2024 (9) TMI 1338 - HC - Income Tax

Notices under Section 148 invalid if they bypass Section 151A faceless assessment scheme dated 29 March 2022

HC held that notices under Section 148 issued by the jurisdictional assessing officer are invalid where they bypass the faceless assessment regime ... 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 decision of this Court in 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. We find substance in contentions as urged on behalf of the petitioner considering that the impugned notice has been issued by the Jurisdictional Assessing officer, which is outside the faceless mechanism as provided under the provisions of Section 144(B) read with Section 151A and the “Scheme” notified by the Central Government dated 29 March 2022 under Section 151A. It is also correct that in several proceedings which had come up before this Court, the Court had taken into consideration the said decision and had granted reliefs, finally disposing of the petitions. What now bothers us and more so judicially, is that neither for the assessee nor for the revenue, the ball would stop rolling. This, in as much as, the decision of this Court in Hexaware, being already assailed by the Revenue before the Supreme Court, it is stated by Mr. Sharma, that all our judgments which follow the decision in Hexaware and the other connected decisions, are now being assailed by the Revenue before the Supreme Court, in the proceedings of a Special Leave Petition being filed under Article 136 of the Constitution of India. This has entailed a peculiar situation, namely that the Revenue is now required to initiate proceedings before the Supreme Court and the assessee would be required to face such proceedings. Thus, the proceedings which stood disposed of by this Court, by such method, in fact, would get transferred to the Supreme Court, in view of the pendency of the Revenue’s challenge to the decision of this Court in Hexaware. In such circumstances, in our opinion, it is in the interest of the parties, that henceforth we need to have a different approach considering that in disposing of such petitions following Hexaware, it would involve both the Revenue as also the assessee to face further proceedings, for the reason that our orders in such manner create further litigation between the Revenue and the assessees. We may observe that the endeavor of the Court would always be, that at least, the orders passed by the Court ought not to generate any litigation between the parties much less a further litigation with which we are concerned. Issues:Challenge to notice issued under Section 148A(b) and order under Section 148A(d) of the Income Tax Act, 1961 - Jurisdiction of Assessing Officer outside faceless mechanism - Similar petitions granted relief based on previous decisions - Concerns regarding ongoing litigation due to Supreme Court challenge - Need for a different approach to prevent further litigation - Admission of petition and grant of interim reliefs.Analysis:The petitioner sought relief to quash a notice under Section 148A(b) and an order under Section 148A(d) of the Income Tax Act, 1961, along with a stay on the impugned notice. The primary contention was that the impugned notice was issued by the Jurisdictional Assessing Officer outside the faceless mechanism provided under the law. The petitioner relied on previous decisions by the Court and argued that similar relief should be granted in this case. The Court found merit in the petitioner's contentions, noting that several petitions with similar issues had been allowed previously.The Court expressed concern over the increasing number of cases seeking similar reliefs based on the Court's previous decisions. It noted that both the Revenue and the assessee were facing ongoing litigation due to challenges to the Court's decisions before the Supreme Court. The Court highlighted the burden on both parties in terms of time and expenditure to defend such proceedings. It acknowledged that the Supreme Court's authoritative pronouncement on the legal issues involved was awaited.In light of the situation and to prevent further litigation between the parties, the Court decided to adopt a different approach. It admitted the petition and granted interim reliefs, including a stay on the notice under Section 148 and any related proceedings. The Court emphasized the need for a deviation from the previous approach in handling cases covered by the relevant decisions. It provided liberty to the parties to apply after appropriate orders are passed by the Supreme Court or its final decision in the matter.In conclusion, the Court acknowledged the complexities and implications of the ongoing litigation arising from its previous decisions. It aimed to address the concerns of both parties by granting interim reliefs and signaling a shift in approach to prevent further legal disputes.