JAO lacks jurisdiction to issue Section 148 notices; only FAO has exclusive jurisdiction under Section 151A

Rajasthan HC held that Jurisdictional Assessing Officers (JAO) lack jurisdiction to issue notices under Section 148 of the Income Tax Act, 1961. The court ruled that only Faceless Assessing Officers (FAO) have exclusive jurisdiction for reassessment proceedings under Section 151A read with CBDT Notification dated 29.03.2022. Concurrent jurisdiction would defeat the purpose of faceless assessment regime and undermine legislative intent for technology-based randomized allocation. The impugned notices issued by JAO were quashed, with liberty to respondents to issue fresh notices through FAO in compliance with the notification.

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1. ISSUES PRESENTED and CONSIDERED

The core legal question considered in this judgment is whether the notices for assessment and reassessment issued by the Jurisdictional Assessing Officers (JAOs) are valid and lawful, or if they suffer from fundamental jurisdictional errors when considered in conjunction with Sections 151A, 144B, 147, and 148 of the Income Tax Act, 1961, and the Central Board of Direct Taxes (CBDT) Scheme notified on 29.03.2022.

2. ISSUE-WISE DETAILED ANALYSIS

The primary issue revolves around the validity of notices issued by JAOs under Sections 147 and 148 of the Income Tax Act, 1961, in light of the CBDT's "e-Assessment of Income Escaping Assessment Scheme, 2022". The relevant legal framework includes Sections 144B and 151A of the Income Tax Act, which outline the procedure for faceless assessment and the powers of the CBDT to notify a scheme for assessment, reassessment, or recomputation of income.

Relevant Legal Framework and Precedents:

The legal framework is based on the provisions of Sections 144B and 151A of the Income Tax Act, 1961, which mandate faceless assessment and the issuance of notices through automated allocation. The CBDT Notification dated 29.03.2022, which introduced the "e-Assessment of Income Escaping Assessment Scheme, 2022", requires that notices under Sections 147 and 148 be issued in a faceless manner.

Court's Interpretation and Reasoning:

The Court interpreted that the legislative intent behind the faceless assessment scheme was to eliminate the interface between the income tax authorities and the assessee, optimize resource utilization, and create a transparent and efficient system. The Court emphasized that the CBDT's scheme and the provisions of Sections 144B and 151A must be strictly followed to ensure the integrity of the faceless assessment process.

Key Evidence and Findings:

The Court found that the notices issued by the JAOs were not in compliance with the faceless assessment scheme as they were not issued through automated allocation by the National Faceless Assessment Centre (NFAC). The Court noted that the scheme requires the issuance of notices in a faceless manner, which was not adhered to in the present case.

Application of Law to Facts:

The Court applied the provisions of Sections 144B and 151A of the Income Tax Act and the CBDT Notification to the facts of the case, concluding that the notices issued by the JAOs were invalid as they contravened the mandatory requirements of the faceless assessment scheme.

Treatment of Competing Arguments:

The Court considered the respondents' argument that the JAOs retained concurrent jurisdiction and could issue notices to ensure the efficiency and accountability of the assessment process. However, the Court rejected this argument, emphasizing that the legislative intent was to conduct assessments in a faceless manner to eliminate discretion and ensure transparency.

Conclusions:

The Court concluded that the impugned notices issued by the JAOs were invalid and suffered from jurisdictional errors as they were not issued in compliance with the faceless assessment scheme. The Court held that the FAO should have exclusive jurisdiction to issue notices under Sections 147 and 148.

3. SIGNIFICANT HOLDINGS

The Court held that the mandate of Section 151A of the Income Tax Act, 1961, must be strictly followed, and the JAO does not have the jurisdiction to issue notices under Sections 147 and 148. The Court emphasized the importance of adhering to the algorithm-based random assessing system for issuing notices.

Verbatim Quotes:

"This Court holds that the mandate of Section 151A of the Act of 1961 has to be strictly followed as there cannot be a way out of doing the same."

"The impugned notices deserve to be quashed."

Core Principles Established:

The judgment establishes that the faceless assessment scheme must be strictly adhered to, and any deviation from the prescribed procedure renders the notices invalid. The scheme aims to eliminate discretion and ensure transparency and efficiency in the assessment process.

Final Determinations on Each Issue:

The Court quashed the impugned notices issued by the JAOs, holding that they were invalid due to non-compliance with the faceless assessment scheme. The Court granted liberty to the respondents to issue fresh notices in compliance with the CBDT Notification, with the FAO as the assessing officer.

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