TaxTMI 
TaxTMI 
2025 (8) TMI 1754
X X X X Extracts X X X X
X X X X Extracts X X X X
....ocate), (By Sri T. Suryanarayanan, Sr. Advocate A/W Ms. Tanmayee Rajkumar, Advocate). For the Respondents: (By Sri E.I. Sanmathi, Advocate), (By Sri Ravi Raj Y.V., Advocate). ORAL ORDER The petitioners in all these cases, inter alia, call in question the notice issued by the jurisdictional Assessing Officer contending that it is without jurisdiction as the notice had to emerge in a faceless manner. Since the issue of jurisdiction being common in all these cases, they are taken up together and considered by this common order. 2. Facts, in brief, germane are as follows: IN WRIT PETITION NO.28182 OF 2024: The petitioner is an individual. He files his return of income for the assessment year 2017-18 on 02-11-2017 declaring total income of Rs.1,24,22,910/-. The 1st respondent issued notice under Section 148A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act' for short) on 16-02-2024 holding that a search and seizure operation under Section 132 of the Act was conducted in the case of M/s AMR India Private Limited and others on 02-05-2018, and as a part of the search operation M/s. YHR Infra Projects was surveyed under Section 133A of the Act. During the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....taken by the respondent - one such ground is the notice suffering lack of jurisdiction inasmuch as, after faceless regime, the proceedings could not have been initiated by the jurisdictional Assessing Officer. In WRIT PETITION NO. 26203 OF 2024: 4. The subject petition is by an individual. The petitioner is at the doors of this Court calling in question a notice so issued by the 1st respondent/Income Tax Officer under Section 148A(b) of the Act on the contention that it is without jurisdiction. In the subject petition no other ground is urged except the jurisdictional aspect qua faceless regime. 5. Thus, in all these cases, one common stream of challenge that runs through is, challenge to the jurisdictional issue qua the notice issued on initiation of proceedings under Section 148A (a) & (b) of the Act. 6. Heard Sri A. Shankar, learned senior counsel appearing for the petitioner in W.P.No.28182 of 2024; Sri K.K. Chythanya, learned senior counsel appearing for the petitioner in W.P.No.17352 of 2022; Sri T. Suryanarayana, learned senior counsel appearing for the petitioner in W.P. No.26203 of 2024; Sri E.I. Sanmathi, learned counsel appearing for the respondents in Writ P....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aping assessment.-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). Explanation.-For the purposes of assessment or reassessment or recomputation under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of Section 148-A have not been complied with.] 148. Issue of notice where income has escaped assessment.-(1) Before making the assessment, reassessment or recomputation under Section 147, the Assessing Officer shall, subject to the provisions of Section 148-A, issue a notice to the assessee, along with a copy of the order passed under sub-section (3) of Section 148-A, requiring....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... sub-section (2-A) of the said section, on or after the 1st day of September, 2024.] 148-A. Procedure before issuance of notice under Section 148.-(1) Where the Assessing Officer has information which suggests that income chargeable to tax has escaped assessment in the case of an assessee for the relevant assessment year, he shall, before issuing any notice under Section 148 provide an opportunity of being heard to such assessee by serving upon him a notice to show cause as to why a notice under Section 148 should not be issued in his case and such notice to show cause shall be accompanied by the information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year. (2) On receipt of the notice under sub-section (1), the assessee may 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 S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law. (2) The provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken. 151. Sanction for issue of notice.-Specified authority for the purposes of Sections 148 and 148-A shall be the Additional Commissioner or the Additional Director or the Joint Commissioner or the Joint Director, as the case may be. 151-A. Faceless assessment of income escaping assessment.-(1) The Central Governm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....), the Central 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was for issuance of notification under Section 148 of the Act in a faceless manner under Section 144B of the Act, so that there is no inter-action between the assessee and the Officer which would also speed up the process. 10. The Apex Court in the case of UNION OF INDIA v. ASHISH AGARWAL (2022) 138 taxmann.com 64 (SC) holds that the new provision of the Finance Act, 2021 in which the faceless regime being remedial and benevolent in nature must be strictly adhered to. The Apex Court particularly recognizes the manner in which the notice can be issued after bringing in Section 151A of the Act, which deals with faceless assessment. The other High Courts have also interpreted the mandatory nature of the notification dated 29-03-2022. A division bench of the High Court of Telangana in the case of KANKANALA RAVINDRA REDDY v. INCOME TAX OFFICER (2023) 156 Taxmann.com 178 (TELANGANA)/[2023] 295 taxmann 652 (TELANGANA) has held as follows: "19. It would be relevant at this juncture to take note of the observations made by the hon'ble Supreme Court in paragraph 7 and paragraph 8. The relevant portion of which is being reproduced herein under: "Thus, the new provisio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, 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 Assessing Officers shall within thirty days from today provide to the assessees the information and material relied upon by the Revenue so that the assessees can reply to the notices within two weeks thereafter; (ii) The requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a) be dispensed with as a one-time measure vis-a-vis those notices which have been issued under section 148 of the unamended Act from April 1, 2021 till date, including those which have been quashed by the High Courts; (iii) The Assessing Officers shall thereafter pass an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....all 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 of the Income-tax Act which stood amended with effect from 1-4-2021 by virtue of the Finance Act, 2021. Section 144B inserted by virtue of the Finance Act, 2021, with effect from 1-4-2021 provides for faceless assessment and sub-section (1) of the said newly inserted section 144B is an non-obstante clause. The relevant portion of sub-section (1) of section 144B necessary for adjudication of the preliminary issue under consideration is reproduced herein under: "Notwithstanding anything to the contrary contained in any....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Similarly, the Central Board of Direct Taxes had also amended section 130 of the Income-tax Act so far as conferring jurisdiction on 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: "(1) 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 as referred to in section 120; or (b) vesting the jurisdiction with the Assessing Officer as referred to in section 124; or (c) exercise of power to transfer cases under section 127; or (d) exercise of jurisdiction in case of change of incumbency as referred to in section 129, so as to impart greater efficiency, transparency and accountability by- (i) eliminating the interface between the Income-tax authority and the assessee or any other person, to th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (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 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 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." 25. A plain reading of the aforesaid two notifications issued by the Central Board of Direct Taxes dated March 28, 2022 and March 29, 2022, it would clearly indicate that the Central Board of Direc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ge of the issuance of notices under section 148, nor is the direction to that effect. And there cannot be any confusion, ambiguity or misconception for the respondent-Department to have in this regard. 29. The Hon'ble Supreme Court has in paragraph 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 8 very emphatically had said that the proceedings ought not to have been issued under the unamended Act. Rather ought to have 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 to the assessee under the substituted provisions under the Finance Act, 2021. The fact that the hon'ble Supreme Court allowed the notice earlier issued under section 148 be treated as notice one under section 148A and further it was also to be treated as the show-cause notice issued under....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (2015) 32 GSTR 468 (SC); (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 eyes 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 the appellants in that he was not their employee but also stated that he was not present when the samples were taken. In fact, therefore, there was no representative of the appellants when the samples were taken. In law equally th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 sections 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 the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically. 37. The preliminary objection raised by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of notice where income has escaped assessment.- Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified author....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee where the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. Explanation 3.-For the purposes of this section, specified authority means the specified authority referred to in section 151. 151A. Faceless assessment of income escaping assessment.- (1) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of assessment, reassessment or recomputation 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 to impart greater efficiency, transparency and accountability by- (a) eliminating the interface between the Income-tax authority and the assessee or any other....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 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, to the extent provided in section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee." 14. The respondent during the course of arguments vehemently and vigorously pleaded that notice under section 148 can be issued by the jurisdictional Assessing Officer. In support of his contention, they heavily relied upon Office Memorandum dated February 20, 2023 and letter dated January 19, 2024 issued by the Directorate of Income-tax (System). 15. From the perusal of section 151A, it is quite evident that the scheme of faceless assessment is applicable from the stage of show-cause notice under section 148 as well as section 148A. Clause 3(b) of notification dated March 29, 2022 issued under section 151A clearly provides that scheme would be applicable to notice under section 148. Even otherwise, it is a settled proposition of law that assessment pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 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; (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. In exercise of the powers conferred by sub-sections (1) and (2) of Se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 issuance of no....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....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 expressl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 29 th 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the said clause to 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 an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ocedure in a reasonable time. " In our opinion, there is no such power given to the administration under 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. Furt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e said judgment cannot be treated as a precedent or relied upon to decide the jurisdiction of the Assessing 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 [(2023) 156 taxmann.com 178 (Telangana)/295 Taxman 652 (Telangana)] has held that in view of the provisions of Section 151A of the Act 14 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." (Emphasis supplied) The High Court of Bombay in PARAS MAHENDRA SHAH v. UNION OF INDIA (2024) 165 taxmann.com 546 (Bombay) has held as follows: "5. Therefore, it is apparent that the Respondent-Revenue is not in compliance with the Scheme notified by the Central Government pursuant to Section 151A(2) of the Act. The Scheme has al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llocation, 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, to the extent provided in section 144B of the Act with reference to making assessment or reassessment of total income or loss of the assessee." 10. On a plain reading of paragraph 3, it is clear to us that the provisions of section 148A would also fall within the ambit/scope of the scheme. All aspects pertaining to "assessment", "reassessment" or "recomputation" under section 147 of the Act and issuance of notice under section 148 of the Act, are to be undertaken through automated allocation, in accordance with risk management strategy formulated by the Board, as provided for in section 148 of the Act for issuance of notice, and in a faceless manner, to the extent provided under section 144B of the Act, in making assessment or reassessment of total income or loss of assessee. 11. Having noted the scope of the scheme under the aforesaid notification, the basic provision under which such notification is issued, namely, section 151A would also be required to be noted, which reads thus: "151A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessment, reassessment, recomputation or issuance or sanction of notice with dynamic jurisdiction. Sub-section (2) makes it explicit that for the purpose of giving effect to the scheme made under sub-section (1), by notification in the Official Gazette, the Central Government can also 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 and further under sub-section (3), every notification issued under sub-section (1) and sub-section (2) shall be laid before each House of Parliament. 13. It is thus clear from the implications as brought about by the provisions of section 151A that the notification dated March 29, 2022 ((2022) 442 ITR (Stat) 198) is issued in terms of what has been provided under section 151A. It has been issued after the amendments were incorporated in sub-section (1) by Finance Act, 2021 ((2021) 432 ITR (Stat) 52) with effect from April 1, 2022. It would be thus difficult to accept a proposition when in paragraph 3(a) of the scheme defining the scope of the scheme when the words "assessment","reassessment" or "recomputation" under section 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to accept the Revenue's contention that the provisions of section 148A stands excluded from the applicability of the faceless mechanism. 16. For the aforesaid reasons, we would not accept Mr. Mohanty's submission that the scope of the scheme would exclude the applicability of section 148A and if steps are taken by the jurisdictional Assessing Officer under section 148A culminating into issuance of a notice under section 148 of the Act, the entire exercise being undertaken outside the faceless mechanism would be required to be quashed and set aside. There cannot be any other reading of these provisions along with the notification. 17. In the light of the above discussion, and as there is no dispute that the jurisdictional Assessing Officer had no jurisdiction to issue the impugned notice, the writ petition is accordingly allowed in terms of prayer clause (a) which reads thus: "(a) that this hon'ble court be pleased to issue a writ of certiorari or any other writ, order or direction under article 226 of the Constitution of India calling for the records of the case leading to the issue of the impugned initial notice (exhibit L) dated March 30, 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nLine SC 25: "3. ..... The word assessment is used in a comprehensive sense and includes all proceedings, starting with the filing of the return or issue of notice and ending with the determination of the tax payable by assessee." (ii) J.K. Iron & Steel Co. v. L.T. Officer, reported in 1965 SCC OnLine ALL 423: "9. ..... The word 'assessment' includes not only computation of income but also the entire machinery and procedure for imposing and enforcing the tax liability." (iii) Auto & Metal Engineers v. Union of India, reported in (1997) 7 SCC 734: "7. ..... the expression "assessment proceeding" in the explanation must be construed to comprehend the entire process of assessment starting from the stage of filing of the return under Section 139 or issuance of notice under Section 142(1) till the making of the order of assessment under Section 143(3) or Section 144. Since the making of the order of assessment under Section 143(3) or Section 144 of the Act is an integral part of the assessment proceeding, it is not possible to split the assessment proceeding and confine it up to the stage of inquiry under Sections 142 and 143 and excl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g into force on 1-4-2021, according to learned ASG, the Revenue issued approximately 90,000 reassessment notices to the respective assessees under the erstwhile Sections 148 to 151 thereof by relying on explanations in the Notifications dated 31-3-2021 and 27-4-2021. The said reassessment notices were the subject-matter of writ petitions before the various High Courts. The respective High Courts have held that all the respective reassessment notices issued under the erstwhile Sections 148 to 151 of the Income Tax Act, 1961, are bad in law as the reassessment notices issued after 1-4-2021 are governed by the substituted Sections 147 to 151 of the Income Tax Act, 1961, substituted by the Finance Act, 2021. Consequently, the respective High Courts have set aside all the reassessment notices issued under Section 148 of the Income Tax Act, 1961 wherever assailed. 13. The common judgment and order [Ashok Kumar Agarwal v. Union of India, 2021 SCC OnLine All 799] passed by the High Court of Allahabad is the subject-matter of the present appeals. However, the High Court of Delhi in its common judgment and order dated 15-12-2021 [Mon Mohan Kohli v. CIT, 2021 SCC OnLine Del 5250] whi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lowed as per the judgment of this Court in GKN Driveshafts (India) [GKN Driveshafts (India) Ltd. v. ITO, (2003) 1 SCC 72]. 19. However, by way of Section 148-A, the procedure has now been streamlined and simplified. It provides that before issuing any notice under Section 148, the assessing officer shall: (i) conduct any enquiry, if required, with the approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (ii) provide an opportunity of being heard to the assessee, with the prior approval of specified authority; (iii) consider the reply of the assessee furnished, if any, in response to the show-cause notice referred to in clause (b); and (iv) decide, on the basis of material available on record including reply of the assessee, as to whether or not it is a fit case to issue a notice under Section 148 of the IT Act; and (v) the AO is required to pass a specific order within the time stipulated. ..... 24. There appears to be genuine non-application of the amendments as the officers of the Revenue may have been under a bona fide belie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent proceeding. c) It cannot be disputed that the changes to Sections 147 to 151 of the Act, introduced vide Finance Act, 2021, are made governing the procedure relating to reassessment. In other words, Section 148A of the Act is also part of the procedure governing reassessment. d) If Section 148A of the Act is distinct from re-assessment/ assessment of escaped income, the need to deem notice issued under Section 148 of the Act, post introduction of Section 148 A of the Act as one under Section 148A of the Act, would not have arisen. The deeming was necessary, else reassessment would be rendered vulnerable to challenge on the ground of want of jurisdiction. 5.3.6. In view of the above, I am unable to concur with the decision of this Court dissecting the integrated reassessment proceeding into two parts. II) Scheme not in confirmity with Parent Act: 5.3.7. Considering the legislative and judicial history leading up to insertion of Section 148A and Section 151A of the Act, it appears that omission of Section 148A in the Scheme framed by the Central Government in exercise of powers under Section 151A is an omission by the delegate and may ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... legislature should, before delegating, enunciate either expressly or by implication, the policy and the principles for the guidance of the delegates. These principles also apply to taxing statutes. The effect of these principles is that the delegate which has been authorised to make subsidiary rules and regulations has to work within the scope of its authority and cannot widen or constrict the scope of the Act or the policy laid down thereunder. It cannot, in the garb of making rules, legislate on the field covered by the Act and has to restrict itself to the mode of implementation of the policy and purpose of the Act." (ii) Gaurav Kumar v. Union of India, reported in (2025) 1 SCC 641: "67. A two-Judge Bench of this Court identified the following relevant principles in matters of delegated legislation : (Shalimar Chemical Works case [Agricultural Market Committee v. Shalimar Chemical Works Ltd., (1997) 5 SCC 516], SCC p. 525, para 26) "26. ... the delegate which has been authorised to make subsidiary rules and regulations has to work within the scope of its authority and cannot widen or constrict the scope of the Act or the policy laid down thereunder. I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mpermissible. It thus appears to me that any attempt to suggest that Section 148A of the Act is outside the Scheme framed by the Central Government in exercise of its power conferred under Section 151A of the Act, would be overlooking the legislative policy enunciated in Section 151A of the Act. It may result in giving primacy to the scheme which is a subordinate legislation over Section 151A of the Act, which as stated above is the parent Act enabling the Central Government to frame a scheme. A consequence/ construction which ought to be avoided." (Emphasis supplied) Few of the afore-mentioned judgments are taken to the Apex Court. The Apex Court has issued notice and the matters are pending consideration before the Apex Court. Noticing pendency of the issue before the Apex Court, a division bench of the High Court of Madras in the case of DADHA PHARMA LLP v. THE DEPUTY COMMISSIOINER OF INCOME-TAX W.P.No.35385 of 2024 decided on 24-06-2025 holds as follows: "This petition got listed in view of a difference of opinion between two learned Single Judges. 2. Learned Single Judge in order dated 20.12.2024 in WP Nos.25223 of 2024 held that it does not matter if t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t covered, those are kept open to be raised at the appropriate stage. 12. With the liberty as noted above, this petition stand disposed of holding in favour of assessee. There will be no order as to costs. Consequently, the interim applications also stand disposed of." (Emphasis supplied) The division bench holds that the issue would get covered by the judgment rendered in the case of HEXAWARE TECHNOLOGIES LIMITED, which is quoted supra and the judgment in the case of HEXAWARE TECHNOLOGIES LIMITED is carried to the Apex Court by the Revenue. Noticing that the proceedings therein are quashed with a clarification that in the event, the Apex Court reverses the judgment against the HEXAWARE TECHNOLOGIES LIMITED, the parties would be covered by the decision of the Apex Court. Keeping open all the contentions, the notice challenged was set aside. The High Court of Telangana in the case of KANAKANALA RAVINDRA REDDY (supra) has held in favour of the assessee, holding that once faceless regime is in place, the jurisdictional Assessing Officer could not have acted outside the notification by issuing a notice invoking his jurisdiction. A subsequent judgment rendered by the divi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIA [2023] 156 taxmann.com 478/101 GST 711/81 GSTL 139(Delhi), Punjab and Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA,[2024] 165 taxmann.com 115 (Punjab and Haryana), and Telangana High Court in the case of SRI VENKATARAMANA REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAX [2024] 167 taxmann.cm 411/468 ITR 181 (Telangana) where the issue was in respect of international taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICER, INTERNATIONAL TAXATION [2024] 166 taxmann.com 679/301 Taxman 156/468 ITR 350 (Bombay) which is again on international taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICER [2024] 165 taxmann.com 113/300 Taxman 216 (Himachal Pradesh), Gujarat High Court in the case of MANSUKHBHAI DAHYADHAI RADADIYA V.INCOME TAX OFFICER 2024 SCC OnLine Guj 4012, Jharkand High Court in the case of SHYAM SUNDAR SAW V.UNION OF INDIA 2025 SCC OnLine Jhar 287, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER [2023: RJ-JD:4984-DB] which stood decided on 19.03.2024.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Reddy (1 supra), learned Standing Counsel for the Income Tax Department contends that those would unnecessarily burden the Income Tax Department where they would be required to file equal number of SLPs before the Hon'ble Supreme Court and it would be further burdening the exchequer of the Union of India. It was also the contention of the learned Standing Counsel that no prejudice would be caused to the interest of the petitioners in case if this writ petition is kept pending till the finalization of the SLPs pending before the Hon'ble Supreme Court and the fact that the petitioner is already enjoying the benefit of interim protection. Nonetheless, on the earlier query of this Court as to why the Income Tax Department have not come out with a mechanism to issue appropriate instructions or to take appropriate steps in ensuring that proceedings under Section 148A of the Act as also the assessment orders under Section 148 of the Act are kept in a hold in the light of the decisions decided by the various High Courts, it was submitted by the learned Standing Counsel that the said steps can only be taken at the level of CBDT as any such steps would have to be taken Pan India and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icial to the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concerned. As a consequence, the Income Tax Department gets an extended period of time for initiation of fresh proceedings. 12. The alarming trend of docket explosion in this Court, despite the clear precedent set in Kanakala Ravindra Reddy (1 supra), is a matter of grave concern. The Income Tax Department's persistent initiation of fresh proceedings, disregarding the established judicial pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions piling up on the same issue. This deliberate approach not only undermines the principle of judicial precedent but also strains the judicial resources unnecessarily. The Department's strategy of awaiting the Supreme Court's decision on pending SLPs while continuing to initiate fresh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than adhering to the established legal position. Such conduct raises serious questions about the administrative efficiency and the respect for judicial pronouncements, particularly when this Court has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....8-A and 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner. 14. In the case of BANK OF INDIA vs. ASSISTANT COMMISSIONER, INCOME TAX [2025] 170 taxmann.com 422 (Bombay), on an issue whether it was justifiable on the part of the Income Tax Department in not following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division Bench of the High Court of Bombay held at paragraph No.25 as under, viz., : "25. Mr. Paridwalla has rightly drawn out attention to the decision of this Court in Commissioner of Income Tax vs. Smt. Godavaridevi Saraf [1978] 113 ITR 589 (Bombay) as also the recent decision of the co-ordinate Bench of this Court in Samp Furniture (P) Ltd. v. ITO [2024] 165 taxmann.com 581/300 Taxman 452 (Bombay) of which one of us (Justice G.S. Kulkarni) was a member, wherein the Court categorically observed that the Revenue having not "accepted" the judgment of the High Court would not mean that till the same is set aside in a manner known to law, it would loose its binding force. Referring to the decision of the Supreme Court in Union of India vs. Kamlakshi Fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by the High Court, have been harsh on the officers. It is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assesses-public without any benefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." 15. What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the Income Tax Department being violative of the Finance Act, 2020 and Finance Act, 2021. Now, in order to protect the interest of the Reven....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., supra, as a one-time measure exercising the powers under Article 142 of the Constitution of India, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashish Agarwal, supra." 18. We would only further like to make observations that since we are inclined to dispose of the instant writ petition, conscious of the fact that the earlier order of this High Court in the case of Kanakala Ravindra Reddy (1 supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No. 3574 of 2024, preferred by the Income Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravindra Reddy (1 supra). This, in other words, would mean that either of the parties, if they so want, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble ....