2024 (8) TMI 187 - HC - Income Tax

JAO lacks jurisdiction to issue Section 148 notices; only FAO authorized under Section 151A

The Bombay HC held that notices issued under Section 148 by Joint Assessment Officer (JAO) instead of Faceless Assessment Officer (FAO) were invalid due ... 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:Challenge to notice for reassessment under Section 148 of the Income Tax Act, 1961 and underlying prior notice and order under Section 148A(b) and Section 148A(d) of the Act. Compliance with Section 151 and Section 151A of the Act for reassessment proceedings.Analysis:1. Challenge to Notice for Reassessment under Section 148:The Writ Petition was filed to challenge a notice dated 18th April, 2022, issued for reassessment in Assessment Year 2018-19 under Section 148 of the Income Tax Act, 1961. The Petitioner contended that the notice and underlying orders were issued by the Jurisdictional Assessing Officer (JAO) and not a Faceless Assessing Officer (FAO) as required by Section 151A of the Act. Additionally, the sanction for reassessment was given by an authority under Section 151(i) of the Act, not the authority specified in Section 151(ii), rendering the reassessment proceedings illegal.2. Compliance with Section 151A and Faceless Assessment Scheme:The Division Bench of the High Court, in the case of Hexaware Technologies Limited, clarified that the issuance of notice under Section 148 of the Act must comply with Section 151A. The Scheme framed by the Central Government under Section 151A governs the conduct of proceedings under Section 148A and Section 148. The Court emphasized that the FAO, not the JAO, has the jurisdiction to issue notices under Section 148 in a faceless manner. Non-compliance with the Scheme vitiates the proceedings, as established in the Hexaware case.3. Sanction for Reassessment and Compliance with Section 151:The Court highlighted that the reassessment proceedings were initiated well after three years from the end of the relevant assessment year, requiring the sanction to be granted by authorities specified in Section 151(ii) of the Act. Referring to previous judgments, including Vodafone Idea Limited vs. Deputy Commissioner of Income Tax, the Court emphasized the importance of proper authorization for reassessment. As the JAO lacked jurisdiction to issue the notice and the reassessment lacked proper sanction, the Writ Petition was allowed, quashing the reassessment proceedings.4. Final Decision and Disposition of the Writ Petition:The Court allowed the Writ Petition, quashing the reassessment proceedings for non-compliance with Section 151 and Section 151A of the Act. The Court clarified that the decision was based solely on these grounds and did not express an opinion on other issues raised in the petition. The Rule was made absolute in favor of the Petitioner, and the Writ Petition was disposed of without costs.