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TMI Blog2023 (9) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act would now have to be taken as per the procedure legislated by the Parliament in respect of reopening/ re-assessment i.e., proceedings under Section 148A of the Act. Parliament had by virtue of the Finance Act 2021, brought certain amendments to the provisions of the Income Tax Act, more particularly, in respect of the manner in which the reassessment and the procedure to be adopted by the Income Tax Department. The amendment was brought with an intention to make the law more transparent and effective. The Hon ble Supreme Court also while deciding the case of Ashish Agarwal, supra, as is discussed with in the preceding paragraph had specifically directed the Union of India to proceed further in terms of the substituted provisions brought in by way of Finance Act 2021. What is also relevant to take note of the fact that the Hon ble Supreme Court ASHISH AGARWAL [ 2022 (5) TMI 240 - SUPREME COURT] while exercising its power under Article 142 of the Constitution of India has also not relaxed the applicability of the Finance Act 2021. Rather, the Hon ble Supreme Court in very clear and unambiguous terms had held that the notices issued under the un-amended provisions, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , under Section 148 of the Income Tax Act, as well, issued by the respondent No.1 himself. 2. Heard Sri A.V. Krishna Kaundinya, learned Senior Counsel appearing on behalf of Sri A.V.A. Siva Kartikeya, learned counsel for the petitioner and Sri J.V. Prasad, learned counsel for the respondent-Department. 3. Though the aforesaid two orders have been assailed on various grounds, nonetheless, the foremost objection which the petitioners have raised is that of the two orders being in contravention of the amended provision of the Income Tax Act, 1961. 4. The objection specifically was that once when the respondent No.1 have decided to go in for re-assessment of the return submitted by the petitioner/assessee and notice for the same under Section 148A of the Act was issued, it was incumbent upon the respondent No.1 to have adhered to the amended provision of the Act. According to the learned Senior Counsel for the petitioner it was required to get the re-assessment done in a faceless manner, rather than being assessed by the jurisdictional officer as has been provided under Section 144B of the Act and in accordance with the scheme enacted by the Central Government under Section 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice under Section 148A shall be done through the automated allocation. Further the notices, to be issued, have to be in a faceless manner as is provided under Section 144B of the Act. It was also contended that the re-opening proceedings first of all could not have been initiated after a gap of three (3) years. Secondly, re-opening of the proceedings can only be permitted if the income chargeable to tax escaping assessment is more than fifty Rs.50,00,000/-. 9. It was further contended by the learned Senior Counsel appearing for the petitioner that the respondent No.1 has acted in a mechanical and arbitrary fashion while issuing notices through the jurisdictional officer. The said Act was without taking into consideration the amended provision under the Income Tax Act, 1961, as introduced under the Finance Act, 2021. It was also without proper verification of whether the so called income which has escaped assessment exceeds Rs.50,00,000/- or more. 10. Learned counsel for the respondent-Department on the other hand opposing the petition submits that it is not the case where a notice has been recently issued to the petitioner subsequent to the amendment brought in to the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Section nor the scheme dated 29.03.2022 speak about the detail specifics of the procedure to be followed therein. They lay down the general principles that should be followed so as to impart greater efficiency, transparency and accountability to the procedures contained therein. The said scheme lays down that the issuance of notice under Section 148 of the Act shall be through automated allocation in accordance with Section 144B of the Act. It was also submitted that the CBIT has issued notification No.01/2022 dated 11.05.2022 containing guidelines for implementation of the Hon ble Supreme Court s judgement in the case of Union of India and Others vs. Ashish Agarwal. Vide the said judgment, the Hon ble Supreme Court revived nearly 90,000 notices issued under Section 148 between 01.04.2021 to 30.06.2021 re-opening assessment for the assessment year 2013-14 and subsequent years. It is to be stated that these notices were issued under the old provisions of re-opening. The Hon ble Supreme Court had revived these notices quashed by certain High Courts by converting the notices issued under Section 148 (old) to notice under Section 148A (new) of the Act with a direction to continue the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecific aim and object, more particularly, to protect the rights and interests of the assessee and the same being in public interest, held that they were in complete agreement with the view taken by the various High Courts while holding that the benefit of the new provisions shall be made available even in respect of the proceedings relating to the past assessment years, where notices have been issued under Section 148 on or after 01.04.2021 i.e. the date since when the Finance Act, 2021, became enforceable. 18. However, while upholding the judgements of the High Courts, the Hon ble Supreme Court taking into consideration the fact that the Income Tax Department had issued approximately 90,000 notices under Section 148 of the un-amended Act and in all these cases, the Department would become remediless so far as re-assessment proceedings are concerned. Therefore, as a onetime measure invoking the powers conferred upon it under Section 142 of the Constitution of India, the Hon ble Supreme Court ordered that the notices under Section 148 which were issued by the Department should be considered to have been issued under Section 148A of the Income Tax Act i.e. new provision inserted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 148A and the Revenue ought to have been permitted to proceed further with the reassessment proceedings as per the substituted provisions of sections 147 to 151 of the Income-tax Act as per the Finance Act, 2021, subject to compliance of all the procedural requirements and the defences, which may be available to the assessee under the substituted provisions of sections 147 to 151 of the Income-tax Act and which may be available under the Finance Act, 2021 and in law. Therefore, we propose to modify the judgments and orders passed by the respective High Courts as under : (i) The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the Income-tax Act as substituted by the Finance Act, 2021 and treated to be show-cause notices in terms of section 148A(b). The respective Assessing Officers shall within thirty days from today provide to the asseessees the information and material relied upon by the Revenue so that the asseessees can reply to the notices within two weeks thereafter ; (ii) The requirement of conducting any enquiry with the prior approval of the specified authority under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required ; (iii) The Assessing Officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessees ; thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted) ; (iv) All defences which may be available to the assessees including those available under section 149 of the Income-tax Act and all rights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and in law, shall continue to be available. 20. Keeping the aforesaid view of the Hon ble Supreme Court, it would be relevant at this juncture to take note certain provisions of the Income Tax Act which stood amended with effect from 01.04.2021 by virtue of the Finance Act, 2021. Section 144B inserted by virtue of the Finance Act, 2021, with effect from 01.04.2021 provides for faceless assessment and sub-Section 1 of the said newly inserted Section 144B is an non-obstante clause. The relevant portion of sub-Section 1 of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am-based assessment, reassessment, re-computation or issuance or sanction of notice with dynamic jurisdiction . 22. Similarly, the Central Board of Direct Taxes had also amended Section 130 of the Income Tax Act so far as conferring jurisdiction of the Income Tax Authorities in the light of the faceless assessment procedure being adopted. The amended Section 130 and sub-Section 1 which is relevant for the present issue under consideration again for ready reference is being reproduced herein under: The Central Government may make a scheme, by notification in the Official Gazette, for the purpose of (a) exercise of all or any of the powers and performance of all or any of the functions conferred on, or, as the case may be, assigned to income-tax authorities by or under this Act as referred to in section 120; or (b) vesting the jurisdiction with the Assessing Officer as referred to in section 124; or (c) exercise of power to transfer cases under section 127; or (d) exercise of jurisdiction in case of change of incumbency as referred to in section 129, so as to impart greater efficiency, transparency and accountability by (i) eliminating the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eans an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources. And the scope of the scheme again has been envisaged in Section 3 of the said scheme, which again for ready reference is being reproduced herein under: For the purpose of this Scheme,- (a) assessment, reassessment or recomputation under sectopm 147 of the Act, (b) issuance of notice under section 148 of the Act, shall be through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in section 148 of the Act for issuance of notice, and in a faceless manner, to the extent provided in section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee. 25. A plain reading of the aforesaid two notifications issued by the Central Board of Direct Taxes dated 28.03.2022 and 29.03.2022, it would clearly indicate that the Central Board of Direct Taxes was very clear in its mind when it framed the aforesaid two schemes with respect to the proceedings to be drawn under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt-Department to have in this regard. 29. The Hon ble Supreme Court has in paragraph No.7 specifically held that the High Courts have rightly held that the benefit of new provisions shall be made available in respect of the proceedings relating to past assessment years. Further, the Hon ble Supreme Court again in paragraph No.8 very emphatically had said that the proceedings ought not to have been issued under the unamended Act. Rather ought to had been issued under the substituted provisions as per the Finance Act, 2021. Further, in the same paragraph clearly directed the Income Tax Department to proceed further as per the Finance Act, 2021, subject to compliance of all the procedural requirements and defences available to the assessee under the substituted provisions under the Finance Act, 2021. The fact that the Hon ble Supreme Court allowed the notice earlier issued under Section 148 be treated as notice one under Section 148A and further it was also be treated as the show cause notice issued under Section 148A(b) by itself establishes the fact the directions given by the Hon ble Supreme Court for the respondent-Department was to proceed further in accordance with the substi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if it is not done in that manner then it would have no existence in the eye of law. In paragraph 18 of the said judgment, the Hon ble Supreme Court held as under: The Tribunal s judgment has proceeded on the basis that even though the samples were drawn contrary to law, the appellants would be estopped because their representative was present when the samples were drawn and they did not object immediately. This is a completely perverse finding both on fact and law. On fact, it has been more than amply proved that no representative of the appellant was, in fact, present at the time the Customs Inspector took the samples. Shri K.M. Jani who was allegedly present not only stated that he did not represent the Clearing Agent of the appellants in that he was not their employee but also stated that he was not present when the samples were taken. In fact, therefore, there was no representative of the appellants when the samples were taken. In law equally the Tribunal ought to have realized that there can be no estoppel against law. If the law requires that something be done in a particular manner, it must be done in that manner, and if not done in that manner has no existence in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instance. Secondly, it is also in direct contravention to the directives issued by the Hon ble Supreme Court in the case of Ashish Agarwal, supra. 36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent-Department is neither tenable, nor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to the notices issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically. 37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are getting quashed on the point of jurisdiction, we are not inclined to proceed further and decide the other issues raised by the petitioner which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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