2024 (7) TMI 971 - HC - Income Tax

Notices under Section 148 quashed where JAO lacked jurisdiction; Section 151A and central notification require FAO issuance

HC held that notices issued under section 148 were illegal and invalid because Junior Assessing Officer (JAO) lacked jurisdiction where Section 151A and ... Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A - notices issued by JAO instead of FAO - HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. (2024 (5) TMI 302 - BOMBAY HIGH COURT]. The impugned notices would be required to be held to be illegal and invalid. We, accordingly, allow this petition in terms of prayer clause (a). Issues:Challenge to re-opening of assessment under Income Tax Act, 1961 through Section 148A, validity of notice issued by Jurisdictional Assessing Officer (JAO) without following faceless assessment provisions under Section 151A.Analysis:The petitioner sought relief against the re-opening of assessment for the year 2019-20 under Section 148A of the Income Tax Act, 1961, arguing that the notice issued by the Jurisdictional Assessing Officer (JAO) did not comply with the faceless assessment provisions of Section 151A. The petitioner prayed for the quashing of the notice and subsequent orders. The petitioner relied on a previous decision by the Division Bench of the Bombay High Court in a similar case involving Hexaware Technology Ltd., which held that the JAO issuing a notice under Section 148A(b) without following the faceless assessment provisions was impermissible.The Court analyzed Section 151A of the Act, which introduced a regime of faceless assessment to enhance efficiency and transparency in tax assessments. The Court emphasized that the Central Board of Direct Taxes (CBDT) had the power to notify the scheme for automated allocation of assessments and issuance of notices in a faceless manner. The Court noted that the impugned notice issued by the JAO was not in accordance with the CBDT's scheme, which mandated automated allocation for assessments. The Court clarified that there was no concurrent jurisdiction between the JAO and the Faceless Assessment Officer (FAO) for issuing notices under Section 148, as the scheme assigned specific roles to each, precluding any overlap.Furthermore, the Court highlighted that when an authority acts contrary to the law, the action must be quashed, even without the need to establish prejudice, as any deviation from statutory procedures inherently prejudices the taxpayer. The Court emphasized that all taxpayers are entitled to be assessed in accordance with the law and due process, and any deviation from prescribed procedures inherently prejudices the taxpayer. Therefore, the Court held that the impugned notice issued by the JAO was invalid and must be set aside.In conclusion, the Court allowed the writ petition, quashing the impugned notice and subsequent orders issued by the JAO. The Court held that the petitioner was entitled to relief as the notice was issued in violation of the faceless assessment provisions under Section 151A. The Court ruled in favor of the petitioner, emphasizing the importance of adherence to statutory procedures in tax assessments.