JAO cannot issue Section 148 notice when FAO has jurisdiction under faceless assessment regime

The Bombay HC held that a notice issued by the Jurisdictional Assessing Officer (JAO) under Section 148 was invalid as it violated Section 151A provisions establishing faceless assessment regime. Following precedents in Nainraj Enterprises and Hexaware Technology, the court ruled that JAO and Faceless Assessing Officer (FAO) cannot have concurrent jurisdiction for issuing Section 148 notices. When specific jurisdiction is assigned to either JAO or FAO under the March 2022 scheme, it excludes the other. The court emphasized that allowing concurrent jurisdiction would create chaos and render faceless proceedings redundant. The notice was quashed as contrary to law, with the court noting that procedural violations inherently prejudice assessees. Decision favored the assessee.

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Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for reassessment for the Assessment Year 2017-18 due to non-compliance with Section 151A and the faceless mechanism introduced by the Central Government.

Detailed Analysis:

1. The Writ Petition was filed to challenge a notice issued under Section 148 of the Income Tax Act, 1961. The notice, along with prior notices, was issued by the Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) as required by Section 151A of the Act. The Central Government introduced a faceless mechanism through a Notification, mandating compliance with Section 151A for valid issuance of notices for reassessment under Section 148.

2. The Division Bench of the High Court in a previous case, Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax, interpreted Section 151A and the faceless mechanism. It clarified that there is no concurrent jurisdiction of JAO and FAO for issuing notices under Section 148. The Scheme framed by CBDT applies to both assessment and issuance of notices under Section 148, making it mandatory for FAO to issue such notices, not JAO.

3. Acting contrary to the law, as in this case, requires quashing of the action without the need for the petitioner to establish prejudice. The non-compliance with the Scheme notified by the Central Government under Section 151A renders the notice invalid, vitiating the proceedings initiated under Section 148 for reassessment.

4. The judgment in Nainraj Enterprises Pvt. Ltd. case and Kairos Properties Pvt. Ltd. case supported the interpretation of Section 151A and the requirement for FAO to issue notices under Section 148. Considering these precedents and the non-compliance in the present case, the Writ Petition was allowed, quashing the impugned notices issued by the JAO.

5. The Court clarified that the decision was based on non-compliance with Section 151A and did not address other issues raised in the petition. The Rule was made absolute in favor of the petitioner, and no costs were awarded.

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