TaxTMI 
TaxTMI 
2026 (9) TMI 816
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....CWP-11968-2025 CWP-15122-2025 CWP-10060-2025 CWP-12357-2025 CWP-15164-2025 CWP-10076-2025 CWP-12366-2025 CWP-1517-2025 CWP-10116-2025 CWP-12508-2025 CWP-15575-2025 CWP-10115-2025 CWP-12512-2025 CWP-1577-2025 CWP-10211-2025 CWP-12524-2025 CWP-15883-2025 CWP-10295-2025 CWP-12564-2025 CWP-15902-2025 CWP-10297-2025 CWP-12570-2025 CWP-15915-2025 CWP-1695-2025 CWP-245-2025 CWP-516-2025 CWP-17442-2025 CWP-248-2025 CWP-518-2025 CWP-17559-2025 CWP-2628-2025 CWP-5268-2025 CWP-17561-2025 CWP-268-2025 CWP-534-2025 CWP-17564-2025 CWP-269-2025 CWP-536-2025 CWP-17565-2025 CWP-299-2025 CWP-5557-2025 CWP-17645-2025 CWP-300-2025 CWP-5600-2025 CWP-17647-2025 CWP-314-2025 CWP-617-2025 CWP-17662-2025 CWP-337-2025 CWP-6366-2025 CWP-17663-2025 CWP-4085-2025 CWP-6566-2025 CWP-17893-2025 CWP-4265-2025 CWP-685-2025 CWP-18053-2025 CWP-436-2025 CWP-6935-2025 CWP-18819-2025 CWP-440-2025 CWP-7254-2025 CWP-18821-2025 CWP-443-2025 CWP-7666-2025 CWP-189-2025 CWP-449-2025 CWP-768-2025 CWP-194-2025 CWP-451-2025 ....
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....5-2024 CWP-13094-2025 CWP-28513-2024 CWP-24841-2026 CWP-13141-2025 CWP-28334-2024 CWP-24820-2026 CWP-13200-2025 CWP-28330-2024 CWP-25651-2026 CWP-13193-2025 CWP-28329-2024 CWP-21604-2026 CWP-21581-2026 CWP-31431-2024 CWP-23562-2024 CWP-24660-2024 CWP-667-2025 CWP-22544-2024 CWP-25015-2026 CWP-22812-2024 CWP-1270-2025 CWP-25057-2026 CWP-26046-2026 CWP-24638-2024 CWP-28344-2024 CWP-21459-2024 CWP-6916-2025 CWP-8410-2024 CWP-221-2025 CWP-2636-2026 CWP-17449-2025 CWP-22305-2025 CWP-9769-2025 CWP-21528-2026 CWP-222-2025 CWP-10590-2025 CWP-4488-2025 CWP-22564-2024 CWP-19340-2024 CWP-7765-2025 CWP-22370-2024 CWP-22403-2024 CWP-8506-2025 CWP-20823-2024 CWP-21651-2026 CWP-18730-2025 CWP-22535-2024 CWP-3181-2025 CWP-22603-2025 CWP-23711-2025 CWP-25227-2026 CWP-18792-2024 CWP-7779-2025 CWP-22528-2024 CWP-471-2025 CWP-8668-2024 CWP-1144-2025 CWP-2608-2025 CWP-25940-2024 CWP-8811-2025 CWP-4192-2025 CWP-22386-2024 CWP-25175-2025 CWP-25157-2026 CWP-5070-2025 CWP-21478-2024 CWP-25203-2026 CWP-4021....
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.... CWP-21953-2026 CWP-18747-2026 CWP-20469-2026 CWP-22054-2026 CWP-18760-2026 CWP-20484-2026 CWP-22072-2026 CWP-18993-2026 CWP-19046-2026 CWP-12822-2025 CWP-17814-2026 CWP-19124-2026 CWP-13092-2025 CWP-18077-2026 CWP-19302-2026 CWP-18607-2025 CWP-18521-2026 CWP-19463-2026 CWP-21111-2025 CWP-18599-2026 CWP-20501-2026 CWP-21447-2025 CWP-18604-2026 CWP-20849-2026 CWP-21986-2025 CWP-18740-2026 CWP-20876-2026 CWP-26436-2025 CWP-18743-2026 CWP-21062-2026 CWP-35256-2025 CWP-18746-2026 CWP-21088-2026 CWP-21505-2026 CWP-18751-2026 CWP-21292-2026 CWP-21600-2026 CWP-18980-2026 CWP-21388-2026 CWP-21689-2026 CWP-19045-2026 CWP-21451-2026 CWP-21727-2026 CWP-19049-2026 CWP-21469-2026 CWP-17283-2026 CWP-19180-2026 CWP-9823-2024 CWP-35257-2025 CWP-19407-2026 CWP-24994-2024 CWP-19150-2025 CWP-19465-2026 CWP-30472-2024 CWP-20573-2025 CWP-20859-2026 CWP-9856-2025 CWP-20600-2025 CWP-21042-2026 CWP-11532-2025 CWP-21114-2025 CWP-21072-2026 CWP-12829-2025 CWP-21139-2025 CWP-21228-2026 CWP-18090-2025 CWP-21286-....
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....WP-508-2025 CWP-21076-2025 CWP-22917-2026 CWP-18616-2025 CWP-21096-2025 CWP-21118-2025 CWP-25883-2025 CWP-6577-2025 CWP-21119-2025 CWP-21491-2024 CWP-33077-2024 CWP-22724-2026 CWP-23970-2025 CWP-29523-2024 CWP-22995-2026 CWP-22049-2025 CWP-30457-2024 CWP-22723-2026 CWP-11972-2025 CWP-26041-2024 CWP-22680-2026 CWP-21655-2025 CWP-21464-2024 CWP-26664-2025 CWP-21487-2026 CWP-21993-2024 CWP-22401-2026 CWP-21486-2026 CWP-3939-2024 CWP-13663-2025 CWP-21488-2026 CWP-13608-2024 CWP-25840-2025 CWP-26386-2026 CWP-13133-2025 CWP-26436-2026 Present: For the Petitioner(s): Dr. Sanjay Bansal, Senior Advocate with Mr. Iman Singla, Advocate, Mr. Brij Mohan Monga, Advocate, Mr. Gurdeep Singh, Advocate, Mr. Sushrut Singla, Advocate and Ms. Kannopriya Gupta, Advocate, Ms. Radhika Suri, Senior Advocate with Mr. Abhinav Narang, Advocate and Ms. Parnika Singla, Advocate Mr. Sandeep Goyal, Senior Advocate with Mr. Rishab Singla, Advocate, Mr. Anirudh Garg, Advocate, Ms. Aakriti, Advocate, Ms. Urvi Khanna, Advocate, Mr. Aditya Gupta, Advocate, Mr. Rishab Bansal, Advocate, Mr. ....
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.... Mr. Deepak Aggarwal, Advocate, Mr. Sanjiv Sharma, Advocate, Mr. Sushil Jain, Advocate, Ms. Achintaya Soni, Advocate, Mr. Vivek Aggarwal, Advocate, Mr. Prateek Gupta, Advocate, Ms. Riya Mukherji, Advocate, Ms. Simmy Gupta, Advocate. For the Respondent(s)-Income Tax Department: Mr. N. Venkataraman, Additional Solicitor General of India (through VC), assisted by Mr. Nakul Madhan, Advocate, Ms. Urvashi Dhugga, Senior Standing Counsel, Mr. Vaibhav Gupta, Junior Standing Counsel and Ms. Kavita, Advocate, Mr. Saurabh Kapoor, Senior Standing Counsel, Mr. Rana Gurtej Singh, Junior Standing Counsel, Ms. Muskan Gupta, Advocate, Mr. Vivek Sharma, Advocate, Ms. Tanya Kumar, Advocate Mr. Ranvijay Singh, Senior Standing Counsel Mr. Vidul Kapoor, Junior Standing Counsel and Mr. Varun Issar, Senior Standing Counsel, Ms. Pridhi Sandhu, Junior Standing Counsel and Ms. Nikita Garg, Junior Standing Counsel Ms. Gauri Neo Rampal, Senior Standing Counsel (through VC). JUDGMENT PER DEEPAK SIBAL, J. 1. These are a bunch of petitions seeking therein to declare Section 147A of the Income-tax Act, 1961 (for short - the Act) to be ultra vires Articles 14, 19(1)(g) and 265 of the Indian Constitution....
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....een initiated against her. According to the petitioner, since no proceedings under Section 132 of the Act had been conducted on any of her premises, she was also ignorant as to who was the person on whose premises search proceedings under Section 132 of the Act had been conducted leading to the issuance of notice under Section 148 of the Act to her. On 28.06.2024 the petitioner received an intimation informing her that proceedings against her shall be conducted in a faceless manner. The petitioner challenged the notice dated 15.03.2024, issued under Section 148 of the Act, through filing of a petition before this Court being CWP-15791-2024 which petition was allowed by a Division Bench of this Court through judgment dated 19.07.2024 primarily for the reason that the impugned notice issued by the petitioner's jurisdictional AO violated Section 151A of the Act read with the scheme framed thereunder dated 29.03.2022. The reliance placed upon by the respondent authorities on an office memorandum and other internal communications to justify issuance of the impugned notice by the petitioner's jurisdictional AO was rejected in the light of the clear mandate under Section 151A read with Se....
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....ranted. However, such grant of interim stay was subject to further terms and conditions, if any, to be imposed by the respective jurisdictional High Courts. Operative part of the order of the Supreme Court dated 10.04.2026 reads as follows:- "21. It appears to us that the assessees would be entitled to challenge the amending provisions as elaborated upon heretofore, for which it would only be appropriate to relegate them to the jurisdictional High Courts. All contentions raised before us, as well as any other grounds available to them to question the impugned notices, may be urged before the High Courts instead. 22. Since the High Courts have primarily quashed the reassessment notices on the ground that the JAOs lacked competence to initiate such proceedings, and the very foundation of that view now stands altered by the amending legislation, the impugned judgments in favour of the assessees are set aside on this limited ground. The matters are accordingly remitted to the respective High Courts for fresh consideration. Ordered accordingly. 23. The assessees are granted liberty to amend their writ petitions, if so advised, within a period of four (4) weeks....
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....High Court in the case of Kankanala Ravindra Reddy's case (supra) and the Gauhati High Court in Ram Narayan Sah's case (supra), after analyzing the provisions of the Act, categorically held that in the light of Section 151A of the Act read with the scheme framed thereunder dated 29.03.2022, notices under Section 148 of the Act could only be issued by a Faceless Assessment Officer; without amending Section 151A of the Act and/or the scheme framed thereunder dated 29.03.2022 and thus without curing the defect pointed out by the constitutional courts through the afore referred judgments, through the retrospective enactment of Section 147A, the legislature could not nullify the effect of the judgments delivered by the constitutional courts; promulgation of Section 147A of the Act by the legislature, without amending Section 151A and Section 130 of the Act and/or the schemes framed thereunder is a glaring example of legislative outreach and breach of separation of powers between the legislature and the judiciary which the Indian Constitution clearly seeks to maintain; simply because Section 147A of the Act begins with a non-obstante clause, it cannot nullify the effect of law laid down ....
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....highly desirable and that Section 147A of the Act is also arbitrary because it artificially bifurcates the different stages of assessment especially when proceedings under Sections 148 and 147 of the Act are statutorily required to be an integral part of the same process. 8. Alternatively, the submissions made by the learned counsels for the petitioner(s) was that even if this Court does not find favour with the submissions made on behalf of the petitioner(s) with regard to the challenge to the vires of Section 147A of the Act still the impugned notices issued under Section 148 of the Act are liable to be set aside as they have not been issued by AOs chosen randomly by way of automated allocation in terms of Section 151A of the Act read with the scheme framed thereunder dated 29.03.2022. 9. In support of their submissions, reliance was placed by learned counsel of the petitioners on the following judgments:- 1. NHPC Ltd. Vs. State of Himachal Pradesh Secretary and others, (2023) 17 SCC 1 2. Janapada Sabha Chhindwara Vs. Central Provinces Syndicate Ltd. and another, (1970) 1 SCC 509 3. State of Tamil Nadu Vs. State of Kerala and another, (2014) 12 SC....
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.... schemes framed under Section 130 of the Act requires assessment to be done in a faceless manner; on the other hand the scheme framed under Section 135A of the Act is totally non-faceless while the scheme framed under Section 151A of the Act is hybrid - both faceless and non-faceless; an assessee is only entitled to a fair assessment but as to who should be his Assessing Officer is not an assessee's fundamental or constitutional right; the plea raised by the petitioner is extremely hyper technical; the entire process of assessment by either the assessee's jurisdictional AO or faceless AO is through electronic means with no personal interface; there are two broad technological systems which work in conjunction, one of which is the Risk Management Strategy which works under the control and supervision of Director General system which picks up cases on automated allocation basis for assessment, re-assessment or re-computation with there being no manual interference either by the assessees or by the income tax authorities; cases which are picked up under the Risk Management Strategy are handed over to the NFAC under Section 144B of the Act which is also done through electronic means; p....
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....ssment on the assessee's jurisdictional AO and the faceless AO; after the introduction of Section 144B(1) of the Act, jurisdiction of an assessee's jurisdictional AO from conducting assessment under Sections 143, 144 and 147 of the Act was ousted; pre-assessment proceedings under Section 148A and notice under Section 148 were specifically kept outside the purview in Section 144B(1) of the Act; thereafter Section 151A and the scheme framed thereunder was introduced wherein there is no reference to Section 148A and therefore, in terms of the afore-referred notifications issued under Section 120 of the Act only the assessee's jurisdictional AO could conduct proceedings under Section 148A of the Act and that being so, mere reference to Section 148 in the scheme under Section 151A of the Act would not confer exclusive jurisdiction on the AO under the faceless regime because if Section 151A with the scheme framed thereunder is harmoniously read with Section 144B(1) and the notification dated 10.06.2022, the only conclusion which can be arrived at is that proceedings under Section 148A culminating in the issuance of notice under Section 148 can only be by the assessee's jurisdictional AO.....
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....me 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.] Section 148 148. (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall, subject to the provisions of section 148A, issue a notice to the assessee, along with a copy of the order passed under sub-section (3) of section 148A, requiring him to furnish, within such period as may be specified in the notice, 76[not being less than thirty days from the date of such notice but] not exceeding three months from the end of the month in which such notice is issued, a return of his income or income of any other person in respect of whom he is assessable under this Act during the previous year corresponding to the relevant assessment year: 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: Provided further that where the Assessin....
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....his 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 148A have not been complied with. 15. Section 148A of the Act prescribes the procedure before issuance of notice under Section 148. As per Section 148A if an Assessing Officer has information which suggests that an assessee's income, chargeable to tax, has escaped assessment for the relevant assessment year, he shall issue a notice upon the assessee, under Section 148A(1) of the Act, bringing to the assessee's notice the information in his possession. On receipt of the said notice the assessee may file a response. Thereafter, on the basis of material available on record, including the reply to the show cause notice by the assessee, if any, the Assessing Officer is required to pass an order under Section 148A(3) of the Act, with the prior approval of the specified authority, determining as to whether it is a fit case for issuance of notice under Section 148 of the Act. 16. As per Section 148 of the Ac....
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....r. To start with, such e-assessments shall be carried out in cases requiring verification of certain specified transactions or discrepancies. 125. Cases selected for scrutiny shall be allocated to assessment units in a random manner and notices shall be issued electronically by a Central Cell, without disclosing the name, designation or location of the Assessing Officer. The Central Cell shall be the single point of contact between the taxpayer and the Department. This new scheme of assessment will represent a paradigm shift in the functioning of the Income Tax Department." (emphasis supplied) 19. Similar intent of the Government of India is also found in the speech of the Union Minister of Finance in the Parliament, delivered on 01.02.2020, the relevant portion of which is reproduced below:- "125. Faceless appeals Our government is committed to bringing in transformational changes so that maximum governance is provided with minimum government. In order to impart greater efficiency, transparency and accountability to the assessment process, a new faceless assessment scheme has already been introduced. Currently, most of the functions of the In....
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....ncy and accountability by" (i) eliminating the interface between the income-tax authority and the assessee or any other person, to the extent technologically feasible; (ii) optimising utilisation of the resources through economies of scale and functional specialisation; (iii) introducing a team-based exercise of powers and performance of functions by two or more income-tax authorities, concurrently, in respect of any area or persons or classes of persons or incomes or classes of income or cases or classes of cases, 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 House of Parliament. Faceless collection o....
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....ent Centre shall intimate the assessee that assessment in his case shall be completed in accordance with the procedure laid down under this section; (iii) a notice shall be served on the assessee, through the National Faceless Assessment Centre, under sub-section (2) of section 143 or under sub-section (1) of section 142 and the assessee may file his response to such notice within the date specified therein, to the National Faceless Assessment Centre which shall forward the same to the assessment unit; (iv) where a case is assigned to the assessment unit, under clause (i), it may make a request through the National Faceless Assessment Centre for" (a) obtaining such further information, documents or evidence from the assessee or any other person, as it may specify; (b) conducting of enquiry or verification by verification unit; (c) seeking technical assistance in respect of determination of arm's length price, valuation of property, withdrawal of registration, approval, exemption or any other technical matter by referring to the technical unit; (v) where a request under sub-clause (a) of clause (iv) has been initiated by the ....
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....) 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; (xii) the assessment unit shall, after taking into account all the relevant material available on the record, prepare, in writing,- (a) an income or loss determination proposal, where no variation prejudicial to assessee is proposed and send a copy of such income or loss determination proposal to the National Faceless Assessment Centre; or (b) in any other case, a show cause notice stating the variations prejudicial to the interest of assessee proposed to be made to the income of the assessee and calling upon him to submit as to why the proposed variation should not be made and serve such show cause notice, on the assessee, through the National Faceless Assessment Centre; (xiii) the assessee shall file his reply to the show cause notice served under sub-clause (b) of clause (xii) on a date and time as specified therein or such time as may be extended on the basis of an application made in this regard, to the National Faceless Assessment Centre, which shall forward the reply to the ass....
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....nt Centre shall serve the draft order referred to in clause (xx) on the assessee; (xxii) in any case other than that referred to in clause (xxi), the National Faceless Assessment Centre shall convey to the assessment unit to pass the final assessment order in accordance with such draft order, which shall thereafter pass the final assessment order and initiate penalty proceedings, if any, and send it to the National Faceless Assessment Centre; (xxiii) upon receiving the final assessment order as per clause (xxii), the National Faceless Assessment Centre shall serve a copy of such order and notice for initiating penalty proceedings, if any, on the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; (xxiv) where a draft order is served on the assessee as referred to in clause (xxi), such assessee shall," (a) file his acceptance of the variations proposed in such draft order to the National Faceless Assessment Centre; or (b) file his objections, if any, to such variations, with" (I) the Dispute Resolution Panel, and (II) the Nat....
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....ny stage of the proceedings before it, the assessment unit having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of accounts, multiplicity of transactions in the accounts or specialised nature of business activity of the assessee, and the interests of the revenue, is of the opinion that it is necessary to do so, it may, upon recording its reasons in writing, refer the case to the National Faceless Assessment Centre stating that the provisions of sub-section (2A) of section 142 may be invoked and such case shall be dealt with in accordance with the provisions of sub-section (7). (2) The faceless assessment under sub-section (1) shall be made in respect of such territorial area, or persons or class of persons, or incomes or class of incomes, or cases or class of cases, as may be specified by the Board. (3) The Board may, for the purposes of faceless assessment, set up the following Centre and units and specify their functions and jurisdiction, namely:- (i) a National Faceless Assessment Centre to facilitate the conduct of faceless assessment proceedings in a centralised manner; (ii) such as....
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....ction (1), which includes checking whether the relevant and material evidence has been brought on record, relevant points of fact and law have been duly incorporated, the issues requiring addition or disallowance have been incorporated and such other functions as may be required for the purposes of review and the term "review unit", wherever used in this section, shall refer to an Assessing Officer having powers so assigned by the Board. (4) The assessment unit, verification unit, technical unit and the review unit shall have the following authorities, namely:- (i) Additional Commissioner or Additional Director or Joint Commissioner or Joint Director, as the case may be; (ii) Deputy Commissioner or Deputy Director or Assistant Commissioner or Assistant Director, or Income-tax Officer, as the case may be; (iii) such other income-tax authority, ministerial staff, executive or consultant, as may be considered necessary by the Board. (5) All communications,- (i) among the assessment unit, review unit, verification unit or technical unit or with the assessee or any other person with respect to the information or documents or evidence....
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....be determined in accordance with the provisions of section 13 of the Information Technology Act, 2000 (21 of 2000); (vi) a person shall not be required to appear either personally or through authorised representative in connection with any proceedings before any unit set up under this section; (vii) in a case where a variation is proposed in the income or loss determination proposal or the draft order, and an opportunity is provided to the assessee by serving a notice calling upon him to show cause as to why the assessment should not be completed as per such income or loss determination proposal, the assessee or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income-tax authority of the relevant unit; (viii) where the request for personal hearing has been received, the income-tax authority of relevant unit shall allow such hearing, through National Faceless Assessment Centre, which shall be conducted exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or v....
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....nce has been received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner under sub-clause (i) of clause (a), he shall direct the Assessing Officer, having jurisdiction over the case, to invoke the provisions of sub-section (2A) of section 142; (c) where a reference has not been forwarded to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, having jurisdiction over the case, in a case referred to in sub-clause (i) of clause (a), the assessment unit shall proceed to complete the assessment in accordance with the procedure laid down in this section. (8) Notwithstanding anything contained in sub-section (1) or sub-section (2), the Principal Chief Commissioner or the Principal Director General, as the case may be, in-charge of National Faceless Assessment Centre may, at any stage of the assessment, if considered necessary, transfer the case to the Assessing Officer having jurisdiction over such case, with the prior approval of the Board. (9) [Omitted by the Finance Act, 2022, w.r.e.f. 1-4-2021.] (10) Omitted by the Finance Act, 2022, w.e.f. 1-4-2022.] ....
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.... (la) "electronic verification code" means a code generated for the purpose of electronic verification as per the data structure and standards specified by the Principal Director General or Director General, as the case may be, in-charge of information technology; (m) "eligible assessee" shall have the same meaning as assigned to in clause (b) of sub-section (15) of section 144C; (n) "email" or "electronic mail" and "electronic mail message" means a message or information created or transmitted or received on a computer, computer system, computer resource or communication device including attachments in text, image, audio, video and any other electronic record, which may be transmitted with the message; (o) "hash function" and "hash result" shall have the same meaning as assigned to them in the Explanation to sub-section (2) of section 3 of the Information Technology Act, 2000 (21 of 2000); (p) "Mobile app" shall mean the application software of the Income-tax Department developed for mobile devices which is downloaded and installed on the registered mobile number of the assessee; (q) [***] (r) "real time alert" means any commun....
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.... 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 House of Parliament." Scheme framed under Section 135A of the Act "MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 13th December, 2021 (INCOME-TAX) S.O.....
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....ments in text, image, audio, video and any other electronic record, which may be transmitted with the message; (l) "Prescribed Authority shall mean any income-tax authority working in the Directorate of Income-tax (Intelligence and Criminal Investigation), who is authorised by the Board to act as such authority for the purposes of this Scheme; (m) "registered account of the assessee means the electronic filing account registered by the assessee in designated portal; (n) "registered e-mail address means the e-mail address at which an electronic communication may be delivered or transmitted to the addressee, including- (i) the e-mail address available in the electronic filing account of the addressee registered in the designated portal; or (ii) the e-mail address available in the last income-tax return furnished by the addressee; or (iii) the e-mail address available in the permanent account number database relating to the addressee; or (iv) in the case of addressee being an individual who possesses the Aadhaar number, the e-mail address of addressee available in the database of Unique Identification Authority of India; o....
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....), as the case may be; or (ii) made available to the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems), as the case may be, by- (a) the Director General of Income-tax (Intelligence and Criminal Investigation); (b) the Commissioner of Income-tax in charge of the Centralised Processing Centre for processing of returns; (c) the Commissioner of Income-tax in charge of the Centralised Processing Centre (TDS) for processing of statement of tax deducted at source; or (d) any other authority, body or person. 4. Electronic Collection and Verification.― (1) The Commissioner of Income-tax (e-Verification) shall collect the information referred to in sub-paragraph (1) of paragraph 3, in accordance with the procedure laid down by the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems), as the case may be. (2) The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems), as the case may be, shall make available the information referred to in sub-paragraph (2) of paragraph 3, to the Commissioner of Income....
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....in accordance with the criteria approved by the Board shall be considered for closure. (11) The remaining information in the form of final verification report shall be processed in accordance with sub-paragraph 12. (12) If the information referred to in sub-paragraph (11),- (i) pertains to a pending scrutiny assessment, it shall be made available electronically to the Faceless Assessing Officer or Jurisdictional Assessing Officer, as the case may be. (ii) does not pertain to a pending scrutiny assessment, it shall be utilised for further necessary action in accordance with the provisions of the Act. 5. Random Allocation of information. "The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall, with the approval of the Board, devise a process to randomly allocate or transfer the information, referred to in sub-paragraph (6) of paragraph 4, to the Prescribed Authority. 6. Issue and service of notice.- (1) For the purpose of verification of information, the Prescribed Authority shall issue notice to a person requiring him to furnish information or documents as....
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.... of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be. 10. Authentication of electronic record.- For the purposes of this Scheme, an electronic record shall be authenticated by the - (i) Commissioner of Income-tax (e-Verification) or the Prescribed Authority, as the case may be, by affixing its digital signature; (ii) person or his authorised representative, by affixing his digital signature if he is required under the rules to furnish his return of income under digital signature, and in any other case, by communicating through his registered e-mail address. 11. Power to specify procedure and processes.- (1) The Director General of Income-tax (Intelligence and Criminal Investigation) shall, with the approval of the Board, specify from time to time, procedures and processes for effective implementation and functioning of this Scheme, with respect to the following matters:- (a) Standard Operating Procedures and techniques of verification to be followed, by the prescribed authorities while verifying such information; (b) managing administration functions such as receipt, scanning, data entry, ....
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....o income-tax authorities, by or under the Act as referred to in section 120 of the Act; or (b) 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 assessee; (ii) the Faceless Appeal Scheme, 2021 notified under sub-sections (6B) and (6C) of section 250 of the Act with reference to the disposal of appeals; (iii) the Faceless Penalty Scheme, 2021 notified under sub-sections (2A) and (2B) of section 274 of the Act with reference to imposition of penalty under Chapter XXI of the Act; (iv) the e-Verification Scheme, 2021 notified under sub-sections (1) and (2) of section 135A of the Act with reference to the calling for of information under section 133 of the Act, collecting certain information under section 133B of the Act, or calling for information by prescribed authority under section 133C of the Act, or exercise of power to inspect register of companies under section 134, or exercise of po....
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....t or reassessment of total income or loss of assessee. [Notification No. 18/2022/F. No. 370142/16/2022-TPL(Part1] SHEFALI SINGH, Under Secy." 22. As per Section 130 of the Act, read with the scheme framed thereunder dated 28.03.2022, the exercise of all or any of the powers and performance of all or any of the functions conferred on or assigned to income tax authorities by or under the Act as referred to in Section 120 of the Act or vesting of jurisdiction with the Assessing Officer as referred to in Section 124 of the Act was required to be done in a faceless manner through automated allocation in accordance with and to the extent provided in Section 144B of the Act with reference to faceless assessment of total income or loss of the assessee. 23. Under sub-sections 1, 2 and 5 of Section 120 of the Act, a notification dated 10.06.2022 was issued by the Government of India which was in supersession of all earlier notifications issued prior thereto. Through this notification directions were issued that to facilitate the conduct of faceless assessment proceedings under Section 144B of the Act income tax authorities or units mentioned in the notification would ....
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....provide for issuance of notice under section 148 of the Act, there can be no ambiguity in the fact that the JAO still has the jurisdiction to issue notice under section 148 of the Act." 4. Considering the facts and circumstances of the case and submissions of the parties and in view of the aforesaid circular of the Board, I find no merit in the writ petition being WPO 1566 of 2023 and accordingly the same is dismissed." 26. A perusal of the afore quoted portion of the judgment of the Calcutta High Court in Triton Overseas Private Limited's case (supra) clearly reveals that the said judgment was rendered in the revenue's favour in the light of an office memorandum dated 20.03.2023 issued by the CBDT as per which memorandum the assessee's Jurisdictional AO continued to have jurisdiction to issue notice under Section 148 of the Act. 27. A Division Bench of the Telangana High Court in Kankanala Ravindra Reddy's case (supra) also considered the same issue as above and through judgment dated 14.09.2023 rendered a decision in favour of the assessee. The operative part of the judgment of the Telangana High Court in the case of Kankanala Ravindra Reddy's case (supra) reads as....
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....tation 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 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, recomputation or issuance or sanction of notice with dynamic jurisdiction." 22. Similarly, the Central Board of Direct Taxes had also amended section 130 of the Income-tax Act so far as conferring jurisdiction 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: "130. (1) The Central Government may make a scheme, by notification in the Official Gazette, for....
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....tion 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 assessee;" 24. In furtherance to the aforesaid notification, the Central Board of Direct Taxes again in exercise of its powers conferred under sub-sections (1) and (2) of section 151A framed another scheme called as the e-Assessment of Income Escaping Assessment Scheme, 2022 ((2022) 442 ITR (St) 198), which defines automated allocation is reproduced herein under (page 198 of 442 ITR (St)): "In this Scheme, unless the context otherwise requires,- (a) 'Act' means the Income-tax Act, 1961 (43 of 1961); (b) 'automated allocation' means an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources." And the scope of the scheme again has been envisaged in section 3 of the said scheme, which again for ready reference is being repro....
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....x xx xx xx xx 30. xx xx xx xx xx 31. xx xx xx xx xx 32. xx xx xx xx xx 33. xx xx xx xx xx 34. xx xx xx xx xx 35. In view of the aforesaid discussions, it is by now very clear that the procedure to be followed by the respondent-Department upon treating the notices issued for reassessment being under section 148A, the subsequent proceedings were mandatorily required to be undertaken under the substituted provisions as laid down under the Finance Act, 2021. In the absence of which, we are constrained to hold that the procedure adopted by the respondent-Department is in contravention to the statute, i.e., the Finance Act, 2021, at the first instance. Secondly, it is also in direct contravention to the directives issued by the hon'ble Supreme Court in the case of Ashish Agarwal supra." (emphasis supplied) 28. Thus, in Kankanala Ravindra Reddy's case (supra), the Telangana High Court held that, consequent upon the introduction of the "Faceless Jurisdiction of Income Tax Authorities scheme, 2022" under Section 130 of the Act and the "e-Assessment of Income Escaping Assessment Scheme, 2022", under Section 151A of the Act....
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....148 of the Act. The scheme dated 29-3-2022 [(2022) 442 ITR (St.) 198] in Para 3 clearly provides that the issuance of notice "shall be through automated allocation" which means that the same is mandatory and is required to be followed by the Department and does not give any discretion to the Department to choose whether to follow it or not. That automated allocation is defined in Para 2(b) of the scheme to mean 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. Therefore, it means that the case can be allocated randomly to any officer who would then have jurisdiction to issue the notice under Section 148 of the Act. It is not the case of Respondent 1 that Respondent 1 was the random officer who had been allocated jurisdiction. 50. With respect to the arguments of the Revenue i.e. the Notification dated 29-3-2022 [(2022) 442 ITR (St.) 198] provides that the scheme so framed is applicable only "to the extent" provided in Section 144-B of the Act and Section 144-B of the Act does not refer to issuance of notice under Section 148 of the Act an....
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....covered under faceless assessment regime in Section 144-B of the Act. The argument of the respondent, therefore, renders the whole scheme redundant. An argument which renders the whole scheme otiose cannot be accepted as correct interpretation of the scheme. The phrase "to the extent provided in Section 144-B of the Act" in the scheme is with reference to only making assessment or reassessment or total income or loss of the assessee. Therefore, for the purposes of making assessment or reassessment, the provisions of Section 144-B of the Act would be applicable as no such manner for reassessment is separately provided in the scheme. For issuing notice, the term "to the extent provided in Section 144-B of the Act" is not relevant. The scheme provides that the notice under Section 148 of the Act, shall be issued through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in Section 148 of the Act and in a faceless manner. Therefore, "to the extent provided in Section 144-B of the Act" does not go with issuance of notice and is applicable only with reference to assessment or reassessment. The phrase "to the extent provided in Section....
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....ied) 30. The issue as to whether after the enactment of Section 151A of the Act and framing of the scheme thereunder dated 29.03.2022, the assessee's jurisdictional AOs could issue notices under Section 148 of the Act then arose before the Gauhati High Court in Ram Narayan Sah's case (supra). The issue was decided in favour of the assessee by holding as follows:- "8. A careful perusal of the scheme reveals that the scope of the scheme is for the purpose of the assessment, reassessment, recomputation under section 147 of the Act and issuance of notices under section 148 of the Act and the same shall be by a process through automated allocation in accordance with the risk management strategy formulated by the Board as referred to in section 148 of the Act for issuance of the notice and in a faceless manner and to the extent provided under section 144B of the Act with reference to making the assessment or reassessment of total income or loss of the assessee. 9. A perusal of section 151A along with the scheme reveals that the statute in order to obviate prejudice and bias has resorted to issuance of notices by automated allocation through the risk management strate....
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....scheme of faceless assessment is applicable from the stage of show cause notice under Section 148 as well as 148A. Clause 3 (b) of notification dated 29.03.2022 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 proceedings commence from the stage of issuance of show cause notice. The object of introduction of faceless assessment would be defeated if show cause notice under Section 148 is issued by Jurisdictional Assessing Officer. The respondents are heavily placing reliance upon office memorandum and letter issued by departmental authorities. It is axiomatic in tax jurisprudence that circulars, instructions and letters issued by Board or any other authority cannot override statutory provisions. The circulars are binding upon authorities and Courts are not bound by circulars. The mandate of Section 144B, 151A read with notification dated 29.03.2022 issued thereunder is quite lucid. There is no ambiguity in the language of statutory provisions, thus, office memorandum or any other instruction issued by Board or any other authority cannot be relied upon. Instructio....
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....Then was rendered another judgment by the Bombay High Court in Kairos Properties Pvt. Ltd. Vs. Assistant Commissioner of Income Tax and others, 2024 SCC OnLine Bom 2571 wherein a Division Bench, other than the Division Bench which decided Hexaware Technologies Ltd.'s case (supra), decided the afore issue in favour of the assessee. The following observations by the Bombay High Court in Kairos Properties Pvt. Ltd.'s case (supra) are relevant:- "12. On a plain reading of sub-section (1) of Section 151-A, it is seen that it clearly provides that 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, etc. or sanction for issue of such notice under Section 151, so as to impart greater efficiency, transparency and accountability which could be in terms of clauses (a), (b) and (c) of sub-section (1) of Section 151-A, namely, eliminating the interface between the Income Tax Authority and the assessee or any other person, to the extent technologically feasible; optimising utilisation of resources through economi....
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.... that merely because the notification does not explicitly refer to the provisions of Section 148-A, the scope of the scheme as defined in para 3 would exclude the applicability of Section 148-A, would lead to an absolute absurdity, and more particularly, considering the express provisions of sub-section (1) of Section 151-A. Also it is not possible to accept reading of the provisions of Section 144-B dehors Section 151-A(1). Sub-section (2) of Section 151-A is specifically incorporated to empower the Central Government to exclude the applicability of any of the provisions of the Act and/or to make such provisions applicable with exceptions, modifications and adaptations. Nothing of this nature is found in the notification to infer any exclusion of Section 148-A, and when it clearly concerns the entire assessment, reassessment or recomputation under Section 147 and issuance of notice in that regard under Section 148 of the Act. 15. Thus, the Central Government has not applied the provisions of sub-section (2) of Section 151-A to specifically exclude the application of Section 148-A from the scope of the scheme in Para 3 of Notification dated 29-3-2022 [(2022) 442 ITR (St.) ....
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....intent underlying each phase of the faceless assessment process. 101. As we had noticed in the preceding parts of this decision, the risk management strategy and the Insight Portal pushes information to the jurisdictional Assessing Officer and is principally not concerned with faceless assessment at all. The risk management strategy essentially enables the jurisdictional Assessing Officer to firstly examine the veracity of disclosures made and examine the return against various parameters and information which has been collated by the Directorate of Systems. It thus provides the jurisdictional Assessing Officer with an insight in respect of various transactions to which the assessee may be connected as well as data pertaining to that assessee which has otherwise been aggregated and mapped on the basis of material existing on the system of the respondents. The respondents would, therefore, appear to be correct in their submission that when material comes to be placed in the hands of the jurisdictional Assessing Officer by the risk management strategy, it would consequently be entitled to initiate the process of reassessment by following the procedure prescribed under sectio....
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....n viewed in that light it is manifest that it strikes a just balance between the obligation of the jurisdictional Assessing Officer to scrutinise information and the conduct of assessment itself through a faceless allocation. The distribution of functions between the jurisdictional Assessing Officer and National Faceless Assessment Centre is complimentary and concurrent as contemplated under the various schemes and the statutory provisions. This balanced distribution underscores the legislative intent to create a seamless integration of traditional and faceless assessment mechanisms within a unified statutory framework. This we so hold and observe since we have, principally, been unable to countenance a situation where the jurisdictional Assessing Officer stands completely deprived of the jurisdiction to evaluate data and material that may be placed in its hands." 35. A Division Bench of the Rajasthan High Court then considered the same issue and through its judgment dated 19.03.2025 in Sharda Devi Chhajer Vs. Income-tax Officer and another, 2025 SCC OnLine Raj 3386 rendered its decision in the assessee's favour by holding as follows:- "11. This court further observes t....
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....flict between the two jurisdictions. 15. This court also observes that the Faceless Assessing Officer has been assigned specific jurisdiction and the Scheme dated March 29, 2022 ((2022) 442 ITR (St) 198) also clearly indicates that the Faceless Assessing Officer has to be the jurisdictional authority. The opening of multiple jurisdictional avenues will not only lead to confusion, but will also result into a failure on the part of the Revenue, to give a concrete opportunity to the assessee. The concurrent jurisdiction of the Faceless Assessing Officer and the jurisdictional Assessing Officer, if accepted, would defeat the very purpose of statutory provisions, i.e., sections 151A and 144B of the Act of 1961. The words carefully chosen by the Central Board of Direct Taxes, include "automated allocation", and the baseline for the same being "algorithm for randomised allocation", clearly show that the technology was supposed to be used for the purpose of allocating jurisdiction to a random officer. 16. This court is of the opinion that section 151A of the Act of 1961 deals with the assessment, reassessment and recomputation provided in sections 147 and 148 of the Act o....
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....al Board of Direct Taxes circular read with section 151A of the Act of 1961 has to be given full meaning and any ways and 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 of the Act of 1961 has to be strictly followed as there cannot be a way out of doing the same. This court also holds that the jurisdictional Assessing Officer shall not have the jurisdiction to issue notices under section 148 of the Act of 1961, as it would not only render section 151A weak, but may also lead to its diminishing activation. For the purpose of assessment and reassessment under sections 147, 148 and 148A and in the light of the sanction under section 151A, adherence has to be made to algorithm based random assessing system, and therefore, the impugned notices deserve to be quashed." 36. Through judgment dated 24.06.2025 in TVS Credit Services Ltd. Vs. Deputy Commissioner of Income-tax and another, 2025 SCC OnLine Mad 18383, a Division Bench of the Madras High Court then decided the issue in question in the assessee's favour. 37. Then were delivered the following tw....
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....hrough automated allocation system and section 144B of the Act has no role to play for the purpose of faceless assessment. 29. Therefore, if we read paragraph 3 of the Scheme, 2022, which refers to the issuance of the notice through automated allocation in accordance with the risk management strategy formulated by the Board only. The contention on behalf of the petitioners that the issuance of notice also should be in a faceless manner is also required to be considered from the subsequent prefix after the words "and in faceless manner" which is further qualified by the words "to the extent provided in section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee". If we further analyse the provisions of section 144B of the Act, it provides that National Faceless Assessment Centre shall intimate the assessee that assessment in his case shall be completed in accordance with the procedure laid down in section 144B of the Act. Both the clauses (i) and (ii) of section 144B of the Act which have come into operation with effect from April 1, 2022 only refer to assessment proceedings and thereafter, from clause (iii) onwards, the p....
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.... of the Scheme would lead to an absolute absurdity and would amount to alter the Scheme. In such circumstances, we are with due respect not in agreement with the Bombay High Court to insert the provisions of section 148A of the Act to be read in the scope of the Scheme. Therefore, the logical conclusion which comes that if section 148A of the Act is not part of the Scheme, 2022, then issuance of notice under section 148 of the Act by the Faceless Assessing Officer would be an empty formality because issuance of notice under section 148 of the Act is a consequence of the order which is passed under section 148A(d) of the Act. As held by this court in the case of Talati and Talati LLP v. Office of Asst. CIT, [(2024) 469 ITR 643 (Guj); 2024 SCC OnLine Guj 4297.], the notice issued under section 148 of the Act by the jurisdictional Assessing Officer in search cases is held to be a valid notice and would also justify our view that the notice under section 148 of the Act has to be issued by the Assessing Officer who has passed the order under section 148A(d) of the Act. If the notice is issued by the faceless Assessing Officer under section 148 of the Act on the basis of the order which ....
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...., 135A and 151A of the Act. There was one judgment of the Telangana High Court, two judgments of the Bombay High Court, two judgments of this Court, two judgments of the Rajasthan High Court, one judgment of the Madras High Court, one judgment of the Karnataka High Court, one judgment of the Andhra Pradesh High Court and one judgment of the Gauhati High Court favouring the assessees with one judgment of the Calcutta High Court, one judgment of the Delhi High Court and one judgment of the Gujarat High Court rendering opinions in favour of the revenue. The respective parties, aggrieved by the afore referred judgments, knocked the doors of the Supreme Court raising their respective grievances through filing of Special Leave Petitions but while the matter was pending adjudication before the Supreme Court, the Finance Bill, 2026 (now an Act of Parliament) was promulgated inter alia through which Section 147A was enacted with effect from 01.04.2021. 41. Relevant portion of the memorandum, which was attached with the Finance Bill, 2026, explaining the reasons behind introduction of Section 147A, reads as follows:- "Memorandum Explaining Provisions in the Finance Bill, 2026 ....
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....eme, 2022 was also the same. 5. However, divergent views have been expressed on this issue by various High Courts, some in favour of the revenue and some in assessee's favour. The matter is now pending in Hon'ble Supreme Court. The present amendment seeks to achieve certainty and clarity and avoid litigation. 6. The Income-tax Act, 2025 is coming into force from the 1st of April, 2026. The objective of the new law has been to provide simplicity in language and provisions so as to avoid interpretational issues and prevent litigation. Therefore, there is an urgent need to clarify the position of law in the new Income-tax Act, 2025. The intention of the legislature also needs to be clearly laid out in the Income-tax Act, 1961 so that the intent is uniformly reflected in the two Acts. 7. Accordingly, it is proposed to clarify in the Income-tax Act, 1961 that notwithstanding anything contained in any judgment, order or decree of court, the Assessing Officer for the purposes of section 148 and section 148A shall mean and shall always be deemed to have meant Assessing Officer other than the National Faceless Assessment Centre or any of its assessment uni....
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.... Supreme Court with regard to the removal of the basis of a judgment rendered by a constitutional court through adoption of the legislative course of abrogation. 46. In Janapada Sabha Chhindwara etc. vs. The Central provinces Syndicate Ltd. & another (1970) 1 SCC 509, a Constitution Bench of the Supreme Court held that though it is open to the legislature, within certain limits, to amend the provisions of a statute, even retrospectively, but the legislature, through an enactment, cannot overrule or set aside decisions rendered by the constitutional courts or to say that a judgment of a Court rendered in exercise of its powers in a matter brought before it shall be deemed to be ineffective and that the interpretation of the law declared by the Court shall be otherwise than what has been held by the Court. The relevant paragraph of the judgment in Janapada Sabha's case (supra) reads as follows:- "10. The nature of the amendment made in Act 4 of 1920 has not been indicated. Nor is there anything which enacts that the notifications issued without the sanction of the State Government must be deemed to have been issued validly under Section 51(2) without the sanction of the L....
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....ntally altered that the decision could not have been given in the altered circumstances. Ordinarily, a court holds a tax to be invalidly imposed because the power to tax is wanting or the statute or the rules or both are invalid or do not sufficiently create the jurisdiction. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by re-enacting retrospectively a valid and legal taxing provision and then by fiction making the tax already collected to stand under the re-enacted law. Sometimes the legislature gives its own meaning and interpretation of the law under which tax was collected and by legislative fiat makes the new meaning binding upon courts. The legislature may follow any one method or all of them and while it does so it may neutralise the effect of the earlier decision of the court which becomes ineffective after the change of the law. Whichever method is adopted it must be within the competence of the legislature....
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....e court and invalidity suffered by previous law is cured complying with the legal and constitutional requirements; (b) whether the legislature has competence to validate the law; (c) whether such validation is consistent with the rights guaranteed in Part III of the Constitution. (7) The court does not have the power to validate an invalid law or to legalise impost of tax illegally made and collected or to remove the norm of invalidation or provide a remedy. These are not judicial functions but the exclusive province of the legislature. Therefore, they are not encroachment on judicial power. (8) In exercising legislative power, the legislature by mere declaration, without anything more, cannot directly overrule, revise or override a judicial decision. It can render judicial decision ineffective by enacting valid law on the topic within its legislative field fundamentally altering or changing its character retrospectively. The changed or altered conditions are such that the previous decision would not have been rendered by the court, if those conditions had existed at the time of declaring the law as invalid. It is also empowered to give effect to retrospective leg....
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....same is not to overrule the decision of the court or encroach upon the judicial turf, but simply enact a fresh law with retrospective effect to alter the foundation and meaning of the legislation and to remove the base on which the judgment is founded. This does not amount to statutory overruling by the legislature. In this manner, the earlier decision of the court becomes non-existent and unenforceable for interpretation of the new legislation. No doubt, the new legislation can be tested and challenged on its own merits and on the question whether the legislature possesses the competence to legislate on the subject-matter in question, but not on the ground of overreach or colourable legislation." 50. In S.R. Bhagwat vs. State of Mysore (1995) 6 SCC 16 the Supreme Court held as under:- "18. A mere look at sub-section (2) of Section 11 shows that the respondent State of Karnataka, which was a party to the decision of the Division Bench of the High Court against it had tried to get out of the binding effect of the decision by resorting to its legislative power. The judgments, decrees and orders of any court or the competent authority which had become final against the Sta....
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....ge of Raipura there was a preliminary notification calling for objections to the extension of the limits of the Kota Municipality to include it, but it was not followed by a final notification. In the case of the village of Ummedganj there was a notification extending the limits of the Kota Municipality to include it, but it had not been preceded by a notification inviting the objections of the public thereto. Later, another notification was published whereby the village of Ummedganj was excluded from the limits of the Kota Municipality. The provisions of Sections 4 to 7 of the 1959 Act and the earlier provisions of the 1951 Act in the same behalf were, therefore, not met in the case of either the village of Raipura or the village of Ummedganj. The Full Bench of the Rajasthan High Court has held that these provisions were mandatory and that judgment has become final. 16. The Validating Act provides that, notwithstanding anything contained in Sections 4 to 7 of the 1959 Act or in any judgment, decree, order or direction of any court, the villages of Raipura and Ummedganj should be deemed always to have continued to exist and they continue to exist within the limits of the K....
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....nstitutions of the countries which contain express provision for separation of powers. 126.2. Independence of courts from the executive and legislature is fundamental to the rule of law and one of the basic tenets of Indian Constitution. Separation of judicial power is a significant constitutional principle under the Constitution of India. 126.3. Separation of powers between three organs-the legislature, executive and judiciary-is also nothing but a consequence of principles of equality enshrined in Article 14 of the Constitution of India. Accordingly, breach of separation of judicial power may amount to negation of equality under Article 14. Stated thus, a legislation can be invalidated on the basis of breach of the separation of powers since such breach is negation of equality under Article 14 of the Constitution. 126.4. The superior judiciary (High Courts and Supreme Court) is empowered by the Constitution to declare a law made by the legislature (Parliament and State Legislatures) void if it is found to have transgressed the constitutional limitations or if it infringed the rights enshrined in Part III of the Constitution. 126.5. The doctrine....
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....on which has been held by a court to be invalid, provided, such a law removes the basis of the judgment of the court, by curing the defects of the legislation as it stood before the amendment. 39.2. The validating legislation may be retrospective. It must have the effect that the judgment pointing out the defect would not have been passed, if the altered position as sought to be brought in by the validating statute existed before the court at the time of rendering its judgment. 39.3. Retrospective amendment should be reasonable and not arbitrary and must not be violative of any constitutional limitations. 39.4. Setting at naught a decision of a court without removing the defect pointed out in the said decision is opposed to the rule of law and the scheme of separation of powers under the Constitution of India. 39.5. Abrogation is not a device to circumvent an unfavourable judicial decision. If enacted solely with the intention to defy a judicial pronouncement, an Amendment and Validation Act, 1997 may be declared as ultra vires." (emphasis supplied) 54. After considering the afore referred judgments of the Supreme Court it can safely ....
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.... legislation is enacted solely with the intention to defy a judicial pronouncement, such legislation would be an example of legislature overreach and therefore, unconstitutional. 55. In the light of the afore discussion and reference to the law settled by the Supreme Court the decks are now clear for us to analyze and determine as to whether Section 147A, enacted retrospectively by the legislature, is constitutionally valid ? 56. As noticed earlier, the Telangana High Court in Kankanala Ravindra Reddy's case (supra), categorically held that a notice under Section 148 of the Act is required to be issued only by a randomly chosen Assessing Officer through automated allocation and that after the introduction of the schemes dated 28.03.2022 and 29.03.2022, framed under Sections 130 and 151A respectively, it becomes mandatory for the revenue to conduct/ initiate proceedings pertaining to reassessment under Sections 147, 148 and 148A of the Act, in a faceless manner. 57. Similarly, in Hexaware Technologies Ltd.'s case (supra), a Division Bench of the Bombay High Court clearly held that in terms of the scheme dated 29.03.2022, framed under Section 151A of the Act, issuance of not....
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..... Ltd.'s case (supra), Ram Narayan Sah's case (supra), Shree Cement Ltd.'s case (supra), Sharda Devi Chhajer's case (supra); TVS Credit Services Ltd.'s case (supra), Ramachandra Reddy Ravi Kumar's case (supra), Prameela Pasumarthi's case (supra) and Ram Narayan Sah's case (supra) the constitution courts categorically held that in terms of Section 151A of the Act, read with the scheme framed thereunder dated 29.03.2022, a notice under Section 148 of the Act could "only" be issued by a faceless AO. Through and even after the retrospective enactment of Section 147A, Section 151A of the Act and the scheme framed thereunder continue to exist on the statute book and without any amendment. Thus, the primary basis on which the constitutional courts had held that notices issued under Section 148 of the Act could not have been issued by the assessees' jurisdictional AOs has not been removed through the retrospective enactment of Section 147A. Without amending Section 151A of the Act or the scheme framed thereunder, the "clarification" made by the legislature through the retrospective enactment of Section 147A that Assessing Officers for the purpose of issuance of notices under Section 148....
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....e issuance of notices under Section 148 of the Act. The object behind framing of the said scheme, which is clearly brought out on a bare reading of Section 151A(1) of the Act, was that the scheme was framed for the purpose of imparting greater efficiency, transparency and accountability by eliminating the interface between the income-tax authorities and the assessees or any other persons. Under Section 151A(2) the Central Government, for the purpose of giving effect to the scheme made under Section 151A(1), by issuance of a notification in the official gazette, could direct that any of the provisions of the Act shall not apply or shall apply with such exceptions, modification etc. as the case may be but in terms of the first proviso to Section 151A(2) no such direction could be issued after 31.03.2022. After having specifically included issuance of notices under Section 148 of the Act in the scheme framed under Section 151A(1) it was only till 31.03.2022 that the Central Government could have issued a notification for the exclusion of applicability of Section 148 of the Act to the scheme framed under Section 151A (1) and not thereafter. Till 31.03.2022 no notification was issued by....
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....n 147A, it was desirable for the respondents to have invited an early opinion of the Supreme Court at the time when cross petitions were pending before the Supreme Court, filed by the respective parties aggrieved by the divergent views expressed by different jurisdictional High Courts as that would have finally put a lid on this issue. 63. In the light of the afore discussion, we have no hesitation to declare Section 147A of the Act to be unconstitutional. 64. This brings us to the issue as to whether even in the absence of Section 147A of the Act are the notices issued to the petitioners under Section 148 of the Act, by their respective jurisdictional AOs, sustainable in law. 65. At this stage, reference to Section 151A of the Act and the scheme framed thereunder dated 29.03.2022 is essential. They are again reproduced below for ready reference:- 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-....
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....his 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. [Notification No. 18/2022/F. No. 370142/16/2022-TPL(Part1] SHEFALI SINGH, Under Secy." 66. Section 151A enables the Central Government to make a scheme for the purpose of assessment, reassessment or re-computation under Section 147 of the Act or issuance of notice under Section 148 of the Act or conduct enquiries or issuance of show cause notice or passing of order under Section 148A of the Act or sanction for the issue of such notice under Section 151 of the Act so as to impart greater efficiency, transparency and accountability by eliminating the interface between the income-tax authorities and the assessees or any other person to the extent technologically fea....
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....r the Act or the rules thereunder and, therefore, an election petition could, under no circumstances, be presented to the Registrar to save the period of limitation. It is a well-settled salutary principle that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner." (emphasis supplied) 70. To the same effect are the following observations of the Supreme Court in Cherukuri Mani Vs. Chief Secretary, Govt. of Andhra Pradesh and others, (2015) 13 SCC 722: "14. Where the law prescribes a thing to be done in a particular manner following a particular procedure, it shall be done in the same manner following the provisions of law, without deviating from the prescribed procedure. When the provisions of Section 3 of the Act clearly mandated the authorities to pass an order of detention at one time for a period not exceeding three months only, the government order in the present case, directing detention of the husband of the appellant for a period of twelve months at a stretch is clear violation of the prescribed manner and contrary to the provisions of law. The Government cannot direct or extend....
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....n under the statute. As such the power is to be exercised in that manner alone, failing which it would fall foul of the requirement of complying with due process under law. We have found fault with the authorised officer and declared the action bad only insofar as not following the legal requirement before and after freezing the account. This shall not be construed as an opinion expressed on the merit of the allegation or any other aspect relating to the matter and the action initiated against the appellant and its Directors which is a matter to be taken note of in appropriate proceedings if at all any issue is raised by the aggrieved party." (emphasis supplied) 73. It is the submission of the respondents that the phrase in the scheme dated 29.03.2022 "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" implies that Clause 3 of the said scheme does not apply to issuance of notices under Section 148 of the Act because Section 144B specifically excludes preassessment proceedings under sections 148 and 148A. Such a submission does not warrant acceptance because when the scheme dat....
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....: (i) in interpreting a taxing statute, equitable considerations are entirely out of place. Taxing statutes cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any deficiency; (ii) before taxing any person it must be shown that he falls within the ambit of the charging section by clear words used in the section; and (iii) if the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject. There is nothing unjust in the taxpayer escaping if the letter of the law fails to catch him on account of the legislature's failure to express itself clearly." It is further the respondents' submission that the scheme dated 29.03.2022 would not apply to issuance of notices under Section 148 of the Act because Section 148 is subject to Section 148A and there is no reference in the scheme to Section 148A, which the court also cannot add to the scheme. This submission is also required to be considered only to be rejected in the light of t....
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.... scheme framed thereunder, the provisions of the Act read with the scheme framed thereunder shall prevail especially when such scheme has also been accorded approval by both the houses of Parliament. 74. In this regard reference to the following observations by a Constitution Bench of the Supreme Court in Commissioner of Central Excise, Bolpur Vs. Ratan Melting & Wire Industries, (2008) 13 SCC 1 would be useful:- "6. Learned counsel for the assessee on the other hand submitted that once the circular has been issued it is binding on the Revenue Authorities and even if it runs counter to the decision of this Court, the Revenue Authorities cannot say that they are not bound by it. The circulars issued by the Board are not binding on the assessee but are binding on the Revenue Authorities. It was submitted that once the Board issues a circular, the Revenue Authorities cannot take advantage of a decision of the Supreme Court. The consequences of issuing a circular are that the authorities cannot act contrary to the circular. Once the circular is brought to the notice of the Court, the challenge by the Revenue should be turned out and the Revenue cannot lodge an appeal taking....