Faceless reassessment upheld: JAO exclusively issues s.148 notices; FAO and JAO share s.147 assessment jurisdiction

HC upheld faceless reassessment procedures and dismissed the writ petitions. It held the Jurisdictional Assessing Officer (JAO) alone has exclusive power to issue notices under s.148, while both the Faceless Assessment Office (FAO) and JAO have concurrent jurisdiction for assessment/re-assessment under s.147. The Directorate may auto-allocate s.148A/148 cases to JAOs by PAN; JAOs may digitally sign and send s.148 notices via ITBA. omission of the JAO's name was a curable procedural defect. Prior approval under s.151A remains required; NaFAC assumes jurisdiction under s.144B and may issue further notices under ss.143(2)/142(1).

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1. ISSUES PRESENTED and CONSIDERED

The central issue in these writ petitions is the determination of the appropriate authority to issue notices under Section 148 of the Income Tax Act, 1961, following the introduction of the E-Assessment of Income Escaping Assessment Scheme, 2022, and the Faceless Jurisdiction of Income-tax Authorities Scheme, 2022. The specific legal questions include:

• Whether the Jurisdictional Assessment Officer (JAO) has the authority to issue notices under Section 148 of the IT Act after the introduction of the new Schemes.
• Whether the issuance of notices under Section 148 and 148A should be conducted in a faceless manner by the National Faceless Assessment Centre (NaFAC).
• Whether the guidelines issued by the Board on 24.05.2023 are within the powers conferred by Section 144B of the IT Act.
• Whether the procedural errors in issuing notices affect the jurisdiction and validity of the notices.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Authority to Issue Notices under Section 148

• Legal Framework and Precedents: The IT Act, specifically Section 144B and Section 151A, provides the framework for faceless assessments and the issuance of notices. The E-Assessment Scheme and the Faceless Jurisdiction Scheme are central to this issue.
• Court's Interpretation and Reasoning: The court held that the JAO retains the authority to issue notices under Section 148. The Schemes introduced do not eliminate the JAO's role but rather integrate it with the faceless assessment process.
• Key Evidence and Findings: The court found that the Directorate of Income Tax (Systems) allocates cases through an Automated Allocation System based on risk management strategies, which are then handled by the JAO.
• Application of Law to Facts: The court applied the provisions of Section 144B and the Schemes to affirm that the JAO's role in issuing notices is consistent with the legislative intent.
• Treatment of Competing Arguments: The petitioner's argument that only NaFAC should issue notices was rejected. The court emphasized the concurrent jurisdiction of the JAO and the FAO.
• Conclusions: The JAO has the exclusive jurisdiction to issue notices under Section 148, while the assessment, reassessment, or re-computation involves both the JAO and FAO.

Issue 2: Faceless Manner of Issuance

• Legal Framework and Precedents: Section 144B outlines the faceless assessment process, while the Schemes emphasize the faceless nature of issuing notices.
• Court's Interpretation and Reasoning: The court interpreted "faceless manner" as sending notices electronically through the ITBA portal, ensuring no direct interaction between the officer and the assessee.
• Key Evidence and Findings: Notices were sent electronically via the ITBA portal, complying with the faceless requirement.
• Application of Law to Facts: The court found that the notices were issued in a faceless manner, as required by the Schemes and Section 144B.
• Treatment of Competing Arguments: The petitioner's contention about procedural errors was acknowledged, but the court deemed these errors curable and non-jurisdictional.
• Conclusions: Notices were validly issued in a faceless manner, and procedural errors do not invalidate them.

Issue 3: Validity of Guidelines Issued on 24.05.2023

• Legal Framework and Precedents: The guidelines were issued under Section 144B(2), which allows the Board to specify cases for faceless assessment.
• Court's Interpretation and Reasoning: The court upheld the guidelines as within the Board's powers, distinguishing them from modifications under Section 151A.
• Key Evidence and Findings: The guidelines were found to be consistent with the Schemes and did not alter or modify the legislative framework.
• Application of Law to Facts: The guidelines were applied to the case, supporting the allocation and issuance process.
• Treatment of Competing Arguments: The petitioner's argument that the guidelines exceeded statutory authority was rejected.
• Conclusions: The guidelines are valid and do not contravene the Schemes or the IT Act.

3. SIGNIFICANT HOLDINGS

• Verbatim Quotes: "The JAO has the exclusive jurisdiction to issue notices under Section 148 of the IT Act, while the assessment, reassessment, or re-computation involves both the FAO and JAO."
• Core Principles Established: The court established that the issuance of notices under Section 148 must be conducted in a faceless manner, and the JAO retains jurisdiction to issue such notices.
• Final Determinations: The court dismissed the petitions, upholding the validity of the notices and the guidelines. It granted the petitioners 30 days to file a reply, directing the authorities to consider the reply and provide a personal hearing.

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