2024 (10) TMI 94 - HC - Income Tax

Faceless assessment of income escaping assessment - notice issued under Section 148 of the Act is issued by the Jurisdictional Assessing Officer ( JAO ) and not by a Faceless Assessing Officer ( FAO ), as is required by the provisions of Section 151A - HELD THAT - It is now well settled that for a notice to be validly issued for reassessment under Section 148 of the Act, the Respondent-Revenue would need to be compliant with Section 151A, which has been interpreted and analysed in detail by a Division Bench of this Court in the case of Hexaware Technologies Limited 2024 (5) TMI 302 - BOMBAY HIGH COURT wherein held 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 of the Act. Decided in favour of assessee.

Summary

Issues:
Challenge to notice issued under Section 148 of the Income Tax Act, 1961 due to non-compliance with Section 151A of the Act.

Analysis:
The Writ Petition was filed to challenge a notice issued under Section 148 of the Income Tax Act, 1961, along with prior notices under Section 148A(b) and Section 148(A)(d) for reassessment of returns filed for the Assessment Year 2014-15. The main contention was that the notice was issued by the Jurisdictional Assessing Officer (JAO) and not by a Faceless Assessing Officer (FAO) as required by Section 151A of the Act.

The Division Bench of the High Court had previously interpreted Section 151A in the case of Hexaware Technologies Limited, emphasizing that the Scheme for automated allocation of cases is mandatory and must be followed. The Scheme, applicable for both assessment and issuance of notices under Section 148, mandates that only the FAO can issue such notices in a faceless manner, excluding the JAO from this process.

The Court reiterated that when an authority acts contrary to the law, the act must be quashed and set aside as invalid, causing prejudice to the assessee. Compliance with the due process of law is essential for all assessments, and any deviation from the prescribed procedure results in prejudice to the assessee, making the action invalid.

In light of the non-compliance with Section 151A and the precedent set by the Hexaware case, the Court allowed the Writ Petition, quashing the impugned notice and order issued by the JAO. Any consequential demand or penalty notices were also set aside. The judgment did not address other issues raised in the petition, as the non-compliance with Section 151A was sufficient to dispose of the case. The Writ Petition was allowed without costs, emphasizing the importance of following the statutory procedures outlined in the Act.