2024 (7) TMI 511 - HC - Income Tax

Faceless assessment of income escaping assessment - validity of notice issued by the JAO as not in accordance with Section 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 Hexaware T.echnology 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:
Challenge to order under Section 148A(d) of the Income Tax Act and notice under Section 148, Jurisdiction of Assessing Officer in issuing notice under Section 148, Compliance with faceless assessment scheme.

Analysis:
The petitioner filed a petition under Article 226 seeking to quash an order and notice issued by respondent No.1 under the Income Tax Act. The petitioner's return of income for the Assessment Year 2017-18 was scrutinized, leading to a rejection of accounts and estimation of net profit. Subsequently, a notice was issued regarding a suspicious transaction with M/s. Choksi Navnitlal, prompting the petitioner to challenge the jurisdiction of the Assessing Officer.

The petitioner argued that the notice was invalid due to non-compliance with the faceless assessment scheme under Section 151A of the IT Act. Citing the decision in Hexaware Technology Ltd. case, the petitioner contended that the Jurisdictional Assessing Officer lacked authority to issue the notice, as the scheme mandated automated allocation for assessments and notices. The Court held that the faceless assessment regime prohibited the Jurisdictional Assessing Officer from issuing notices under Section 148, emphasizing the importance of following the prescribed procedures.

The Court highlighted that the scheme aimed to eliminate the interface between tax authorities and assesses, ensuring efficiency and transparency in assessments. It emphasized the mandatory nature of automated allocation, precluding concurrent jurisdiction between officers designated in the scheme. The Court ruled that actions contrary to law must be quashed, as they inherently prejudice the assessee. Consequently, the impugned order and notice were deemed invalid and set aside, granting relief to the petitioner.

In conclusion, the petition was allowed, quashing the impugned order and notice. The Court emphasized adherence to statutory procedures and the significance of the faceless assessment scheme in maintaining fairness and transparency in tax assessments. The judgment underscores the importance of upholding legal provisions to protect the rights of assesses and ensure proper administration of tax laws.