2024 (7) TMI 589 - HC - Income Tax

Validity of reopening of assessment - notice issued by the JAO - HELD THAT - JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT . The impugned notices would be required to be held to be illegal and invalid. We, accordingly, allow this petition in terms of prayer clause (a).

Summary

Issues:
Challenge to notice under Income-tax Act, jurisdiction of Assessing Officer, legality of notice issuance, validity of order, faceless assessment scheme, concurrent jurisdiction, jurisdictional authority for notice issuance.

Analysis:
The petitioner challenged a notice issued by the Jurisdictional Assessing Officer (JAO) under section 148A (b) of the Income-tax Act, along with subsequent orders seeking to reopen the assessment for the AY 2017-18. The petitioner sought writs of Certiorari, Mandamus, and Prohibition to quash the impugned notices and prevent further proceedings. The petitioner relied on a decision by a co-ordinate Bench of the High Court regarding the legality of notices issued under Section 148. The Court considered the implications of Section 151A and the faceless assessment scheme introduced by the Central Board of Direct Taxes (CBDT) to enhance efficiency and transparency in tax assessments. The Court highlighted that the scheme mandated automated allocation of cases and faceless proceedings, emphasizing the exclusivity of jurisdiction between the Jurisdictional Assessing Officer (JAO) and the Faceless Assessment Officer (FAO). The Court noted that the JAO did not have the authority to issue the impugned notices as per the scheme and relevant provisions. Consequently, the Court deemed the notices illegal and invalid, ruling in favor of the petitioner.

The Court emphasized the importance of adhering to the scheme framed by the CBDT under Section 151A for efficient and transparent tax assessments. It clarified that the scheme's provisions for automated allocation and faceless proceedings must be strictly followed to avoid jurisdictional conflicts and maintain the integrity of the assessment process. The Court rejected the revenue's argument regarding the applicability of the scheme, highlighting that any deviation from the scheme's requirements would render it redundant and defeat its purpose of streamlining tax assessments. By upholding the scheme's provisions and exclusivity of jurisdiction between the JAO and FAO, the Court affirmed the necessity of following prescribed procedures for issuing notices and conducting assessments under the Income-tax Act.

In conclusion, the Court allowed the petition, declaring the impugned notices as illegal and invalid due to the JAO's lack of jurisdiction under the faceless assessment scheme and Section 151A. The decision underscored the significance of upholding statutory schemes and jurisdictional boundaries to ensure the legality and validity of tax assessments. The Court's ruling provided clarity on the procedural requirements for issuing notices and conducting assessments in compliance with the law, thereby safeguarding the rights of taxpayers and maintaining the integrity of the tax administration system.