JAO cannot issue Section 148 notice under faceless assessment regime, violates Section 151A provisions

The Bombay HC held that a notice issued by the Jurisdictional Assessing Officer (JAO) under Section 148 was invalid as it breached Section 151A provisions establishing faceless assessment regime. Following Hexaware Technology Ltd. precedent, the court ruled that JAO and Faceless Assessing Officer (FAO) cannot have concurrent jurisdiction for issuing Section 148 notices. When specific jurisdiction is assigned to either JAO or FAO under the March 29, 2022 scheme, it excludes the other. The court emphasized that actions contrary to statutory provisions are inherently prejudicial to assessees, who are entitled to assessment following prescribed legal procedures. The invalid notice was quashed, deciding in favor of the assessee.

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Issues:
Challenge to order under Section 148A(d) of the Income Tax Act and notice under Section 148, Jurisdiction of Assessing Officer in issuing notice under Section 148, Compliance with faceless assessment scheme.

Analysis:
The petitioner filed a petition under Article 226 seeking to quash an order and notice issued by respondent No.1 under the Income Tax Act. The petitioner's return of income for the Assessment Year 2017-18 was scrutinized, leading to a rejection of accounts and estimation of net profit. Subsequently, a notice was issued regarding a suspicious transaction with M/s. Choksi Navnitlal, prompting the petitioner to challenge the jurisdiction of the Assessing Officer.

The petitioner argued that the notice was invalid due to non-compliance with the faceless assessment scheme under Section 151A of the IT Act. Citing the decision in Hexaware Technology Ltd. case, the petitioner contended that the Jurisdictional Assessing Officer lacked authority to issue the notice, as the scheme mandated automated allocation for assessments and notices. The Court held that the faceless assessment regime prohibited the Jurisdictional Assessing Officer from issuing notices under Section 148, emphasizing the importance of following the prescribed procedures.

The Court highlighted that the scheme aimed to eliminate the interface between tax authorities and assesses, ensuring efficiency and transparency in assessments. It emphasized the mandatory nature of automated allocation, precluding concurrent jurisdiction between officers designated in the scheme. The Court ruled that actions contrary to law must be quashed, as they inherently prejudice the assessee. Consequently, the impugned order and notice were deemed invalid and set aside, granting relief to the petitioner.

In conclusion, the petition was allowed, quashing the impugned order and notice. The Court emphasized adherence to statutory procedures and the significance of the faceless assessment scheme in maintaining fairness and transparency in tax assessments. The judgment underscores the importance of upholding legal provisions to protect the rights of assesses and ensure proper administration of tax laws.

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