Notices under Section 148 in faceless assessments invalid as Joint AO lacked jurisdiction; violated Section 151A and 29 Mar 2022

HC held notices issued under Section 148 in faceless assessment proceedings invalid because Joint AO lacked jurisdiction; issuance contravened Section 151A read with the Central Government notification dated 29 March 2022. Court found non-compliance with the statutory scheme for faceless assessments and, following precedent, quashed the impugned notices as illegal and without jurisdiction, allowing the taxpayer's petition.

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Issues:
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 2016-17. Compliance with Section 151A in issuance of the notice. Validity of notice issued by Jurisdictional Assessing Officer (JAO) instead of Faceless Assessing Officer (FAO).

Analysis:
The Writ Petition challenges a notice issued under Section 148 of the Income Tax Act, 1961, for reassessment of the Petitioner's returns for the Assessment Year 2016-17. The notice, along with prior notices and orders, was issued by the Jurisdictional Assessing Officer (JAO) instead of the required Faceless Assessing Officer (FAO) as per Section 151A of the Act. The Central Government introduced a faceless mechanism through a Notification dated 29 March 2022, mandating adherence to Section 151 and the Notification for valid notice issuance under Section 148. The judgment in Hexaware Technologies Limited v. Assistant Commissioner of Income Tax emphasized exclusive jurisdiction of either JAO or FAO for notice issuance, highlighting the mandatory nature of automated allocation for faceless proceedings.

The Court emphasized that non-compliance with the Scheme notified under Section 151A (2) of the Act renders the notice invalid, as the Scheme governs proceedings under Section 148A and 148. Citing previous judgments, including Nainraj Enterprises Pvt. Ltd. and Kairos Properties Pvt. Ltd., the Court reiterated the necessity of FAO issuance for Section 148 notices. The judgment in Kairos Properties Pvt. Ltd. clarified that the Scheme encompasses steps taken by Revenue for notice issuance and orders, falling under Section 151A. Consequently, the Court allowed the Petition due to non-compliance with Section 151A, quashing the impugned notices and orders issued by the JAO.

The Court, having found the JAO's lack of jurisdiction in issuing the notice, allowed the Writ Petition, quashing the impugned notices and orders. The judgment clarified that the decision was based solely on non-compliance with Section 151A, without expressing opinions on other raised issues. The ruling made it clear that all assessees are entitled to be assessed as per law and due process, emphasizing the importance of following prescribed procedures in tax assessments.

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