2024 (8) TMI 132 - HC - Income Tax

Section 148 notices issued by JAO instead of FAO declared invalid for lack of jurisdiction

The Bombay HC held that notices issued under Section 148 by JAO instead of FAO were invalid due to lack of jurisdiction. The court found that JAO had no ... Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - 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 as and there is no dispute that the JAO had no jurisdiction to issue the impugned notice. We, accordingly, allow this petition in favour of assessee. Issues Involved:Challenge to notice under Section 148 of the Income Tax Act, 1961 for reassessment of returns filed by the Petitioner-Assessee for the Assessment Year 2017-18 due to non-compliance with Section 151A of the Act.Detailed Analysis:1. Non-compliance with Faceless Assessment Scheme: The Writ Petition was filed to challenge a notice issued under Section 148 of the Income Tax Act, 1961, which was not issued by a Faceless Assessing Officer (FAO) as required by Section 151A of the Act. The notice was issued by the Jurisdictional Assessing Officer (JAO), contrary to the provisions of the Act which mandate compliance with the Faceless Assessment Scheme. The Court emphasized the importance of following the Scheme for faceless proceedings to avoid chaos and maintain the integrity of the assessment process.2. Legal Precedents and Interpretation: The judgment referred to the case of Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax, where the Division Bench clarified that the Scheme for faceless assessment must be strictly adhered to. The Court highlighted that the Scheme covers both assessment, reassessment, or recomputation under Section 147 as well as the issuance of notice under Section 148 of the Act. It was established that only the FAO, not the JAO, has the authority to issue notices under Section 148 in a faceless manner, as per the Scheme framed by the CBDT.3. Quashing of Notice and Order: Due to the non-compliance with Section 151A of the Act and the Faceless Assessment Scheme, the Court found the notice and order issued by the JAO to be invalid and unsustainable. The Court relied on the precedent set by a recent decision in Nainraj Enterprises Pvt. Ltd. Vs. The Deputy Commissioner of Income Tax, where a similar petition was allowed based on the provisions of Section 151A. Consequently, the Court quashed and set aside the impugned notice and order, declaring them invalid.4. Disposition of the Writ Petition: The Court disposed of the Writ Petition by allowing it on the grounds of non-compliance with Section 151A of the Act. It was clarified that the judgment did not express any opinion on other issues raised in the petition since it was unnecessary to address them. The Writ Petition was made absolute in the terms mentioned, and no costs were awarded in this matter.This detailed analysis of the judgment highlights the significance of compliance with statutory provisions and legal frameworks, particularly in the context of faceless assessments under the Income Tax Act, 1961.