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2024 (9) TMI 23 - HC - Income TaxValidity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - notices issued by JAO instead of FAO - 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 as and there is no dispute that the JAO had no jurisdiction to issue the impugned notice. We, accordingly, allow this petition in favour of assessee.
Issues:
1. Validity of notice issued under Section 148 of the Income Tax Act. 2. Compliance with Section 151A and the faceless mechanism introduced by the Central Government. 3. Jurisdiction of the Assessing Officer in issuing notices for reassessment. 4. Applicability of the Scheme framed by the CBDT for assessment and reassessment proceedings. 5. Prejudice caused to the assessee by actions contrary to law. Detailed Analysis: 1. The High Court of Bombay heard a writ petition challenging a notice issued under Section 148 of the Income Tax Act for reassessment of returns filed by the petitioner for the Assessment Year 2017-18. The court noted that the impugned notice and related orders were issued by the Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) as required by Section 151A of the Act. 2. The court emphasized the importance of compliance with Section 151A and the faceless mechanism introduced by the Central Government through a notification. The Scheme framed by the CBDT governs the conduct of proceedings under Section 148A and Section 148 of the Act. The court referred to a Division Bench judgment in the case of Hexaware Technologies Limited, which clarified the exclusive jurisdiction of either the JAO or the FAO for issuing notices under Section 148, highlighting the mandatory nature of automated allocation under the Scheme. 3. The court reiterated that the FAO, not the JAO, is authorized to issue notices under Section 148 of the Act in a faceless manner. Failure to adhere to the Scheme and Section 151A renders the notice invalid and vitiates the proceedings. The court cited a recent decision in Nainraj Enterprises Pvt. Ltd. where similar circumstances led to the petition being allowed based on Section 151A provisions. 4. The court acknowledged the agreement between counsels that the proceedings initiated under Section 148 would not be sustainable due to non-compliance with Section 151A. References were made to judgments in cases like Kairos Properties Pvt. Ltd., further emphasizing the applicability of the law laid down in Hexaware and the observations made in Kairos Properties. 5. Ultimately, the court allowed the writ petition, quashing the impugned notices and orders due to the JAO's lack of jurisdiction in issuing the notice. The decision was made in light of non-compliance with Section 151A, without expressing an opinion on other issues raised in the petition. The ruling emphasized that actions contrary to law cause prejudice to the assessee, warranting the invalidation of such actions.
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