Bombay High Court
Harish Mansukhani vs Union Of India on 1 August, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-OS:11745-DB 914-WPL-18695-2024.DOC
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L.) NO. 18695 OF 2024
Digitally
signed by
Harish Mansukhani ...Petitioner
SHRADDHA
SHRADDHA KAMLESH
KAMLESH TALEKAR
Vs.
TALEKAR Date:
2024.08.05
20:02:20
1. Union of India & Ors. ...Respondents
+0530
_______
Ms. Neha Anchlia, for Petitioner.
Mr. Ravi Rattesar for Respondents.
_______
CORAM: G. S. KULKARNI &
SOMASEKHAR SUNDARESAN, JJ.
Date : August 01, 2024
PC :-
1. Rule. Rule made returnable forthwith. Learned Counsel for the
Respondents waives service. By consent of the parties, heard finally.
2. This Writ Petition under Article 226 of the Constitution of India has been
filed to challenge a notice dated 11 April, 2022 (" impugned notice") issued to the
Petitioner under Section 148 of the Income Tax Act, 1961 (" the Act") and also the
underlying prior notice and order under Section 148A(b) and Section 148A(d) of
the Act, respectively. The reassessment under Section 148 of the Act has been
initiated in respect of returns filed by the Petitioner-Assessee for the Assessment
Year 2015-16. The reassessment proceedings led to a reassessment order dated 26
March, 2024 being passed, which is impugned in this Writ Petition.
3. On perusal of the record, it is apparent that the notice dated 11
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April, 2022 issued under Section 148 of the Act and indeed the underlying order
of the same date under Section 148A(d) of the Act are issued by the Jurisdictional
Assessing Officer ("JAO") and not by a Faceless Assessing Officer ("FAO"), as is
required by the provisions of Section 151A of the Act.
4. It is now well settled that for a notice to be validly issued for reassessment
under Section 148 of the Act, the Respondent-Revenue would need to be
compliant with Section 151A, which has been interpreted and analysed in detail by
a Division Bench of this Court in the case of Hexaware Technologies Limited Vs.
Assistant Commissioner of Income Tax & 4 Ors. 1 ("Hexaware"). The Division
Bench has clearly declared the law as follows :
35 Further, in our view, there is no question of concurrent
jurisdiction of the JAO and the FAO for issuance of notice under
Section 148 of the Act or even for passing assessment or
reassessment order. When specific jurisdiction has been
assigned to either the JAO or the FAO in the Scheme dated 29 th
March, 2022, then it is to the exclusion of the other. To take any
other view in the matter, would not only result in chaos but also
render the whole faceless proceedings redundant. If the
argument of Revenue is to be accepted, then even when notices
are issued by the FAO, it would be open to an assessee to make
submission before the JAO and vice versa, which is clearly not
contemplated in the Act. Therefore, there is no question of
concurrent jurisdiction of both FAO or the JAO with respect to
the issuance of notice under Section 148 of the Act. The Scheme
dated 29th March 2022 in paragraph 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 paragraph 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
1 (2024) 464 ITR 430
01 August, 2024
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914-WPL-18695-2024.DOC
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 no.1 that respondent no.1 was the
random officer who had been allocated jurisdiction.
36 With respect to the arguments of the Revenue, i.e., the
notification dated 29th March 2022 provides that the Scheme so
framed is applicable only 'to the extent' provided in Section
144B of the Act and Section 144B of the Act does not refer to
issuance of notice under Section 148 of the Act and hence, the
notice cannot be issued by the FAO as per the said Scheme, we
express our view as follows:-
Section 151A of the Act itself contemplates
formulation of Scheme for both assessment,
reassessment or recomputation under Section 147 as
well as for issuance of notice under Section 148 of
the Act. Therefore, the Scheme framed by the CBDT,
which covers both the aforesaid aspect of the
provisions of Section 151A of the Act cannot be said
to be applicable only for one aspect, i.e., proceedings
post the issue of notice under Section 148 of the Act
being assessment, reassessment or recomputation
under Section 147 of the Act and inapplicable to the
issuance of notice under Section 148 of the Act. The
Scheme is clearly applicable for issuance of notice
under Section 148 of the Act and accordingly, it is
only the FAO which can issue the notice under
Section 148 of the Act and not the JAO. The
argument advanced by 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. ........"
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37 When an authority acts contrary to law, the said act of the
Authority is required to be quashed and set aside as invalid and
bad in law and the person seeking to quash such an action is not
required to establish prejudice from the said Act. An act which is
done by an authority contrary 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.
[Emphasis Supplied]
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 also been tabled in Parliament and is in the character of
subordinate legislation, which governs the conduct of proceedings under Section
148A as well as Section 148 of the Act. In view of the explicit declaration of the
law in Hexaware, the grievance of the Petitioner-Assessee insofar as it relates to an
invalid issuance of a notice is sustainable and consequently, the very manner in
which the proceedings have been initiated, vitiates the proceedings.
6. Learned Counsel for both the parties agree that the proceedings initiated
under Section 148 of the Act would not be sustainable in view of the judgment
rendered in Hexaware. Learned Counsel for the Petitioner-Assessee has also drawn
our attention to a recent decision of this Court in Nainraj Enterprises Pvt. Ltd. Vs.
The Deputy Commissioner of Income Tax, Circle-4(3)(1), Mumbai & Ors. 2,
2 Writ Petition (L.) No. 16918 of 2024 dt. 2-07-2024
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whereby in similar circumstances, this Court has allowed the petition considering
the provisions of Section 151A of the Act.
7. Learned Counsel for the Respondent-Revenue has highlighted that in the
facts of the case, the reassessment has in fact been completed and an order dated 26
March, 2024 has been passed, which has also been challenged before the Learned
Commissioner of Income-tax (Appeals). These developments took place prior to
the filing of this Writ Petition, which was affirmed on 6 June 2024.
8. Learned Counsel for the Petitioner has pointed out that the judgement in
Hexaware was pronounced on 3 May, 2024. Our attention has also been drawn to a
decision in the case of Vikram Developers Private Limited vs. Income Tax Officer
8(3)(1) and Others3 ("Vikram Developers") dated 10 May, 2024, where the
Division Bench of this Court that rendered judgement in Hexaware had also ruled
that any reassessment order passed pursuant to the foundationally-defective notice
under Section 148 would also stand quashed. So also, the Division Bench ruled in
Vikram Developers that any consequential demand notices or penalty notices will
also stand quashed and set aside.
9. In our opinion, considering the fact that the impugned notice issued by the
Jurisdictional Assessing Officer was itself defective and without authority of law
and the same was contrary to the provisions of Section 151A read with the
Notification dated 29 March, 2022 issued thereunder, the Petitioner having filed
an Appeal ought not distract this Court's attention. Consistent with the view taken
3 Writ Petition (L.) No. 14777 of 2024 dt. 10-05-2024
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by a Division Bench of this Court in Vikram Developers, and since there is no
dispute that the JAO had no jurisdiction to issue the impugned notice, the Writ
Petition is accordingly allowed and the impugned notice as well as order are hereby
quashed and set aside. So also consequential demand notices or penalty notices
will also stand quashed and set aside.
10. We make it clear that having disposed of this petition on the ground of non-
compliance with Section 151A of the Act, we have not expressed any opinion on
the other issues raised in the Writ Petition. The other questions raised in this
petition are not being answered since it is not necessary to do so.
11. Rule is made absolute in the aforesaid terms and the Writ Petition is hereby
disposed of. No costs.
(SOMASEKHAR SUNDARESAN, J.) (G. S. KULKARNI , J.)
01 August, 2024
Shraddha Talekar, PS
