2024 (10) TMI 1766 - HC - Income Tax

Faceless assessment under the statute: notices issued by the jurisdictional assessing officer set aside for noncompliance with faceless procedure

Faceless assessment under the statute requires initiation and completion through the prescribed faceless procedure; notices issued by the jurisdictional ... Validity of Faceless assessment u/s 144B - notices issued by the JAO and not FAO - HELD THAT:- Both the counsel are ad idem that the issue involved in the present petition stands finally examined and concluded by this Court in Jasjit Singh [2024 (8) TMI 228 - PUNJAB AND HARYANA HIGH COURT] and Jatinder Singh Bhangu [2024 (7) TMI 1191 - PUNJAB AND HARYANA HIGH COURT] notices issued by the JAO under Section 148 of the Act, 1961 and the proceedings initiated thereafter without conducting the faceless assessment as envisaged under Section 144B of the Act, 1961, have been found to be contrary to the provisions of the Act, 1961 and accordingly notices are set aside for want of jurisdiction. Accordingly, notice issued by Jurisdictional Assessing Officer under Section 148 as well as the consequential proceedings are set aside. Issues: (i) Whether notices issued under Section 148 of the Income-tax Act, 1961 and consequential proceedings initiated without conducting faceless assessment as envisaged under Section 144B of the Act are valid; (ii) Whether circulars or instructions issued by the Board can override or render statutory provisions otiose.Issue (i): Whether notices under Section 148 issued without conducting faceless assessment under Section 144B are valid.Analysis: The Court applied the coordinate-bench ruling in Jasjit Singh (supra) and examined the statutory scheme requiring faceless assessment under Section 144B. The Court held that proceedings initiated after issuance of notices under Section 148, without following the faceless-assessment procedure mandated by Section 144B, are contrary to the provisions of the Income-tax Act, 1961. The Court noted that where the statutory procedure is mandatory, failure to follow it renders subsequent actions without jurisdiction.Conclusion: Notices issued under Section 148 and consequential proceedings initiated without conducting faceless assessment under Section 144B are set aside and declared invalid.Issue (ii): Whether Board circulars or instructions can override statutory provisions or be used to bypass mandatory statutory procedure.Analysis: The Court agreed with the view that administrative circulars and instructions can only supplement statutory provisions and cannot be issued so as to override, nullify, or render statutory enactments otiose. By exercising powers under Sections 119 and 120 and provisions such as Section 144B, authorities cannot usurp legislative provisions to the detriment of taxpayers; circulars that attempt to do so are ultra vires the statute.Conclusion: Circulars or instructions that seek to override or circumvent mandatory statutory provisions are not valid and cannot confer jurisdiction or legitimize proceedings which the statute does not authorize.Ratio Decidendi: Administrative instructions or board circulars cannot override or render otiose mandatory statutory procedures; failure to comply with statutory procedural requirements (including faceless assessment under Section 144B) vitiates notices issued under Section 148 and renders consequent proceedings without jurisdiction.