Notices under section 148 invalid for breaching faceless-assessment scheme under section 151A and Scheme dated 29 March 2022

HC held that notices issued by the Jurisdictional Assessing Officer under section 148 were invalid because they breached the faceless-assessment regime established by section 151A and the Scheme dated 29 Mar 2022. The Court found Revenue had not complied with the Scheme's allocation of exclusive jurisdiction between the Jurisdictional AO and the Faceless Assessment Office; concurrent jurisdiction was impermissible. Applying Hexaware, the HC allowed the writ, concluded the impugned notice was without jurisdiction, and held the initiation of proceedings in that manner vitiated the assessment process.

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Issues:
1. Validity of notice issued under Section 148 of the Income Tax Act, 1961.
2. Compliance with the provisions of Section 151A and the faceless mechanism introduced by the Central Government.
3. Jurisdiction of the Assessing Officer in issuing notices under Section 148 of the Act.
4. Applicability of the Scheme framed by the CBDT and the Notification dated 29 March 2022.
5. Effect of non-compliance with Section 151A on the validity of the notice and subsequent proceedings.

Detailed Analysis:
1. The writ petition challenges a notice dated 23 March, 2023, issued under Section 148 of the Income Tax Act, 1961, for reassessment of returns filed by the petitioner for the Assessment Year 2019-20. The petitioner argues that the notice, along with prior notices under Section 148A(b) and 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.

2. The Central Government introduced a faceless mechanism through a Notification dated 29 March 2022, mandating compliance with Section 151A for notices issued under Section 148. The Division Bench in the case of Hexaware Technologies Limited vs. Assistant Commissioner of Income Tax clarified that the FAO, not the JAO, has the exclusive jurisdiction to issue notices under Section 148 in a faceless manner.

3. The Court emphasized that the Scheme framed by the CBDT, applicable to both assessment and issuance of notices under Section 148, cannot be selectively applied. Non-compliance with the faceless mechanism outlined in Section 151A renders the notice invalid, as it prejudices the assessee by deviating from the statutory procedure.

4. The judgment in Nainraj Enterprises Pvt. Ltd. and Kairos Properties Pvt. Ltd. further supports the requirement for FAO issuance of notices under Section 148 in accordance with the Scheme notified by the Central Government. The Court rejected arguments regarding central charges exempting the case from the Scheme's applicability, emphasizing adherence to the statutory provisions.

5. In the case of Abhin Anilkumar Shah vs. Income Tax Officer, the Court reiterated that exceptions related to central charges do not exclude the application of Section 151A and the faceless mechanism. The writ petition was allowed, quashing the impugned notices issued under Section 148 due to non-compliance with Section 151A. The judgment clarifies that the decision is based solely on non-compliance and does not address other issues raised in the petition.

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