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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 ..... ed, direct, by a Notification in the Official Gazette, that any of the provisions 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. In exercise of this power, the Central Government has notified Faceless Assessment Scheme, 2019 and the CBDT, which is conferred with powers to ensure that assessment shall be under the Scheme in respect of certain persons or class of persons or class of incomes under the terms of the Scheme, has issued order dated 13.08.2020 u/s 119[2] 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer, then the Assessing Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under Section 124[2]. These provisions, it is argued, is limited to those cases where territorial jurisdiction is challenged, but even according to the decision [CIT v. Ramesh D Patel [ 2014 (2) TMI 29 - GUJARAT HIGH COURT ] 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. 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 disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... responses to each of these notices, including the response dated 20.07.2022. 3. The first respondent has passed the impugned Assessment Order dated 20.09.2022 with certain additions and disallowances. The petitioner has filed its appeal against the first respondent s Assessment Order dated 20.09.2022 with the Commissioner of Income Tax [Appeals]-11 Bengaluru. The petitioner has also filed separate applications for rectification under Section 154 of the IT Act with the first respondent on 18.10.2022 and 06.12.2022. The aforesaid appeal and the applications for rectification are pending consideration. 4. The Principal Commissioner of Income Tax [Central], Bengaluru by the order dated 20.12.2022 has granted stay of recovery in terms of the Assessment Order subject to the petitioner depositing the disputed amount in ten installments of Rs. 1,96,28,424/-. This Court, in the light of the submission that the first of the installments in Rs. 1,96,28,424/- is paid under protest, and because of the question that is canvassed, has recorded that the respondents are expected not to be precipitative. It is placed on record that in due deference to this observation, the respondents have no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;Prescribed Income Tax Authority' for the purposes of Section 143[2] of the IT Act in exercise of the powers conferred thereunder and Rule 12A of the Income Tax Rules, 1962 read with Section 143[2], and that the 'Prescribed Income Tax Authority' is vested with jurisdiction to issue notice under Section 143[2] of the IT Act for cases to be assessed under the provisions of Section 144B of the IT Act or outside such assessment in appropriate cases. 7. The respondents, to vindicate their case that the second respondent is vested with jurisdiction in law to issue notice under Section 143[2] of the IT Act, have also, as part of their Statement of objections and convenience compilation filed during the course of hearing, given a historical background to bring out the evolution in the assessment proceedings with the elimination of the interface between Assessing Officers and Assessees by utilizing technology and the introduction of a team based assessment with dynamic jurisdiction. 8. If these are the elementary pleadings and contentions for and against the question that is framed for consideration, both Sri A Shankar and Sri. N Venkataraman have elaborated the respective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stipulated that any assessment which is not in conformity with the afore shall be treated as non-est. The CBDT, even after the incorporation of the National Faceless Assessment Scheme under Section 144B in the IT Act, has issued orders under Section 119 of the IT Act on 31.03.2021 specifying that all assessment proceedings pending as on 31.03.2021 and the assessment proceedings initiated on or after 01.04.2021 [other than those in Central charges and International Taxation charges] shall be completed under Section 144B of the IT Act. 9.3 The CBDT, which had issued order dated 13.08.2020 in exercise of its powers under Section 119[2] of the IT Act, classifying Central Charges and International Taxation Charges as separate classes when Faceless Assessment Scheme, 2019 was in vogue, has not issued a similar order with the introduction of National Faceless Assessment Scheme with the insertion of the Section 144B of the IT Act. This order dated 13.08.2020 cannot continue with the introduction of the later Scheme, and the order dated 31.03.2021, issued under Section 119[1] of the Act, which is essentially an internal communication, cannot be effective, and as such, the arrangement un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have to be within one month from the date on which the petitioner was served with the aforesaid notice. In this regard, the learned Additional Solicitor General, drawing support from the Division Bench Judgment of the Delhi High Court in Commissioner of Income Tax vs. Kapil Jain 2010 SCC Online Delhi 2596, relies upon the provisions of Section 124[3] of the IT Act and emphasizes that the provisions of this Section stipulate that no person shall be entitled to call in question the jurisdiction of the assessing officer after the expiry of one month from the date of receipt of the notice under Section 143[2] or after the completion of the assessment, whichever is earlier. 12. Sri N. Venkataraman submits that going by the history of the law, it is self-evident that, post 01.06.2016, either the concerned Assessing Officer or the Prescribed Income Tax Authority can issue notice under Section 143[2] of the IT Act, and insofar as the history of the law, the learned Additional Solicitor General submits that the history must be seen in four phases and elaborates thus. THE FIRST PHASE: This phase is prior to 31.05.2016 i.e., before the amendment of Section 143[2] with e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved by National e-Assessment Centre and subsequently, directly displayed to the concerned jurisdictional Assessing Officer for carrying out further assessment proceedings. 13. Sri N. Venkataraman canvasses that the CBDT, in consonance with this evolving change, has issued notifications under Section 143[2] of the IT Act authorizing the Additional Commissioner/ Deputy Commissioner of Income Tax [National E-Assessment Centre] to act as the Prescribed Income Tax Authority for the purposes of this Section. The CBDT has issued the first notification on 25.09.2020, and this is continued by the subsequent notification dated 31.03.2021. The CBDT has also notified Computer Assisted Scrutiny Selection [CASS, 2020] on 17.05.2021 stipulating that the Prescribed Income Tax Authority shall issue notice under Section 143[2] of the IT Act, such notice shall be served by National e-Assessment Centre and subsequently the cases shall be assigned to a specific Assessment Unit in a Regional e-Assessment Centre through an automated allocation system for the purposes of e-Assessment. Insofar as the cases relating to Central and International Taxation Charges, the instructions under CASS, 2020 are th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e IT Act unlike in the present case where the petitioner, without questioning the jurisdiction of the Assessing Officer, is contending that the assessment proceedings could not have been continued with the notice under Section 143[2] of the IT Act being issued by the Prescribed Income Tax Authority. Sri A. Shankar, relying upon the decision of the High Court of Gujarat in CIT v. Ramesh D Patel 326 ITR 492 [GUJ], also submits that in any event the embargo under Section 124[3] of the IT Act will be only when an assessee proposes to question the Assessing Officer s territorial jurisdiction. 17. Sri A. Shankar and Sri N. Venkataraman, are heard on the question framed for hearing, but as they have dilated on the question of maintainability of the petition, this Court will have to consider the following two questions: [a] Whether the Additional Commissioner of Income Tax NaFAC-1(1)(2) could have assumed jurisdiction in respect of the petitioner s case which belongs to Central Charge for issuance of notice under Section 143(2) of the Income Tax Act, 1961; and if the aforesaid officer could not have so assumed jurisdiction, whether the proceedings must fail for want of due notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Amendment (2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under- paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.] (2) Where a return has been furnished under section 139, or in respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 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 served on an assessee only within the time contemplated in the proviso appended to this subject. It would suffice, for the purposes of the present controversy, to record that if there is change inasmuch as an Assessing Officer or the Prescribed Income Tax Authority can serve notice under Section 143[2] of the IT Act, the provisions of Section 143[3] have always stipulated that the Assessing Officer shall complete the assessment in writing assessing the total income loss of the assessee and determining the sum payable. Subsequently changes have been made to introduce e-assessment/faceless assessment, but this change has remained unaltered. 23. The Central Government, with the amendment of Section 143[2] of the IT Act and the introduction of Section 143[3A]-[3C] Act, has notified Faceless Assessment Scheme, 2019 vide the notification dated 12.09.2019 in exercise of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner/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 order as aforesaid, the Prescribed Income Tax Authority, for the relevant assessment years, has issued notice under Section 143[2] to all the assessees and the assessment proceedings are continued under the Faceless Assessment Scheme, 2019 except insofar as Central Charges and International Tax Charges. 27. The Faceless Assessment Scheme, 2019 is repealed with effect from 01.04.2021 and National Faceless Assessment Scheme is introduced by the Parliament inserting Section 144B of the IT Act. The petitioner does not have any quarrel with the Prescribed Income Tax Authority issuing notices in the cases of Central Charges and International Taxation Charges under the erstwhile Scheme, but contends the Prescribed Income Tax Authority under the new Scheme cannot assume jurisdiction in these cases. The background and the antecedent matrix in which the new Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 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 29. The CBDT, with the National Faceless Assessment Scheme on the anvil, has issued Order dated 31.03.2021 under Section 119[2] of the IT Act stipulating that all the assessment proceedings pending as on 31.03.2021 and assessment proceedings initiated on or before 01.04.2021 [other than those a settled charges and International Taxation chances] shall be completed under Section 144B of the IT Act. The Directorate of Income Tax [Systems] has issued Communication dated 17.05.2021 to the Principal Chief Commissioner of Income Tax/Chief Commissioners of Income Tax stating that in cases pertaining to Central Charges and Intern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 a subsequent notification, been withdrawn from the re-extended to such area or any part thereof, the provisions of such Act or Regulation shall be deemed to have been repealed and re-enacted in such area or part within the meaning of this section. These provisions contemplate that where any central Act or Regulation, after the commencement of the General Clauses Act, 1897 is repealed and re-enacted with or without modification, then, unless it is otherwise expressly provided, any order or regulation made under the repealed Act or Regulation shall continue in force and be deemed to have been made or issued under the re-enactment unless it is inconsistent with the provisions of the re-enactment and until it is superseded by any orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 observed at this stage that it is not pointed out to this Court that the National Faceless Assessment Scheme which is now part of the Statute contained any condition that would be inconsistent with the arrangement under the Faceless Assessment Scheme, 2019 or that the CBDT has issued any directions to the contrary. 38. In fact, it is submitted that the order dated 31.03.2021 issued by the CBDT is to continue the arrangement in the Scheme under the National Faceless Assessment Scheme This order dated 31.03.2021 in its material part reads as under: Order under sub-section (2) of Section 144B of the Income-tax Act, 1961 for specifying the scope cases to be done under the Act - regarding In pursuance of sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 percent of the disputed demand after disposal of the rectification application filed by the petitioner in ten equal monthly installments starting from the month of January 2023 . 41. The petitioner has paid the first installment in terms of this interim order, and it is at this stage that the petitioner has approached this Court essentially on the ground that the petitioner is not challenging the jurisdiction of the first respondent to pass the impugned assessment order dated 20.09.2022 but is calling in question the jurisdiction of the Prescribed Income Tax authority to issue notice under Section 143[2] of the IT Act under the National Faceless Assessment Scheme. 42. The provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H 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 assessment, whichever is earlier. (4) Subject to the provisions of sub- section (3), where an assessee calls in question the jurisdiction of an Assessing Officer, then the Assessing Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under sub- section (2) before the assessment is made. (5) Notwithstanding anything contained in this section or in any direction or order issued under section 120, every Assessing Officer shall have all the powers conferred by or under this Act on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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