2024 (10) TMI 1091 - HC - Income Tax

Faceless assessment of income escaping assessment - notice issued under Section 148 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 u/s 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 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 under Section 148. As there is no dispute that the JAO had no jurisdiction to issue the impugned notice, the Writ Petition is accordingly allowed.

Summary

Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for reassessment of returns filed by the Petitioner-Assessee for the Assessment Year 2017-18. Compliance with provisions of Section 151A and the faceless mechanism introduced by the Central Government. Validity of notice issued by Jurisdictional Assessing Officer (JAO) instead of Faceless Assessing Officer (FAO).

Detailed Analysis:

1. Challenge to Notice under Section 148:
The Writ Petition was filed to challenge a notice dated 25 April, 2024, issued under Section 148 of the Income Tax Act, 1961, for reassessment of returns filed by the Petitioner-Assessee for the Assessment Year 2017-18. The impugned notice, along with prior notices under Section 148A (b) and Section 148A (d), were issued by the Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) as required by Section 151A of the Act.

2. Compliance with Section 151A and Faceless Mechanism:
The Central Government introduced a faceless mechanism through a Notification dated 29 March 2022 to ensure compliance with Section 151A of the Act. The Division Bench in the case of Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax & 4 Ors. emphasized that only the FAO, not the JAO, can issue notices under Section 148 of the Act in a faceless manner. The Scheme framed by the CBDT covers both assessment/reassessment under Section 147 and issuance of notices under Section 148, making it clear that the FAO is the designated authority for issuing such notices.

3. Validity of Notice Issued by JAO:
The Respondent-Revenue failed to comply with the Scheme notified by the Central Government under Section 151A (2) of the Act, rendering the notice invalid. The Court relied on the judgment in Hexaware and a recent decision in Nainraj Enterprises Pvt. Ltd. to conclude that the proceedings initiated under Section 148 would not be sustainable due to non-compliance with the faceless mechanism requirements.

4. Judicial Precedents and Decision:
The Court also referred to the decision in Kairos Properties Pvt. Ltd. vs. Assistant Commissioner of Income-tax, highlighting the importance of the scheme notified by the Central Government in determining the validity of notices issued under Section 148A (b) and Section 148A (d). Considering the precedents and the non-compliance with Section 151A, the Court allowed the Writ Petition, quashing the impugned notices.

5. Final Judgment:
The Court allowed the Writ Petition, setting aside the impugned notices issued by the JAO due to non-compliance with Section 151A of the Act. The Court clarified that the decision was based on this ground and did not address other issues raised in the petition. No costs were awarded in the matter.

This detailed analysis outlines the key issues raised in the judgment, emphasizing the importance of compliance with statutory provisions, specifically Section 151A, and the faceless mechanism introduced by the Central Government for issuing notices under the Income Tax Act.