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TMI Blog2025 (3) TMI 1229X X X X Extracts X X X X X X X X Extracts X X X X ..... 23, D.B. Civil Writ Petition No. 7245/2023, D.B. Civil Writ Petition No. 7271/2023, D.B. Civil Writ Petition No. 7322/2023, D.B. Civil Writ Petition No. 7588/2023, D.B. Civil Writ Petition No. 7769/2023, D.B. Civil Writ Petition No. 8212/2023, D.B. Civil Writ Petition No. 8296/2023, D.B. Civil Writ Petition No. 8804/2023, D.B. Civil Writ Petition No. 18361/2023, D.B. Civil Writ Petition No. 832/2025, D.B. Civil Writ Petition No. 7950/2024. Sharda Devi Chhajer, Arun Choudhary, Vaishali Dang, Bhavana Talwar, Khemani Metal Industries Private Limited, M/s Kushal Metals, Suyash Food Specialty Pvt Ltd, Agrawal House, Bohra Industries, Surana Metals, Mittal Steel Manufacturing Company (Steel Division), Arihant Industries, Shree Ram Steel Industries, Ashok Jain, Jay Kothari, M/s Rounak Steel, Pradeep Kumar Jain, Rajesh Metals, Parakh Industries, M/s Krishna Petroleum, (Disolved), Krishan Kumar, Khatri Ceramics Private Limited, Aditi Specialty Packaging Pvt Ltd, Yunus Panwar, Versus The Income Tax Officer, Ward 1(1), Income Tax Office, Bikaner, Union Of India, Through Secretary (Revenue), Ministry Of Finance, North Block, New Delhi., Principal Chief Commissioner Of Income Tax, Jaipur, Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 148 of the Act of 1961, and thereafter, the notices were issued under the said provision of law. 2.1. The pertinent issue before this Court is that the Central Board of Direct Taxes (in short, 'CBDT'), framed a Scheme, namely, "e-Assessment of Income Escaping Assessment Scheme, 2022", vide Notification No. 18 of 2022/S.O. 1466(E) dated 29.03.2022 (hereinafter referred to as 'Scheme of 2022'). In the said notification, the procedure for assessment, reassessment & re-computation of income under Sections 147 & 148 of the Act of 1961 has been notified. 2.2. The notices which were issued under Sections 147 & 148 of the Act of 1961 were required to comply with the Scheme of 2022 and thus, ought to have been Faceless as enshrined in the CBDT Notification dated 29.03.2022. 2.3. The core question raised by learned counsel for the petitioners is that whether the notices issued by Jurisdictional Assessing Officer (JAO) are to be declared invalid & bad in law, being in contravention of Section 151A of the Act of 1961 read with Notification dated 29.03.2022. The said notification, for ready reference, reads as under: "MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity 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 of the resources through economies of scale and functional specialisation; (c) introducing a team-based assessment, reassessment, re-computation or issuance or sanction of notice with dynamic jurisdiction. (2) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (1), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification: Provided that no direction shall be issued after the 31st day of March, 2022. (3) Every notification issued under sub-section (1) and sub-section (2) shall, as soon as may be after the notification is issued, be laid before each House of Parliament." 2.6. Learned counsel for the parties submitted that Section 151A of the Act of 1961 confers powers on the CBDT to notify Scheme for the purpose of assessment, reassessment & re-computation under section 147 or issuance of notice under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Assessee, as far as the law permits. The random allocation as per learned counsel for the petitioners would render the jurisdiction for such notices who would have the allocated jurisdiction and would not prejudice either of the parties as the petitioners herein are not trying to suggest that the powers under Sections 147, 148, 148A & 151 of the Act of 1961 have become redundant, as far as the Faceless is concerned. 2.11. Learned counsel for the petitioners further submitted that the department's discretion has to be minimized and the Act of 1961 and the Scheme of 2022 read in tandem clearly forbids any kind of absolute discretion, as far as JAO is concerned. 2.12. Learned counsel for the petitioners also submitted that the respondents had not followed the procedure, and once the CBDT Notification dated 29.03.2022 read with the legislative intention of Section 151A of the Act of 1961, it was out of the jurisdiction that the JAO has been given the power to issue the notices. It was further submitted that any kind of power to a fixed person well identified by the respondents would render the whole Scheme redundant. It was also submitted that once the jurisdiction has been not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aras of some of the afore-cited judgments, as relied upon, are reproduced as hereunder: Kankanala Ravindra Reddy & Ors. (Supra): "34. As regards ITBA step-by-step Document No. 2 regarding issuance of notice under section 148 of the Act, relied upon by Revenue, an internal document cannot depart from the explicit statutory provisions of, or supersede the Scheme framed by the Government under section 151A of the Act which Scheme is also placed before both the Houses of Parliament as per Section 151A (3) of the Act. This is specially the case when the document does not even consider or even refer to the Scheme. Further the said document is clearly intended to be a manual/guide as to how to use the Income-tax Department's portal, and does not even claim to be a statement of Revenue's position/stand on the issue in question. Our observations with respect of the guidelines dated 1st August 2022 relied upon by the Revenue will equally be applicable here. 35. Further, in our view, there is no question of concurrent jurisdiction of the JAO and the FAO for issuance of notice under Section 148 of the Act or even for passing assessment or reassessment order. When specific jurisdiction has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act and inapplicable to the issuance of notice under Section 148 of the Act. The Scheme is clearly applicable for issuance of notice under Section 148 of the Act and accordingly, it is only the FAO which can issue the notice under Section 148 of the Act and not the JAO. The argument advanced by the respondent would render clause 3 (b) of the Scheme otiose and to be ignored or contravened, as according to respondent, even though the Scheme specifically provides for issuance of notice under Section 148 of the Act in a faceless manner, no notice is required to be issued under section 148 of the Act in a faceless manner. In such a situation, not only clause 3 (b) but also the first two lines below clause 3 (b) would be otiose, as it deals with the aspect of issuance of notice under section 148 of the Act. Respondents, being an authority subordinate to the CBDT, cannot argue that the Scheme framed by the CBDT, and which has been laid before both House of Parliament is partly otiose and inapplicable. The argument advanced by respondent expressly makes clause 3 (b) otiose and impliedly makes the whole Scheme otiose. If clause 3 (b) of the Scheme is not applicable, then only clause 3( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the power to the Central Board of Direct Taxes ("CBDT") to notify the Scheme for : (i) the purpose of assessment, reassessment or recomputation under Section 147; or (ii) issuance of 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 str ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Government under Section 151A of the Act which Scheme is also placed before both the Houses of Parliament as per Section 151A (3) of the Act. This is specially the case when the document does not even consider or even refer to the Scheme. Further the said document is clearly intended to be a manual/guide as to how to use the Income Tax Department's portal, and does not even claim to be a statement of the Revenue's position/stand on the issue in question. Our observations with respect to the guidelines dated 1st August 2022 relied upon by the Revenue will equally be applicable here. 35. Further, in our view, there is no question of concurrent jurisdiction of the JAO and the FAO for issuance of notice under Section 148 of the Act or even for passing assessment or reassessment order. When specific jurisdiction has been assigned to either the JAO or the FAO in the Scheme dated 29th March, 2022, then it is to the exclusion of the other. To take any other view in the matter, would not only result in chaos but also render the whole faceless proceedings redundant. If the argument of Revenue is to be accepted, then even when notices are issued by the FAO, it would be open to an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignored or contravened, as according to respondent, even though the Scheme specifically provides for issuance of notice under Section 148 of the Act in a faceless manner, no notice is required to be issued under Section 148 of the Act in a faceless manner. In such a situation, not only clause 3 (b) but also the first two lines below clause 3 (b) would be otiose, as it deals with the aspect of issuance of notice under Section 148 of the Act. Respondents, being an authority subordinate to the CBDT, cannot argue that the Scheme framed by the CBDT, and which has been laid before both House of Parliament is partly otiose and inapplicable. The argument advanced by respondent expressly makes clause 3 (b) otiose and impliedly makes the whole Scheme otiose. If clause 3 (b) of the Scheme is not applicable, then only clause 3(a) of the Scheme remains. What is covered in clause 3(a) of the Scheme is already provided in Section 144B (1) of the Act, which Section provides for faceless assessment, and covers assessment, reassessment or recomputation under Section 147 of the Act. Therefore, if Revenue's arguments are to be accepted, there is no purpose of framing a Scheme only for clause 3(a) whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orandum dated 20th February 2023, the said Office Memorandum merely contains the comments of the Revenue issued with the approval of Member (L&S) CBDT and the said Office Memorandum is not in the nature of a guideline or instruction issued under Section 119 of the Act so as to have any binding effect on the Revenue. Moreover, the arguments advanced by the Revenue on the said Office Memorandum dated 20th February 2023 is clearly contrary to the provisions of the Act as well as the Scheme dated 29th March 2022 and the same are dealt with as under - (i) It is erroneously stated in paragraph 3 of the Office Memorandum that "The scheme clearly lays down that the issuance of notice under section 148 of the Act has to be through automation in accordance with the risk management strategy referred to in section 148 of the Act." The issuance of notice is not through automation but through "automated allocation". The term "automated allocation" is defined in clause 2 (1) (b) of the said Scheme to mean random allocation of cases to Assessing Officers. Therefore, it is clear that the Assessing Officer are randomly selected to handle a case and it is not merely a case where notice is sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dom allocation' has correctly been made as random allocation of cases to the Assessment Units by the National Faceless Assessment Centre. When random allocation is with reference to officer for reassessment then the same would equally apply for issuance of notice under Section 148 of the Act. (iii) The conclusion at the bottom of page 2 in paragraph 3 of the Office Memorandum that "Therefore, as provided in the scheme the notice under section 148 of the Act is issued on automated allocation of cases to the Assessing Officer based on the risk management criteria" is also factually incorrect and on the basis of incorrect interpretation of the Scheme. Clause 2(1)(b) of the Scheme defined 'automated allocation' to mean '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'. The said definition does not provide that the automated allocation of case to the Assessing Officer is based on the risk management criteria. The reference to risk management criteria in clause 3 of the Scheme is to the effect that the notice under Section 148 of the Act should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that issuance of notice under section 148 of the Act shall be through automated allocation in accordance with the risk management strategy and that the assessment shall be in faceless manner to the extent provided in section 144B of the Act." The Scheme is categoric as stated aforesaid that the notice under Section 148 of the Act shall be issued through automated allocation and in a faceless manner. The Scheme clearly provides that the notice under Section 148 of the Act is required to be issued by NFAC and not the JAO. Further, unlike as canvassed by Revenue that only the assessment shall be in faceless manner, the Scheme is very clear that both the issuance of notice and assessment shall be in faceless manner (vii) In paragraph 5 of the Office Memorandum, a completely unsustainable and illogical submission has been made that Section 151A of the Act takes into account that procedures may be modified under the Act or laid out taking into account the technological feasibility at the time. Reading the said Scheme along with Section 151A of the Act makes it clear that neither the Section or the Scheme speak about the detailed specifics of the procedure to be followed therein. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued by the JAOs are invalid and bad in law. We are also of the same view." SHL India (P) Ltd. (Supra): "25. In our view, the following principles emerge from the above discussion :- (i) that the procedure prescribed under Section 144C of the IT Act is a mandatory procedure and not directory. (ii) failure to follow the procedure under Section 144C (1) would be a jurisdictional error and not merely procedural error or irregularity. (iii) therefore, Section 292B of the IT Act cannot save an order passed in breach of the provisions of Section 144C (1), the same being an incurable illegality. 26. It is important to note that Section 144C (1) is a non-obstante provision, which requires its compliance irrespective of the other provisions that may be contained in the IT Act. There is no dispute that Petitioner is an eligible assessee and also there is no dispute as to the applicability of Section 144C. It is also not in dispute that the final Assessment Order has been passed without the draft Assessment Order as contemplated under Section 144C (1) of the IT Act. The Assessing Officer ought to have in the first instance forwarded a draft of the proposed order of assessment t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procedure laid down in Section 144C (1) to pass and furnish a draft Assessment Order to Petitioner and directly passing a final Assessment Order and without giving Petitioner an opportunity to raise objections before the DRP, there is a complete contravention of Section 144C, the Assessing Officer having wrongly assumed jurisdiction to straight away pass the final order. This is not a mere irregularity but an incurable illegality. Even the provisions of Section 292B of the IT Act would not protect such an order as Section 292B of the IT Act cannot be read to confer jurisdiction on the Assessing Officer, where none exists. The Supreme Court decision in the case of Income-Tax Officer Vs. M. Pirai Choodi; [2011] 334 ITR 262 (SC) referred to in the Revenue's reply is also not applicable to the issue at hand as that was a case where the assessee was not given an opportunity to cross-examine the concerned witness and which assessee also had a statutory appellate remedy which the assessee had failed to avail of, whereas there is no such right available to Petitioner in this case. In fact, Petitioner has lost a substantive right due to the failure of the Respondents to pass and forward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise of powers, including to call for, or collect, or process, or utilise, the information, with dynamic jurisdiction. (2) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (1), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification: Provided that no direction shall be issued after the 31st day of March, 2022: Provided further that the Central Government may amend any direction, issued under this sub-section on or before the 31st day of March, 2022, by notification in the Official Gazette. (3) Every notification issued under sub-section (1) and sub-section (2) shall, as soon as may be after the notification is issued, be laid before each House of Parliament." "Faceless Assessment. 144B. (1) Notwithstanding anything to the contrary contained in any other provision of this Act, the assessment, reassessment or recomputation under sub-section (3) of section 143 or under section 144 or under section 147, as the case may be, with respect to the cases referred to in sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t unit under sub-clause (c) of clause (iv), the request shall be assigned by the National Faceless Assessment Centre to a technical unit through an automated allocation system; (vii) the National Faceless Assessment Centre shall send the report received from the verification unit or the technical unit, as the case may be, based on the request referred to in clause (vi) to the concerned assessment unit; (viii) where the assessee fails to comply with the notice served under clause (v) or notice issued under sub-section (1) of section 142 or the terms of notice issued under sub-section (2) of section 143, the National Faceless Assessment Centre shall intimate such failure to the assessment unit; (ix) the assessment unit shall serve upon such assessee, as referred to in clause (viii), a notice, through the National Faceless Assessment Centre, under section 144, giving him an opportunity to show-cause on a date and time as specified in such notice as to why the assessment in his case should not be completed to the best of its judgment; (x) the assessee shall, within the time specified in the notice referred to in clause (ix) or such time as may be extended on the basis of an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all thereafter prepare a draft order; or (b) assign the income or loss determination proposal to a review unit through an automated allocation system, for conducting review of such proposal; (xvii) the review unit shall conduct review of the income or loss determination proposal assigned to it by the National Faceless Assessment Centre, under sub-clause (b) of clause (xvi), whereupon it shall prepare a review report and send the same to the National Faceless Assessment Centre; (xviii) the National Faceless Assessment Centre shall, upon receiving the review report under clause (xvii), forward the same to the assessment unit which had proposed the income or loss determination proposal; (xix) the assessment unit shall, after considering such review report, accept or reject some or all of the modifications proposed therein and after recording reasons in case of rejection of such modifications, prepare a draft order; (xx) the assessment unit shall send such draft order prepared under sub-clause (a) of clause (xvi) or under clause (xix) to the National Faceless Assessment Centre; (xxi) in case of an eligible assessee, where there is a proposal to make any variation which is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt of the directions issued by the Dispute Resolution Panel under sub-section (5) of section 144C, forward such directions to the assessment unit; (xxix) the assessment unit shall, in conformity with the directions issued by the Dispute Resolution Panel under sub-section (5) of section 144C, complete the assessment within the time allowed in sub-section (13) of section 144C and initiate penalty proceedings, if any, and send a copy of the assessment order to the National Faceless Assessment Centre; (xxx) the National Faceless Assessment Centre shall, upon receipt of the assessment order referred to in clause (xxvi) or clause (xxix), as the case may be, serve a copy of such order and notice for initiating penalty proceedings, if any, on the assessee, along with the demand notice, specifying the sum payable by, or the amount of refund due to, the assessee on the basis of such assessment; (xxxi) the National Faceless Assessment Centre shall, after completion of assessment, transfer all the electronic records of the case to the Assessing Officer having jurisdiction over the said case for such action as may be required under the provisions of this Act; (xxxii) if at any stag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in any other faceless centre set up under the provisions of this Act or under any scheme notified under the provisions of this Act; and the request for verification may also be assigned through the National Faceless Assessment Centre to such verification unit; (iv) such technical units, as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of providing technical assistance which includes any assistance or advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, management or any other technical matter under this Act or an agreement entered into under section 90 or 90A, which may be required in a particular case or a class of cases, under this section and the term "technical unit", wherever used in this section, shall refer to an Assessing Officer having powers so assigned by the Board; (v) such review units, as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of review of the income determination proposal assigned under sub-clause (b) of clause (xvi) of sub-section (1), which includes checking whether the relevant and material eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d copy thereof in the registered account of the assessee; or (b) sending an authenticated copy thereof to the registered email address of the assessee or his authorised representative; or (c) uploading an authenticated copy on the Mobile App of the assessee, and followed by a real time alert; (iii) every notice or order or any other electronic communication shall be delivered to the addressee, being any other person, by sending an authenticated copy thereof to the registered email address of such person, followed by a real time alert; (iv) the assessee shall file his response to any notice or order or any other electronic communication, through his registered account, and once an acknowledgement is sent by the National Faceless Assessment Centre containing the hash result generated upon successful submission of response, the response shall be deemed to be authenticated; (v) the time and place of dispatch and receipt of electronic record shall be determined in accordance with the provisions of section 13 of the Information Technology Act, 2000 (21 of 2000); (vi) a person shall not be required to appear either personally or through authorised representative in connectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for effective functioning of the National Faceless Assessment Centre and the units set up, in an automated and mechanised environment. (7) (a) The Principal Chief Commissioner or the Principal Director General, as the case may be, in-charge of the National Faceless Assessment Centre shall, in accordance with the procedure laid down by the Board in this regard, if he considers appropriate that the provisions of sub-section (2A) of section 142 may be invoked in the case,- (i) forward the reference received from an assessment unit under clause (xxxii) of sub-section (1) to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner having jurisdiction over such case, and inform the assessment unit accordingly; (ii) transfer the case to the Assessing Officer having jurisdiction over such case in accordance with sub-section (8); (b) where a reference has been received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner under sub-clause (i) of clause (a), he shall direct the Assessing Officer, having jurisdiction over the case, to invoke the provisions of sub-section (2A) of section 142; (c) wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year. Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment." 148. Issue of notice where income has escaped assessment. Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (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. Explanation 3.-For the purposes of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er submitted that the Faceless authorities themselves have concurrent jurisdictions and therefore, the JAO cannot be deprived of his power to conduct the assessment and reassessment of the returns. 3.4. Learned counsel also that though the idea was that the broader framework of the National Faceless Assessment Centre (NFAC) does not conflict with the powers held by the JAO, thus, a complementary set up was required keeping into consideration the highest parameters of accountability and adaptability. 3.5. Learned counsel further submitted that the object of conferring jurisdiction upon the JAO was to have a human supervisory element, which could overcome any kind of deficiencies that would arise out of the faceless assessment. 3.6. Learned counsel also submitted that the JAOs' authority was not merely residual, but it has an active and complementary role in the assessment system, and thus, at every stage, the concurrent jurisdiction would stand for the purpose of jurisdictional assessment. 3.7. Learned counsel further submitted that excluding one against another would not only go against the interest of the Revenue, but it will also create an anomaly which could not be the desig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .)], (e) Sanghi Steel Udyog Private Limited v. Union of India and Ors., [WPO/1549/2023, decided on 13 September, 2023, Calcutta High Court], (f) Dhiraj Lakhotia v. Union of India and Anr., [W.P. (A). No. 1458 of 2024, Calcutta High Court]. 4. Heard learned counsel for the parties as well as perused the record of the case, alongwith the judgments cited at the Bar. 5. The following core point commonly has been raised by the learned counsel for the petitioners: Whether the impugned notices for assessment and reassessment, having been issued by the JAOs, are valid and good in the eyes of law or if they suffer from fundamental jurisdictional error, when conjointly considered in terms of Sections 151A, 144B, 147 & 148 of the Act of 1961, and the CBDT Scheme notified on 29.03.2022? 6. This Court observes that before delving into the nitty-gritty of the instant case and the challenge in question, it is pertinent to understand the nature, intention and the mechanics underlying the Faceless Regime and how it has contributed to the paradigm shift in administration of the Income-tax law in India. 6.1. The Government of India launched 'Transforming taxation - Honouring the honest' pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Proceeding facility to enable electronic tax assessments. By way of this facility, a tax officer or assessing officer could communicate with a taxpayer through the e-Filing portal and could upload a notice on the income tax e-filing portal. It also in the same proceedings gave an option to the tax-payer to respond to it. The same lead to the expansion of electronic assessment proceedings and thereby, eliminated the need for taxpayers to send their responses either via email or as hard copies. The CBDT, in August 2018, made it mandatory to conduct all assessments framed in the financial year 2018-19, through the e-Proceeding facility, subject to certain exceptional circumstances. 6.6. The Hon'ble Finance Minister introduced the 'faceless assessment procedure' in his Budget Speech in 2018, (earlier called, e-Assessment scheme). The objectives of the scheme and the intention expounded in the memorandum to the Finance Bill, 2018, viz., "the objective of reducing the interface between the department and the taxpayers" closely resembles the faceless assessment scheme. 6.7. Subsequently, the Finance Act, 2018 amended the Income-tax law (Amendment to Section 143(3A) and insertion of sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grey areas to rule out alleged discretion in administrative processes and by putting in place unambiguous policies; limit human interface; reduce litigation related to tax; integrate the elements of 'efficiency, integrity and sensitivity' in the governance system; improve ranking of India on the 'Ease of doing business' rankings. 6.13. The faceless assessment scheme was codified in Income-tax Law in India (Section 144B of the Act) andwas thereby introduced vide 'The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020', effective 1 April 2021. 6.14. Before the introduction of the faceless regime, the notices were issued by the JAO, and the same led to multiple issues, such as, the system often entailed multiple physical meetings between the taxpayer and Income-tax Department officials, leading to long waiting times for the taxpayer; issuance of notices, through the system and manually made record-keeping difficult and often led to disputes between the taxpayer and the Department; the discretionary power vested with tax officers led to a subjective approach and varying interpretations; large percentage of Department personnel were involved only in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Article 265 of the Constitution of India, prohibits the State from extracting tax from the citizens without authority of law. It is axiomatic that taxation statute has to be interpreted strictly because State cannot at its whims and fancies burden the citizens without authority of law, as has been held in Commissioner of Customs (Import), Mumbai Vs. M/s. Dilip Kumar and Company & Ors., 2018 (361) E.L.T. 577 (SC). 7.1. In a taxing statute, one has to look at the text as it is. There is no equity in taxation law. There is no intendment and presumption as to tax. Nothing is to be read in and nothing is to be implied. 7.2. The basic principle of charge under Tax Statutes is, "No tax can be imposed on the subject without words in the Act clearly showing an intention to lay a burden upon him." 7.3. Burden of proof of bringing someone under a charge is on the revenue and that of bringing assessee under exemption/deduction is on the assessee itself. 7.4. If an interpretation of a fiscal enactment is open to doubt and two views are reasonably possible then the one more beneficial or favourable to the assessee should be adopted. 7.5. Provisions related to machinery of assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teworthy that if clause 3 (b) of the Scheme is not applicable, then only clause 3(a) of the Scheme remains. What is covered in clause 3(a) of the Scheme is already provided under Section 144B (1) of the Act which provides for faceless assessment and covers assessment, re-assessment or re-computation under Section 147 of the Act. Therefore, in absence of Clause 3 (b), there is no purpose of framing the Scheme only for Clause 3(a) as the same is anyways covered under Section 144B, would make the whole Scheme redundant. Such an interpretation of law renders the Scheme and its purpose superfluous, and shall not be adopted. 11. This Court further observes that the phrase "to the extent provided in Section 144B of the Act" in the Scheme is with reference to only making assessment and reassessment of the total income or loss of the assessee and therefore does not go with issuance of notice. The Scheme provides that the notice under Section 148 of the Act, shall be issued through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in Section 148 of the Act and in a faceless manner. Further, the exceptions provided in sub-sections (7) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d allocation', and the baseline for the same being 'algorithm for randomized allocation', clearly show that the technology was supposed to be used for the purpose of allocating jurisdiction to a random officer. 16. This Court is of the opinion that Section 151A of the Act of 1961 deals with the assessment, reassessment and re-computation provided in Sections 147 & 148 of the Act of 1961, and therefore, the same has to be faceless and the FAO has to have an exclusive jurisdiction to issue the notices. 17. The Scheme to the extent of Section 144B of the Act of 1961 for issuance of notice cannot be said to be relevant for the purpose of issuing notices under Section 147 & 148 of the Act of 1961. Sections 147 & 148 have been kept separately. The restrictions provided for the purpose of Section 144B shall be relevant. 18. This Court further observes that any jurisdictional error in the notices has to be cured and thus, the notices which have been issued for assessment and reassessment and which are the impugned notices under Section 148 of the Act of 1961, do not withstand the broader scheme of law, which requires automated allocation based on algorithm and random assignment of the a ..... 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