2024 (9) TMI 94 - HC - Income Tax

Faceless assessment of income escaping assessment - validity of notice issued by the JAO as not in accordance w/sec 151A - not permissible for the Jurisdictional Assessing Officer to issue a notice under Section 148, as the same would amount to breach of the provisions of section 151A - HELD THAT - As decided in recent decision of this Court in Nainraj Enterprises Pvt. Ltd. 2024 (7) TMI 511 - BOMBAY HIGH COURT relying on Hexaware Technology Ltd. 2024 (5) TMI 302 - BOMBAY HIGH COURT provisions of Section 151A of the IT Act had clearly brought a regime of faceless assessment. The Court held that it was not permissible for the Jurisdictional Assessing Officer to issue a notice under Section 148, as the same would amount to breach of the provisions of section 151A of the IT Act. There is no question of concurrent jurisdiction of the JAO and the FAO for issuance of notice under Section 148 of the Act or even for passing assessment or reassessment order. When specific jurisdiction has been assigned to either the JAO or the FAO in the Scheme dated 29th March, 2022, then it is to the exclusion of the other. To take any other view in the matter, would not only result in chaos but also render the whole faceless proceedings redundant. If the argument of Revenue is to be accepted, then even when notices are issued by the FAO, it would be open to an assessee to make submission before the JAO and vice versa, which is clearly not contemplated in the Act. Therefore, there is no question of concurrent jurisdiction of both FAO or the JAO with respect to the issuance of notice under Section 148. When an authority acts contrary to law, the said act of the Authority is required to be quashed and set aside as invalid and bad in law and the person seeking to quash such an action is not required to establish prejudice from the said Act. An act which is done by an authority contrary to the provisions of the statue, itself causes prejudice to assessee. All assessees are entitled to be assessed as per law and by following the procedure prescribed by law. Therefore, when the Income Tax Authority proposes to take action against an assessee without following the due process of law, the said action itself results in a prejudice to assessee. Decided in favour of assessee.

Summary

Issues:
1. Validity of notice issued under Section 148 of the Income Tax Act, 1961.
2. Compliance with the provisions of Section 151A for issuance of notices in a faceless manner.
3. Jurisdiction of the Assessing Officer in issuing the impugned notice.
4. Delay in deciding on the application for condonation of delay in filing of return of income and tax audit report.

Analysis:
1. The Writ Petition was filed to challenge a notice issued under Section 148 of the Income Tax Act, 1961, for reassessment. The notice, along with prior notices and orders, was issued by the Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) as required by Section 151A of the Act. The Central Government had introduced a faceless mechanism through a Notification, mandating compliance with Section 151A for valid issuance of notices under Section 148. The Court referred to the Division Bench's decision in Hexaware, emphasizing the exclusivity of jurisdiction between JAO and FAO for issuing notices under Section 148, and the mandatory nature of automated allocation under the Scheme dated 29th March 2022.

2. The Court held that the Respondent-Revenue did not comply with the Scheme notified by the Central Government under Section 151A of the Act, rendering the notice invalid. The Scheme, treated as subordinate legislation, governs proceedings under Section 148A and Section 148. Referring to the judgment in Hexaware and another recent decision, the Court found that the proceedings initiated under Section 148 were unsustainable due to non-compliance with Section 151A.

3. The Court acknowledged the delay in deciding on the petitioner's application for condonation of delay in filing the return of income and tax audit report. It noted that the application should have been decided expeditiously. Consequently, the Court considered granting the prayer for condonation of delay, highlighting the importance of timely decision-making by the tax authorities.

4. As the JAO had no jurisdiction to issue the impugned notice, the Court allowed the Writ Petition, quashing the impugned orders and notices. The relief sought by the petitioner was granted, emphasizing the need for compliance with Section 151A for valid issuance of notices under Section 148. The Court clarified that its decision was based on non-compliance with Section 151A and did not address other issues raised in the petition.

5. The Court made the Rule absolute in favor of the petitioner, without imposing any costs, and refrained from addressing other issues raised in the petition as they were deemed unnecessary due to the non-compliance with Section 151A being the primary ground for the decision.