Section 148 notices issued by Joint Assessment Officer instead of Faceless Assessment Officer declared invalid due to jurisdictional defects

The Bombay HC held that notices issued under Section 148 by Joint Assessment Officer (JAO) instead of Faceless Assessment Officer (FAO) were invalid due to lack of jurisdiction. The court found non-compliance with Section 151A provisions and Central Government notification dated 29 March 2022, which mandated FAO to issue such notices in faceless assessment proceedings. Following precedent in Hexaware Technologies Ltd., the court declared the impugned notices illegal and invalid, allowing the petition in favor of the assessee.

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Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for reassessment for the Assessment Year 2020-21. Non-compliance with Section 151A of the Act regarding issuance of notice by Jurisdictional Assessing Officer instead of Faceless Assessing Officer.

Analysis:
The Writ Petition was filed to challenge a notice issued under Section 148 of the Income Tax Act, 1961, for reassessment for the Assessment Year 2020-21, which was not issued by a Faceless Assessing Officer as required by Section 151A of the Act. The Division Bench in the case of Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax clarified that the jurisdiction for issuance of notice under Section 148 is exclusive to either the Jurisdictional Assessing Officer (JAO) or the Faceless Assessing Officer (FAO) as per the Scheme dated 29th March 2022. The Scheme mandates automated allocation for randomised case allocation, and only the FAO can issue the notice under Section 148, not the JAO.

The Respondent-Revenue's non-compliance with the Scheme notified under Section 151A (2) of the Act was evident, and the Court found the notice invalid due to the failure to follow the faceless assessment procedure. The Court held that the proceedings initiated in violation of the Scheme were vitiated. Both parties agreed that the proceedings under Section 148 would be unsustainable based on the Hexaware judgment. Another decision, Nainraj Enterprises Pvt. Ltd. Vs. The Deputy Commissioner of Income Tax, supported this view, leading to the allowance of the petition due to non-compliance with Section 151A.

Consequently, the Court quashed and set aside the impugned notice and order, emphasizing that the JAO lacked jurisdiction to issue the notice. The judgment focused on the non-compliance with Section 151A and did not address other issues raised in the petition, clarifying that it was unnecessary to do so. The Writ Petition was allowed based on the non-compliance grounds, and no costs were awarded in the matter.

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