2024 (12) TMI 1273 - HC - Income Tax

Jurisdiction of the AO u/s 143 (2) - JAO's assumption of jurisdiction - notice was issued to the petitioner u/s 143 (2) for the AY 2023-24 by the Jurisdictional Assessing Officer (JAO), ITO Ward Sunam, whereas the said notice was to be issued in terms of section 144B (1) (iii) of the Act by the NFAC - HELD THAT - As notice under section 143 (2) for assessment u/s 144B would be issued through the NFAC, and the assessee would file a response to such notice within the date specified therein. After the Faceless Assessment Scheme was introduced by amendment in the Act through new regime, the jurisdiction has been ceased for the purpose of issue of notice under section 148, and it is only in special circumstances as provided u/s 144B(7) and (8) that the concerned Principal Commissioner of Income Tax may direct for issuance of notice. The circumstances as mentioned in section 144B (7) and (8) would only be where a notice u/s 148 has already been issued. CBDT Guidelines with respect to the power of issuance of notice by the JAO would arise only in terms thereto. On perusal of para 2 (4) (i) of the Circular dated 03.05.2024, it is apparent that the proceedings for scrutiny by the JAO can be picked up, and notice can be issued u/s 143 (2) only in cases where notice under section 148 has been issued for that particular assessment year. It is an admitted position from the reply filed by the respondent that notice under section 148 was issued for AYs 2020-21, 2021-22 and 2022-23, and was not issued for the AY 2023-24. In view thereto, the JAO would not have jurisdiction to issue notice under section 143 (2) of the Act, and it would be only the NFAC as per section 144B (1) (iii) to have jurisdiction to initiate proceedings under section 143 (2) of the Act. The notice issued under section 143 (2) of the Act is therefore found to be without jurisdiction. Merely taking approval from the concerned Principal Commissioner would not be sufficient to grant jurisdiction to the JAO.

Summary

Issues:
Jurisdiction of the Assessing Officer under Section 143 (2) of the Income Tax Act for assessment year 2023-24.

Analysis:
The case involved a dispute regarding the jurisdiction of the Assessing Officer (AO) under Section 143 (2) of the Income Tax Act for the assessment year 2023-24. The petitioner argued that the notice issued by the Jurisdictional Assessing Officer (JAO) was without jurisdiction as it should have been issued by the National Faceless Assessment Centre (NFAC) in accordance with Section 144B of the Act. The petitioner contended that the JAO's assumption of jurisdiction was not in line with the Circular dated 03.05.2024, which required a notice under Section 148 of the Act for compulsory scrutiny. The petitioner also relied on a previous judgment by the Court in a similar matter.

On the other hand, the respondent argued that the ITR filed by the petitioner fell within the jurisdiction of the JAO, who had issued the notice under Section 143 (2) of the Act. The respondent contended that the JAO had jurisdiction as per the CBDT Guidelines for compulsory selection of returns for scrutiny. The respondent highlighted that the petitioner had not filed returns in response to a previous notice under Section 148 of the Act for other assessment years.

The Court examined the relevant provisions of the law, specifically Section 144B (1) of the Act, which mandates assessment in a faceless manner through the NFAC. The Court noted that the JAO's jurisdiction to issue a notice under Section 143 (2) arises only if a notice under Section 148 has been issued for that assessment year. Since no notice under Section 148 was issued for the assessment year 2023-24, the JAO did not have jurisdiction to issue the notice under Section 143 (2).

Citing a previous judgment, the Court emphasized that instructions and circulars cannot override statutory provisions and must only supplement them. The Court held that the notices issued by the JAO without conducting faceless assessment were contrary to the provisions of the Act and lacked jurisdiction. Consequently, the Court quashed the notice dated 18.06.2024 and set aside the proceedings initiated by the JAO. The respondents were directed to follow the procedures laid down under the Act for further action.

In conclusion, the Court allowed the writ petition, quashed the notice issued by the JAO, and disposed of all pending applications in the matter.