TaxTMI 
TaxTMI 
2023 (9) TMI 951
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....rder passed by the respondent No.1/The Income Tax Officer dated 29.07.2022, vide DIN & Notice No.ITBA/COM/F/17/2022-23/1044297902(1) for the assessment year 2016-17, under Section 148-A (d) of the Income Tax Act, 1961 (for short 'the Act'). The challenge is also to the consequential notice dated 29.07.2022, under Section 148 of the Income Tax Act, as well, issued by the respondent No.1 himself. 2. Heard Sri A.V. Krishna Kaundinya, learned Senior Counsel appearing on behalf of Sri A.V.A. Siva Kartikeya, learned counsel for the petitioner and Sri J.V. Prasad, learned counsel for the respondent-Department. 3. Though the aforesaid two orders have been assailed on various grounds, nonetheless, the foremost objection which the petitioners have raised is that of the two orders being in contravention of the amended provision of the Income Tax Act, 1961. 4. The objection specifically was that once when the respondent No.1 have decided to go in for re-assessment of the return submitted by the petitioner/assessee and notice for the same under Section 148A of the Act was issued, it was incumbent upon the respondent No.1 to have adhered to the amended provision of the Act. According to....
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....of Direct Taxes (for short 'CBIT'), have issued the notification dated 29.03.2022, whereby a scheme called e-assessment of Income Escaping Assessment Scheme 2022 which came into force with effect from 29.03.2022 itself; the assessment, re-assessment or re-computation under Section 147 and the issuance of notice under Section 148A shall be done through the automated allocation. Further the notices, to be issued, have to be in a faceless manner as is provided under Section 144B of the Act. It was also contended that the re-opening proceedings first of all could not have been initiated after a gap of three (3) years. Secondly, re-opening of the proceedings can only be permitted if the income chargeable to tax escaping assessment is more than fifty Rs.50,00,000/-. 9. It was further contended by the learned Senior Counsel appearing for the petitioner that the respondent No.1 has acted in a mechanical and arbitrary fashion while issuing notices through the jurisdictional officer. The said Act was without taking into consideration the amended provision under the Income Tax Act, 1961, as introduced under the Finance Act, 2021. It was also without proper verification of whether the so ca....
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....m the above, it is apparent that in the procedure for re-assessment, as it exists as on date, both these can be followed. Therefore, it will be incorrect to state that the issuance of notice by the JAO is without jurisdiction. 13. According to the learned counsel for the respondent-Department neither the Section nor the scheme dated 29.03.2022 speak about the detail specifics of the procedure to be followed therein. They lay down the general principles that should be followed so as to impart greater efficiency, transparency and accountability to the procedures contained therein. The said scheme lays down that the issuance of notice under Section 148 of the Act shall be through automated allocation in accordance with Section 144B of the Act. It was also submitted that the CBIT has issued notification No.01/2022 dated 11.05.2022 containing guidelines for implementation of the Hon'ble Supreme Court's judgement in the case of Union of India and Others vs. Ashish Agarwal. Vide the said judgment, the Hon'ble Supreme Court revived nearly 90,000 notices issued under Section 148 between 01.04.2021 to 30.06.2021 re-opening assessment for the assessment year 2013-14 and subsequent years. I....
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....ision in the case of UNION OF INDIA AND OTHERS. VS. ASHISH AGARWAL 2022 444 ITR 1 SC. 17. The Hon'ble Supreme Court after considering the legal contentions raised at the bar, at paragraph No.7 held that the Finance Act, 2021, being of remedial and benevolent nature and having been substituted with a specific aim and object, more particularly, to protect the rights and interests of the assessee and the same being in public interest, held that they were in complete agreement with the view taken by the various High Courts while holding that the benefit of the new provisions shall be made available even in respect of the proceedings relating to the past assessment years, where notices have been issued under Section 148 on or after 01.04.2021 i.e. the date since when the Finance Act, 2021, became enforceable. 18. However, while upholding the judgements of the High Courts, the Hon'ble Supreme Court taking into consideration the fact that the Income Tax Department had issued approximately 90,000 notices under Section 148 of the un-amended Act and in all these cases, the Department would become remediless so far as re-assessment proceedings are concerned. Therefore, as a onetime meas....
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....e leeway must be shown in that regard which the High Courts could have done so. Therefore, instead of quashing and setting aside the reassessment notices issued under the unamended provisions of the Income-tax Act as those deemed to have been issued under section 148A of the Income-tax Act as per the new provisions of section 148A and the Revenue ought to have been permitted to proceed further with the reassessment proceedings as per the substituted provisions of sections 147 to 151 of the Income-tax Act as per the Finance Act, 2021, subject to compliance of all the procedural requirements and the defences, which may be available to the assessee under the substituted provisions of sections 147 to 151 of the Income-tax Act and which may be available under the Finance Act, 2021 and in law. Therefore, we propose to modify the judgments and orders passed by the respective High Courts as under : (i) The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the Income-tax Act as substituted by the Finance Act, 2021 and treated to be show-cause notices in terms of section 148A(b). The respective Assess....
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....he prior approval of specified authority under section 148A(a) is hereby dispensed with as a onetime measure vis-A -vis those notices which have been issued under section 48 of the unamended Act from April 1, 2021 till date, including those which have been quashed by the High Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required ; (iii) The Assessing Officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessees ; thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted) ; (iv) All defences which may be available to the assessees including those available under section 149 of the Income-tax Act and all rights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and in law, shall continue to be available. 20. Keeping the aforesaid view of the Hon'ble Supreme Court, it would be relevant at this juncture to take note certain provisions ....
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.... such notice under section 151, so as to import greater efficiency, transparency and accountability by (a) eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible; (b) optimising utilisation of the resources through economies of scale and functional specialisation; (c) introducing a team-based assessment, reassessment, re-computation or issuance or sanction of notice with dynamic jurisdiction". 22. Similarly, the Central Board of Direct Taxes had also amended Section 130 of the Income Tax Act so far as conferring jurisdiction of the Income Tax Authorities in the light of the faceless assessment procedure being adopted. The amended Section 130 and sub-Section 1 which is relevant for the present issue under consideration again for ready reference is being reproduced herein under: "The Central Government may make a scheme, by notification in the Official Gazette, for the purpose of (a) exercise of all or any of the powers and performance of all or any of the functions conferred on, or, as the case may be, assigned to income-tax authorities by or under this Act....
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....ification, the Central Board of Direct Taxes again in exercise of its powers conferred under sub-Sections 1 and 2 of Section 151A framed another scheme called as the e-assessment of Income Escaping Assessment Scheme 2022, which defines automated allocation is reproduced herein under: "In this Scheme, unless the context otherwise requires,- (a) "Act" means the Income-tax Act, 1961 (43 of 1961); (b) "automated allocation" means an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources." And the scope of the scheme again has been envisaged in Section 3 of the said scheme, which again for ready reference is being reproduced herein under: "For the purpose of this Scheme,- (a) assessment, reassessment or recomputation under sectopm 147 of the Act, (b) issuance of notice under section 148 of the Act, shall be through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in section 148 of the Act for issuance of notice, and in a faceless manner, ....
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...., the Hon'ble Supreme Court has only permitted the Union of India to proceed further with the reassessment proceedings under the amended provision of law, more particularly, as amended by the Finance Act, 2021. It never intended the authorities concerned to continue with the proceedings from the stage of the issuance of notices under Section 148, nor is the directions to that effect. And there cannot be any confusion, ambiguity or mis-conception for the respondent-Department to have in this regard. 29. The Hon'ble Supreme Court has in paragraph No.7 specifically held that the High Courts have rightly held that the benefit of new provisions shall be made available in respect of the proceedings relating to past assessment years. Further, the Hon'ble Supreme Court again in paragraph No.8 very emphatically had said that the proceedings ought not to have been issued under the unamended Act. Rather ought to had been issued under the substituted provisions as per the Finance Act, 2021. Further, in the same paragraph clearly directed the Income Tax Department to proceed further as per the Finance Act, 2021, subject to compliance of all the procedural requirements and defences available ....
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....0 13 SCC 234, and in the case of Opto Circuit India Limited Vs. Axis Bank and others 2021 6 SCC 707 and again in the case of Union of India Vs. Mahesh Sing CAP.No.4807 of 2022.In the case of Tata Chemicals Limited Vs. Commissioner of Customs (preventive) Jam Nager 2015 11 SCC 628, wherein it has been held that there can be no stopple against the law. If the law requires something to be done in a particular manner, then it must be done in that manner, if it is not done in that manner then it would have no existence in the eye of law. In paragraph 18 of the said judgment, the Hon'ble Supreme Court held as under: "The Tribunal's judgment has proceeded on the basis that even though the samples were drawn contrary to law, the appellants would be estopped because their representative was present when the samples were drawn and they did not object immediately. This is a completely perverse finding both on fact and law. On fact, it has been more than amply proved that no representative of the appellant was, in fact, present at the time the Customs Inspector took the samples. Shri K.M. Jani who was allegedly present not only stated that he did not represent the Clearing Agent of th....
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.... procedure to be followed by the respondent-Department upon treating the notices issued for reassessment being under Section 148A, the subsequent proceedings was mandatorily required to be undertaken under the substituted provisions as laid down under the Finance Act, 2021. In the absence of which, we are constrained to hold that the procedure adopted by the respondent-Department is in contravention to the statute i.e. the Finance Act, 2021, at the first instance. Secondly, it is also in direct contravention to the directives issued by the Hon'ble Supreme Court in the case of Ashish Agarwal, supra. 36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent-Department is neither tenable, nor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to the notices issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles that when....