Faceless assessment under s.144B read with s.151A applies to notices under ss.148A/148, junior AO notices invalid

HC held the faceless assessment scheme under s.144B read with s.151A (and the Central Government scheme of 29 Mar 2022) applies to notices under ss.148A/148, including matters of central charges and international taxation. Notices issued by a Junior Assessing Officer outside the faceless mechanism were held illegal and without jurisdiction. The revenue's contention that such cases are excluded was rejected, and the challenge succeeded in favour of the assessee.

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Issues Involved:
1. Jurisdiction of the Jurisdictional Assessing Officer (JAO) under Section 148A and Section 148 of the Income Tax Act, 1961.
2. Applicability of the faceless mechanism under Section 144B and Section 151A of the Income Tax Act, 1961.
3. Interpretation of orders dated 31 March, 2021 and 6 September, 2021 issued by the Central Board of Direct Taxes (CBDT).
4. Validity of the impugned notice and order under Sections 148A(b), 148A(d), and 148 of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Jurisdiction of the JAO under Section 148A and Section 148 of the Income Tax Act, 1961:
The petitioner challenged the jurisdiction of the JAO to issue notices under Sections 148A and 148 of the Income Tax Act, 1961, arguing that these actions were contrary to the provisions of Section 151A and Section 144B, which mandate a faceless mechanism. The Court referred to the decision in Hexaware Technologies Limited, which held that the JAO does not have concurrent jurisdiction with the Faceless Assessing Officer (FAO) for issuing notices under Section 148. The Court emphasized that the issuance of notices must be through automated allocation as per the scheme notified by the Central Government, which mandates a faceless mechanism.

2. Applicability of the Faceless Mechanism under Section 144B and Section 151A of the Income Tax Act, 1961:
The petitioner argued that the faceless mechanism under Section 144B and Section 151A should apply to their case. The Court noted that the scheme notified on 29 March, 2022, under Section 151A, mandates that both assessment/reassessment and the issuance of notices under Section 148 must be through automated allocation and in a faceless manner. The Court rejected the revenue's argument that the faceless mechanism does not apply to cases of international taxation, referring to the decision in CapitalG LP, which held that the faceless mechanism applies to all cases, including those related to international taxation.

3. Interpretation of Orders Dated 31 March, 2021 and 6 September, 2021 Issued by the CBDT:
The revenue argued that the orders dated 31 March, 2021, and 6 September, 2021, exclude cases of international taxation from the faceless mechanism. The Court examined these orders and concluded that they only apply to assessment orders and not to the issuance of notices under Sections 148A and 148. The Court emphasized that the scheme notified on 29 March, 2022, under Section 151A, does not reference or include these orders, and thus, the faceless mechanism applies to the issuance of notices in all cases, including those of international taxation.

4. Validity of the Impugned Notice and Order under Sections 148A(b), 148A(d), and 148 of the Income Tax Act, 1961:
The Court held that the notices issued by the JAO were illegal and without jurisdiction as they did not follow the mandatory faceless procedure. The Court referred to its decision in Kairos Properties Pvt. Ltd., which held that the faceless mechanism applies to the procedure under Section 148A as well. Consequently, the Court quashed and set aside the impugned notice dated 31 March, 2024, the order dated 19 April, 2024, and the reassessment notice dated 19 April, 2024, pertaining to the assessment year 2017-18.

Conclusion:
The Court concluded that the faceless mechanism under Section 144B read with Section 151A applies to the issuance of notices under Sections 148A and 148, including cases of international taxation. The impugned notices and orders issued by the JAO were quashed as they did not comply with the mandatory faceless procedure. The petition was allowed, and the rule was made absolute with no costs.

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