2024 (8) TMI 1675 - HC - Income Tax

Faceless assessment scheme noncompliance in reopening proceedings invalidates notice and vitiates reassessment, petition allowed.

Non-compliance with the faceless assessment scheme governing reassessment notices was held to vitiate reopening proceedings: because the prescribed scheme ... Reopening of assessment - Notice issued by the Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) - non-compliance with the faceless scheme mandated by Section 151A HELD THAT:- In the present case, it is apparent that the Respondent-Revenue has not complied with the Scheme notified by the Central Government pursuant to Section 151A(2) of the Act. The Scheme has also been tabled before Parliament and is in the character of subordinate legislation, which governs the conduct of proceedings under Section 148A as well as Section 148 of the Act. In view of the explicit declaration of the law in Hexaware, the grievance of the Petitioner-Assessee insofar as it relates to an invalid issuance of a notice is sustainable and consequently, the very manner in which the proceedings have been initiated, vitiates the proceedings. Both the parties agree that the proceedings initiated under Section 148 of the Act would not be sustainable in view of the judgment rendered in Hexaware [2024 (5) TMI 302 - BOMBAY HIGH COURT] - Petitioner-Assessee has also drawn our attention to a recent decision of this Court in Nainraj Enterprises Pvt. Ltd. [2024 (7) TMI 511 - BOMBAY HIGH COURT] whereby in similar circumstances, this Court has allowed the petition considering the provisions of Section 151A of the Act. As there is no dispute that the JAO had no jurisdiction to issue the impugned notice, the Writ Petition is accordingly allowed. Issues: (i) Whether a notice under Section 148 of the Income-tax Act, 1961 issued by the Jurisdictional Assessing Officer (JAO), instead of a Faceless Assessing Officer (FAO), in contravention of Section 151A and the Notification dated 29 March 2022 (Faceless Scheme), is valid.Analysis: The Scheme notified by the Central Government pursuant to Section 151A introduces a faceless mechanism and mandates issuance of notices and related proceedings through automated allocation to the officer allocated by the Scheme. The Division Bench decision in Hexaware Technologies (reported) interprets Section 151A and the Scheme to exclude concurrent jurisdiction between the JAO and FAO for issuance of notices under Section 148, holding that the Scheme's automated allocation is mandatory. Where the revenue acts contrary to the Scheme and issues a notice under Section 148 through the JAO instead of following the faceless procedure, that act constitutes non-compliance with Section 151A and the notified Scheme. Such procedural non-compliance, being contrary to the statutory scheme and subordinate legislation, vitiates the initiation of reassessment proceedings and requires quashing of the impugned action without necessity for separate proof of prejudice.Conclusion: The notice(s) under Section 148 issued by the JAO in breach of Section 151A and the Notification dated 29 March 2022 are invalid; the impugned notices and related order are quashed and set aside and the writ petition is allowed on that ground.