Bombay High Court
Sarika Raju Shah vs Income Tax Officer Ward 23 3 6 Mumbai And 3 ... on 6 August, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-OS:12612-DB
920-WP(L)-15752-2024(OS).DOC
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 15752OF2024
Sarika Raju Shah ...Petitioner
Versus
Income Tax Officer Ward-2(3)(3)(6), Mumbai & ...Respondents
Ors.
----
Mr. Jitendra Singh a/w Ms. Shivali Mhatre, for Petitioner.
Ms. Mamta Omle, for Respondents.
_______________________
CORAM: G. S. KULKARNI &
SOMASEKHAR SUNDARESAN, JJ.
DATE 06 AUGUST 2024
_______________________
P.C.
1. Rule. Rule made returnable forthwith. Learned counsel for the
respondents waives service. By consent of the parties, heard finally.
2. Reply affidavit on behalf of the revenue is taken on record.
3. This Writ Petition under Article 226 of the Constitution of India is filed
challenging notice dated 21st July 2022 issued by respondent no.2 to the
Petitioner under Section 148 of the Income Tax Act, 1961 ("the Act"), and also
a prior notice issued under Section 148A(b) dated 25 th May, 2022 and an order
dated 21 July, 2022 passed under Section 148A(d) of the Act. The Assessment
Year in question is AY 2013-14.
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4. It is apparent that the impugned notice dated 21 July, 2022 issued under
Section 148 of the Act and the order of the same date under Section 148A(d)
of the Act are issued by the Jurisdictional Assessing Officer ("JAO") and not
under the mandatory faceless mechanism as per the provisions of Section 151A
of the Act. For a notice to be validly issued under Section 148 of the Act, the
Respondent No.2 would be required to comply with the provisions of Section
151A of the Act, so as to adhere to the faceless mechanism, as notified by the
Central Government by notification dated 29 March 2022. A Division Bench
of this Court in the case of Hexaware Technologies Limited Vs. Assistant
Commissioner of Income Tax & 4 Ors. 1 had considered the effect and
interpretation of the said provision. The relevant extract of the said decision
reads thus:-
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
1 (2024) 464 ITR 430
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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 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. It is hence apparent that in the present case, the impugned order and the
notices issued by respondent no.2 are not in compliance with the Scheme
notified by the Central Government implementing the provisions of Section
151A of the Act. The Scheme, as tabled before the Parliament as per the
requirements of the said provision, is in the nature of a subordinate legislation,
which governs the conduct of proceedings under Section 148A as well as
Section 148 of the Act. Thus, in view of the explicit declaration of the law in
Hexaware Technologies Limited (supra), the grievance of the petitioner-
assessee insofar as it relates to an invalid issuance of the impugned order and
the notice is required to be accepted.
6. Learned Counsel for the parties agree that in this view of the matter, the
proceedings initiated under Section 148 of the Act would not be sustainable
and are rendered invalid in view of the judgment rendered in Hexaware
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Technologies Limited (supra).
7. Learned Counsel for the petitioner has placed reliance on the decision of
a co-oridnate Bench of this Court in New India Assurance Company Ltd. Vs.
Assistant Commissioner of Income Tax & Ors. , the contend that in similar
circumstances, the notice as issued to the petitioner in the said proceedings was
held to be bad an illegal and was quashed by this Court. Our attention is
invited to the relevant paragraph of the said decision, which reads thus:
"35 The Revenue's contention that the reopening notice
was torelate back to an earlier date is entirely flawed and
unacceptable. Thus, the reassessment notices issued for AY
2013-14 are patently barred by limitation as the six years
limitation period under the Act (as extended by Section 3 of
TOLA) expired by 31st March 2021. However, even on the
Revenue's demurrer and assuming that such reopening notices
could travel back in time and that the provisions of TOLA
protected such reopening notices (we do not agree), even then,
in so far as the notices issued for AY 2013-14 is concerned,
would in any case be barred by limitation. As stated earlier,
under the erstwhile Section 149, a notice under Section 148
could have been issued within a period of six years from the end
of the relevant assessment year. The Notifications issued under
TOLA, viz., Notification No.20/2021, which is relied upon by
the Revenue, only cover those cases where 31st March, 2021
was the end date of the period during which the time limit,
specified in, or prescribed or notified under the Income Tax Act
falls for completion. The limitation under the Income Tax Act,
1961 (erstwhile Section 149) for reopening the assessment for
the AY 2013-14 expired on 31st March 2020. Hence,
Notification No.20/2021 did not apply to the facts of the
present case, viz., reopening notice for the AY 2013-14.
Therefore, the Revenue could not issue any notice under
Section 148 beyond 31st March 2021 and hence, even the
relate back theory of the Revenue could not safeguard the
reassessment proceedings initiated after 1st April 2021 for AY
2013-14."
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8. In the light of the above discussion, and when there is no dispute that
the Jurisdictional Assessing Officer had no jurisdiction to issue the impugned
order and the impugned notices, the writ petition is required to be allowed. It
is accordingly allowed in terms of prayer clause (a), which reads thus:-
"(a) That this Hon'ble Court may be pleased to issue under
Article 226 of the Constitution of India an appropriate direction order
or a writ including a writ in the nature of 'Certiorari' to call for the
records of the Petitioner's case and after verifying the legality of the
same, quash and set aside the order dated 21 st July, 2022 passed under
Section 148A(d) of the Act (being Exhibit - 'F'), subsequent notice
dated 21st July, 2022 issued under Section 148 of the Act (being
Exhibit - 'G') as the same are without jurisdiction and bad in law and
the reassessment order dated 28th May 2023 passed under Section 147
read with Section 144B of the Act (being Exhibit - 'I') in pursuance to
the above notice issued under Section 148 of the Act as the same is
void-ab-inito as well as the notice issued under section 156 of the Act
(being Exhibit - 'J') and penalty notice issued under section 271(1)(c)
of the Act (being Exhibit - 'K') as the same are also bad in law. Also
quash the Instruction No. 01/2022, dated 11 th May, 2022 issued by the
Respondent No. 4 being ultra-virus and contrary to the provisions of
law."
9. 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 as raised in the Writ Petition, which are expressly
kept open.
10. Rule is made absolute in the aforesaid terms. No costs.
(SOMASEKHAR SUNDARESAN, J.) (G. S. KULKARNI , J.)
6 August 2024
Kiran Kawre
