ACIT jurisdiction challenge under faceless assessment scheme rejected due to delayed objection beyond Section 124(3) timeline

The Karnataka HC rejected a petition challenging the jurisdiction of ACIT, NaFAC-1(1)(2), Delhi to issue assessment notices under the faceless assessment scheme. The court held that the CBDT's order dated 13.08.2020, which exempted Central Charges and International Taxation Charges from faceless assessment, remained valid despite the transition from the Faceless Assessment Scheme 2019 to the statutory National Faceless Assessment Scheme under Section 144B. The court ruled that jurisdictional challenges must be raised within one month of notice service per Section 124(3), and the petitioner's delay barred such objections. The petition was dismissed with directions for installment payments.

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Issues Involved:
1. Jurisdiction of the Additional Commissioner of Income Tax NaFAC-1(1)(2) to issue notice under Section 143(2) of the Income Tax Act, 1961.
2. Maintainability of the writ petition challenging the Assessment Order dated 20.09.2022.

Summary:

Issue 1: Jurisdiction of the Additional Commissioner of Income Tax NaFAC-1(1)(2)
The petitioner argued that the jurisdictional Assessing Officer is the Deputy Commissioner of Income Tax, Central Circle 2(1), Bangalore, and thus the Additional Commissioner of Income Tax, NaFAC-1(1)(2), Delhi could not have assumed jurisdiction to issue the notice under Section 143(2) of the Income Tax Act, 1961. The petitioner contended that the notice issued by an officer without jurisdiction renders the entire proceedings culminating in the Assessment Order dated 20.09.2022 null and void.

The respondents asserted that the second respondent is vested with the jurisdiction to issue the notice due to the amendment to Section 143(2) effective from 01.06.2016 and the insertion of Section 144B effective from 01.04.2021. They argued that the Central Board of Direct Taxes (CBDT) authorized the second respondent to act as the 'Prescribed Income Tax Authority' under Section 143(2) and that the notice was validly issued.

The court examined the statutory amendments and concluded that the CBDT's order dated 13.08.2020, which classified Central Charges and International Taxation Charges as separate classes, continues to hold the field under Section 24 of the General Clauses Act, 1897. Thus, the issuance of the notice by the Prescribed Income Tax Authority is valid, and the petitioner's challenge on this ground fails.

Issue 2: Maintainability of the Writ Petition
The respondents argued that the petition should be dismissed on the ground of maintainability, citing that the petitioner participated in the assessment proceedings without demur and filed a statutory appeal against the Assessment Order dated 20.09.2022. They relied on Section 124(3) of the Income Tax Act, which limits the right to challenge the jurisdiction of the Assessing Officer after one month from the date of receipt of the notice under Section 143(2).

The court opined that Section 124(3) applies to all grounds on which jurisdiction is called into question, not just territorial jurisdiction. Given that the petitioner participated in the proceedings and availed statutory remedies, the court held that the petitioner must fail on the second question as well.

Conclusion:
The petition was rejected. The petitioner is required to pursue its appeal subject to the deposit of further installments in terms of the order dated 20.12.2022, starting from 20.01.2024.

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