Thikka Reddy Palakurthi Vs Dc/Acit Circle - 5(1) — Income Tax | Telangana HC (2025)

Thikka Reddy Palakurthi Vs Dc/Acit Circle - 5(1) — Income Tax | Telangana HC (2025)

What the court decided

AI extract

Outcome

Writ petition allowed on the jurisdictional issue; the impugned notices under Sections 148A and 148 dated 28.03.2024 and the assessment order dated 21.01.2025 stand set aside/quashed, with consequential orders likewise quashed in terms of Kanakala Ravindra Reddy; disposal expressly subject to the outcome of SLP No. 3574 of 2024 with liberty to either party to seek revival; no order as to costs; pending miscellaneous petitions (including IA No. 1 of 2025 under Section 151 CPC) closed.

Issue for consideration

Whether the assessment order dated 21.01.2025 passed by the 3rd respondent u/s 147 r.w.s. 144B/148 of the Income-tax Act for A.Y. 2017-18 (DIN ...1072370781(1)), consequent to the order u/s 148A dt. 28.03.2024 and the notice u/s 148 dt. 28.03.2024 issued by the JAO (1st respondent) instead of the FAO (3rd respondent), is void, illegal and contrary to the provisions of the Income-tax Act and the principles of natural justice. +2 more

Court's answer

The writ petition is allowed in favour of the assessee on the jurisdictional issue: the impugned notices under Sections 148A and 148 dated 28.03.2024, issued by the JAO instead of the FAO, and the consequential assessment order dated 21.01.2025, stand set aside/quashed.

Ratio / Principle

All consequential orders, if any, passed pursuant to the quashed notices also stand set aside/quashed in similar terms as in Kanakala Ravindra Reddy; there shall be no order as to costs and pending miscellaneous petitions shall stand closed.

Key takeaways

Initiation of proceedings under Sections 148A/148 through the jurisdictional Assessing Officer after the Finance Act 2020/2021 amendments (requiring faceless operation per Section 151A read with Notification 18/2022) is held unsustainable; this Court follows the consistent stand of the majority of High Courts embodied in its own earlier Kanakala Ravindra Reddy decision.ratio¶96
Identical writ petitions squarely covered by this Court's earlier decision (fortified by other High Courts) are to be timely disposed of as covered matters rather than kept pending, especially as counsel conceded no interim order has been granted by the Supreme Court in these matters; the Revenue's interests were already considered and protected in paragraphs 36-38 of the Kanakala Ravindra Reddy order, including the reserved liberty to initiate fresh proceedings in accordance with the amended provisions.ratio¶97

Detailed headnote1 paragraphs

Direct taxes - Faceless assessment scheme - Notices under Sections 148A and 148 dated 28.03.2024 and consequential assessment order dated 21.01.2025 u/s 147 r.w.s. 144B/148 (A.Y. 2017-18, DIN ITBA/AST/S/148/2024-25/1072370781(1)) routed through the jurisdictional Assessing Officer/JAO instead of the specified authority (FAO) after the Finance Act, 2021 amendments (w.e.f. 01.04.2021) - Held violative of Section 151A read with Notification 18/2022 dated 29.03.2022; writ petition allowed on the jurisdictional issue in terms of Kanakala Ravindra Reddy (Telangana HC, 14.09.2023) [(2023) 156 taxmann.com 178], a view consistently taken by the Bombay (Hexaware; Abhinav Anilkumar Shah; Bank of India), Gauhati, Punjab & Haryana, Telangana, Himachal Pradesh, Gujarat, Jharkhand, Rajasthan and Calcutta High Courts - Impugned notices and all consequential orders quashed - Allowance expressly subject to the outcome of SLP No. 3574 of 2024 and about 1200 allied SLPs pending before the Supreme Court, with liberty to seek revival - No interim order exists in those SLPs - Court censures the Department for continued non-faceless initiations causing docket explosion (600-700 petitions), viewing the wait-and-initiate strategy as a calculated attempt to circumvent limitation; judicial discipline requires adherence to binding orders notwithstanding pending appeals (Bank of India v. ACIT, drawing on Union of India v. Kamlakshi Finance) - Revenue's rights preserved: liberty to initiate fresh proceedings strictly per the amended provisions - No costs; miscellaneous petitions closed.

134471

HIGH COURT^{FOR THE STATE OF TELANGANA} AT HYDERABAD

(SPecial Original Jurisdiction)

THURSDAY ,THE^{TWENTY FOURTH DAY OF APRIL} TWO THOUSAND^{ANDTWENTY FIVE}

PRESENT

THE HONOURABLE^{SRIJUSTICE P.SAM KOSHY} AND THE HONOURABLE^{SRI JUSTICE NARSING RAO NANDIKONDA}

WRIT PETITION^{NO:5 154 0F 2025}

Between:

Thikka Reddy^{Palakurthi, S/o Narayana} -Reddv^{Aoed about 57 years} Occuoation. Arsinerr]"if.rur^{e-)-6B,4IiUl2.Bhavani [lagar.Road No. 12,} dr'"iJ*'Hirit^{5. o, xnair"taoad,Hyderabad, Telangana-500034'}

...PETITIONER

AND

DC/ACIT Circle^{- 5(1), Hyderabad,RoomNo 2]4'B-Block'2nd.Floor'lT} ' i#;'ACGriroi) Mas6o rank, Hvderabad, Telansana 500004

The Principal^{Chief Commissioner of lncoine Tax AP andTS' 1Oth Floor' C-}

Bi;;i,, i.i.%*"r.' to-z-s, A.C. Guards, Hvderabad-500004'

3- The Assessment^{Unit, lncome Tax Department'NationalFaceless} " A;;;#;;i C"nti", b.rtii rtli'.r"i.v oi'Finan-c-e, Room No 401' 2nd Floor' E- iii.p, Ja*an"dal^{Nehru Stadium, Delhi-1 10003}

...RESPONDENTS

Petition under^{Article 226 of the constitutionof lndia prayingthat.inthe} circumstancesStatedintheaffidavitfiledtherewith,theHighCourtmaybepleased t. i;r" an appropriate^{writ order or direction more particularlyone in the natureof} declaring the^{Assessmentorder dt. 21 .O1 .2025 passed by the} writ "t-rrlr"o'rmus, giJiesponoent uts147 r.*.r'tqut+qB of^{the lncome-taxAct for A.Y.201 7-18vide} orsr r.r". tieninslslt+7t2o24-25t1072370781(1),^{consequent to theorderpassed} ,i.'i+anloi dt.^{28.03.2024 vide DtN No. |TBA/AST/F/148N2o23-} )iinoaniizt'iz4(l)^{and the notice u/s 148 dt. 28.03.2024vide DINNo.} natuAsilslr+altzozs_z+n063563433(1),^{issued by the JA0(1st respondent)} instead of FAO(3rd^{respondent), as void, illegal' and contrary to the provisions of} tncome-tax Act^{andcorltrary to the Principles of Natural Justice}

'..:

lA NO: 1 OF 2025

Petition under section 1 5 i cpc praying that in the circumstances stated in the_ affidavit filed in support of the petition, the High court may be pleased-to Jay all further proceedings pursuant to the Assessmenl order at. zi .ol iozs prr."J by the 3rdrespondent uls 147 r.w.s 14411448 of the lncome-tax Act for A.y. 2017-iB vid e D I N No. ITBA/AST/S I 1 4Z I 2024 -25 I 1 07 231 07 81 (1 )

Counsel for the Petitioner: SRl. DUNDU MANMOHAN

!9gnse!^{for the Respondent Nos.1&2:Ms. BOKARO SAPNA} REDDy (Jr. SC FOR TNCOME TAX)

Counsel for the Respondent No.3: SRI GADI PRAVEEN KUMAR Dy SOLICITOR GENERAL OF INDIA

The Court made the following: ORDER

<br>

THE HONOT]RABLE^{SRT JUSTICEP.SAM KOSHY} AND TIIE HONOURABLE^{SRI JUSTICE NARSING RAO} NANDIKONDA

W.P.No.51 540^{F 202s}

@EB' @er^{Hon'bleSri Justice P'Sam Koshy)}

Heard Mr.^{DunduManmohan,leamed counselfor the} petitioner and Ms'^{B.SapnaReddy, learned Junior Standing} Counsel for^{the lncomeTax Department for respondentNos'l} and 2. Perused^{the record.}

This is a^{writ petition where the proceedingsare either} challenged^{to the noticeswhich wereissued under Section148^4} andl48oftheIncomeTaxAct,lg6l(forshort.theAct')orthe assessment^{orders those have been passed underSection 147 of} the Act which^{have been assailed'}

This writ^{petition is being taken up today only on one of the} grounds, that^{the noticesissued under Section 1484. of the Act} and the^{subsequentinitiationofproceedings under Section 148 of} the Act by^{the jurisdictional Assessing Offrcer'whereasin terms} oftheamendmentthatwasbroughttothelncomeTaxActbyway of Finance^{Act, 2021 w'e'f', 01'04'2021 onwards'proceedings}

'' - r'jl
*-t
d{,)^)pw
. . rr.-..-,r,-!lr. - Id.

il

2

under Section 1484. ofthe Act as also under Section 14g ofthe Act ought to have also been issued and proceeded in a faceiess manner

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 148,4. and Section l4g of the Act not being issued in a faceless manner, have already been dealt with and decided by this Court in rhe case of KANKANALA RAVINDRA REDDY vs. INCOME_TAX OFFICER' decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section t4gA as arso under Section 148 of the Act were held to be bad with consequential reriefs on the ground of it being in violation of the provisions of Section l5lA of the Act read with Notification l8lZ02Z 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.

'l(2023)¹⁵⁶ taxmann.com 178 (Telangana)l

3

Down the^{line, we find that the same issrie''ihasatr$obeen} decided against the^{Revenue by variousHigh Courts i'e''} by the^{Bombay High Court in the case of IIEXAWARE} TECTINOLOGIES^{LTD., VS. ASSISTANT COMMISSIONER} OF INCOME TAX^{& OTHERS2,GauhatiHigh Court in the case} of RAM^{NARAYANSAII vs. UNION OF INDIA3,Punjab and} Haryana High^{Court in thecaseof JATINDERSINGH BANGU} vs. UNION OF^{INDIA4, and Telangana High Court in the case of} SRI .ENKATARAMANA^{REDDYPATLOOLAVS. DEPUTY} COMMISSIONER^{OF INCOME TAX5where the issuewas in} respect of intemational^{taxation, Bombay High Court in the caseof} ABHIN ANILKUMAR^{SHAH VS. INCOME TAX OFFICE&} INTERNATIONAL^{TAXATION6which is again on intemational} taxation and^{central circle,HighCourt of HimachalPradeshin the} case of GOVIND^{SINGH vs. INCOME TAX OFFICERT'} Gujarat High^{Court inthe case ofMANSUKIIBIIAI}

'pozql464ITR^{430 (Bom)} '^{(1202i1 1 56 taxmann'com 478 (Gauhati)l} ' l(2024)^{165 taxmann.com1 I 5 (Punjab& Haryana)l}

'[2024)^{167 taxmann.com 411 (Telangana)]} " l2OZ4)^{166 taxmann.com 679(Bombay)l} 'iZOZqi^{165 taxmann'com113(HimachalPradesh)l}

I

DAIIYdBIIAI RADADIYA vs. INCOME TAX OFFICER, WARD 3(3Xt8, Jharkand High Court in the case of SHyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and barch of *rit petitionsr0 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 on25.09.2024.

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 ,s to 10 writ petitions. That upon the instructions being sought Iiom the Department, they have been taking a solitary ground that the decision of the Bombay High Court in the case of Hexaware Technologies Ltd., (Z supra) as also the one which has been decided by this Court in the case of Kqnakala Ravindra Reddy

8z0z+ scc online Guj 4012

'2025^{SCCOnline Jhar287}

'o 12023..^{RJ-JD :49 84-DBl}

5

l I l L I I i l I

(1 supra) has been^{subjected to c,hallengein' a Special Le4vp} Petition i.e., SLP^{No.3574 of 2024 before the Hon'bleSupreme} Court and^{the Hon'bleSupreme Court is seized of the matter'} In addition,^{thereare about1200 SLPs also filed arisingout ofthe} same issue^{being decided by variousHigh Courts'}

To a query being^{put to the learned counselfor the Revenue'} they have categorically^{accepted the fact that thereis no interim} order^{granted by the Hon'bleSupremeCourt in any of these} matters^{pending before it.Meanwhile,fresh writ petitions of} identical nature^{are beingpiled up beforethis Benchon daily basis} and the^{pendency is getting increasedon matterwhichotherwise} has already been^{dealtand decidedby this very High Courtitself'}

On the one^{hand, even thoughthe order of this Court that} was passed^{as earlyas on 14.09.2023and more 16 months have} lapsed, till^{date, we do not frnd any remedial steps havingbeen} taken by the^{Income Tax Departmentto take appropriate steps to} either hold back^{issuance of noticeunder Sectionl48Aand under} Section 148^{of the Act by the jurisdictionalAssessing Officer'} rather the authorities^{concernedin the teeth of series of decisions}

1

5

by all the major High Courts in India are continuously still initiating proceedings under Section 14gA of the Act and arso initiating proceedings under Section l4g 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 Z02l .

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 (l 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 nureber of SLps before the Hon'ble Supreme Court and it would be furlher burdening the exchequer of the Union of India. It was also the contention of the leamed 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 hnalization of the SLps pending before rhe Hon,ble Supreme Court and the fact that the petitioner is already enjoying the beneht 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

l(

1i

appropriate^{stepsin ensuring that proceedingsund6r'section148.4} of the Act^{as also the assessment orders under Section148 of the} Act are kept^{in a holdin the light of the decisions dedcided by the} various High^{Courts, it was submittedby the. leamedStanding} Counsel that^{the saidsteps can only be taken at the level of CBDT} as any such^{steps would have to be taken Pan India and cannotbe} limited to any^{of these jurisdictionalHigh Courts'}

As a^{resultof which, what we are facing is steep increaseof} litigation day^{in and day out even though various ordershave been} passed by this^{High Court allowing writ petitionson the very same} issue. The^{Income Tax authorities concemed are still even now in} 2025 also initiating^{proceedingsin contraventionto the provisions} of Section^{1514. 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^{issuewhichotherwise stands squarely coveredby the} judgment of this Court in the^{case of Kanakala RavindraRedd'y} (1 supra). What is^{also surprising is the fact that thoughwhile} allowing the writ^{petitions in the case of KanakalaRavindta} Reddy (l supra),.^{the DivisionBenchwhile reserving the right of} the Revenue,^{has also protected the interest 'of the petitioners}

d

ir - c.

inscfar ;s the rio: i;.^-;vr,icn ,,v^.:; .runt,^d to l:e Revenue ior initiating fresh proceedings strictly in accordance with the amended provisions of the Act, as amended by the Finance Act, 2020 aod the Finance Act,20Zl. The petitioner assessee would be entitled to challenge or raise the other regal 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.

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 lncome 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 Couft confrrms the decision taken by this High Court as also by the other High Cotirts irr which the SLPs 2.* stili pending, the Income .Iax

9

Department.wo.uld^{get the advantagerqf the libertyth-atis otherwise} protected in favour of^{the Revenuefor initiation of fresh} proceedings from^{the disposal ofthesematters at a much later stage} which would^{be advantageous and beneltcial to the Revenueand} would be equally^{disadvantageousand detrimental so far as interest} of the assesses^{are concemed' As a consequence,the Income Tax} Department^{gets an extendedperiodof time for initiation of fresh} proceedings.

The alarming^{trend of docketexplosion in this Court, despite} the clear precedent^{setin Kanakala RavindruReddy (l supra)'is a} matter of^{grave concem. The Income Tax Department's persistent} initiation of fresh^{proceedings, disregardingthe establishedjudicial} pronouncements, has^{led to an unprecedentedsurge in litigation} with over 600-700^{petitionspiling up on the same issue' This} deliberate approach^{not onlyunderminesthe principleof judicial} precedent but also strains^{the judicialresourcesunnecessarily'The} Department's strategy^{of awaiting the Supreme Court'sdecision on} pending SLPs while^{continuingto initiate fresh proceedings} appears to be a.^{calculated move to buy time and circumvent} limitation periods, rather^{than adheringto 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 akeady provided a balanced approach by preserving both the Revenue,s rights and assesses interests.

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 148-4 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 whichit is already seized ofor, 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 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

(

t\

has to be taken,^{has to be taken for the whole oflndia' and which} otherwise has^{to be by way ofa policy decision and thattoo at the} level of Central^{Board of Direct Taxes' Though the leamed} Standing Counsel^{for the IncomeTax Department contendedthat} theDelhiHighCourtdismissedawritpetitionofsimilarnatufe,on the one hand^{when the HighCourt is strugglingto reduce its} pendency, such^{notices whichare under challenge in this writ} petition are forcing^{the assesseeto knock the doors of this High} Court resulting^{in filing of hundredsof new writ petitions whichin} the long run^{not only affects the disposalof the writ petitionsbut} alsoconsumessubstantialtimeoftheBenchinhearingthese matters again and^{again on daily basis. Admittedly,in spite of the} matter before^{the Hon'ble SupremeCourt havingbeen takenon} many occasions,^{the Hon'bleSupremeCourt which is seized of the} matter has been^{reluctant in granting any interim protectionto the} Income Tax Department.^{Yet, the authorities concerned at the} State level are^{not ready to acceptthe verdictpassedby a majority} of High Courts of^{differentStates on the same issue; and to make} things further^{worse,the Income TaxDepartment is showing} audacity by issuing^{noticescontinuously under Sections 148-A and}

I I

; l i I

I I I

-ta

ii.r ihrrugh the ,c,:sdrutioiai Assossing Officer whereas it ought to have been only in the faceless manner.

In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME 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 Bombay held at paragraph No.25 as under, viz., :

"25. Mr.^paridwalla has righfly drawn out attention to the decision of this Court in Commissioner of lncome Tax vs. Smt. Godavaridevi Sarafl2 as also the recent decision of the coordinate Bench of this Court in Samp FErniture (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 "accepled" 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 lndia vs. Kamlakshi Finance Corporation Ltd.r4, 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.

t,',lr1r?11 170 raxmann.com 422 (Bombay)J '' ll971l Il3 ITR 589 (Bombay)

" 720241^{165 taxmann.com} 5gl/300 Taxmarr452@ombay)

'o^{l_l99Z1taxmam com l6155} ELT 433 (SC)

r'

13

'6.Sri Reddy is^{perhapsright" in saying,thatthe} officers were not actuated^{by any mala fidesin} passing the impugned orders.^{They perhaps} genuinely felt that the claim of^{theassesseewasnot} tenable and that, if^{it was accepted, the Revenue} would suffer. But what^{Sri Reddy overlooksis that we} are not concerned^{herewith the correctnessor} otheruise of their^{conclusionor of anyfactual} malafides but^{with the fact that the officers, in reaching} in their conclusion,^{by-passedtwoappellate ordersin} regard to the same issue^{which were placedbefore} them, one of the^{Collector (Appeals)and the other of} the Tribunal. The^{High Courthas, in our view, rightly} criticized this conduct^{of the Assistant Collectors and} the harassment to the^{assessee causedby the failure} of these officers to^{give effect to the ordersof} authorities higher^{to themin the appellatehierarchylt} cannot be too^{vehemently emphasizedthat it is of} utmost importance that,^{indisposingofthe} quasijudicial issues before them,^{revenue officers are} bound by the decisions^{of the appellateauthorities'} The order of the Appellte^{Collector is bindingon the} Assislant Collectors^{workingwithin his jurisdiction and} the order of the^{Tribunalis binding upon theAssistant} Collectors and the^{Appellate Collectors who function} under the^{jurisdiction of the Tribunal.The principlesof} judicial discipline require that the orders^{of the higher} appellate authorities^{shouldbe 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 obiectionable phrase} - and is the subject^{matter of an appealcan furnish no} ground for not following^{it unless its operationhas} been suspended^{by a competentcourt. lf this healthy}

14

rule is not followed, the result will only be undue harassment to assesses and chaos in administration of tax [aws.

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 apparenfly unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could resutt in considerable harassmenl 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 anl 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."

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

r

15

FinanceLct,2020andFinanceAct,2O2l'Now,inordertoprotect the interest ofthe^{Revenueas also that ofthe assessee' it wouldbe} trite at this^{juncture, if we dispose of the writ petition withan} observation/directionthatthedisposaloftheinstantwritpetitionin terms of the^{judgmentrendered by this High Court in the case of} Kankanala Ravindra^{Reddy (l supra) shallhowever be subjectto} the outcome of^{the SLPswhich were filed by the IncomeTax} Department and^{whichis pending consideration before the Hon'ble} Supreme Court.

In the^{givenfactsand circumstances,this Bench is of the} considered opinion^{thatunlessand until we do not timely dispose} of matters which^{are squarely covered by the decisionof this Court} and which stands^{fortified by the decisionsof the variousother} High Courts on^{the very same issue, the pendency of this High} Court would^{further be burdenedwhichotherwisecan be decided} and disposed^{of as a covered matter.}

So far^{as the interestof the Revenue is concemed, we are of} the considered^{opinion that the interestof the Revenue hasalready} been considered^{and protected,as has beenobserved in paragraphs}

\ o

I I l

't6

; j I i

I

36,37 and 38 ofthe order which, for ready reference, is reproduced

hereunder:

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, alt the impugned orders getting quash6d, the conseque.ritial orders passed by the respondent-Department pursuant to the notices issued under Section 1 47 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 automatica y.

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 gefting 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.

Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a onetime measure exercising the powers under Article 142 of the Constitution of lndia, permifted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right

L7

{ (

confened 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.

We would only further like to make^{observationsthat since} we are inclined to dispose of the^{instantwrit petition, consciousof} the fact that the earlier order of this^{High Court in the case of} Kanakala Ravindra Reddy (1 supra) is^{subjectedto challenge} before the Hon'bte Supreme^{Court in SLP No.3574of 2024,} preferred by the Income Tax Deparlment,^{we make it clear that} allowing of the instant writ^petition is^{subject to outcome of the} aforesaid SLP preferred by the Revenue^{againstthe decisionof this} High Court in the case of Kanakala^{Ravindra Reddy (lstpra).} This, in other words, would mean that either^{of the parties, if they} so want, may move an appropriate^{petitionseekingrevival of this} writ petition in the light of the decision of^{the Hon'bleSupreme} Court in the pending SLP on the very same^issue.

Accordingly, the instant writ^{petitionstandsallowed in} favour of the assessee so far as the^{issue of. jurisdiction} rs concemed. As. a consequence,^{the impugnednotice under} challenge under Sections^{148-4and 148 standsselaside/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 Kunksnala Ruvindra Reddy (l supra). There shall be no order as

to costs.

Consequently, miscellaneous petitions pending, if any, shall

stand closed.

,

SD/. AHMED ABDULLAH KHAN ASSISTANT REGISTRAR //TRUE COPY// SECThfr*,"=* /

To,

1 DC/ACIT Circle - 5(1). Hvderabad. Room No. 224,8_ Btock.2nd Floor, lT rower, AC Guards, rvasib Tank. Hyd;;;il, i;il;sr;, 500004

2 The Principal Chief Commissioner of lncome Tax Ap and TS, .lOth Floor, C_ Block, t.T. Towers, ro-z_a, n.C. cuard.:"H;;#;_stooo+

a National Faceless Assessment Centre, D6lhi, The Assessment Unit, lncome Tax Department. Nationar Fac-eress n.seJr"i"nt L"itt, outr'i, I\Iinistrv of B,J,fll!?.BBB,^{No 40r . zno Froor E_i;ffi, :;;;i,iilr r.r"r.,r.,stadiuin,}

4 One CC to SRI. DUNDU IiIANMOHAN Advocate tOpUCl

5 Pdr"r?? to Ms. BoKARo SAPNA REDDy (Jr. sc FoR tNCOME rAX)

f) One CC to Sri Gadi praveen Kumar, Deputy Solicitor General of lndia [OpUC]

7 Two CD Copies

KKS GJ U

rt. .x :di**.:&3*!c;- ltl.,

I I

I I i I i I l

HIGH COURT

DATED:2410412025

ORDER

1 )-lE S lt, c'
i!
08 sEP zffi ;- tl
..,',
o

WP.No.5154 ot 2025

ALLOWING THE WRIT PETITION WITHOUT COSTS

,{
\

Issues for consideration

3 issues framed by the court

AI extract

1.
Whether the assessment order dated 21.01.2025 passed by the 3rd respondent u/s 147 r.w.s. 144B/148 of the Income-tax Act for A.Y. 2017-18 (DIN ...1072370781(1)), consequent to the order u/s 148A dt. 28.03.2024 and the notice u/s 148 dt. 28.03.2024 issued by the JAO (1st respondent) instead of the FAO (3rd respondent), is void, illegal and contrary to the provisions of the Income-tax Act and the principles of natural justice.¶17
The court held
The writ petition is allowed in favour of the assessee on the jurisdictional issue: the impugned notices under Sections 148A and 148 dated 28.03.2024, issued by the JAO instead of the FAO, and the consequential assessment order dated 21.01.2025, stand set aside/quashed.ratio¶113
2.
Whether, after the amendment brought by the Finance Act, 2021 (w.e.f. 01.04.2021), notices under Section 148A and initiation of proceedings under Section 148 of the Income Tax Act were required to be issued/conducted in a faceless manner (per Section 151A read with Notification 18/2022 dated 29.03.2022) rather than by the jurisdictional Assessing Officer.¶31
The court held
Initiation of proceedings under Sections 148A/148 through the jurisdictional Assessing Officer after the Finance Act 2020/2021 amendments (requiring faceless operation per Section 151A read with Notification 18/2022) is held unsustainable; this Court follows the consistent stand of the majority of High Courts embodied in its own earlier Kanakala Ravindra Reddy decision.ratio¶96
3.
Whether this writ petition, being squarely covered by the decision in Kanakala Ravindra Reddy (14.09.2023) and similar decisions of multiple High Courts, should be disposed of forthwith notwithstanding the pendency of SLP No. 3574 of 2024 (and about 1200 allied SLPs) before the Supreme Court, and on what terms the Revenue's interests are to be protected.¶96
The court held
Identical writ petitions squarely covered by this Court's earlier decision (fortified by other High Courts) are to be timely disposed of as covered matters rather than kept pending, especially as counsel conceded no interim order has been granted by the Supreme Court in these matters; the Revenue's interests were already considered and protected in paragraphs 36-38 of the Kanakala Ravindra Reddy order, including the reserved liberty to initiate fresh proceedings in accordance with the amended provisions.ratio¶97