TaxTMI 
TaxTMI 
2025 (3) TMI 1229
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....on No. 7077/2023, D.B. Civil Writ Petition No. 7230/2023, D.B. Civil Writ Petition No. 7245/2023, D.B. Civil Writ Petition No. 7271/2023, D.B. Civil Writ Petition No. 7322/2023, D.B. Civil Writ Petition No. 7588/2023, D.B. Civil Writ Petition No. 7769/2023, D.B. Civil Writ Petition No. 8212/2023, D.B. Civil Writ Petition No. 8296/2023, D.B. Civil Writ Petition No. 8804/2023, D.B. Civil Writ Petition No. 18361/2023, D.B. Civil Writ Petition No. 832/2025, D.B. Civil Writ Petition No. 7950/2024. Sharda Devi Chhajer, Arun Choudhary, Vaishali Dang, Bhavana Talwar, Khemani Metal Industries Private Limited, M/s Kushal Metals, Suyash Food Specialty Pvt Ltd, Agrawal House, Bohra Industries, Surana Metals, Mittal Steel Manufacturing Company (Steel Division), Arihant Industries, Shree Ram Steel Industries, Ashok Jain, Jay Kothari, M/s Rounak Steel, Pradeep Kumar Jain, Rajesh Metals, Parakh Industries, M/s Krishna Petroleum, (Disolved), Krishan Kumar, Khatri Ceramics Private Limited, Aditi Specialty Packaging Pvt Ltd, Yunus Panwar, Versus The Income Tax Officer, Ward 1(1), Income Tax Office, Bikaner, Union Of India, Through Secretary (Revenue), Ministry Of Finance, North Block, New Delhi., ....
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....on 148 of the Act of 1961. The approvals were granted by the respondents for issuance of notices under Section 148 of the Act of 1961, and thereafter, the notices were issued under the said provision of law. 2.1. The pertinent issue before this Court is that the Central Board of Direct Taxes (in short, 'CBDT'), framed a Scheme, namely, "e-Assessment of Income Escaping Assessment Scheme, 2022", vide Notification No. 18 of 2022/S.O. 1466(E) dated 29.03.2022 (hereinafter referred to as 'Scheme of 2022'). In the said notification, the procedure for assessment, reassessment & re-computation of income under Sections 147 & 148 of the Act of 1961 has been notified. 2.2. The notices which were issued under Sections 147 & 148 of the Act of 1961 were required to comply with the Scheme of 2022 and thus, ought to have been Faceless as enshrined in the CBDT Notification dated 29.03.2022. 2.3. The core question raised by learned counsel for the petitioners is that whether the notices issued by Jurisdictional Assessing Officer (JAO) are to be declared invalid & bad in law, being in contravention of Section 151A of the Act of 1961 read with Notification dated 29.03.2022. The said notifi....
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....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 to 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 notification: Provided that no direction shall be issued after the 31st day of March, 2022. (3) Every notification issued under sub-section (1) and sub-section (2) shall, as soon as may be after the notification is issued, be laid before each Ho....
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....to take place through the automated allocation, and thus, was carrying a mandate to be followed for making it an algorithm based and randomized allocation with the help of the appropriate technology so as to optimize the use of resources and provide efficient relief to the Assessee, as far as the law permits. The random allocation as per learned counsel for the petitioners would render the jurisdiction for such notices who would have the allocated jurisdiction and would not prejudice either of the parties as the petitioners herein are not trying to suggest that the powers under Sections 147, 148, 148A & 151 of the Act of 1961 have become redundant, as far as the Faceless is concerned. 2.11. Learned counsel for the petitioners further submitted that the department's discretion has to be minimized and the Act of 1961 and the Scheme of 2022 read in tandem clearly forbids any kind of absolute discretion, as far as JAO is concerned. 2.12. Learned counsel for the petitioners also submitted that the respondents had not followed the procedure, and once the CBDT Notification dated 29.03.2022 read with the legislative intention of Section 151A of the Act of 1961, it was out of the juri....
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....istant Commissioner of Income-tax [W.P. (C) No. 7406/2022, decided by the Hon'ble Delhi High Court]. (g) Godrej Sara Lee Limited Vs. Excise Taxation Officer cum Assessing Authority (Civil Appeal No. 5393/2010 decided by the Hon'ble Supreme Court). (h) Harbanslal Sahnia & Ors. Vs. IOCL, (2003) 2 SCC 107. Relevant paras of some of the afore-cited judgments, as relied upon, are reproduced as hereunder: Kankanala Ravindra Reddy & Ors. (Supra): "34. As regards ITBA step-by-step Document No. 2 regarding issuance of notice under section 148 of the Act, relied upon by Revenue, an internal document cannot depart from the explicit statutory provisions of, or supersede the Scheme framed by the Government under section 151A of the Act which Scheme is also placed before both the Houses of Parliament as per Section 151A (3) of the Act. This is specially the case when the document does not even consider or even refer to the Scheme. Further the said document is clearly intended to be a manual/guide as to how to use the Income-tax Department's portal, and does not even claim to be a statement of Revenue's position/stand on the issue in question. Our observations wit....
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....ssuance of notice under section 148 of the Act. Therefore, the Scheme framed by the CBDT, 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 the respondent would render clause 3 (b) of the Scheme otiose and to be ignored or contravened, as according to respondent, even though the Scheme specifically provides for issuance of notice under Section 148 of the Act in a faceless manner, no notice is required to be issued under section 148 of the Act in a faceless manner. In such a situation, not only clause 3 (b) but also the first two lines below clause 3 (b) would be otiose, as it deals with the aspect of issuance of notice under section 148 of the Act. Respondents, bei....
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....l not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification: Provided that no direction shall be issued after the 31st day of March, 2022. (3) Every notification issued under sub-section (1) and subsection (2) shall, as soon as may be after the notification is issued, be laid before each House of Parliament. Section 151A of the Act gives the power to the Central Board of Direct Taxes ("CBDT") to notify the Scheme for : (i) the purpose of assessment, reassessment or recomputation under Section 147; or (ii) issuance of notice under Section 148; or (iii) conducting of inquiry or issuance of show cause notice or passing of order under Section 148A; or (iv) sanction for issuance of notice under Section 151; so as to impart greater efficiency, transparency and accountability by inter alia eliminating the interface between the Income Tax Authorities and assessee. Sub-section 3 of Section 151A of the Act also provides that every notification issued under sub-section (1) and (2) of Section 151A of the Act shall be laid before each House of Parliament. I....
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....e Parliament, would be binding on the Revenue and the guideline dated 1st August 2022 cannot supersede the Scheme and if it provides anything to the contrary to the said Scheme, then the same is required to be treated as invalid and bad in law. 34. As regards ITBA step-by-step Document No. 2 regarding issuance of notice under Section 148 of the Act, relied upon by Revenue, an internal document cannot depart from the explicit statutory provisions of, or supersede the Scheme framed by the Government under Section 151A of the Act which Scheme is also placed before both the Houses of Parliament as per Section 151A (3) of the Act. This is specially the case when the document does not even consider or even refer to the Scheme. Further the said document is clearly intended to be a manual/guide as to how to use the Income Tax Department's portal, and does not even claim to be a statement of the Revenue's position/stand on the issue in question. Our observations with respect to the guidelines dated 1st August 2022 relied upon by the Revenue will equally be applicable here. 35. Further, in our view, there is no question of concurrent jurisdiction of the JAO and the FAO for ....
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....pect, 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 would render clause 3 (b) of the Scheme otiose and to be ignored or contravened, as according to respondent, even though the Scheme specifically provides for issuance of notice under Section 148 of the Act in a faceless manner, no notice is required to be issued under Section 148 of the Act in a faceless manner. In such a situation, not only clause 3 (b) but also the first two lines below clause 3 (b) would be otiose, as it deals with the aspect of issuance of notice under Section 148 of the Act. Respondents, being an authority subordinate to the CBDT, cannot argue that the Scheme framed by the CBDT, and which has been laid before both House of Parliament is partly otiose and inapplicable. The argument advanced by respondent express....
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....y to the provisions of the statue, itself causes prejudice to assessee. All assessees are entitled to be assessed as per law and by following the procedure prescribed by law. Therefore, when the Income Tax Authority proposes to take action against an assessee without following the due process of law, the said action itself results in a prejudice to assessee. Therefore, there is no question of petitioner having to prove further prejudice before arguing the invalidity of the notice. 38. With respect to the Office Memorandum dated 20th February 2023, the said Office Memorandum merely contains the comments of the Revenue issued with the approval of Member (L&S) CBDT and the said Office Memorandum is not in the nature of a guideline or instruction issued under Section 119 of the Act so as to have any binding effect on the Revenue. Moreover, the arguments advanced by the Revenue on the said Office Memorandum dated 20th February 2023 is clearly contrary to the provisions of the Act as well as the Scheme dated 29th March 2022 and the same are dealt with as under - (i) It is erroneously stated in paragraph 3 of the Office Memorandum that "The scheme clearly lays down that ....
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....mean "an algorithm for randomised allocation of cases.....". The term 'random', in our view, has been used in the context of assigning the case to a random Assessing Officer, i.e., an Assessing Officer would be randomly chosen by the system to handle a particular case. The term 'random' is not used for selection of case for issuance of notice under Section 148 as has been alleged by the Revenue in the Office Memorandum. Further, in paragraph 3.2 of the Office Memorandum, with respect to the reassessment proceedings, the reference to 'random allocation' has correctly been made as random allocation of cases to the Assessment Units by the National Faceless Assessment Centre. When random allocation is with reference to officer for reassessment then the same would equally apply for issuance of notice under Section 148 of the Act. (iii) The conclusion at the bottom of page 2 in paragraph 3 of the Office Memorandum that "Therefore, as provided in the scheme the notice under section 148 of the Act is issued on automated allocation of cases to the Assessing Officer based on the risk management criteria" is also factually incorrect and on the basis of incorrect interpretation of the....
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....er either Section 151A of the Act or under the said Scheme. The Scheme is clear and categorical that notice under Section 148 of the Act shall be issued through automated allocation and in a faceless manner. Therefore, the argument of the Revenue is clearly contrary to the provisions of the Scheme. (vi) In paragraph 3.3 of the Office Memorandum, it is again erroneously stated that "Here it is pertinent to note that the said notification does not state whether the notices to be issued by the NFAC or the Jurisdictional Assessing Officer ("JAO")......It states that issuance of notice under section 148 of the Act shall be through automated allocation in accordance with the risk management strategy and that the assessment shall be in faceless manner to the extent provided in section 144B of the Act." The Scheme is categoric as stated aforesaid that the notice under Section 148 of the Act shall be issued through automated allocation and in a faceless manner. The Scheme clearly provides that the notice under Section 148 of the Act is required to be issued by NFAC and not the JAO. Further, unlike as canvassed by Revenue that only the assessment shall be in faceless manner, the Sch....
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....g Officer to issue notice under Section 148 of the Act. The Hon'ble Calcutta High Court has referred to an Office Memorandum dated 20th February 2023 being F No. 370153/7/2023 TPL which has been dealt with above. Therefore, no reliance can be placed on the said Office Memorandum to justify that the JAO has jurisdiction to issue notice under Section 148 of the Act. Further the Hon'ble Telangana High Court in the case of Kankanala Ravindra Reddy vs. Income Tax Officer has held that in view of the provisions of Section 151A of the Act read with the Scheme dated 29th March 2022 the notices issued by the JAOs are invalid and bad in law. We are also of the same view." SHL India (P) Ltd. (Supra): "25. In our view, the following principles emerge from the above discussion :- (i) that the procedure prescribed under Section 144C of the IT Act is a mandatory procedure and not directory. (ii) failure to follow the procedure under Section 144C (1) would be a jurisdictional error and not merely procedural error or irregularity. (iii) therefore, Section 292B of the IT Act cannot save an order passed in breach of the provisions of Section 144C (1), the same b....
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.... Assessment Order in the first instance in such a case. The legislature, in our view, has intended to give an important opportunity to Petitioner, who is an eligible assessee, which in our view, has been taken away. In our view, failure to follow the procedure under Section 144C (1) would be a jurisdictional error and not merely procedural error or a mere irregularity. The Assessment Order has not been passed in accordance with the provisions of Section 144C of the IT Act. This is not an issue, which involves a mistake in the said order, but it involves the power of the Assessing Officer to pass the order. By not following the procedure laid down in Section 144C (1) to pass and furnish a draft Assessment Order to Petitioner and directly passing a final Assessment Order and without giving Petitioner an opportunity to raise objections before the DRP, there is a complete contravention of Section 144C, the Assessing Officer having wrongly assumed jurisdiction to straight away pass the final order. This is not a mere irregularity but an incurable illegality. Even the provisions of Section 292B of the IT Act would not protect such an order as Section 292B of the IT Act cannot be read to ....
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....for the purposes of calling for information under section 133, collecting certain information under section 133B, or calling for information by prescribed income-tax authority under section 133C, or exercise of power to inspect register of companies under section 134, or exercise of power of Assessing Officer under section 135 so as to 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 exercise of powers, including to call for, or collect, or process, or utilise, the information, 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 notification: Provided that no direction shall be issued....
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....e or any other person for obtaining the information, documents or evidence requisitioned by the assessment unit and the assessee or any other person, as the case may be, shall file his response to such notice within the time specified therein or such time as may be extended on the basis of an application in this regard, to the National Faceless Assessment Centre which shall forward the reply to the assessment unit; (vi) where a request,- (a) for conducting of enquiry or verification by the verification unit has been made by the assessment unit under sub-clause (b) of clause (iv), the request shall be assigned by the National Faceless Assessment Centre to a verification unit through an automated allocation system; or (b) for reference to the technical unit has been made by the assessment unit under sub-clause (c) of clause (iv), the request shall be assigned by the National Faceless Assessment Centre to a technical unit through an automated allocation system; (vii) the National Faceless Assessment Centre shall send the report received from the verification unit or the technical unit, as the case may be, based on the request referred to in clause (....
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....lause (xii) within the time specified therein or within the extended time, if any, the National Faceless Assessment Centre shall intimate such failure to the assessment unit; (xv) the assessment unit shall, after considering the response received under clause (xiii) or after receipt of intimation under clause (xiv), as the case may be, and taking into account all relevant material available on record, prepare an income or loss determination proposal and send the same to the National Faceless Assessment Centre; (xvi) upon receipt of the income or loss determination proposal, as referred to in sub-clause (a) of clause (xii) or clause (xv), as the case may be, the National Faceless Assessment Centre may, on the basis of guidelines issued by the Board,- (a) convey to the assessment unit to prepare draft order in accordance with the income or loss determination proposal, which shall thereafter prepare a draft order; or (b) assign the income or loss determination proposal to a review unit through an automated allocation system, for conducting review of such proposal; (xvii) the review unit shall conduct review of the income or loss determinati....
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....xv) the National Faceless Assessment Centre shall,- (a) upon receipt of acceptance from the eligible assessee; or (b) if no objections are received from the eligible assessee, within the period specified in sub-section (2) of section 144C, intimate the assessment unit to complete the assessment on the basis of the draft order; (xxvi) the assessment unit shall, upon receipt of intimation under clause (xxv), pass the assessment order, in accordance with the relevant draft order, within the time allowed under sub-section (4) of section 144C and initiate penalty proceedings, if any, and send the order to the National Faceless Assessment Centre; (xxvii) where the eligible assessee files objections with the Dispute Resolution Panel, under sub-clause (b) of clause (xxiv), the National Faceless Assessment Centre shall send such intimation along with a copy of objections filed to the assessment unit; (xxviii) the National Faceless Assessment Centre shall, in a case referred to in clause (xxvii), upon receipt of the directions issued by the Dispute Resolution Panel under sub-section (5) of section 144C, forward such directions to the asse....
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....ncludes identification of points or issues material for the determination of any liability (including refund) under this Act, seeking information or clarification on points or issues so identified, analysis of the material furnished by the assessee or any other person, and such other functions as may be required for the purposes of making faceless assessment, and the term "assessment unit", wherever used in this section, shall refer to an Assessing Officer having powers so assigned by the Board; (iii) such verification units, as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of verification, which includes enquiry, cross verification, examination of books of account, examination of witnesses and recording of statements, and such other functions as may be required for the purposes of verification and the term "verification unit", wherever used in this section, shall refer to an Assessing Officer having powers so assigned by the Board: Provided that the function of verification unit under this section may also be performed by a verification unit located in any other faceless centre set up under the provisions of this ....
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....Assessment Centre; (ii) between the National Faceless Assessment Centre and the assessee, or his authorised representative, or any other person shall be exchanged exclusively by electronic mode; and (iii) between the National Faceless Assessment Centre and various units shall be exchanged exclusively by electronic mode: Provided that the provisions of this sub-section shall not apply to the enquiry or verification conducted by the verification unit in the circumstances as may be specified by the Board in this behalf (6) For the purposes of faceless assessment- (i) an electronic record shall be authenticated by- (a) the National Faceless Assessment Centre by way of an electronic communication; (b) the assessment unit or verification unit or technical unit or review unit, as the case may be, by affixing digital signature; (c) assessee or any other person, by affixing his digital signature or under electronic verification code, or by logging into his registered account in the designated portal; (ii) every notice or order or any other electronic communication shall be delivered to the addressee, being the ....
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....ct to the proviso to sub-section (5), any examination or recording of the statement of the assessee or any other person (other than the statement recorded in the course of survey under section 133A) shall be conducted by an income-tax authority in the relevant unit, exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, to the extent technologically feasible, in accordance with the procedure laid down by the Board; (x) the Board shall establish suitable facilities for video conferencing or video telephony including telecommunication application software which supports video conferencing or video telephony at such locations as may be necessary, so as to ensure that the assessee, or his authorised representative, or any other person is not denied the benefit of faceless assessment merely on the consideration that such assessee or his authorised representative, or any other person does not have access to video conferencing or video telephony at his end; (xi) the Principal Chief Commissioner or the Principal Director General, as the case may be, in-cha....
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...., with a view to optimise the use of resources; (d) "automated examination tool" means an algorithm for standardised examination of draft orders, by using suitable technological tools, including artificial intelligence and machine learning, with a view to reduce the scope of discretion; (k) "faceless assessment" means the assessment proceedings conducted electronically in 'e-Proceeding' facility through assessee's registered account in designated portal; (m) "eligible assessee" shall have the same meaning as assigned to in clause (b) of sub-section (15) of section 144C; "Income escaping assessment. 147. If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). Provided that where an assessment under sub-section (3) of section 143 or the section has bee....
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....proval 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. 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; (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 section 135A; or (v) any information which requires action in consequence of the order of a Tribunal or a Court. Explanation 2.-For the purposes of this section, where,- (i) a search is initiated under section 132 or b....
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....y furnish his reply within such period, as may be specified in the notice. (3) The Assessing Officer shall, on the basis of material available on record and taking into account the reply of the assessee furnished under sub-section (2), if any, pass an order with the prior approval of the specified authority determining whether or not it is a fit case to issue notice under section 148. (4) The provisions of this section shall not apply to income chargeable to tax escaping assessment for any assessment year in the case of an assessee where the Assessing Officer has received information under the scheme notified under section 135A. Explanation.-For the purposes of this section and section 148, "specified authority" means the specified authority referred to in section 151." 3. Learned counsel for the respondents submitted that sub-sections (7) & (8) of Section 144B of the Act of 1961 authorize the Principal Chief Commissioner or the Principal Director General to transfer cases to the JAOs, when deemed appropriate. 3.1. Learned counsel further submitted that such kind of flexibility has been provided to ensure that wherever the assessment and reassessmen....
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....chances of any person escaping assessment or reassessment. 3.11. Learned counsel further submitted that the jurisdictional conflict sought to be projected on behalf of the petitioners in itself is not correct in the eyes of law, because these are concurrent powers which have been carefully laid down for the purpose of providing maximum efficiency to the process of assessment and any kind of interference by this Court in the powers of the JAO would render the assessment process weak, impractical and misaligned. 3.12. Learned counsel also submitted that the JAO retains power for accessing and evaluating the information and to operate in conjunction with the FAO and not for any purpose, which could result into lack of transparency or efficiency. 3.13. Learned counsel further submitted that the Central Government's Scheme for the purpose of supplementing the provisions of assessment or reassessment and sanction was required for the purpose of achieving greater efficiency, transparency and accountability. 3.14. In support of such submissions, learned counsel relied upon the following judgments: (a) Mark Studio India Private Limited v. Income Tax Officer, Nungambakka....
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....gh collation of information from various sources, along with the use of various data analytics techniques. This is expected to ensure effective and efficient collection of tax revenues by the Income-tax Department. 6.1.3. The Taxpayers' Charter' introduced in the Income-tax Act, 1961 (the Act) makes a commitment whereby the Income Tax Department will ensure fair administration of taxation for taxpayers. 6.2. The introduction of the faceless regime is a landmark moment in the tax administration's history in India. The e-governance scheme of Government of India And the Income-tax-related initiatives can be traced back to 2006, when the e-filing of Income-tax returns was enabled by the department. 6.3. A short journey through the key e-Governance initiatives introduced by the Government of India are as follows: Year Initiative 2006 Launch of a project for e-filing returns 2007 Mandatory e-filing of returns for corporate taxpayers and taxpayers who are required to have their accounts audited under Section 44AB of the Act, and thereafter, for other taxpayers at different points in time 2009 Establishment of the Centralised Processing Centre Online (CPC) ....
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....troduced a revamped scheme for tax assessments. Accordingly, the e-Assessment scheme was renamed as the faceless assessment scheme. Notifications were also issued i.e., No. 2745(E) (Notification No. 60/2020 (F No. 370149/154/2019-TPL)] dated 13.08.2020) and No. 2746(E) (Notification No. 61/2020 (F No. 370149/154/2019-TPL)] dated 13 August 2020) with the details of the faceless scheme. With this scheme, the Government introduced 'Faceless Appeal' and the 'Taxpayers' Charter'. 6.10. Under the Faceless Assessment Scheme, all cases for tax assessments, other than those allotted to central and international tax charges, are selected by an automated allocation system through the use of artificial intelligence (AI) and machine learning tools. The same suggests a 360-degree profiling of taxpayers, and aims to enable more focused and meaningful assessments than in the past. This system, comprises of a team-based assessment mechanism having multiple layers of units formed by the CBDT. The same has also been extended to CIT (A) proceedings. This has made appeal proceedings being governed in a similar manner as faceless assessments. It involves the concept of dynamic jurisdictions to increa....
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....uthenticate submissions, and in the case of a corporate entity, this can be done by the authorised person assigned to sign a tax return. Further, every submission filed by a taxpayer under the faceless regime is authorised by a digital signature certificate or by using an electronic verification code. Furthermore, a taxpayer's case is randomly allocated to Assessment Units. All notices are issued electronically with a valid Document Identification Number. The scheme will save time for taxpayers and their representatives by freeing them from multiple visits to a tax office. 6.17. With introduction of faceless assessments, India has become a pioneer in embracing technology and AI in tax administration, to enhance transparency, accountability and efficiency in the system. 6.18. This Court observes that the case laws relied by the learned counsel for the respondents are a form of interpretation, wherein the Courts have adopted a literal interpretation of the relevant provisions in question thereby giving way to Jurisdictional Assessing Officer as well to issue the notice. However, the same when interpreted in the cases relied upon by the counsel on behalf of the petitioners, does....
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....e avoided so as to ensure a smooth travel of the revenue assessments. The liberal interpretation made by the Hon'ble Delhi High Court in T.K.S. Builders Private Ltd. (supra) and the Hon'ble Madras High Court in Mark Studio India Private Limited (supra) have to be scrutinized in light of the settled legal position that the Tax Statutes have to be strictly interpreted. 9. Learned counsel for the petitioners have heavily relied upon the judgment rendered by the Hon'ble Bombay High Court in the case of Hexaware Technologies Ltd. (supra), wherein while dealing with the issue as to whether the impugned notice was invalid or bad in law being issued by the jurisdictional Assessing Officer as the same was not in accordance with Section 151A of the Income Tax Act; the Court delved into the nitty-gritty of the faceless regime in India, conducted a critical study of Faceless Assessment of income escaping assessment as provided under Section 151A, power of CBDT to notify Scheme vis-à-vis faceless assessment and nature of such notification and concluded that the Scheme framed by the CBDT, which covers both the aspect of the provisions of Sectio 151A of the Act cannot be said to be appl....
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....said to be random. The Computer/System cannot select cases on random but selection can be based on certain well-defined criteria. 13. This Court observes that Statute so created, was required to eliminate the interface between the income tax authorities and the assessee, while optimizing the utilization of the resources and also creating a harmonious atmosphere with a dynamic jurisdiction. The Scheme of the Central Government, in the opinion of this Court, was also to further fortify the legislative intention of strengthening the process of assessment, reassessment & re-computation. This Court further observes that even the strong rigors, having been provided for the purpose of Sections 148, 148A of the Act of 1961 and the sanction under Section 151A coupled with the CBDT Scheme, were meant to strengthen the system of revenue assessment. 14. This Court further observes that the automated allocation in a faceless manner was to be given effect to, as far as possible, and any deviation from the same, would not only hamper the legislative intention behind the revenue assessment to be made faceless, but will also create a concurrent and a parallel jurisdiction, thereby leading to ....
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....es, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources. The common tendency to cling to control and old methods has to be dealt with firmly and ways & means including loopholes to fall back upon the old regime of control is an imminent danger which has to be thwarted off. The legislative intention, legislative vision and legislative wisdom has to be given full meaning in terms of technology and progressiveness, and thus, once an effective and strong step has been taken towards faceless regime, then maintaining the strings of local control to the prejudice of a common man would not only undermine the legislative wisdom but the gains in terms of such a progressive and pragmatic step would stand to reduce. Once the gear of progress has been applied in a democratic set up, the same has to be strongly supported and sustained. The CBDT Circular read with Section 151A of the Act of 1961 has to be given full meaning and any ways & means to defeat the technology or to manually try to control the same would go against the legislative purpose. 20. Thus, this Court holds that the mandate of Section 151A....