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2025 (1) TMI 702

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.... CWP-19493-2022 (O&M), CWP-19538-2022 (O&M), CWP-19553-2022 (O&M), CWP-19640-2022 (O&M), CWP-20228-2022 (O&M), CWP-20230-2022 (O&M), CWP-20246-2022 (O&M), CWP-20253-2022 (O&M), CWP-20268-2022 (O&M), CWP-20270-2022 (O&M), CWP-20274-2022 (O&M), CWP-20312-2022 (O&M), CWP-20316-2022 (O&M), CWP-20340-2022 (O&M), CWP-20351-2022 (O&M), CWP-20354-2022 (O&M), CWP-20506-2022 (O&M), CWP-20515-2022 (O&M), CWP-20594-2022 (O&M), CWP-20604-2022 (O&M), CWP-20622-2022 (O&M), CWP-20655-2022 (O&M), CWP-20734-2022 (O&M), CWP-20750-2022 (O&M), CWP-20878-2022 (O&M), CWP-20902-2022 (O&M), CWP-21372-2022 (O&M), CWP-21394-2022 (O&M), CWP-21466-2022 (O&M), CWP-21542-2022 (O&M), CWP-21897-2022 (O&M), CWP-22071-2022 (O&M), CWP-22084-2022 (O&M), CWP-22138-2022 (O&M), CWP-22294-2022 (O&M), CWP-22806-2022 (O&M), CWP-23030-2022 (O&M), CWP-23769-2022 (O&M), CWP-23780-2022 (O&M), CWP-23900-2022 (O&M), CWP-23954-2022 (O&M), CWP-24324-2022 (O&M), CWP-24506-2022 (O&M), CWP-25033-2022 (O&M), CWP-25054-2022 (O&M), CWP-25058-2022 (O&M), CWP-25066-2022 (O&M) CWP-25102-2022 (O&M), CWP-25126-2022 (O&M), CWP-25209-2022 (O&M), CWP-25265-2022 (O&M), CWP-25269-2022 (O&M), CWP-25332-2022 (O&M), CWP-25612-2022 (O&M), CWP-25753-20....

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....r, Vijay Kumar, M/s Raj Sons, Jitender Kumar, Kay Bee Safal India Ltd., Shree Mahalaxmi Trading Company, Kailash Chand Gupta, Anju Gupta, Rajeev Suneja, Surjit Kumar (HUF) Th. Karta Surjit Kumar Chopra, M/s. TMS Real Estate Pvt. Ltd., Sweeti Kumari, M/s VV International, Krishan Kumar Kasera, Parveen Garg, Kewal Garg, M/s. Kaithal Solvent Private Limited, Gulzar Singh Since Deceased Th. Legal Heir., Lalita Lohi, Mahi Pal, Sunita, Ajay Swami, Rajiv Kumar Lohia, Hawa Singh Goyal, Sudarshan Singh Sangwan, Roshan Lal Agarwal, Mainpal Singh, M/s Ram Parkash Mulakh Raj, Sunita, New Punjab Pesticides, Rameshwar Dass Garg, Rameshwar Dass Garg, Aditya Gulati, Sanjay Goyal, Neeraj Kumar Mehta, Tirath Ram Surinder Paul, Purshotam Dass, Halcyon Life Sciences Pvt Ltd., Ankit Basia, Bain & Company Inc., Bain & Company, Inc. 131, Renu Jain, Abhishek Jain, Anita Jain, Prince Jain, Sumit Garg, Shree Jee Jee Grain Products Pvt Ltd., Ajay Kumar HUF, Shee Jee Jee Grain Products Pvt Ltd., Suman Mittal, Jay Jay Agro Industries, Priyanka Mittal, Yoginder Kumar Sharma, Veena Devi Sureka, Ruchi Jain, Br Guar Gum Pvt Ltd., Nanu Ram Jindal Gum and Chemicals Pvt. Ltd., Hope Trade Links Private Limited, Pawan ....

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.... Ms. Mamta Gupta, Advocate, Mr. Alok Mittal, Advocate and Mr. Sylvester, Advocate Mr. Chetan Jain, Advocate, Mr. Peyush Pruthi, Advocate, Mr. Pranav Jain, Advocate,. For the Respondent(s) - Revenue: Mr. Yogesh Putney, Sr. Standing Counsel Mr. Vaibhav Gupta, Jr. Standing Counsel, Ms. Urvashi Dhugga, Sr. Standing Counsel, Mr. Saurabh Kapoor, Sr. Standing Counsel Ms. Pridhi Sandhu, Sr. Standing Counsel, Mr. Ranvijay Singh, Sr. Standing Counsel, Ms. Gauri Neo Rampal, Sr. Standing Counsel (through V.C.) Mr. Varun Issar, Sr. Standing Counsel,. SANJEEV PRAKASH SHARMA, J. The aforesaid bunch of writ petitions has been taken up together as one of the questions of law arises for determination in all the writ petitions for determination is as under:- "Whether the proceedings could have been initiated and continued by the jurisdictional assessing officer and the assessment order could have been passed by him in cases where the original notices issued by the jurisdictional assessing officer were treated to have been issued in terms of the new regime by the Supreme Court in Union of India and others vs Ashish Aggarwal 2023 (1) SCC 617 and have been also treated within limitation in terms of....

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....e Act again started with a non-obstante clause, which is as under:- "Faceless Assessment. 144B (1) Notwithstanding anything to the contrary contained in any other provision of this Act, the assessment, reassessment or recomputation under sub-section (3) of section 143 or under section 144 or under section 147, as the case may be, with respect to the cases referred to in sub-section (2), shall be made in a faceless manner as per the following procedure. (i) to (xxxii) xxx xxx It was again provided under sub-sections (7) and (8), which are as under:- "(7) (a) The Principal Chief Commissioner or the Principal Director General, as the case may be, in-charge of the National Faceless Assessment Centre shall in accordance with the procedure laid down by the Board in this regard, if he considers appropriate that the provisions of sub-section (2A) of section 142 may be invoked in the case,- (i) forward the reference received from an assessment unit under clause (xxxii) of sub-section (1) to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner having jurisdiction over such case, and inform the assessment unit accordingly; (ii) transfer....

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....h is as under:- "Faceless assessment of income escaping assessment, 151A. (1) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of assessment, reassessment or re-computation under section 147 or issuance of notice under section 148 [or conducting of enquiries or issuance of show-cause notice or passing of order under section 148A] or sanction for issue of such notice under section 151, so as impart 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. (2) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (1), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notifi....

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.... the notification is issued, be laid before each House of Parliament." In terms of the aforesaid provisions, the CBDT exercising power under sub-section (1) and sub-section (2) of Section 130 of the Act introduced and framed a scheme called 'Faceless Jurisdiction of Income Tax Authorities Scheme, 2022' vide notification dated 28.03.2022. Thus, the scheme was introduced on 28.03.2022 and 29.03.2022 by the CBDT. The jurisdiction of Assessing Officer is provided under Section 124 of the Act. It means the jurisdiction to assess any person and also to reassess. However, as per the scheme, the National Faceless Assessment Center was to act as the assessing officer having jurisdiction to make assessment and reassessment of the returns and the proceedings which are to be placed through automated allocation. For the purpose, it would be apposite to quote Section 3 of the said Scheme:- "vesting the jurisdiction with the Assessing Officer as referred to in section 124 of the Act, shall be in a faceless manner, through automated allocation, in accordance with and to the extent provided in- (i) Section 144B of the Act with reference to making faceless assessment of total income or loss of ....

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....tices within two weeks thereafter; (ii) The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed with as a one-time measure vis-a-vis those notices which have been issued under section 148 of the unamended Act from 01.04.2021 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 assesses including those available under section 149 of the IT 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." 7. The second fallout of the aforesaid case was with reference ....

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....er under Section 148A (d) or issuing a notice under Section 148. These notices ought to have been issued following the time limits specified under Section 151 of the new regime read with TOLA, where applicable." It further examined the interplay of Ashish Aggarwal's case with TOLA as under:- "110. The effect of the creation of the legal fiction in Ashish Agarwal (supra) was that it stopped the clock of limitation with effect from the date of issuance of Section 148 notices under the old regime [which is also the date of issuance of the deemed notices]. As discussed in the preceding segments of this judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra) has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assesses to reply to the show cause notices must also be excluded in terms of the third proviso to Section 149. 111. The clock started ticking for the Revenue only after it received the response of the assesses to the show causes....

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....the deemed notices, ought to be issued within the time limit surviving under the Income Tax Act read with TOLA. A reassessment notice issued beyond the surviving time limit will be time barred. In Rajeev Bansal's case (supra), the Supreme Court, therefore, held and concluded as under:- "G. Conclusions 114. In view of the above discussion, we conclude that: a. After 1 April 2021, the Income Tax Act has to be read along with the substituted provisions; b. TOLA will continue to apply to the Income Tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income Tax Act falls for completion between 20 March 2020 and 31 March 2021; c. Section 3(1) of TOLA overrides Section 149 of the Income Tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under Section 148; d. TOLA will extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March, then the specified authority ....

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....ily. By exercising the powers contained in Sections 119 and 120 of the Act, 1961 as well as Section 144B (7 & 8), the authorities cannot be allowed to usurp the legal provisions to their own satisfaction and convenience causing hardship to the assessees. It also leaves confusion in the minds of the taxpayers. In the opinion of this Court, instructions and circulars can be issued only for the purpose of supplementing the statutory provisions and for their implementation. 17. In view of the aforesaid discussion, there is no occasion to distinguish or take a different view as suggested by the learned counsel for the revenue from what has already been held by the Coordinate Bench. 18. Keeping in view the law laid down by the Coordinate Bench (supra), notices issued by the JAO under Section 148 of the Act, 1961 and the proceedings initiated thereafter without conducting the faceless assessment as envisaged under Section 144B of the Act, 1961, have been found to be contrary to the provisions of the Act, 1961 and accordingly notices dated 28.02.2023, 16.03.2023, 20.03.2024 and 30.03.2023 and order dated 30.03.2023, are set aside for want of jurisdiction." 11. In the present bunch of ....

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....rwal and Rajeev Bansal. Hence, he submits that the observations made by the Apex Court in Ashish Aggarwal's case (supra) would not be said to mean that the Jurisdictional Assessing Officer was empowered to examine and pass assessment order. He submits that the Supreme Court realizes that after the faceless scheme was brought into operation, assessment or reassessment can only be done in accordance with the new regime. 15. He submits that against the judgments passed by this Court in Jasjit Singh; Telangana High Court in Kankanala Ravindra Reddy and Bombay High Court in Hexaware Technologies Limited, appeals were filed by the department before the Supreme Court, but no order has been passed therein. 16. Learned counsels appearing for other petitioners, apart from adopting arguments of learned senior counsel, have argued that if the Jurisdictional Assessing Officer is allowed to pass reassessment orders, the entire scheme introduced known as faceless scheme stands negated. 17. It would be apposite to quote the provisions of Sections 148 and 149 of the Act as they stood prior to the Finance Act, 2021 and the new provisions of Sections 148, 148A and 148B and 149 of the Act, as they ....

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....has been furnished on or after the 1st day of October, 2005 in response to a notice served under this section. (2) The Assessing Officer shall, before issuing any notice under this section, record is reasons for doing so." Section 149 of the Act as stood prior to the Finance Act, 2021 "149. Time limit for notice (1) No notice under section 148 shall be issued for the relevant assessment year,- (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year; (c) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. Explanation-In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanatio....

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.... no such approval shall be required where the Assessing Officer, with the prior approval of the specified authority, has passed an order under clause (d) of section 148A to the effect that it is a fit case to issue a notice under this section:] [Provided also that any return of income, required to be furnished by an assessee under this section and furnished beyond the period allowed shall note deemed to be a return under section 139.] Explanation 1-For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means.- (i) any information in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time, or (ii) any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act; or (iii) any information received under an agreement referred to in section 90 or section 90A of the Act; or (iv) any information made available to the Assessing Officer under the scheme notified under....

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....d but not exceeding thirty days from the date on which such notice is issued or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a): (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires: Provided that the provisions of this section shall not apply in a case where- (a) a search is initiated under section 132 or books of account, other ....

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.... amounts to or is likely to amount fifty lakh rupees or more:] Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before Ist day of April, 2021 if a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this sub-section shall not apply in a case where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021: Provided also that for cases referred to in clauses (i), (iii) and (iv) of Explanation 2 to section 148, where,- (a) a search is initiated under section 132; or (b) a search under section 132 for which the last of authorisations is executed; or (c) re....

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....the value referred to in clause (b) of sub-section (1). has escaped the assessment and the investment in such asset or expenditure in relation to such event or occasion has been made or incurred, in more than one previous years relevant to the assessment years within the period referred to in clause (b) of sub-section (1), a notice under section 148 shall be issued for every such assessment year for assessment, reassessment or recomputation, as the case may be. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151." 18. The Supreme Court while examining the interplay of Ashish Aggarwal with TOLA in Rajeev Bansal's case (supra) had noticed one instance in para 113. It used the words 'to assume jurisdiction to issue notices under Section 148 with respect to the relevant assessment years of 2013-2014, 2014-2015, 2015-2016, 2016-2017 and 2017-2018'. It had to be within the time prescribed under Section 149(1) of the new regime read with TOLA and also obtain the previous approval of the authority under Section 151 of the Act. It observed that the notice issued without complying with the preconditions is invalid as it affects....

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.... of the Act treating it to be a fit case for reassessment, if so required or may drop the proceedings. Once he has issued notice under Section 148 of the Act, the proceedings can be transferred for issuing the reassessment order through faceless regime. If the contention of the respondents is accepted, the entire process has to be conducted under the faceless regime, not by the jurisdictional assessing officer the result would be that all the notices issued and treated by the Supreme Court as issued under Section 148A (b) of the Act would become otiose and redundant for all the purposes. 21. As per Section 148 of the Act amended with effect from 01.04.2021, the assessing officer has to serve on the assessee a notice before making assessment / reassessment or recomputation on the basis of information with the assessing officer which suggests that the income chargeable to tax has escaped assessment. Therefore, the assessing officer has to be the same who had initiated the proceedings since originally the jurisdictional assessing officer had issued the notice which has been deemed to be a notice under Section 148A (b) of the Act by the Apex Court. It can be safely assumed that it is ....