JAO lacks jurisdiction to issue reassessment notice under Section 148 when FAO has specific assignment

The Bombay HC quashed a reassessment notice issued under Section 148 by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO). The court held that Section 151A mandates compliance with faceless assessment procedures, and there is no concurrent jurisdiction between JAO and FAO for issuing reassessment notices. Following the precedent in Hexaware Technologies Limited, the court ruled that when specific jurisdiction is assigned to either JAO or FAO under the March 2022 scheme, it excludes the other. The writ petition was allowed as the JAO lacked jurisdiction to issue the notice.

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Issues Involved:
Challenge to notice under Section 148 of the Income Tax Act, 1961 due to jurisdictional concerns.

Detailed Analysis:

Issue 1: Validity of Notice under Section 148
The writ petition challenges a notice dated 31 March, 2024, issued to the petitioner under Section 148 of the Income Tax Act, 1961, for reassessment in relation to the Assessment Year 2017-18. The petitioner argues that the notice was issued by a Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO) as required by Section 151A of the Act. The Court notes that a faceless mechanism was introduced by the Central Government through a notification dated 29 March 2022. The Division Bench in the case of Hexaware Technologies Limited Vs. Assistant Commissioner of Income Tax & 4 Ors. has clarified that the FAO is exclusively authorized to issue notices under Section 148, and there is no concurrent jurisdiction between the JAO and FAO in this regard.

Issue 2: Compliance with Scheme under Section 151A
The Court emphasizes that the respondent-revenue failed to comply with the Scheme framed by the CBDT under Section 151A (2) of the Act, which governs proceedings under Section 148A and Section 148. The Scheme, being subordinate legislation, mandates a faceless issuance of notices under Section 148. The Court, relying on the precedent set by the Hexaware case, finds the grievance of the petitioner valid due to the non-compliance with the Scheme, which renders the proceedings initiated against the petitioner unsustainable.

Issue 3: Legal Consequences and Relief
Both parties agree that the proceedings initiated under Section 148 are not sustainable in light of the Hexaware judgment. The Court, referencing a similar case, Nainraj Enterprises Pvt. Ltd. Vs. The Deputy Commissioner of Income Tax, agrees that the present petition should be allowed. Consequently, the Court quashes the impugned notice dated 31 March 2024, as the JAO lacked jurisdiction to issue it. The Court clarifies that its decision is based on non-compliance with Section 151A and refrains from addressing other issues raised in the petition.

In conclusion, the Court allows the writ petition, setting aside the notice under Section 148 due to jurisdictional non-compliance. The judgment emphasizes the importance of adhering to the faceless mechanism introduced by the Central Government and upholding the legal procedures prescribed by law in income tax assessments.

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