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TMI Blog2024 (7) TMI 727X X X X Extracts X X X X X X X X Extracts X X X X ..... on dated 29 March, 2022 notified a scheme in regard to faceless assessment inter alia providing that the assessment, reassessment or recomputation of income under section 147 of the Act as also the 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. Section 144B of the Act is a provision which ordains faceless assessment. Perusal of Section 144B indicates the entire procedure to be followed in undertaking assessment in a faceless manner involving the National Faceless Assessment Center. Section 144B of the Act although was inserted by the TOLA, it has been brought into effect from 01 st April, 2021. The impugned notice in the said proceedings being issued by the JAO and not as per the faceless assessment procedure, as envisaged under the scheme notified by the Central Government by notification dated 29 March 2022 was illegal and invalid. It was held that the JAO had no jurisdiction to issue such notice, as it was not issued as per the requirements of Section 151A read with Section 144B of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the ITAT, Mumbai while passing the orders for assessment years 2012-13, 2016-17 and 2017-18, had accepted that the petitioner was following project completion method of accounting and accordingly, advances were received by the petitioner from customers. 4. It is contended that for the assessment year 2016-17, the petitioner had filed her return of income on 30 March, 2016 under Section 139 of the Income Tax Act, 1961 (for short, the Act ) declaring total income as Nil . The return of income was processed under Section 143 (1) of the Act on 08 June, 2018. 5. The petitioner has stated that subsequent assessment years i.e. 2017-18 and 2018-19 were subjected to scrutiny under Section 143 (3) of the Act. The assessment orders dated 24 December, 2019 and 23 June, 2021 for assessment years 2017-18 and 2018-19 respectively were passed by the Assessing Officer, who assessed and taxed a profit rate of 8% on closing work in progress by applying percentage completion method. The petitioner had shown the following advances received from customers in the balance sheet as under:- Asst. Year Closing WIP as at year end Profit @ 8% on Closing WIP AY 2017-18 Rs. 109,02,26,300/- Rs. 8,72,18,104/- AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above. 10. The contentions as urged on behalf of the petitioner in supporting the prayers is that the order passed by the assessing officer under Section 148A (d) of the Act is invalid for the reason that the Assessing Officer has failed to deal with the objections which were filed by the petitioner. It is submitted that it was incumbent on the part of the Assessing Officer to do so as per the guidelines dated 01 August, 2022 issued by CBDT bearing F. No. 299/10/2022 which makes it mandatory for a speaking order to be passed under Section 148A (d), in disposing of the objections as raised by the assessee. The learned counsel for the petitioner has contended that the Assessing Officer, without application of mind, has recorded in the impugned order that the assessee did not make any effort to explain why the income arose out of sale transactions made by her proprietary concern was not offered for taxation and that the assessee s reply was evasive, insufficient and not satisfactory . It is submitted that perusal of the reply itself indicates that the petitioner had furnished detailed reasons in reply to the notice and such reasons as attributed in the impugned order are mechanical an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdictional Assessing Officer could not have issued a notice under Section 148A (b) of the Act, outside the Faceless Assessment Scheme. In the context of the contentions as urged on behalf of the petitioner, at the outset, we may note the provisions of Section 151A of the Act, which was inserted by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions), Act, 2020 (for short, TOLA ) with effect from 01 November, 2020 providing for faceless assessment of income escaping assessment . The said provision reads thus:- 151A. Faceless assessment of income escaping assessment. (1) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of assessment, reassessment or re-computation under section 147 or issuance of notice under section 148 [or conducting of enquiries or issuance of show-cause notice or passing of order under section 148A] or sanction for issue of such notice under section 151, so as to impart greater efficiency, transparency and accountability by (a) eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible; (b) optimising utilisation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Section 144B of the Act is a provision which ordains faceless assessment. Perusal of Section 144B indicates the entire procedure to be followed in undertaking assessment in a faceless manner involving the National Faceless Assessment Center. Section 144B of the Act although was inserted by the TOLA, it has been brought into effect from 01 st April, 2021. 16. We may observe that in Hexaware Technologies Limited (supra), the implications as brought about by Section 151A and the ancillary provisions in regard to faceless procedure were subject matter of consideration, when the Court framed issue no. 4 as one of the questions being examined namely whether the notice as impugned in the said proceedings dated 27 August, 2022 was valid and bad in law being issued by the JAO as the same not being issued in accordance with Section 151A of the Act. The Division Bench considering the provisions as noted by us above, held that the impugned notice in the said proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f notice under Section 148; or (iii) conducting of inquiry or issuance of show cause notice or passing of order under Section 148A; or (iv) sanction for issuance of notice under Section 151; so as to impart greater efficiency, transparency and accountability by inter alia eliminating the interface between the Income Tax Authorities and assessee. Sub-section 3 of Section 151A of the Act also provides that every notification issued under sub-section (1) and (2) of Section 151A of the Act shall be laid before each House of Parliament. In exercise of the powers conferred by sub-sections (1) and (2) of Section 151A of the Act, CBDT issued a notification dated 29th March, 2022 [Notification No. 18/2022/F. No. 370142/16/2022-TPL and formulated a Scheme. The Scheme provides that - (a) the assessment, reassessment or recomputation under Section 147 of the Act, (b) and the 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 ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, when the Income Tax Authority proposes to take action against an assessee without following the due process of law, the said action itself results in a prejudice to assessee. Therefore, there is no question of petitioner having to prove further prejudice before arguing the invalidity of the notice. (emphasis supplied) 17. In so far as the other issues are concerned, we find substance that the order passed by the Assessing Officer requires interference as it is clear from reading of the impugned order that the submission which was made on behalf of the petitioner before the assessing officer that the petitioner was following the project completion method, has not been taken into consideration while issuing the impugned notice and in coming to a conclusion to re-open the assessment. 18. In the light of the aforesaid discussion, we are certain that the petition needs to succeed. It is accordingly allowed in terms of prayer clause (d), which reads thus:- d. To issue writ of Mandamus or direction or order in the nature of Mandamus or writ of Certiorari or any other writ under Article 226 of the Constitution of India declaring that the consequent notice dated 06/04/2023 issued u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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