JAO lacks jurisdiction to issue Section 148 notice under faceless assessment scheme post-Finance Act 2021

The Bombay HC quashed a Section 148 notice and reassessment order issued by a Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO). Following precedent from Hexaware Technology Ltd. and Vikram Developers, the court held that post-Finance Act 2021, JAOs lack jurisdiction to issue such notices under the faceless assessment scheme. The notice violated Section 151A provisions and the March 29, 2022 scheme. Consequently, all related demand and penalty notices were also quashed and set aside.

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Issues:
Challenge to notice under Section 148 of the Income Tax Act - Compliance with Section 151A - Validity of reassessment order

Analysis:
The Writ Petition challenges a notice dated 30 March, 2023, issued under Section 148 of the Income Tax Act, along with underlying notices under Section 148A(b) and Section 148(A)(d). The reassessment for the Assessment Year 2019-20 led to an impugned reassessment order dated 12 March, 2024. The primary contention is that the notice was issued by the Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) as mandated by Section 151A of the Act.

The Division Bench's judgment in Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax & 4 Ors. is cited to emphasize that the FAO, not the JAO, has the authority to issue notices under Section 148 of the Act. The Scheme dated 29 March 2022, framed by the CBDT, requires automated allocation for notice issuance, which must be followed without discretion. Any action contrary to law, such as the invalid notice issuance, must be quashed without the need for the petitioner to prove prejudice.

The Respondent-Revenue's non-compliance with the Scheme under Section 151A of the Act, as highlighted in Hexaware, renders the notice invalid and vitiates the proceedings. Both parties agree that proceedings initiated under Section 148 are unsustainable due to the judgment in Hexaware and a recent decision in Nainraj Enterprises Pvt. Ltd. The completion of reassessment and subsequent appeal do not negate the defective notice issuance.

In line with the rulings in Hexaware and Vikram Developers Private Limited vs. Income Tax Officer, the Court quashes the impugned notice, reassessment order, and any consequential demand or penalty notices. The judgment is based on the non-compliance with Section 151A, and the Court refrains from addressing other issues raised in the petition.

The Writ Petition is allowed, and the impugned notice and reassessment order are set aside. Consequential demand and penalty notices are also quashed. The Court clarifies that its decision is solely based on non-compliance with Section 151A, without expressing an opinion on other raised issues.

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