2024 (10) TMI 93 - HC - Income Tax

Faceless assessment of income escaping assessment - notice issued under Section 148 of the Act is issued by the Jurisdictional Assessing Officer ( JAO ) and not by a Faceless Assessing Officer ( FAO ), as is required by the provisions of Section 151A - HELD THAT - It is now well settled that for a notice to be validly issued for reassessment under Section 148 of the Act, the Respondent-Revenue would need to be compliant with Section 151A, which has been interpreted and analysed in detail by a Division Bench of this Court in the case of Hexaware Technologies Limited 2024 (5) TMI 302 - BOMBAY HIGH COURT wherein held 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 of the Act. Decided in favour of assessee.

Summary

Issues:
Challenge to notice issued under Section 148 of the Act without compliance with Section 151A and Scheme dated 29 March, 2022.

Analysis:
The Writ Petition challenges a notice issued under Section 148 of the Act without compliance with Section 151A and the Scheme dated 29 March, 2022. The impugned notice was issued by the Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) as required by law. The Division Bench in the case of Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax & 4 Ors. clarified that there is no concurrent jurisdiction of the JAO and FAO for issuing notices under Section 148. The Scheme mandates automated allocation for issuing notices in a faceless manner, making it mandatory for the FAO to issue such notices. The Respondent-Revenue's non-compliance with the Scheme renders the notice invalid, vitiating the proceedings.

The judgment in Hexaware and a subsequent decision in Nainraj Enterprises Pvt. Ltd. Vs. The Deputy Commissioner of Income Tax supported the invalidity of proceedings initiated without adherence to Section 151A. Despite the completion of reassessment and filing of an appeal, the defective notice issued by the JAO without authority of law led to the quashing of the notice and reassessment order. The Division Bench's ruling in Vikram Developers Private Limited vs. Income Tax Officer affirmed that foundationally-defective notices under Section 148 result in quashing reassessment orders and consequential demand or penalty notices.

In light of the non-compliance with Section 151A and the Scheme, the Writ Petition was allowed, and the impugned notice, reassessment order, demand notices, and penalty notices were quashed and set aside. The Court clarified that this decision was based solely on non-compliance with Section 151A and did not address other issues raised in the petition. The Writ Petition was disposed of without costs, emphasizing the importance of adherence to statutory provisions for a valid notice under Section 148.