2024 (3) TMI 886 - HC - Income Tax

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 ... Faceless assessment - automated allocation - Section 144B non-obstante clause - scope of faceless procedure - assessment/reassessment/re-computation vis-a -vis pre-assessment proceedingsFaceless assessment - automated allocation - Section 144B non-obstante clause - Validity of order under Section 148A(a)/(b) where pre-assessment proceedings were conducted by the local jurisdictional officer and not through the faceless/automated allocation mechanism - HELD THAT: - The court examined the scope of the faceless procedure introduced by Section 144B, read with the Schemes framed by the Board defining 'automated allocation' and vesting jurisdiction in a faceless manner. Sub-section (1) of Section 144B, containing a non-obstante clause, mandates that assessment, reassessment or re-computation under specified provisions shall be made in a faceless manner. Sub-section (2) limits such faceless procedure to cases, persons or classes as may be specified by the Board. The court held that Section 144B prescribes the faceless manner for the stage of assessment/reassessment/re-computation itself and does not extend to proceedings antecedent to initiation of reassessment (i.e., pre-assessment or Section 148A proceedings). The petitioner also did not demonstrate that his case falls within any CBIC specification under sub-section (2), and the faceless regime was introduced with effect from 01.04.2021 whereas the assessment year in question is 2019-2020. Consequently, the impugned order under Section 148A was not vitiated merely because the preliminary proceedings were conducted by the local assessing officer rather than through the faceless automated allocation mechanism prescribed for the assessment stage. [Paras 13, 14, 15, 16]The order passed under Section 148A is not invalid for having been conducted by the local jurisdictional officer and not through faceless/automated allocation; the writ petition is dismissed.Final Conclusion: The petition challenging the order under Section 148A was dismissed: the faceless procedure mandated by Section 144B applies to the stage of assessment/reassessment/re-computation and does not render preliminary proceedings under Section 148A invalid; additionally, the petitioner did not establish applicability of any CBIC specification and the faceless regime was introduced with effect from 01.04.2021. 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.