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TMI Blog2024 (10) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be sustained. The submission of petitioner that the Jurisdictional Assessing Officer (JAO) was not competent to issue the impugned notice u/s 148 in a case of Search and Seizure u/s 132are not convincing. \Section 151A contemplates framing of the scheme by the Central Government by notification in the official Gazette, even for the purpose of issuance of notice under Section 148 in the case of re-assessment or sanction for issue of such notice under Section 151, with the aim to impart greater efficiency, transparency and accountability by eliminating the interface between the income tax authority and the assessee or any other person to the extent technologically feasible. The challenge to the impugned notice on the ground of lack of jurisdiction of the Jurisdictional Assessing Authority is, accordingly, turned down. Two Satisfaction Notes have been supplied to the petitioner in the compilation submitted on behalf of the revenue. It was also placed before us by revenue that after issuance of the impugned notice u/s 148 the instant case has proceeded to the stage of issuance of the notice under Section 142 (1). The said notice is also part of the record and has been issued by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which provides for faceless assessment of income escaping assessment. The Central Government has been empowered under Section 151A of the Act 1961 to formulate a scheme aimed at improving efficiency, transparency and accountability in assessment, re-assessment and re-computation processes of Income tax under Sections 147, 148 and 151 of the Act 1961. (4) The Central Government has, accordingly, introduced a scheme through the notification dated 29.03.2022 published in the official Gazette with regard to E-Assessment of Income Escaping Assessment with effect from the date of issuance of the notification and has provided for issuance of notice under Section 148 of the Act through automated allocation in faceless manner. (5) The contention is that with the said scheme dated 29.03.2022 framed by the Central Government, it is mandatory for the revenue to issue notice under Section 148 through automated allocation. The said notification does not leave any discretion to the department to choose any other method as the same is mandatory. In the instant case, the notice under challenge has been issued by the Jurisdictional Assessing Officer (JAO) in physical mode and not through automated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income or loss of assessee. SHEFALI SINGH, Under Secy. (8) It is further brought before us that a Division Bench of the High Court of Bombay in Hexaware Technologies Ltd. V. Assistant Commissioner of Income Tax, [(2024) 162 Taxmann.com 225 (Bombay)] has decided the issue about the authority of the JAO (Jurisdictional Assessing Officer) issuing notice contrary to the Notification dated 29.03.2022. It was noted by the Division Bench that the Central Government has framed the scheme under Section 151A of the Act 1961, which was laid before both the Houses of the Parliament as per Section 151A (3) of the Act 1961 and that the said notification has to be scrupulously followed. Any deviation from the scheme based on subsequent guidelines issued by the CBDT being internal guidelines, having no statutory force, having not been issued under Section 109 of the Act 1961 will not be permissible as it will not override the provisions of Section 151A, which provides for framing of the scheme by the Central Government for faceless assessment of income escaping scheme. (9) It was urged that the law laid down by the Division Bench has been followed by various high Courts including Bombay High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee [where] the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. (13) It is further submitted by the learned advocate appearing for the Revenue that the Apex Court in the case of Principal Director of Income Tax (Investigation) and Ors. V. Laljibhai Kanjibhai Mandalia [[2022] 446 ITR 18 (SC)] has elaborated the principles in exercise of writ jurisdiction in the matter of search and seizure under Section 132 of the Act. In the said case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) The relevance of the reasons for the formation of the belief is to be tested by the judicial restraint as in administrative action as the Court does not sit as a court of appeal but merely reviews the manner in which the decision was made. The Court shall not examine the sufficiency or adequacy thereof. (ix) In terms of the Explanation inserted by the Finance Act, 2017 with retrospective effect from 1-4-1962, such reasons to believe as recorded by the Income Tax Authorities are not required to be disclosed to any person or any authority or the Appellate Tribunal. (14) The contention of the learned counsel for the revenue is that the concept of automated allocation, i.e. application of algorithm for randomized allocation of cases by using suitable technological tools including Artificial Intelligence and Machine Learning, as defined in Clause 2(1)(b) of the Scheme dated 29.03.2022, cannot be applied in a case of Search and Seizure under Section 132, inasmuch as, issuance of notice under Section 148 of the Income Tax Act' 1961, in such cases, is governed by explanation to Section 148, extracted hereinbefore. (15) The issuance of notice under Section 148 in the case of Search a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner is not in a case of Search and Seizure under Section 132 and would not cover the requirement of Explanation 2 of Section 148. (20) Considering the said submissions, we may record that Section 148 of the IT Act 1961, is a procedure provided for issuance of notice in all cases of assessment, re-assessment or re-computation under Section 147, which empowers the Assessing Officer to assess and reassess where any income chargeable to tax, in the case of an assessee, who has escaped assessment for any assessment year, subject to the provisions of Sections 148 to 153. It may also be useful to note that Section 148A inserted by the Finance Act' 2021 with effect from 01.04.2021 provides for inquiry, opportunity of hearing to the assessee before issuance of notice under Section 148. Section 148A reads as under: 148A. The Assessing Officer shall, before issuing any notice under section 148, (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, [***] by serving upon him a notice to show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this section, specified authority means the specified authority referred to in section 151. (21) A reading of the proviso to Section 148A shows that the requirements to conduct an inquiry with the prior approval of the specified authority; provide opportunity of hearing to the assessee; consider reply of the assessee furnished in response to the show-cause notice; and decide on the basis of the material available on record including reply to the assessee, whether or not the case is fit to issue a notice under Section 148, by passing an order, is not applicable in a case of Search and Seizure under Section 132. The proviso will be attracted in a case where the Assessing Officer on the information received by him as a result of search under Section 132, or requisitioned under Section 132A, is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion etc., or any books of accounts / documents etc. seized in a search under Section 132 or requisitioned under Section 132A; in case of any other person on or after 01.04.2021, belongs to, pertain(s) to; or any information contained therein, relate to, the assessee. (22) From a further reading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Risk Management Strategy formulated by the Board is incorporated in Clause (i) of Explanation 1, as also specified in Clause 3 of the notification dated 29.03.2022 issued by the Central Government in accordance with the provisions of Explanation 1 clause (i) to Section 148, which is not applicable in the case of information received during the course of search and seizure under Section 132. (25) From the language employed in the Explanation 1 and Explanation 2 to Section 148 of the Act' 1961, we reach at an opinion that the method of automated allocation, i.e. for random allocation of cases through algorithm, or by using suitable technological tools, including artificial intelligence and machine learning, in accordance with risk management strategy formulated by the Board, as referred to in Explanation 1 clause (i) to Section 148 of the Act, for issuance of notice under Section 148 in a faceless manner, as per the scheme framed vide notification dated 29.03.2022, cannot be applied to the case of Search and Seizure under Section 132, where the Jurisdictional Assessing Officer (JAO) is required to record his satisfaction on the basis of the material for affirmation of opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, would be relevant. There may be a situation, where a scheme may be framed by the Central Government for issuance of the notice under Section 148 even in the case of Search and Seizure under Section 132 of the Act' 1961, so as to meet out the expectations of the legislature under Section 151A, to impart greater efficiency, transparency and accountability by applying artificial intelligence, technological innovations, etc., but as of now, from a careful reading of the notification dated 29.03.2022, along with the statutory provisions, we find that the aforesaid notification does not cover a case where notice under Section 148 is issued by the Jurisdictional Assessing Officer (JAO) the information received by him in the matter of Search and Seizure under Section 132 of the Act' 1961, or requisitioned under Section 132A. (32) The challenge to the impugned notice dated 22.03.2024 on the ground of lack of jurisdiction of the Jurisdictional Assessing Authority is, accordingly, turned down. (33) However, we may further note that two Satisfaction Notes for A.Y. 2021-2022 and A.Y. 2022-2023 dated 22.03.2024 and 07.03.2024 have been supplied to the learned counsel for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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