Telangana High Court
Smt. Vara Lakshmi Koppula vs The Income Tax Officer on 30 April, 2025
Author: P.Sam Koshy
Bench: P.Sam Koshy
THE HONOURABLE SRI JUSTICE P.SAM KOSHY
AND
THE HONOURABLE SRI JUSTICE NARSING RAO
NANDIKONDA
WRIT PETITION No.27132 of 2024
ORDER:
(per Hon’ble Sri Justice P.Sam Koshy)
Heard Mr. A.V.Raghu Ram, learned counsel for the
petitioner and Ms. B.Sapna Reddy, learned Junior Standing
Counsel for the Income Tax Department for the respondents.
Perused the record.
2. 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 (for short ‘the Act’) or the
assessment orders those have been passed under Section 147 of
the Act which have been assailed.
3. This writ petition is being taken up today only on one of the
grounds, that the notices issued under Section 148A 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
2
under Section 148A of the Act as also under Section 148 of the
Act ought to have also been issued and proceeded in a faceless
manner.
4. The contention of the petitioner is that the issue of
proceedings being in violation of the Finance Act, 2021 i.e., the
impugned notices under Section 148A 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 of KANKANALA
RAVINDRA REDDY vs. INCOME-TAX OFFICER 1 decided
on 14.09.2023 whereby a batch of writ petitions were allowed and
the proceedings initiated under Section 148A 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 151A of
the Act read with Notification 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.
1
[(2023) 156 taxmann.com 178 (Telangana)]
3
5. Down the line, we find that the same issue has also been
decided against the Revenue by various High Courts i.e.,
by the Bombay High Court in the case of HEXAWARE
TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER
OF INCOME TAX & OTHERS 2, Gauhati High Court in the case
of RAM NARAYAN SAH vs. UNION OF INDIA 3, Punjab and
Haryana High Court in the case of JATINDER SINGH BANGU
vs. UNION OF INDIA4, and Telangana High Court in the case of
SRI VENKATARAMANA REDDY PATLOOLA vs. DEPUTY
COMMISSIONER OF INCOME TAX 5 where the issue was in
respect of international taxation, Bombay High Court in the case of
ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICER,
INTERNATIONAL TAXATION6 which is again on
international taxation and central circle, High Court of Himachal
Pradesh in the case of GOVIND SINGH vs. INCOME TAX
OFFICER7, Gujarat High Court in the case of MANSUKHBHAI
2
[2024] 464 ITR 430 (Bom)
3
[(2024) 156 taxmann.com 478 (Gauhati)]
4
[(2024) 165 taxmann.com 115 (Punjab & Haryana)]
5
[2024) 167 taxmann.com 411 (Telangana)]
6
[2024) 166 taxmann.com 679 (Bombay)]
7
[2024) 165 taxmann.com 113 (Himachal Pradesh)]
4
DAHYABHAI RADADIYA vs. INCOME TAX OFFICER,
WARD 3(3)(5)8, Jharkand High Court in the case of SHYAM
SUNDAR SAW vs. UNION OF INDIA9, Rajasthan High Court
in the case of SHARDA DEVI CHHAJER vs. INCOME TAX
OFFICER & ANOTHER and batch of writ petitions 10 which
stood decided on 19.03.2024. Similar views have also been taken
by the Division Bench of Calcutta High Court in the case of
GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS
(M.A.T 1690 of 2023), decided on 25.09.2024.
6. Even though the same issue having been decided by a large
number of High Courts, we are still confronted with large filing of
identical matters on daily basis ranging between 5 to 10 writ
petitions. That upon the instructions being sought from the
Department, they have been taking a solitary ground that the
decision of the Bombay High Court in the case of Hexaware
Technologies Ltd., (2 supra) as also the one which has been
decided by this Court in the case of Kanakala Ravindra Reddy
8
2024 SCC OnLine Guj 4012
9
2025 SCC OnLine Jhar 287
10
[2023: RJ-JD:4984-DB]
5
(1 supra) has been subjected to challenge in a Special Leave
Petition i.e., SLP No.3574 of 2024 before the Hon’ble Supreme
Court and the Hon’ble Supreme Court is seized of the matter.
In addition, there are about 1200 SLPs also filed arising out of the
same issue being decided by various High Courts.
7. 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.
8. 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
6
by all the major High Courts in India are continuously still
initiating proceedings under Section 148A of the Act and also
initiating proceedings under Section 148 of the Act in
contravention to the amendments brought into the Income Tax Act
pursuant to the Finance Act, 2020 as also the Finance Act 2021.
9. Upon a query being put as to why can’t this writ petition be
disposed of in the teeth of the decision rendered by this Court in
the case of Kanakala Ravindra Reddy (1 supra), learned 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’ble Supreme Court and it would be further burdening the
exchequer of the Union of India. It was also the contention of the
learned 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 benefit of interim protection. Nonetheless, on the earlier query
of this Court as to why the Income Tax Department have not come
out with a mechanism to issue appropriate instructions or to take
7
appropriate steps in ensuring that proceedings under Section 148A
of the Act as also the assessment orders under Section 148 of the
Act are kept in a hold in the light of the 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.
10. 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 151A 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 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 (1 supra), the Division Bench while reserving the right of
the Revenue, has also protected the interest of the petitioners
8
insofar as the liberty which was granted to the Revenue for
initiating fresh proceedings strictly in accordance with the amended
provisions of the Act, as amended by the Finance Act, 2020 and
the Finance Act, 2021. The petitioner assessee would be entitled to
challenge or raise the other legal objections if the Revenue initiates
fresh proceedings. The Department has made no endeavour in
availing the said liberty that was reserved for the Revenue. On the
contrary, they have been still sticking on to the stand, which this
High Court as well as many other High Courts already held to be
bad.
11. It appears that because of the aforesaid 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 finally at a later stage if the Hon’ble Supreme Court confirms
the decision taken by this High Court as also by the other High
Courts in which the SLPs are still pending, the Income Tax
9
Department would get the advantage of the liberty that is otherwise
protected in favour of the Revenue for initiation of fresh
proceedings from the disposal of these matters at a much later stage
which would be advantageous and beneficial to the Revenue and
would be equally disadvantageous and detrimental so far as interest
of the assesses are concerned. As a consequence, the Income Tax
Department gets an extended period of time for initiation of fresh
proceedings.
12. The alarming trend of docket explosion in this Court, despite
the clear precedent set in Kanakala Ravindra Reddy (1 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 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
10
position. Such conduct raises serious questions about the
administrative efficiency and the respect for judicial
pronouncements, particularly when this Court has already provided
a balanced approach by preserving both the Revenue’s rights and
assesses interests.
13. 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-A 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 Income Tax Department 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 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
11
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 learned
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 concerned 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
12
148 through the jurisdictional Assessing Officer whereas it ought
to have been only in the faceless manner.
14. In the case of BANK OF INDIA vs. ASSISTANT
COMMISSIONER, INCOME TAX 11, 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 Bombay held at paragraph No.25 as under, viz., :
“25. Mr. Paridwalla has rightly drawn out attention to the
decision of this Court in Commissioner of Income Tax vs. Smt.
Godavaridevi Saraf 12 as also the recent decision of the co-
ordinate Bench of this Court in Samp Furniture (P) Ltd. v. ITO 13
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 India 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. In such decision, following are the relevant
observations made by the Supreme Court.
11
[(2025) 170 taxmann.com 422 (Bombay)]
12
[1978] 113 ITR 589 (Bombay)
13
[2024] 165 taxmann.com 581/300 Taxman 452 (Bombay)
14
[1992] taxmann.com 16/55 ELT 433 (SC)
13“6. 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 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. It
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. If this healthy
14rule is not followed, the result will only be undue
harassment to assesses and chaos in administration
of tax laws.
………
12. 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. It 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 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.”
15. 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 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
15
Finance Act, 2020 and Finance Act, 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.
16. 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.
17. So far as the interest of the Revenue is concerned, we are of
the considered opinion that the interest of the Revenue has already
been considered and protected, as has been observed in paragraphs
16
36, 37 and 38 of the order which, for ready reference, is reproduced
hereunder:
36. 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 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.
37. 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 and contended in an
appropriate proceedings.
38. 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 India, permitted the Revenue to proceed
under the substituted provisions, and this Court allowing
the petitions only on the procedural flaw, the right
17
conferred on the Revenue would remain reserved to
proceed further if they so want from the stage of the
order of the Supreme Court in the case of Ashish
Agarwal, supra.
18. 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 (1 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 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.
19. 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 Sections 148-A and 148 stands set aside/quashed.
18
The consequential orders, if any, also stand set aside/quashed in
similar terms as have been passed by this High Court in the case of
Kankanala Ravindra Reddy (1 supra). There shall be no order as
to costs.
Consequently, miscellaneous petitions pending, if any, shall
stand closed.
__________________
P.SAM KOSHY, J
_______________________________
NARSING RAO NANDIKONDA, J
30.04.2025
Lrkm