2024 (7) TMI 1290 - HC - Income Tax

Section 148 reassessment notice issued beyond limitation period ruled time-barred and illegal

The Bombay HC held that a notice under Section 148 issued on 4th April, 2022 was beyond the prescribed limitation period. The court ruled that issuance of ... Validity of reopening of assessment - Notice beyond expiry of the period of limitation as Section 149 (1) (b) HELD THAT:- The legislature has clearly provided for the applicability of the provisions of Section 148 or Section 143(1) or Section 143C and has categorically avoided any procedural steps, as Section 148A would contemplate. Thus, in our opinion, mere issuance of the notice under Section 148A which is a provision for conducting inquiry by providing an opportunity before issuance of notice under Section 148 cannot be read within the ambit of the first proviso to sub-section (1) of Section 149. In this view of the matter, we are clearly of the opinion that the impugned notice as issued to the Petitioner dated 4th April, 2022 u/s148 of the Act was issued beyond the prescribed period of limitation and hence, the consequent actions as taken thereunder would also be required to be held illegal. Validity of notice being issued by the JAO - applicability of provisions of Section 151A - As provisions of the faceless assessment of income escaping assessment as provided for under Section 151A and the scheme in that regard notified by the Central Government being Notification dated 29th March, 2022 [Notification No.18/2022/F. No.370142/16/2022-TPL], which provides that the assessment, reassessment or recomputation under Section 147 of the Act and the issuance of notice under Section 148 of the Act shall be through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in Section 148 of the Act for issuance of notice and in a faceless manner, to the extent provided under Section 144B of the Act. The Court held that in the said case, as the notice impugned therein dated 27th August, 2022 was issued by the JAO and not by the National Faceless Assessment Centre, the same would fall outside the faceless scheme. Assessee appeal allowed. Issues:Challenge to assessment order under Article 226 of the Constitution of India based on jurisdiction and limitation grounds.Analysis:1. The petitioner challenged an assessment order dated March 13, 2024, issued under Section 147 of the Income Tax Act, 1961, along with a notice dated April 4, 2022, under Section 148, on jurisdictional and limitation grounds. The petitioner argued that the notice was issued beyond the prescribed period of limitation as per Section 149 of the Act, which sets time limits for issuing notices for assessment years.2. The primary contention was that the notice dated April 4, 2022, was issued by the Jurisdictional Assessing Officer, Ward 24 (1) (1), Mumbai, contrary to the provisions of Section 151A, which introduces a faceless mechanism for issuing notices under Section 148. The petitioner argued that the notice was illegal due to being issued beyond the limitation period specified in the Act.3. The petitioner cited a Division Bench decision in a similar case, where it was held that notices issued beyond the limitation period prescribed under Section 149 were invalid. In this case, the notice dated April 4, 2022, was issued after the expiry of the relevant period, making it illegal under Section 149 (1) (b) read with the first proviso.4. The court also considered the argument that the notice was not in accordance with Section 151A of the Act, which mandates a faceless assessment scheme. Referring to the Division Bench's decision in another case, the court held that notices issued by Assessing Officers instead of the National Faceless Assessment Centre were outside the faceless scheme, rendering them invalid.5. Consequently, the court allowed the petition, quashing the assessment order dated March 13, 2024, and the notice dated April 4, 2022, as they were issued beyond the prescribed period of limitation and not in compliance with the faceless assessment scheme under Section 151A.6. The judgment highlights the importance of adhering to statutory provisions regarding the issuance of assessment notices, jurisdictional requirements, and the implementation of faceless assessment mechanisms under the Income Tax Act, ensuring fairness and legality in tax assessments.