2024 (10) TMI 263 - 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 and in Nainraj Enterprises Pvt. Ltd. 2024 (7) TMI 511 - 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 Involved:
1. Validity of the reassessment notice issued under Section 148 of the Income Tax Act, 1961.
2. Compliance with the faceless assessment scheme as per Section 151A of the Income Tax Act.
3. Applicability of the faceless scheme to central charges and international taxation charges.

Issue-wise Detailed Analysis:

1. Validity of the Reassessment Notice:
The petitioner challenged the reassessment notice issued under Section 148 of the Income Tax Act, 1961, for the Assessment Year 2017-18. The notice was issued by the Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO), as mandated by the faceless assessment scheme. The court found that the issuance of the notice by the JAO was contrary to the provisions of Section 151A, which requires adherence to the faceless mechanism introduced by the Central Government's notification dated 29 March 2022. The court referenced the case of Hexaware Technologies Limited, which clarified that only the FAO has the jurisdiction to issue such notices, thereby invalidating the concurrent jurisdiction argument.

2. Compliance with the Faceless Assessment Scheme:
The court emphasized the mandatory nature of the faceless assessment scheme as per Section 151A, which requires automated allocation of cases to ensure transparency and efficiency. The scheme is designed to eliminate discretion and optimize resource utilization through technological tools. The court highlighted that any deviation from this scheme, such as issuing notices by the JAO, renders the proceedings invalid. The court reiterated that the scheme applies to both the issuance of notices under Section 148 and the subsequent assessment, reassessment, or recomputation under Section 147.

3. Applicability to Central Charges and International Taxation Charges:
The respondents argued that the case, being under central charges, should be excluded from the faceless scheme. However, the court rejected this contention, referencing its decision in Abhin Anilkumar Shah and other precedents, which held that the faceless scheme applies to all cases, including those involving central charges and international taxation. The court clarified that prior orders dated 31 March 2021 and 6 September 2021, which pertained to assessment orders, do not override the faceless scheme for notices under Section 148. The court concluded that the faceless scheme, as notified on 29 March 2022, stands independent and is applicable to all relevant proceedings.

Conclusion:
The court allowed the writ petition, quashing the impugned notices and proceedings initiated under Section 148 of the Act due to non-compliance with the faceless assessment scheme as mandated by Section 151A. The court did not address other issues raised in the petition, as the primary ground of non-compliance was sufficient to dispose of the case. The rule was made absolute with no costs awarded.