JAO cannot issue Section 148 notices for faceless assessment under Section 151A regime

The Bombay HC held that a notice issued by the Jurisdictional Assessing Officer (JAO) under Section 148 for faceless assessment of income escaping assessment was invalid and not in accordance with Section 151A of the IT Act. The Court ruled that Section 151A establishes a faceless assessment regime, making it impermissible for the JAO to issue such notices as it would breach the statutory provisions. The decision followed precedents from Nainraj Enterprises Pvt. Ltd. and Hexaware Technology Ltd.

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Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1966.
2. Compliance with the faceless assessment scheme as per Section 151A of the Income Tax Act, 1966.
3. Applicability of the faceless scheme to central charges and international tax charges.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 148 of the Income Tax Act, 1966:
The petitioner challenged the notice dated 18 March 2024 issued under Section 148 of the Income Tax Act, 1966, arguing that it was invalid. The court found that the impugned notice, along with the prior notice under Section 148A(b) and the order under Section 148A(d), were issued by the Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO), as required by Section 151A of the Act. The court referenced the case of Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax, which established that only the FAO has the jurisdiction to issue notices under Section 148 of the Act. The court held that the issuance of the notice by the JAO was contrary to the law and thus invalid.

2. Compliance with the Faceless Assessment Scheme as per Section 151A of the Income Tax Act, 1966:
The court emphasized that the faceless assessment scheme introduced by the Central Government's Notification dated 29 March 2022 must be adhered to. The scheme mandates that notices under Section 148 must be issued through automated allocation by the FAO, excluding the JAO. The court reiterated the principles laid down in the Hexaware case, highlighting that the scheme's purpose is to optimize resource use through random allocation using technological tools. The court found that the respondent-Revenue did not comply with the scheme, rendering the proceedings invalid.

3. Applicability of the Faceless Scheme to Central Charges and International Tax Charges:
The respondent-Revenue argued that the case fell under central charges and should be excluded from the faceless scheme as per orders dated 31 March 2021 and 6 September 2021. However, the court rejected this argument, referencing its decision in Abhin Anilkumar Shah Vs. Income Tax Officer, which clarified that the faceless scheme under Section 151A applies to all cases, including central and international tax charges. The court stated that the orders dated 31 March 2021 and 6 September 2021 only apply to assessment orders and not to the issuance of notices under Section 148. The court also referenced the decision of the High Court of Telangana in Sri Venkataramana Reddy Patloola, which supported the view that the faceless scheme applies to the issuance of notices under Section 148.

Conclusion:
The court concluded that the proceedings initiated under Section 148 of the Act were unsustainable due to non-compliance with Section 151A. The writ petition was allowed, and the notices and orders issued under Sections 148A(b), 148A(d), and 148 were quashed. The court did not express any opinion on other issues raised in the petition, as it was unnecessary to do so given the primary ground for the decision.

Judgment:
The writ petition was allowed, and the notices and orders were quashed. The rule was made absolute with no costs.

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