Income Tax reassessment proceedings invalidated for Section 148 notice issued by wrong officer violating Section 151A requirements

The Bombay HC invalidated reassessment proceedings under Section 148 of the Income Tax Act due to non-compliance with Section 151A. The court held that notices issued by Joint Assessment Officer instead of Faceless Assessment Officer violated mandatory statutory requirements. Following the precedent in Hexaware Technologies Limited, the court ruled that such non-compliance with the Central Government's notified scheme renders the entire reassessment proceedings unsustainable and invalid. The petition challenging the notice was allowed, effectively quashing the reassessment proceedings.

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Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for reassessment of returns filed for the Assessment Year 2016-17 due to non-compliance with Section 151A of the Act.

Analysis:

1. The petition challenged a notice dated 16 April, 2024, issued under Section 148 of the Income Tax Act, 1961, for reassessment of returns filed for the Assessment Year 2016-17. The notice and underlying orders were issued by the Jurisdictional Assessing Officer (JAO) and not by a Faceless Assessing Officer (FAO) as required by Section 151A of the Act.

2. The High Court referred to a previous Division Bench judgment in the case of Hexaware Technologies Limited, which clarified that the FAO is exclusively responsible for issuing notices under Section 148 of the Act. The Scheme framed by the CBDT for faceless assessment is applicable for both issuance of notice under Section 148 and subsequent assessment proceedings.

3. It was emphasized that the FAO must issue the notice under Section 148 in a faceless manner as per the Scheme, and any deviation from this process renders the notice invalid. Non-compliance with the Scheme vitiates the proceedings, and the act of an authority acting contrary to law must be quashed, causing prejudice to the assessee.

4. The Court held that the Revenue's failure to comply with the Scheme notified under Section 151A of the Act renders the notice invalid. The petition was allowed based on the non-compliance with the Scheme, and the impugned notice dated 16 April, 2024, was quashed.

5. The judgment clarified that the decision was based solely on the non-compliance with Section 151A of the Act, and no opinion was expressed on other issues raised in the petition. The rule was made absolute in favor of the petitioner, and the writ petition was disposed of without costs.

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