2024 (10) TMI 1282 - HC - Income Tax

Reopening of assessment u/s 147 - non compliance with the faceless assessment scheme u/s 151A - mandation of recording of satisfaction by the Jurisdictional Assessing Officer - Valid Jurisdiction of the Jurisdictional Assessing Officer (JAO) in issuing the notice - HELD THAT - By reading all the relevant provisions of the Income Tax Act' 1961 as also the notification dated 29.03.2022 issued by the Central Government framing scheme for E-Assessment of Income Escaping Assessment under sub-sections (1) and (2) of Section 151A of the Act' 1961, we reach at an irresistible conclusion that the challenge to the notice under Section 148 dated 22.03.2024 for A.Y. 2021-2022 on the sole premise that the said notice could have been issued only through automated allocation in faceless manner and not by Jurisdictional Assessing Officer (JAO), cannot be sustained. The submission of petitioner that the Jurisdictional Assessing Officer (JAO) was not competent to issue the impugned notice u/s 148 in a case of Search and Seizure u/s 132are not convincing. Section 151A contemplates framing of the scheme by the Central Government by notification in the official Gazette, even for the purpose of issuance of notice under Section 148 in the case of re-assessment or sanction for issue of such notice under Section 151, with the aim to impart greater efficiency, transparency and accountability by eliminating the interface between the income tax authority and the assessee or any other person to the extent technologically feasible. The challenge to the impugned notice on the ground of lack of jurisdiction of the Jurisdictional Assessing Authority is, accordingly, turned down. Two Satisfaction Notes have been supplied to the petitioner in the compilation submitted on behalf of the revenue. It was also placed before us by revenue that after issuance of the impugned notice u/s 148 the instant case has proceeded to the stage of issuance of the notice under Section 142 (1). The said notice is also part of the record and has been issued by the Verification Unit of the Faceless Assessment Centre. We, therefore, find it fit and proper to dispose of the present petitions with the observation that the petitioners may pursue his remedy matters before the Competent Authority and may ask for virtual hearing, if the need be, to participate in the proceedings, which have to be brought to their logical end, strictly in accordance with law.

Summary

Issues Involved:
1. Legal validity of the Show-cause Notice issued under Section 148 of the Income Tax Act, 1961.
2. Compliance with the faceless assessment scheme under Section 151A of the Income Tax Act, 1961.
3. Jurisdiction of the Jurisdictional Assessing Officer (JAO) in issuing the notice.
4. Application of automated allocation in cases of Search and Seizure under Section 132.

Detailed Analysis:

1. Legal Validity of the Show-cause Notice under Section 148:
The primary issue in the petitions was the legal validity of the Show-cause Notice dated 22.03.2024 for the Assessment Year 2021-2022, issued under Section 148 of the Income Tax Act, 1961. The petitioner challenged the notice on the grounds that it was issued in violation of the mandatory faceless assessment procedure prescribed under Section 151A of the Act, as amended by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. The court examined whether the issuance of the notice complied with the statutory requirements and concluded that the notice was validly issued by the Jurisdictional Assessing Officer (JAO) in accordance with the law.

2. Compliance with the Faceless Assessment Scheme under Section 151A:
The petitioner contended that the notice under Section 148 should have been issued through automated allocation as per the faceless assessment scheme notified on 29.03.2022. The scheme mandates that notices under Section 148 be issued in a faceless manner to improve efficiency, transparency, and accountability. However, the court noted that the scheme's applicability is limited and does not extend to cases involving Search and Seizure under Section 132, where human intervention is necessary. Therefore, the court held that the automated allocation requirement was not applicable in this case.

3. Jurisdiction of the Jurisdictional Assessing Officer (JAO):
The petitioner argued that the JAO lacked jurisdiction to issue the notice under Section 148, as it was not done through the faceless assessment process. The court rejected this argument, stating that the JAO was competent to issue the notice based on the information received during the Search and Seizure operation. The court emphasized the necessity for the JAO to record satisfaction based on the material available and affirmed that the JAO's actions were within the scope of their jurisdiction.

4. Application of Automated Allocation in Cases of Search and Seizure:
The court addressed the applicability of automated allocation in cases of Search and Seizure under Section 132. It was argued by the revenue that the automated allocation process, which involves the use of algorithms and technological tools, is not suitable for cases involving Search and Seizure. The court agreed, stating that such cases require the application of human judgment and satisfaction by the JAO. The court distinguished the present case from others, such as Hexaware Technologies Ltd., where automated allocation was applicable, and concluded that the faceless assessment scheme does not cover Search and Seizure cases.

Conclusion:
The court concluded that the challenge to the notice under Section 148 on the grounds of automated allocation and jurisdiction was unsustainable. The petitions were disposed of, allowing the petitioner to pursue remedies before the competent authority and participate in the proceedings as per law. The court emphasized that the notice was issued in compliance with the statutory provisions, and the JAO acted within their jurisdiction.