TaxTMI 
TaxTMI 
2024 (9) TMI 100
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....ned Senior Standing Counsel for Income Tax Department. 3. These matters were analogously heard on the joint request of the parties, and during the course of hearing, the bone of contention of learned counsel for the petitioners was that the notices under Sections 148 of the Act were issued in utter violation of the prescribed procedure of faceless assessment. 4. In addition, in W.P.No.13353 of 2024, the argument of learned counsel for the petitioner is that the notice under Section 148 of the Act was issued by the DCIT, Circle 1(1), Hyderabad on 26.04.2022 and not by an officer holding charge of international tax cases. For this reason also, the impugned orders deserve to be interfered with. 5. It is a common ground taken by learned counsel for the petitioners that Section 151A of the Act permits the Central Government to frame a scheme by notifying the same in the official gazette for various purposes including for issuance of notice under Section 148 in order to ensure greater efficiency, transparency and accountability. The whole exercise is done to eliminate the interface between the income tax authority and the assessee. 6. It is urged that in exercise of power und....
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....e under Section 148 remain with the JAOs. 9. It is urged that the judgment of Telangana High Court in Kankanala Ravindra Reddy (supra) and Bombay High Court in Hexaware Technologies Ltd. (supra) are called in question by revenue by filing SLPs before the Supreme Court and same are pending consideration. The petitioners in the instant cases are Non-resident Indians (NRIs) and the faceless scheme is applicable only for residents and that too for conducting assessment proceeding. By placing reliance on the Supreme Court judgments in State of U.P. v. Vijay Anand AIR 1963 SC 946 and State of Haryana v. Bhajanlal AIR 1992 SC 604, it is submitted that when the language of statute is plain and unambiguous, it must be given effect to, irrespective of consequences. Learned Senior Standing Counsel for the Income Tax has also filed brief synopsis. 10. The parties confined their arguments to the extent indicated above. We have bestowed our anxious consideration on rival contentions and perused the record. 11. Before dealing with the rival contentions, it is apposite to reproduce Section 151A of the Act which reads as under: "151A. Faceless assessment of income escaping assessm....
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....entral Government hereby makes the following Scheme, namely:- 1. Short title and commencement:- (1) This Scheme may be called the e-Assessment of Income Escaping Assessment Scheme, 2022. (2) It shall come into force with effect from the date of its publication in the Official Gazette. 2. Definitions:- (1) 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. (2) Words and expressions used herein and not defined, but defined in the Act, shall have the meaning respectively assigned to them in the Act. 3. Scope of the Scheme:- For the purpose of this Scheme,-- (a) assessment, reassessment or recomputation under section 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 Ac....
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....ersons, or incomes or class of incomes, or cases or class of cases, as may be specified by the Board. The sheet anchor of argument of the Revenue is based on this italic portion which gives power to the Board to specify in relation to persons, class of incomes and persons, etc. 16. It is strenuously contended that the order dated 06.09.2021 provides for such exception, and in no uncertain terms, makes it clear that one of the exception is regarding assessment orders in cases assigned to international tax charges. In other words, assessment orders relating to international tax charges are exempted from the purview of faceless assessment system. In our opinion, the argument on the face of it appears to be attractive, but lost much of its shine when provisions were examined minutely. 17. Sub-section (2) of Section 144B of the Act is also an enabling provision to the extent it gives authority to the Board to 'specify' about applicability of faceless assessment in respect of class, income, group, etc. Clause 3(b) of notification/scheme dated 29.03.2022 shows that issuance of notice under Section 148 is squarely covered and mandated under clause 3 by making it clear that it shall b....
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....y formulated by the Board as referred to in Section 148 of the Act for issuance of notice and in a faceless manner, to the extent provided in Section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee." (Scheme) 22. A careful reading of the scheme points out that law makers consciously provided two different sub clauses (a) and (b). Clause 3 '(a)' specifically deals with assessment, reassessment and recomputation whereas sub-clause '(b)' deals with notice under Section 148 of the Act and gives reference of Section 144B for providing 'extent' for the purpose of 'assessment' and 'reassessment'. Putting it differently, sub-clause (b) of Clause 3 of the scheme, before use of word 'and' is complete in itself and makes it obligatory to issue notice under Section 148 as per automated allocation procedure envisaged in clause 2 (b) of the scheme. The sentence after use of word 'and' in sub-clause (b) of clause 3 talks about 'extent' provided in Section 144B with reference to assessment and reassessment. The second portion of sub-clause (b) of clause 3 after 'and' does not deal with issuance of notice un....
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....ordance with the risk management strategy formulated by the Board under Section 148 of the Act. Secondly, the re-assessment has to be done in a faceless manner to the extent provided under Section 144B of the Act." (Emphasis Supplied) 26. The Bombay High Court in Hexaware Technologies Ltd. (supra) held as under: "36.1 Section 151A of the Act itself contemplates formulation of Scheme for both assessment, reassessment or recomputation under Section 147 as well as for issuance of notice under Section 148 of the Act. Therefore, the Scheme framed by the Central Board of Direct Taxes, which covers both the aforesaid aspect of the provisions of Section 151A of the Act cannot be said to be applicable only for one aspect, i.e., proceedings post the issue of notice under Section 148 of the Act being assessment, reassessment or recomputation under Section 147 of the Act and inapplicable to the issuance of notice under Section 148 of the Act. The Scheme is clearly applicable for issuance of notice under Section 148 of the Act and accordingly, it is only the FAO which can issue the notice under Section 148 of the Act and not the JAO. The argument advanced by respondent woul....
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....t or reassessment. The phrase "to the extent provided in Section 144B of the Act" would mean that the restriction provided in Section 144B of the Act, such as keeping the International Tax Jurisdiction or Central Circle Jurisdiction out of the ambit of Section 144B of the Act would also apply under the Scheme. Further the exceptions provided in sub-section (7) and (8) of Section 144B of the Act would also be applicable to the Scheme." 27. We are in respectful agreement with the view taken by the Bombay High Court and are of the opinion that the aforesaid underlined expression used in clause 3(b) of the scheme dated 29.03.2022 does not preclude the mandatory faceless procedure for issuance of notice under Section 148 of the Act. Any other interpretation, in our humble view, will not only cause violence to the language used, but will also defeat the object for which a transparent 'faceless procedure' was introduced. Hence, we are unable to persuade ourselves to accept a different meaning than the literal meaning flowing and conveyed from the provisions. 28. In interpreting a section in a taxing statute, according to LORD SIMONDS, "the question is not at what transaction the sec....