2024 (8) TMI 228 - HC - Income Tax

Faceless assessment scheme - Jurisdiction of the Jurisdictional Assessing Officer (JAO) to issue notice u/s 148 - admittedly notice was issued by the JAO for re-assessment - HELD THAT - Principal Chief Commissioner or the Principal Director General, as the case may be, transfer the case to the Assessing Officer having jurisdiction over such case i.e. JAO. Thus, the power of transfer to the JAO is although available but it has to be exercised only in a particular case considering the facts and circumstances therein and not by way of general order as passed vide letter dated 19.01.2024. Circular or instructions by the Board could not have been issued to override statutory provisions or to make them otiose or obsolete. Legislative enactments having financial implications are required to be followed strictly and mandatorily. By exercising the powers contained in Sections 119 and 120 of the Act, 1961 as well as Section 144B (7 8), the authorities cannot be allowed to usurp the legal provisions to their own satisfaction and convenience causing hardship to the assessees Notices issued by the JAO under Section 148 of the Act, 1961 and the proceedings initiated thereafter without conducting the faceless assessment as envisaged under Section 144B have been found to be contrary to the provisions of the Act, 1961 and accordingly notices issued are set aside for want of jurisdiction.

Issues Involved:
1. Jurisdiction of the Jurisdictional Assessing Officer (JAO) to issue notice under Section 148 of the Income Tax Act, 1961, post the introduction of the faceless assessment scheme.
2. Validity of notices issued by JAO after 01.04.2021 and the subsequent approval orders under Section 151 of the Act.
3. Application of faceless assessment scheme as per notification dated 29.03.2022.
4. Interpretation and application of Sections 119, 120, and 144B of the Income Tax Act, 1961.
5. Validity of office memorandum dated 20.02.2023, and order dated 19.01.2024, in the context of the faceless assessment scheme.

Issue-wise Detailed Analysis:

1. Jurisdiction of the JAO to Issue Notice under Section 148:
The primary issue was whether the JAO is empowered to issue notices under Section 148 after the introduction of the faceless assessment scheme. The court noted that the Coordinate Bench had already adjudicated this issue, concluding that notices under Section 148 should be issued by the National Faceless Assessment Centre as per the notification dated 29.03.2022. The court emphasized that the faceless assessment scheme applies from the stage of issuance of the show cause notice under Section 148 and 148A.

2. Validity of Notices Issued by JAO Post 01.04.2021:
The court observed that the notices issued by the JAO for reassessment after 01.04.2021, and the subsequent approval orders under Section 151, were challenged on the grounds that they should have been issued by the National Faceless Assessment Centre. The Coordinate Bench had previously quashed such notices, emphasizing that circulars and instructions cannot override statutory provisions.

3. Application of Faceless Assessment Scheme:
The court reiterated that the faceless assessment scheme introduced via notification dated 29.03.2022 mandates that assessments, reassessments, and recomputations under Section 147, and issuance of notices under Section 148, must be conducted through automatic allocation. The court upheld the view of the Coordinate Bench that the faceless assessment scheme's objective would be defeated if show cause notices under Section 148 were issued by the JAO.

4. Interpretation and Application of Sections 119, 120, and 144B:
The court examined the provisions of Sections 119 and 120, which allow the Board to issue orders and instructions for the administration of the Act but cannot override statutory provisions. Section 144B, which deals with the faceless assessment process, was also scrutinized. The court noted that the Principal Chief Commissioner or Principal Director General could transfer cases to the JAO only under specific conditions outlined in Sections 144B(7) and 144B(8).

5. Validity of Office Memorandum and Order:
The court addressed the validity of the office memorandum dated 20.02.2023, and the order dated 19.01.2024. It was argued that these were issued in accordance with Section 144B but could not override the statutory provisions. The court agreed with the Coordinate Bench that such circulars or instructions should not make statutory provisions redundant and must be in conformity with the scheme of the Act.

Conclusion:
The High Court followed the judgment of the Coordinate Bench, quashing the notices issued by the JAO under Section 148 and the subsequent proceedings for not adhering to the faceless assessment scheme. The court held that the faceless assessment scheme must be strictly followed, and any deviation via circulars or instructions could not override statutory provisions. The respondents were given liberty to proceed as per the procedure laid down under the Act, 1961, if advised. All writ petitions were allowed, and the interim orders merged with the final order.

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