Officer can conduct Section 148A reassessment proceedings without faceless procedure for pre-2021 assessment years

Kerala HC dismissed a writ petition challenging reassessment proceedings under Section 148A initiated by local jurisdictional officer instead of faceless procedure. Court held that while faceless assessment became mandatory from April 1, 2021, the assessment year 2019-2020 predated this requirement. Additionally, faceless procedure applies to final assessment/reassessment completion, not interior proceedings. Petitioner failed to demonstrate coverage under CBDT notification for faceless procedure. Court found no illegality in local officer conducting Section 148A proceedings.

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Issues:
The judgment involves the legality of the order passed under Clause (d) of Section 148A(a) of the Income Tax Act, 1961 for the assessment year 2019-2020, challenging the faceless regime procedure introduced by the Finance Act, 2021.

Summary:
The petitioner, an assessee under the Income Tax Act, had not filed a return of income for the assessment year 2019-2020. The assessing officer decided to open the assessment due to income chargeable to tax from banking transactions that had escaped assessment. The petitioner challenged the order on the grounds that the Finance Act, 2021 introduced a faceless regime for governing assessments under the Income Tax Act, with provisions like automated allocation and faceless jurisdiction schemes.

The petitioner argued that proceedings under Section 148A of the IT Act should be faceless as per the schemes formulated by the Central Board of Direct Taxes. The petitioner cited legal principles stating that actions must be done as prescribed by law. The petitioner contended that since the proceedings were not faceless as mandated by the schemes, the order was vitiated and should be set aside.

The Senior Standing Counsel for the Income Tax Department countered that the faceless assessment procedure under Section 144B applies to assessment, reassessment, and re-computation, not the proceedings before that stage. The counsel argued that the impugned order under Section 148A(b) was legal and that reassessment following the notice issued under Section 148 would be faceless. The counsel highlighted that the faceless procedure for assessments was introduced after the assessment year in question.

The court analyzed the provisions of Section 144B, which prescribe the faceless procedure for assessment, reassessment, and re-computation. The court noted that the faceless procedure applies to specific territorial areas or classes of persons specified by the Central Board of Direct Taxes. Since the petitioner's case was not covered by the faceless procedure and considering the timing of the introduction of the faceless regime, the court found no illegality in the proceedings before reassessment. The writ petition was dismissed.

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