for short.the Act,) or the assessment or.dcrs those have been passed under Section 147 of the Act which have been assaileci_ 3. l'his wrir petition is being raken up today only on one of the grounds, that rhe norices issued under Section l4gA of the Act and the subsequent initiation of proceedings under Section l4g of the Act bl tlre lurisdictionar Assessing orficer, whereas in terms of the amendntent that was brought to the Income Tax Act by way of Finance Act, 202 I w.e.f., 01.04.202 I onwards, proceedings

The contentiron of the petitioner is that the issue of proceedings being in violation of the Finance Act' 202 I i e ' the impugned notices under Section l48A and Section 148 of the Act not being issued in a faceless manner' have already been dealt with and decided by this Court in the case ol KANKANALA RAVINDRA REDDY vs' INCOME-TAX OFFICEIIT 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 hetd to be bad "vith cotrscqueutial reliefs on the ground of it being in violation ol the provisions of Section l5 I A of the Act read with Notification l8/2022 dated 29 03 1022' The said judgment passed by this Cout't has also beerr subseqtrentl'v lollowed in a large number of writ petitions rvhich rvere allorved on sitnilar manner. terms. 'l(2023) 156 taxmann.corn 178 ('lclangana)l OF INCOME TAX & OTHBRS2, Gauhati High Court in the case respect of international taxation, Bombay I{igh Court in the case of taxation and central circle. I ligh Court ol l{imachal pradesh in the case of GOV{ND SINGH vs. INCOME TAX OFFICERT, Gujarat High Courl in rhe case ol MANSUKIIBHAI 'lzoz<1464 ITR 430 (tlorrr) ' K20241 1 56 raxtnanrr.eorrr { 7g 1 ( iauh:rr i.1 l '[(2024) 165 raxrnann.conr l l5 (t,trnjab & Haryana)] s [2024) 167 taxmann.conr -l t I (.felangana)] :L?024) 166 raxmann,corn 679 (Bonrba1,)l ' 12024) 165 taxnlaln.corr t tf iUi,nac(at't,radesh)i \\

Even though the same issue having been decicled by a large number of High Courts, we are still confronted rvith large filing of identical matters on daily basis ranging betrveen i to l0 writ petitions. That upon the instructions being sought fioni the Department, they have been taking a solitary ground that the decision of the Bombay High Court in ttrc case ol- Hexowore Technologies Ltd., (2 supra) as also the onc r'r'hich has beetr decided by this Court in the case of Kttntkulo Rutindrt Reddl* t202+ scc online Guj 4012 '2025 SCC Online Jhar 287 ' n 12023, RJ-JD :49 84-DBl

To a query being put to the learned counsel for the Revenue, they have categorically accepted the ract rhat there is no interim order granted by the Hon,ble Supreme Court in any of these matters pending before it. Meanwhile, tiesh writ petitions of identical nature are being piled up belorc 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 itse{f.

On the one hand, even though rhc order ol. 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 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 .jurisdictional Assessing Officer, rather the authorities concemed in the teeth ol series of decisions

As a result of which, what we are f'acing 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 stil[ even now in 2025 also initiating proceedings in contravention to the provisions ol Section 15 1A of the Act and as a result b1. nou,, rnore than 600 to 700 petitions have been already got pilcd up bclbre this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case ol' Kunakah Ravindrn Redtly ( I supra). What is also surprising is the iact that though while allowing the writ petitions in the casc of Kunakola Rovirulra Reddy (l supra), the Division Bench wlrile reserving the right of the Revenue, has also protected the interest of the petitioners l i iI

Another aspect which needs to be considered is that in fact it should havc been realized by the Income Tax Department itself and should har,e tbund out via media in ensuring that proceedings under Sections 148-,4. and 148 should not have been issued in a laceless manner, at least till the Hon'ble Supreme court decide the twelve hr.rndred ( 1200) odd SLPs which it is already seized of or' at least thc Income lax Department should have found out sol"ne reuredial stcps to ensure that wherever the authorities intend to initiatc proceedings under Sections 148-,4. and 148' other than in a laccless Iranncr, the proceedings should have been deferred without precipitating the matter further intimating the assessee that thcv shall initiate appropriate proceedihgs only after the SLP's are decidcd by thc t lon'ble Supreme Court on the very same issue' This again. the fncot.ne'Iax Department' has not been able to gir"c a convincing reply. except for the fact that such a decision if at alt

In the case of BANK OF INDIA vs' ASSISTANT COMMISSIONER, TNCOME TAX|r' on an issue whether it was justifiable on the part 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 Bornbay 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 Saraf'' as also tre recent decision of the co- ordinate Bench of this Court in Samp Furniture (P) Ltd' v' lTOr3 of which one of us (Justice G'S Kulkarni) was a member' wherein the Court categorically observed that the Revenue having not "accepted' the ludgment of the High Court would not mean that till the same rs set aside in a manner known to law' it would loose its binding force Referrtng to the decision of the Supreme Court in Union of lndia vs. Kamlakshi Finance Corporation Ltd'14' 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 decislon' following are the relevant observattons made by the Supreme Cou( tt 112025; 170 tannaun,cour 422 (Bombay)l '2 1t9281 I l3 l.l t{ 589 (t}ornbav ) " TZOZ+1165 taxmann.corn 581i300 I'artnan 452 (Bombay) 'o It9921 taxrrarln.c()ur l(r,'55 F.l-1'-l]l (SC)

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 th€ claim of the assessee was not tenable and that, if it was accepted, the Reveoue would sutfer. 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 \,vere placed before them, one of the Collector (Appeals) and the other of the Tribunat. The High Court has, in our view, righfly critrcized 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 h\]her to them in the appellate hierarchy. lt cannot be too vehemenfly emphasized that it is of utmost importance that, in disposing of the quasijudrcial 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 Trtbunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the Jurisdiction of the Tribunal. The prirrci:les of judrcial disciptine require that the orders of the higher appellate aulhorities should be followed unreservedly by the subordrnate authorities. The rnere fact that the order of the appellate authority is not "acceptable,, to the department - in itself an objectioflable 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 I i I I l l l i l

We have dealt with this aspect at some length' because it has been suggested by the 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 apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters 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 adludicating authoritles and the appellate authorrties to the requirements of judicial discipline and the need for grving effect to the orders of the higher appellate authorltles whrch are btnding on them."

What is wotrying this Bcnch more is the fact that an endeavour is being made r'vhole hearredly to ensure not to generate further litigation on issues rvhich lrar e bcen taid to rest by a large number of High Courts all of rvhotl ha'"'c taken a consistent stand thattheactionofthcltrcottrcTaxf)cpartrrrentbeingviolativeofthe l i I 6I t i

So lar as the intcrcst ol the Revenue is concemed, we are of the considered opinion that the interest of the Revenue has already been considered and protectcd, as has been observed in paragraphs i i I I I t II I ! t Itf I l

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 accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the rqspondent-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 consequentlal 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 wr( petitrons stands allowed on this very iurisdictional issue Srnce the rmpugned notlces and orders are getting quashed on the point of ,urisdiction, we are not inclined 10 proceed further and decide the other issues raised by the petitloner which stands reserved to be rarsed and conlended rn 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 Artrcle 142 of the Constitution of lndia, permitted the Revenue to proceed under the substituted provlsions and lhls Court allowing the petitions only on the procedural flaw, the right

Accordingly, rhe instanr rvrit petition stands allowed in favour of the assessce so f'a r as the issue of jurisdiction I ls concemed. As a conscquence, the irnpugned notice under challenge under Secrions I4g-A and l4g stands set aside/quashed. l : i I I I 1 i ! i I I I I II 5 I I ! i I i I I t i I I ; Iit E II I II