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2024 (1) TMI 425 - HC - Income TaxValidity of faceless assessment - Jurisdiction of concerned AO - as argued jurisdictional AO is the Deputy Commissioner of Income Tax, Central Circle 2(1), Bangalore the first respondent and as such, ACIT, NaFAC-1(1)(2), Delhi the second respondent could not have assumed jurisdiction to issue notice because the jurisdiction of the first respondent has not been decentralized insofar as the petitioner - HELD THAT - In the present case, at the first instance, Sections 143 3A 143 3C are incorporated into the Act enabling Notification of a Scheme for the purposes of making assessment u/s 143 3 or Section 144 to usher in efficiency, transparency and accountability in the assessment proceedings and stipulating that the Central Government may, for the purposes of giving effect to the Scheme proposed, direct, by a Notification in the Official Gazette, that any of the provisions of the IT Act relating to the assessment of total income or loss shall not apply or shall apply with such exceptions, modifications and adaptations. In exercise of this power, the Central Government has notified Faceless Assessment Scheme, 2019 and the CBDT, which is conferred with powers to ensure that assessment shall be under the Scheme in respect of certain persons or class of persons or class of incomes under the terms of the Scheme, has issued order dated 13.08.2020 u/s 119 2 stipulating that all assessment orders shall be by the National E-Assessment Centre through the Faceless Assessment Scheme, 2019 except insofar as the cases assigned to Central Charges and International Taxation Charges. With the CBDT also issuing appropriate notification in exercise of powers under Section 143 2 of the IT Act authorizing certain officers as the Prescribed Income Tax Authority for the purposes of this section, notices have been served on all assessees, including the assessees in the case of Central Charges and International Taxation Charges, and because of the order dated 13.08.2020, the assessment proceedings insofar as the aforesaid two categories are carried forward by the jurisdictional AO. This arrangement with the necessary statutory orders is part of the Scheme notified in exercise of powers under Section 143 3A 143 3C . The terms of the Scheme which is part of the Scheme notified under sub-delegation is brought into the enactment with the introduction of Section 144B of the IT Act, and thus, the Faceless Assessment Scheme, 2019 is repealed with this enactment. It must be observed at this stage that it is not pointed out to this Court that the National Faceless Assessment Scheme which is now part of the Statute contained any condition that would be inconsistent with the arrangement under the Faceless Assessment Scheme, 2019 or that the CBDT has issued any directions to the contrary. This Court must opine that there is a transition from a Scheme notified under the provisions of the IT Act to a Scheme under the IT Act incorporation all the essential without material changes insofar as assessments generally and assessments in the cases of Central Charges and International Taxation Charges and there is nothing in this transition, including the provisions of Section 144B or the CBDT s Order, to infer exclusion of the operation of CBDT s order dated 13.08.2020. This Court must therefore conclude that the operation of the CBDT s order dated 13.08.2020 is saved by the application of the Section 24 of the General Clauses Act, 1897. Jurisdiction of the Prescribed Income Tax authority to issue notice under Section 143 2 of the IT Act under the National Faceless Assessment Scheme - Section 124 3 prescribes the time limit. Where a return is filed under Section 115WD 1 or under Section 139 1 , an Assessee cannot call in question the jurisdiction of the Assessing Officer after the expiry of one month from the date on which the assessee is served with notice under Section 143 2 or 143 1 or 115WE 2 and after the completion of assessment but on the condition that the earlier of the two will apply. The provisions of Section 124 1 relate to the territorial jurisdiction and determination of the questions relating to territorial jurisdiction when raised within the time limit under Section 124 3 by the officers mentioned in Section 124 2 . The provisions of Section 124 stipulate that when an assessee calls in question the jurisdiction of the Assessing Officer, then the Assessing Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under Section 124 2 . These provisions, it is argued, is limited to those cases where territorial jurisdiction is challenged, but even according to the decision CIT v. Ramesh D Patel 2014 (2) TMI 29 - GUJARAT HIGH COURT relied upon by the petitioner, these provisions mainly refer to the territorial jurisdiction. It is implicit from this that the restriction under Section 124 3 of the IT Act on the right to raise the question of jurisdiction must extend to all grounds on which jurisdiction is called in question. If the right to call in question the jurisdiction is left open to be raised at any stage, the proceedings will remain inconclusive and that could not have been the intendment of the legislature. Therefore, this Court must opine that the petitioner must fail even on the second question. Petitioner, because of the undertaking given by the respondents before this Court, which is continued through these months, has had the advantage of not tendering the further installments in terms of the order 20.12.2022. However, with the disposal of this petition answering the questions framed against the petitioner, the petitioner must necessarily pursue its appeal subject to deposit of further installments in terms of the order dated 20.12.2022 starting from 20.01.2024. The petition is rejected, and the petitioner, in terms of the orders of the Principal Commissioner of Income Tax, Central, Bengaluru, shall be at liberty to pay installments due but from the month of February 2024.
Issues Involved:
1. Jurisdiction of the Additional Commissioner of Income Tax NaFAC-1(1)(2) to issue notice under Section 143(2) of the Income Tax Act, 1961. 2. Maintainability of the writ petition challenging the Assessment Order dated 20.09.2022. Summary: Issue 1: Jurisdiction of the Additional Commissioner of Income Tax NaFAC-1(1)(2) The petitioner argued that the jurisdictional Assessing Officer is the Deputy Commissioner of Income Tax, Central Circle 2(1), Bangalore, and thus the Additional Commissioner of Income Tax, NaFAC-1(1)(2), Delhi could not have assumed jurisdiction to issue the notice under Section 143(2) of the Income Tax Act, 1961. The petitioner contended that the notice issued by an officer without jurisdiction renders the entire proceedings culminating in the Assessment Order dated 20.09.2022 null and void. The respondents asserted that the second respondent is vested with the jurisdiction to issue the notice due to the amendment to Section 143(2) effective from 01.06.2016 and the insertion of Section 144B effective from 01.04.2021. They argued that the Central Board of Direct Taxes (CBDT) authorized the second respondent to act as the 'Prescribed Income Tax Authority' under Section 143(2) and that the notice was validly issued. The court examined the statutory amendments and concluded that the CBDT's order dated 13.08.2020, which classified Central Charges and International Taxation Charges as separate classes, continues to hold the field under Section 24 of the General Clauses Act, 1897. Thus, the issuance of the notice by the Prescribed Income Tax Authority is valid, and the petitioner's challenge on this ground fails. Issue 2: Maintainability of the Writ Petition The respondents argued that the petition should be dismissed on the ground of maintainability, citing that the petitioner participated in the assessment proceedings without demur and filed a statutory appeal against the Assessment Order dated 20.09.2022. They relied on Section 124(3) of the Income Tax Act, which limits the right to challenge the jurisdiction of the Assessing Officer after one month from the date of receipt of the notice under Section 143(2). The court opined that Section 124(3) applies to all grounds on which jurisdiction is called into question, not just territorial jurisdiction. Given that the petitioner participated in the proceedings and availed statutory remedies, the court held that the petitioner must fail on the second question as well. Conclusion: The petition was rejected. The petitioner is required to pursue its appeal subject to the deposit of further installments in terms of the order dated 20.12.2022, starting from 20.01.2024.
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