Notice under Section 148 invalid for violating Section 151A faceless assessment mandate

The Bombay HC held that a notice issued by the Jurisdictional Assessing Officer under Section 148 was invalid as it violated Section 151A of the IT Act, which mandates faceless assessment. Following the precedent in Hexaware Technology Ltd., the court ruled that the Revenue failed to comply with the Central Government's scheme under Section 151A(2). The court emphasized that there is no concurrent jurisdiction between JAO and Faceless Assessing Officer, and when specific jurisdiction is assigned to either officer under the March 29, 2022 scheme, it excludes the other. The writ petition was allowed, quashing the proceedings initiated through the invalid notice.

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Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for reassessment of returns filed for the Assessment Year 2018-19. Compliance with Section 151A of the Act regarding the issuance of notice in a faceless manner.

Analysis:
The Writ Petition was filed to challenge a notice issued under Section 148 of the Income Tax Act, 1961, for reassessment of returns. The notice, along with prior notices and orders, was issued by the Jurisdictional Assessing Officer (JAO) and not a Faceless Assessing Officer (FAO) as required by Section 151A of the Act. The Central Government introduced a faceless mechanism through a Notification dated 29 March 2022, mandating adherence to Section 151A for valid notice issuance under Section 148. The Division Bench in the case of Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax clarified that only the FAO, not the JAO, can issue notices under Section 148 in a faceless manner to avoid chaos and ensure the efficacy of faceless proceedings.

The Scheme framed by CBDT, applicable to assessment, reassessment, or recomputation under Section 147 and issuance of notice under Section 148, must be followed. The FAO is the only authority empowered to issue notices under Section 148 in a faceless manner. Any action by an authority contrary to law must be quashed, causing prejudice to the assessee. Compliance with the Scheme is crucial, and the failure to do so vitiates the proceedings.

The Respondent-Revenue did not comply with the Scheme under Section 151A, leading to an invalid notice issuance. The Petitioner's grievance regarding the notice's invalidity is sustainable based on the Hexaware judgment. The proceedings initiated under Section 148 are deemed unsustainable due to non-compliance with Section 151A. The recent decision in Nainraj Enterprises Pvt. Ltd. also supports the invalidity of proceedings initiated without adherence to Section 151A.

The impugned notice was issued after the notification of the faceless mechanism, but the substantive provision of Section 151A prevails. The notification does not control Section 151A, as interpreted by the Court in Hexaware. The JAO lacked jurisdiction to issue the notice, leading to the allowance of the Writ Petition. Other issues raised in the petition were not addressed as they were deemed unnecessary.

In conclusion, the Writ Petition was allowed based on non-compliance with Section 151A, emphasizing the importance of following the prescribed procedures for notice issuance under Section 148 in a faceless manner.

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