2024 (9) TMI 742 - HC - Income Tax

JAO cannot issue Section 148 notices when faceless assessment provisions under Section 151A apply

BMC Software India Pvt. Ltd. Versus Deputy Commissioner of Income Tax Circle 1 (1) & Ors.

The Bombay HC held that a Jurisdictional Assessing Officer (JAO) cannot issue notices under Section 148 for income escaping assessment when faceless ... Faceless assessment of income escaping assessment - validity of notice issued by the JAO as not in accordance w/sec 151A - not permissible for the Jurisdictional Assessing Officer to issue a notice under Section 148, as the same would amount to breach of the provisions of section 151A - HELD THAT:- As decided in recent case recent decision of this Court in Nainraj Enterprises Pvt. Ltd. [2024 (7) TMI 511 - BOMBAY HIGH COURT] relying on Hexaware Technology Ltd. [2024 (5) TMI 302 - BOMBAY HIGH COURT] provisions of Section 151A of the IT Act had clearly brought a regime of faceless assessment. The Court held that it was not permissible for the Jurisdictional Assessing Officer to issue a notice under Section 148, as the same would amount to breach of the provisions of section 151A of the IT Act. There is no question of concurrent jurisdiction of the JAO and the FAO for issuance of notice under Section 148 of the Act or even for passing assessment or reassessment order. When specific jurisdiction has been assigned to either the JAO or the FAO in the Scheme dated 29th March, 2022, then it is to the exclusion of the other. To take any other view in the matter, would not only result in chaos but also render the whole faceless proceedings redundant. If the argument of Revenue is to be accepted, then even when notices are issued by the FAO, it would be open to an assessee to make submission before the JAO and vice versa, which is clearly not contemplated in the Act. Therefore, there is no question of concurrent jurisdiction of both FAO or the JAO with respect to the issuance of notice under Section 148. When an authority acts contrary to law, the said act of the Authority is required to be quashed and set aside as invalid and bad in law and the person seeking to quash such an action is not required to establish prejudice from the said Act. An act which is done by an authority contrary to the provisions of the statue, itself causes prejudice to assessee. All assessees are entitled to be assessed as per law and by following the procedure prescribed by law. Therefore, when the Income Tax Authority proposes to take action against an assessee without following the due process of law, the said action itself results in a prejudice to assessee. Decided in favour of assessee. Issues Involved: Validity of notice issued under Section 148 of the Income Tax Act, 1961; Compliance with Section 151A of the Act; Applicability of faceless assessment scheme.Issue-wise Detailed Analysis:1. Validity of Notice Issued under Section 148 of the Income Tax Act, 1961:The petitioner challenged the notice dated 30 March 2024, issued under Section 148 of the Act, and the preceding order under Section 148A(b) and Section 148A(d). The reassessment was initiated for the Assessment Year 2017-18. The court found that the impugned notice and orders were issued by the Jurisdictional Assessing Officer (JAO) instead of the required Faceless Assessing Officer (FAO) as mandated by Section 151A of the Act. The court referenced the Hexaware Technologies Limited case, which clarified that there is no concurrent jurisdiction between JAO and FAO for issuing notices under Section 148. The issuance of notice must be through automated allocation, and any deviation renders the notice invalid.2. Compliance with Section 151A of the Act:The court emphasized that Section 151A mandates a faceless mechanism for issuing notices under Section 148. The Central Government's notification dated 29 March 2022, which introduced this faceless mechanism, must be adhered to. The court reiterated that the scheme covers both the issuance of notices and the subsequent assessment or reassessment. The court found that the respondent-Revenue did not comply with this scheme, thus vitiating the proceedings.3. Applicability of Faceless Assessment Scheme:The court discussed the applicability of the faceless assessment scheme, referencing multiple cases, including Nainraj Enterprises Pvt. Ltd., Kairos Properties Pvt. Ltd., and Abhin Anilkumar Shah. The court concluded that the scheme applies to all steps under Section 148A and Section 148, including cases pertaining to central charges and international tax charges. The court rejected the revenue's argument that the present case should be excluded from the scheme due to its central charge nature.Conclusion:The court allowed the writ petition, quashing the impugned notice and orders due to non-compliance with Section 151A of the Act. The court did not express any opinion on other issues raised in the petition, as it was unnecessary to do so after resolving the primary issue of non-compliance. The rule was made absolute with no costs.Final Order:The writ petition is allowed, and the impugned notices and orders are quashed. The court clarified that this decision is based solely on the non-compliance with Section 151A, leaving other issues unaddressed.