2024 (8) TMI 973 - HC - Income Tax

Absolute abuse of the powers vested in the public officer - Jurisdictional Assessing Officer/ JOA - Validity of Faceless assessment of income escaping assessment - actions initiated by concerned officers against the petitioner, is that the impugned proceedings are initiated with gross non-application of mind and/or much more than mechanically, as the entire basis of such notices is the amount which was subject matter of consideration of the AO in the assessment order which has ultimately resulted in its deletion - notice contrary to the provisions of Section 151A, 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 . We must observe that although we have a pronouncement of a co-ordinate Bench of this Court on the provisions of law, in Hexaware Technologies Limited (Supra) , an affidavit cannot be filed before this Court, to challenge such pronouncement. We are unaware as to how and in what manner the JAO/ the Respondents are advised to file such affidavits. Clearly on affidavit a position being taken that the judgment on a point of law declared by this Court, is not acceptable, is wholly irresponsible. The concerned officers who are supposed to know the Income Tax Act and the law, that the decisions of the jurisdictional High Court would bind them, cannot have an approach of such open disregard to the orders passed by this Court. It is also not the case that before they file any affidavit in the Court they are not legally advised, as to what ought to be an appropriate and proper content of an affidavit, as the law would require the department to file. Also the officer/ deponent needs to know the purpose for which a reply affidavit is necessary in a legal proceeding. A reply affidavit certainly cannot be a mechanical exercise and an empty formality and / or for that matter for any statistical purpose. The present case reflects a very poor state of affairs on the part of the JAOs which is also not being corrected by the higher officials namely, the Commissioner and Chief Commissioner of Income-tax. In the present case even the Chief Commissioner of Income Tax has acted with total non-application of mind. As seen what has been mechanically done is, by some method of online as well as offline, an approval has been accorded by the Chief Commissioner of Income Tax on 7 March, 2024, the same being made available on the order sheet for issuance of the impugned notice. There is no explanation whatsoever as to why such materials which were on the record of the department were not considered and dealt in according such approval. It thus appears that the Chief Commissioner of Income Tax has also acted without application of mind, this has clearly caused prejudice and harassment to the Petitioner. Nowhere the provisions of the Act would justify such action permitting the Chief Commissioner to exercise powers u/s 151 in such manner. In fact in exercising authority in such manner, the whole purpose of a sanction under Section 151 stands defeated, which would be actions against the object and spirit of the provisions of law resulting in civil consequences. It appears that in the present proceedings the Chief Commissioner has also acted, with quite a haste. For all these reasons, we are more than sure that this is a fit case, where not only the reliefs as prayed by the Petitioner are required to be granted, but also the brazen untenable stand of the Respondents on what has been observed hereinabove needs to be deprecated. JAO has refused to acknowledge the orders passed by the CIT (A) involving the very amounts in regard to which the reply affidavit is blissfully silent. This is in fact travesty of law and nullifying the binding effect of the orders passed by the appellate authority. We would be failing in our duty if we do not reprimand such conduct of the JAO in discarding materials which, in fact, prohibited him from issuing the impugned notice as also the Chief Commissioner when he accorded a mechanical sanction. Apart from this, except for the brazen stand taken by the JAO that the decision of this Court in Hexaware Technologies Limited (Supra) is not accepted by the department, so as to justify the impugned notices, there is no acceptable justification as to why the proceedings qua the impugned notice under Section 148 would not stand covered by the decision in Hexaware Technologies Limited (Supra). We direct the JAO as also the Chief Commissioner to deposit personal cost of Rs.25,000/- each,

Summary

Issues Involved:
1. Abuse of powers by the Jurisdictional Assessing Officer (JAO)
2. Issuance of notice under Section 148A of the Income-tax Act, 1961
3. Non-consideration of the Assessment Order dated 20 December, 2019 and the CIT (A) order dated 26 February, 2024
4. Mechanical sanction under Section 151(ii) of the Act
5. Legality of the impugned notices under Section 148A(b) and 148A(d)

Detailed Analysis:

1. Abuse of Powers by the Jurisdictional Assessing Officer (JAO):
The court observed that the JAO exhibited an absolute abuse of powers vested in him by initiating proceedings against the Petitioner under Section 148A of the Income-tax Act, 1961. The JAO either acted with total non-application of mind or irresponsibly by issuing a notice under Section 148 without considering the prior assessment order dated 20 December, 2019, which had already addressed the transaction in question.

2. Issuance of Notice under Section 148A of the Income-tax Act, 1961:
The impugned notice under Section 148A(b) was issued on 8 February, 2024, before the CIT (A) order dated 26 February, 2024. However, by the time the order under Section 148A(d) was passed on 8 March, 2024, the JAO was aware of the outcome of the appeal. The order under Section 148A(d) was silent about the adjudication on the same facts, indicating gross negligence.

3. Non-consideration of the Assessment Order dated 20 December, 2019 and the CIT (A) Order dated 26 February, 2024:
The court noted that the JAO failed to consider the assessment order dated 20 December, 2019, which had already added the amount of Rs. 4 Crores to the Petitioner's income. Furthermore, the CIT (A) had deleted this addition in its order dated 26 February, 2024. The JAO's failure to acknowledge these orders was seen as a dereliction of duty and a deviation from the path of law.

4. Mechanical Sanction under Section 151(ii) of the Act:
The Chief Commissioner of Income-tax granted a mechanical sanction under Section 151(ii) without considering the materials available on record. This sanction was contrary to the provisions of Section 151A and the faceless mechanism under the notification dated 29 March, 2022. The court criticized the Chief Commissioner for acting without application of mind, resulting in prejudice and harassment to the Petitioner.

5. Legality of the Impugned Notices under Section 148A(b) and 148A(d):
The court found that the impugned notices were issued with gross non-application of mind and contrary to the provisions of Section 151A. The JAO's action was seen as an attempt to initiate reassessment proceedings on an issue that had already attained finality. The court referenced the principles laid down in Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax & 4 Ors. (2024) 464 ITR 430, emphasizing the need for judicial discipline and adherence to appellate orders.

Conclusion:
The court allowed the Petition, declaring the impugned notices under Section 148A(b) and 148A(d) as illegal. The JAO and the Chief Commissioner were directed to deposit personal costs of Rs. 25,000/- each with the "National Association for the Blind" within two weeks. The judgment emphasized the importance of judicial discipline and the need for revenue officers to act in accordance with the law.