JAO cannot issue Section 148 reassessment notice when jurisdiction lies with FAO under Section 151A

The Bombay HC quashed a reassessment notice issued under Section 148 by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO) as required under Section 151A. The court held that JAO and FAO do not have concurrent jurisdiction for issuing Section 148 notices, and specific jurisdiction assigned to either officer excludes the other. Following the precedent in Hexaware Technologies Limited, the court ruled that non-compliance with Section 151A renders the notice invalid, allowing the writ petition and emphasizing that accepting concurrent jurisdiction would create chaos and undermine faceless proceedings.

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Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for reassessment of returns filed by the Petitioner-Assessee for the Assessment Year 2017-18. Compliance with provisions of Section 151A and the faceless mechanism introduced by the Central Government. Validity of notice issued by Jurisdictional Assessing Officer (JAO) instead of Faceless Assessing Officer (FAO).

Detailed Analysis:

1. Challenge to Notice under Section 148:
The Writ Petition was filed to challenge a notice dated 25 April, 2024, issued under Section 148 of the Income Tax Act, 1961, for reassessment of returns filed by the Petitioner-Assessee for the Assessment Year 2017-18. The impugned notice, along with prior notices under Section 148A (b) and 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.

2. Compliance with Section 151A and Faceless Mechanism:
The Central Government introduced a faceless mechanism through a Notification dated 29 March 2022 to ensure compliance with Section 151A of the Act. The Division Bench in the case of Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax & 4 Ors. emphasized that only the FAO, not the JAO, can issue notices under Section 148 of the Act in a faceless manner. The Scheme framed by the CBDT covers both assessment/reassessment under Section 147 and issuance of notices under Section 148, making it clear that the FAO is the designated authority for issuing such notices.

3. Validity of Notice Issued by JAO:
The Respondent-Revenue failed to comply with the Scheme notified by the Central Government under Section 151A (2) of the Act, rendering the notice invalid. The Court relied on the judgment in Hexaware and a recent decision in Nainraj Enterprises Pvt. Ltd. to conclude that the proceedings initiated under Section 148 would not be sustainable due to non-compliance with the faceless mechanism requirements.

4. Judicial Precedents and Decision:
The Court also referred to the decision in Kairos Properties Pvt. Ltd. vs. Assistant Commissioner of Income-tax, highlighting the importance of the scheme notified by the Central Government in determining the validity of notices issued under Section 148A (b) and Section 148A (d). Considering the precedents and the non-compliance with Section 151A, the Court allowed the Writ Petition, quashing the impugned notices.

5. Final Judgment:
The Court allowed the Writ Petition, setting aside the impugned notices issued by the JAO due to non-compliance with Section 151A of the Act. The Court clarified that the decision was based on this ground and did not address other issues raised in the petition. No costs were awarded in the matter.

This detailed analysis outlines the key issues raised in the judgment, emphasizing the importance of compliance with statutory provisions, specifically Section 151A, and the faceless mechanism introduced by the Central Government for issuing notices under the Income Tax Act.

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