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TMI Blog2024 (1) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... d Returns of Income [ROI] under Section 139[1] of the IT Act for the Assessment Year 2020-21. The petitioner's case is selected for scrutiny, and the Additional Commissioner of Income Tax, NaFAC-1[1][2], Delhi [the second respondent as the Prescribed Income Tax Authority] [for short, 'the NaFAC'] has issued Notice dated 29.06.2021 [Annexure-C] to the petitioner under Section 143[2] of the IT Act. Subsequently, the first respondent has served Notices dated 23.11.2021, 09.12.2021, 03.01.2022, 11.01.2022, 19.02.2022, 28.04.2022 27.05.2022 and 12.08.2022 [the copies of these Notices are appended to the writ petition as different annexures] under Section 142[1] of the IT Act calling upon the petitioner to furnish details such as computation of income, financial statements along with all the detailed schedules with party-wise and item-wise contents, the party-wise details of sundry advances that are written off and the reasons for writing off such advances, a brief note on various receipts shown in profit and loss account with the various activities carried on during the financial year 2019-20. The petitioner has filed certain responses to each of these notices, including the response da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue notice dated 29.06.2021 [Annexure-C under Section 143[2] of the IT Act because the jurisdiction of the first respondent has not been decentralized insofar as the petitioner. The petitioner contends that because notice dated 29.06.2021 is issued by an officer without jurisdiction, the entire proceedings culminating with the impugned Assessment Order dated 20.09.2022 are without jurisdiction, and hence, this Court must interfere notwithstanding the fact that the petitioner has availed statutory remedy against the Assessment Order. 6. The respondents, who assert that the second respondent is vested with the jurisdiction to issue notice in view of the amendment to Section 143[2] of the IT Act with effect from 01.06.2016 and the insertion of Section 144B with effect from 01.04.2021, question the petitioner's locus to maintain the writ petition relying upon the provisions of Section 124[3] of the IT Act. On the question of jurisdiction to issue notice under Section 143[2] of the IT Act, the respondents assert that the Central Board of Direct Taxes [CBDT] has authorized the second respondent to act as the 'Prescribed Income Tax Authority' for the purposes of Section 143[2] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced any evidence to explain the declarations in ROI. The provisions of Section 143[2] of the IT Act recognize that there will be more than one classes of cases [or incomes or businesses] for assessment, and in respect of these classes either the concerned Assessing Officer or the Prescribed Income Tax Authority, as the case may be, shall issue notice under Section 143[2] of the IT Act. As such, either the concerned Assessing Officer or the Prescribed Income Tax Authority, depending on the class of a case or income or business must issue notice. 9.2 The CBDT, with introduction of the Faceless Assessment Scheme [as e-Assessment Scheme] in the year 2019, has issued Notification dated 13.08.2020 classifying the assessment cases in two classes viz., [a] the assessments in the matters of Central Charge and International Tax Charge and [b] the scrutiny assessment otherwise with the stipulation that all the assessment orders shall be passed by the National e-Assessment Centre through the Faceless Assessment Scheme except in cases assigned to Central Charge and International Tax Charge. The CBDT has further stipulated that any assessment which is not in conformity with the afore shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t accordingly read, the Parliament's intent in enabling different classes of cases with the stipulation that the assessing officer or the prescribed authority, as the case may be, shall issue notice under Section 143[2] of the IT Act will be ignored doing violence to the statutory provision despite the settled proposition. 10. Sri N. Venkataraman submits at the outset that the petition must be dismissed on the ground of maintainability because the petitioner cannot call in question the Assessing Officer's jurisdiction to pass the impugned Assessment Order dated 20.09.2022 [Annexure - A1] when the petitioner, upon receipt of Notice dated 29.06.2021 under Section 143[2] of the IT Act, has filed reply to such notice and to different notices issued thereafter under Section 142[1] of the IT Act leading to the culmination of the assessment proceedings with the assessment order dated 20.09.2022 [Annexure-A1]. 11. Sri N. Venkataraman canvasses that, even if the petitioner could have challenged the jurisdiction to issue notice dated 29.06.2021 [Annexure-C] under Section 143[2] of the IT Act, it would have to be within one month from the date on which the petitioner was served with the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has issued notifications notifying e-Assessment Scheme. This Scheme was in place only for a short period between 01.04.2018 and 31.03.2021 except in cases falling under Section 144[3] of the IT Act. THE FOURTH PHASE The fourth phase is with the introduction of faceless assessment into the IT Act by the Taxation and Other Laws [Relaxation and Amendment of Certain Provisions] Act, 2020 with effect from 01.04.2021. With this amendment, Section 144B is brought into the IT Act stipulating that, notwithstanding anything to the contrary contained in any other provisions of the IT Act, the assessment under Section 143[3] or under Section 144 shall be made in the faceless manner. The golden rule in this phase is for faceless assessment with the Prescribed Income Tax Authority issuing notice under Section 143[2] of the IT Act subject to exception in the cases of Central Charges and International Taxation Charges. In these cases of exception notice under Section 143[2] of the IT Act must be issued by the Prescribed Income Tax Authority and served by National e-Assessment Centre and subsequently, directly displayed to the concerned jurisdictional Assessing Officer for carrying out further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5] 10 SCC 333. 15. Sri A. Shankar in rejoinder rebuts the canvass on the maintainability of the writ petition challenging the assessment order dated 20.09.2022 [Annexure- A1] contending that the petitioner does not challenge the jurisdiction of the first respondent to pass the impugned order because the petitioner's case before this Court is in the premise that the first respondent, and not the second respondent, is the jurisdictional Assessing Officer. The learned Senior Counsel argues that this Court must consider that the petitioner is categorical that the impugned assessment order dated 20.09.2022 [Annexure - A1] is by the jurisdictional Assessing Officer, but such officer first has not assumed jurisdiction with the issuance of notice under Section 143[3] of the IT Act, and therefore, the Assessment Order dated 20.09.2022 must fail. 16. Sri A. Shankar further submits that the embargo under Section 124[3] of the IT Act is to call in question the jurisdiction of the Assessing Officer as defined under Section 2[7A] of the IT Act unlike in the present case where the petitioner, without questioning the jurisdiction of the Assessing Officer, is contending that the assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough, what are described, as economies of scale and functional specialization, and * introducing a team-based assessment with a dynamic jurisdiction. In this regard this Court must refer to the provisions of Section 143[3A] of the IT Act, which are inserted along with Sections 143[3B] and 143[3C] by the Finance Act, 2018 with effect from 01.04.2018. 19. The provisions of Section 143[3B] of the IT Act empower the Central Government, for the purposes of giving effect to a scheme as contemplated under Section 143[3A] of the IT Act, to notify that any provision of the IT Act relating to the assessment of total income or loss shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. These provisions are inserted after Section 143[2] is substituted vide the Finance Act, 2016 with effect from 01.06.2016. 20. The Parliament in substituting the provisions of Section 143[2] of the IT Act has introduced the first change paving way for the later changes. The provisions of Section 143[2] of the IT Act prior to the amendment vide the Finance Act, 2016 and after such amendment read as under: Post Amendment Prior to Amendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 143[2][i] of the IT Act, earlier to 01.06.2003, had reasons to believe that any claim of loss or exemption or deduction or allowance in the ROI is inadmissible, should have issued notice with details of specified; and similarly, for the period after 01.06.2003 and the Assessing Officer considered it either necessary or expedient, to ensure that an assessee has not understated the income or has not computed excessive loss, or has not under-paid the tax in any manner, should have served notice on the concerned assessee as required under Section 143[2][ii] of the IT Act subject to the time limit in the proviso to such sub-section. 22. However, with the amendment vide the Finance Act 2016, where the ROI is furnished under Section 139, or response is filed on service of a notice under Section 142[1], either the Assessing Officer or the Prescribed Income Tax Authority, as the case may be, if, it is considered necessary or expedient to ensure that an assessee has not understated the income or has not computed excessive loss or has not underpaid tax in any manner, shall serve on the assessee a notice for attendance or production of evidence as mentioned therein. This notice is to be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven the scope of the Scheme delineated in paragraph 3 of the Scheme, can specify inter alia the class of cases for assessment under the Scheme. 25. The CBDT, with the introduction of this Scheme and the establishment of the necessary Units as aforesaid, has issued order dated 13.08.2020 in [F No. 187/3/2020-ITA-1] stipulating that all assessment order shall be passed by the National E-assessment Centre through the Faceless Assessment Scheme, 2019 except insofar as assessment orders in the case of Central Charges and International Tax Charges with the stipulation that any assessment which is not in conformity with this arrangement shall be treated as non est and deemed to have never been passed. The CBDT, in exercise of the powers conferred under Section 143[2] of the IT Act read with rule 12E of the Income Tax Rules, 1962, has authorized the Additional Commissioner/Deputy Commissioner of Income Tax[National Assessment Centre] to act as the Prescribed Income Tax Authority for the purposes of Section 143[2] of the IT Act stipulating that this Notification shall come into force with effect from 13.08.2020. 26. It is undisputed that with the introduction of the Scheme and the CBDT's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the legislation as distinguished from the meaning of the enacted provision." 28. This Court must observe that the essential features of the Faceless Assessment Scheme, 2019 are retained with certain modifications under the National Faceless Assessment Scheme in Section 144B of the IT Act, and undeniably, the Parliament's intention in incorporating the Faceless Assessment into the IT Act with inclusion of Section 144B is to continue the Faceless Assessment subject to some changes as felt necessary from the past experience. This is a crucial aspect, and must be examined in the light of fact that CBDT, under both the two Schemes, is conferred with jurisdiction to specify the classes of cases in which the assessment has to be faceless. The relevant provisions are as follows: Paragraph 3 of the Faceless Assessment Scheme, 2019 Section 144B [2] of the IT Act Scope of the Scheme.-- The assessment under this Scheme shall be made in respect of such territorial area, or persons or class of persons, or incomes or class of incomes, or cases or class of cases, as may be specified by the Board The faceless assessment under sub-section (1) shall be made in respect of such territorial area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued the notice under section 143[2] of the IT Act and not the Prescribed Income Tax authority [the second respondent]. 32. The provisions of Section 24 of the General Clauses Act, 1897 provide for continuation of orders etc., issued under enactments repealed and re-enacted. "Section 24. Continuation of orders, etc., issued under enactments repealed and re-enacted.- Where any Central Act or Regulation, is, after the commencement of this Act, repealed and re-enacted with or without modification, then, unless it is otherwise expressly provided any appointment notification, order, scheme, rule, form or bye-law, made or issued under the repealed Act or Regulation, shall, so far as it is not inconsistent with the provisions re- enacted, continue in force, and be deemed to have been made or issued under the provisions so re-enacted, unless and until it is superseded by any appointment notification, order, scheme, rule, form or bye-law, made or issued under the provisions so re-enacted and when any Central Act or Regulation, which, by a notification under section 5 or 5-A of the 8 Scheduled Districts Act, 1874, (14 of 1874) or any like law, has been extended to any local area, has, by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08.2020 under Section 119[2] of the IT Act stipulating that all assessment orders shall be by the National E-Assessment Centre through the Faceless Assessment Scheme, 2019 except insofar as the cases assigned to Central Charges and International Taxation Charges. 36. Further, with the CBDT also issuing appropriate notification in exercise of powers under Section 143[2] of the IT Act authorizing certain officers as the Prescribed Income Tax Authority for the purposes of this section, notices have been served on all assessees, including the assessees in the case of Central Charges and International Taxation Charges, and because of the order dated 13.08.2020, the assessment proceedings insofar as the aforesaid two categories are carried forward by the jurisdictional Assessing Officer. This arrangement with the necessary statutory orders is part of the Scheme notified in exercise of powers under Section 143[3A] - 143[3C]. 37. The terms of the Scheme which is part of the Scheme notified under sub-delegation is brought into the enactment with the introduction of Section 144B of the IT Act, and thus, the Faceless Assessment Scheme, 2019 is repealed with this enactment. It must be observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 144B or the CBDT's Order, to infer exclusion of the operation of CBDT's order dated 13.08.2020. This Court must therefore conclude that the operation of the CBDT's order dated 13.08.2020 is saved by the application of the Section 24 of the General Clauses Act, 1897. Conclusions on Question No. II 40. The petitioner after being served with the notice under Section 143[2] under the National Faceless Assessment Centre on 29.06.2021 has filed response, and the petitioner has also filed response to the subsequent notices served under Section 142[1] of the IT Act. The petitioner has thus participated in the proceedings culminating with the assessment order dated 20.09.2022. The petitioner has availed its statutory remedy against this assessment order in not just filing an appeal under Section 246A of the IT Act but also in filing an application for rectification under Section 154 of the IT Act. These proceedings are pending consideration, and during the pendency of these proceedings, the petitioner has also filed an application for stay before the Principal Commissioner of Income Tax which is disposed of on 20.12.2022 "requesting the petitioner to pay an amount equal to ten per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shall be entitled to call in question the jurisdiction of an Assessing Officer- (a) where he has made a return under sub- section (1) of section 115WD or under sub- section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 142 or sub-section (2) of section 115WE or sub- section (2) of section 143 or after the completion of the assessment, whichever is earlier; (b) where he has made no such return, after the expiry of the time allowed by the notice under sub-section (2) of section 115WD or sub- section (1) of section 142 or under sub-section (1) of section 115WH or under section 148 for the making of the return or by the notice under the first proviso to section 115WF or under the first proviso to section 144 to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer, whichever is earlier; (c) where an action has been taken under section 132 or section 132A, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 153A or sub-section (2) of section 153C or after the completion of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but even according to the decision [CIT v. Ramesh D Patel [supra] relied upon by the petitioner, these provisions mainly refer to the territorial jurisdiction. It is implicit from this that the restriction under Section 124[3] of the IT Act on the right to raise the question of jurisdiction must extend to all grounds on which jurisdiction is called in question. If the right to call in question the jurisdiction is left open to be raised at any stage, the proceedings will remain inconclusive and that could not have been the intendment of the legislature. Therefore, this Court must opine that the petitioner must fail even on the second question. 45. The petitioner, because of the undertaking given by the respondents before this Court, which is continued through these months, has had the advantage of not tendering the further installments in terms of the order 20.12.2022. However, with the disposal of this petition answering the questions framed against the petitioner, the petitioner must necessarily pursue its appeal subject to deposit of further installments in terms of the order dated 20.12.2022 starting from 20.01.2024. Hence the following: ORDER The petition is rejected, and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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