2024 (9) TMI 1451 - HC - Income Tax

Faceless assessment of income escaping assessment - validity of notice issued by the JAO as not in accordance w/sec 151A - not permissible for the Jurisdictional Assessing Officer to issue a notice u/s 148, as the same would amount to breach of the provisions of section 151A - HELD THAT - As decided in recenet case recent decision of this Court in Nainraj Enterprises Pvt. Ltd. 2024 (7) TMI 511 - BOMBAY HIGH COURT relying on Hexaware Technology Ltd. 2024 (5) TMI 302 - BOMBAY HIGH COURT provisions of Section 151A 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 u/s 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 u/s 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 u/s 148. 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 notice under Section 148 of the Income Tax Act, 1961 due to non-compliance with the provisions of Section 151A and the faceless mechanism introduced by the Central Government.

Detailed Analysis:
The Writ Petition was filed to challenge a notice dated 28 March, 2024, issued under Section 148 of the Income Tax Act, 1961, along with prior notices under Section 148A(b) and Section 148A(d) for reassessment of returns filed for the Assessment Year 2018-19. The impugned notices were issued by the Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) as required by Section 151A of the Act. The Central Government had introduced a faceless mechanism through a Notification dated 29 March, 2022, mandating compliance with Section 151A for valid notice issuance under Section 148. The Division Bench in the case of Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax highlighted the exclusive jurisdiction of either JAO or FAO for notice issuance under Section 148, emphasizing the mandatory nature of automated allocation for faceless proceedings.

The Court noted that the Respondent-Revenue failed to comply with the faceless mechanism Scheme under Section 151A(2) of the Act, which has the force of subordinate legislation governing proceedings under Section 148A and Section 148. Citing the precedent set by the Hexaware case, the Court found the notice issuance invalid, thereby vitiating the entire proceedings initiated against the Petitioner-Assessee. Both parties agreed that the proceedings under Section 148 would not be sustainable due to non-compliance with Section 151A, as evidenced by a similar decision in Nainraj Enterprises Pvt. Ltd. Vs. The Deputy Commissioner of Income Tax.

Consequently, the Court allowed the Writ Petition, quashing the impugned notices based on the lack of jurisdiction of the JAO to issue them. The relief sought in the prayer clause was granted, and the Court clarified that its decision was solely based on non-compliance with Section 151A, refraining from addressing other issues raised in the petition. The Rule was made absolute in favor of the Petitioner without costs, emphasizing the importance of adherence to statutory procedures and jurisdictional requirements in tax assessments.