2024 (3) TMI 886 - HC - Income Tax

Validity of Reopening of assessment - proceedings drawn u/s 148A commenced by the local jurisdictional officer - non adherence to procedure of faceless regime for the purposes of governing the assessment under the Income Tax Act - HELD THAT - As after introduction of the aforesaid two schemes, it is now mandatory for the Revenue to conduct / initiate proceedings pertaining to reassessment under Section 147, 148 148A of the Act in a faceless manner. In the present case, the proceedings under Section 148A of the IT Act, has been commenced by the local jurisdictional officer and not in the prescribed faceless manner. What is provided under sub-section (1) which has a non obstante clause is that the faceless procedure for assessment, re-assessment, re-computation and not the proceedings interior to the said assessment, re-assessment, re-computation . Further, sub-section (2) provides that the faceless procedure for assessment, re-assessment and re-computation shall be in respect of the persons, class of persons, class of cases, as may be, specified by the Central Board of Direct Taxes. The petitioner has not brought on record to submit that his case is covered by the notification issued by the CBIC. Even otherwise, the assessment year is of 2019-2020 and the faceless procedure has been introduced with effect from 01.04.2021. Thus we are of the considered view that even if the petitioner s case is covered to be completed under the faceless assessment procedure, the proceedings interior to the reassessment proceedings are not illegal as those are not completed under the faceless procedure as prescribed under Section 144B of the IT Act and the scheme framed by the CBIC. Hence find no substance in this writ petition which is hereby dismissed.

Summary

Issues:
The judgment involves the legality of the order passed under Clause (d) of Section 148A(a) of the Income Tax Act, 1961 for the assessment year 2019-2020, challenging the faceless regime procedure introduced by the Finance Act, 2021.

Summary:
The petitioner, an assessee under the Income Tax Act, had not filed a return of income for the assessment year 2019-2020. The assessing officer decided to open the assessment due to income chargeable to tax from banking transactions that had escaped assessment. The petitioner challenged the order on the grounds that the Finance Act, 2021 introduced a faceless regime for governing assessments under the Income Tax Act, with provisions like automated allocation and faceless jurisdiction schemes.

The petitioner argued that proceedings under Section 148A of the IT Act should be faceless as per the schemes formulated by the Central Board of Direct Taxes. The petitioner cited legal principles stating that actions must be done as prescribed by law. The petitioner contended that since the proceedings were not faceless as mandated by the schemes, the order was vitiated and should be set aside.

The Senior Standing Counsel for the Income Tax Department countered that the faceless assessment procedure under Section 144B applies to assessment, reassessment, and re-computation, not the proceedings before that stage. The counsel argued that the impugned order under Section 148A(b) was legal and that reassessment following the notice issued under Section 148 would be faceless. The counsel highlighted that the faceless procedure for assessments was introduced after the assessment year in question.

The court analyzed the provisions of Section 144B, which prescribe the faceless procedure for assessment, reassessment, and re-computation. The court noted that the faceless procedure applies to specific territorial areas or classes of persons specified by the Central Board of Direct Taxes. Since the petitioner's case was not covered by the faceless procedure and considering the timing of the introduction of the faceless regime, the court found no illegality in the proceedings before reassessment. The writ petition was dismissed.