2024 (9) TMI 486 - HC - Income Tax

Faceless assessment of income escaping assessment - Validity of reopening of assessment - notice issued by the Jurisdictional Assessing Officer ( JAO ) and not by a Faceless Assessing Officer ( FAO ) - HELD THAT - In the present case, it is apparent that the respondent-revenue has not complied with the Scheme notified by the Central Government pursuant to Section 151A (2) of the Act. The Scheme has also been tabled in Parliament and is in the character of subordinate legislation, which governs the conduct of proceedings under Section 148A as well as Section 148 of the Act. In view of the explicit declaration of the law in Hexaware, the grievance of the petitioner-assessee insofar as it relates to an invalid issuance of a notice is sustainable and consequently, the very manner in which the proceedings have been initiated, vitiates the proceedings. Both the parties agree that the proceedings initiated under Section 148 of the Act would not be sustainable in view of the judgment rendered in Hexaware. 2024 (5) TMI 302 - BOMBAY HIGH COURT As JAO had no jurisdiction to issue the impugned notice and that the issue was time-barred, the Writ Petition is accordingly allowed.

Summary

Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 due to jurisdictional concerns and non-compliance with faceless assessment provisions. Assessment year 2013-14. Time limitation for reassessment under Section 148.

Analysis:
The petition was filed to challenge a notice issued under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2013-14. The High Court observed that the notice and order were issued by the Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) as required by Section 151A. The Court referenced the Hexaware case, which emphasized the exclusive jurisdiction of either the JAO or FAO for issuing notices under Section 148, not both concurrently. The faceless mechanism introduced by the Central Government mandates adherence to Section 151A for valid notice issuance.

The Court highlighted that non-compliance with the faceless assessment Scheme, framed under Section 151A, rendered the notice invalid. Both parties agreed that the proceedings initiated under Section 148 were unsustainable based on the Hexaware judgment and a similar decision by the Court in another case. Additionally, the Court referred to the New India Assurance case, which established that reassessment proceedings for the year 2013-14 after March 31, 2021, were time-barred. This limitation period was further analyzed in detail, emphasizing the invalidity of reopening assessments beyond the specified timeframe.

Consequently, the Court allowed the petition, quashing the reopening notice, order, and assessment due to jurisdictional issues and time limitations. The judgment clarified that the decision was based on non-compliance with statutory provisions and did not address other issues raised in the petition. The Rule was made absolute in favor of the petitioner, with no costs awarded.