Sushila Sureshbabu Malge vs Assessment Unit Income Tax Department ...
2024 Latest Caselaw 22775 Bom

Bombay High Court

Sushila Sureshbabu Malge vs Assessment Unit Income Tax Department ... on 6 August, 2024

Author: G. S. Kulkarni

Bench: G. S. Kulkarni

2024:BHC-AS:33113-DB

                                                                                    901.WP6403_2023.DOCX




     Vidya Amin
                            IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                    CIVIL APPELLATE JURISDICTION

                                     WRIT PETITION NO. 6403 OF 2023
                   Sushila Sureshbabu Malge                                 ... Petitioner
                                     Versus
                   Assessment Unit, Income-tax Department, through Pr. ...Respondents
                   Commissioner of Income-Tax & Ors.
                   Ms. Ritika Agarwal i/b. ACE Legal for the petitioner.
                   Mr. Akhileshwar Sharma for the respondents.
                                        _______________________
                                     CORAM:              G. S. KULKARNI &
                                                         SOMASEKHAR SUNDARESAN, JJ.

                                     Date     :          6 August, 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 12 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 2018-19.

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3. On perusal of the record, it is apparent that the impugned notice

dated 22 March, 2022 and 30 March, 2022 issued under Section 148A(b),

the order passed thereon under Section 148A(d) dated 12 April, 2022 and

the consequent notice dated 12 April, 2022 issued under Section 148 of the

Act are all 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. To give effect to the provisions of Section 151A, the Central

Government has issued a Notification dated 29 March 2022 whereby a

faceless mechanism has been introduced. Thus, necessarily in resorting to a

procedure under Section 148A and the consequent notice to be issued under

Section 148 of the Act, the Assessing Officer is required to adhere to the

provisions of Section 151 read with the Notification. Thus, 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 :

(2024) 464 ITR 430

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"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 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

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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. ........"

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. In the present case, it is apparent that the Respondent-Revenue has

not complied with the Scheme notified by the Central Government pursuant

to Section 151A(2) of the Act. The Scheme has also been tabled before the

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

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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, whereby in similar circumstances, this Court has

allowed the petition considering the provisions of Section 151A of the Act.

7. Learned counsel for the petitioner has also drawn our attention to the

decision of this Court in Kairos Properties Pvt. Ltd. vs. Assistant

Commissioner of Income-tax and Ors .3 where the Court considered the effect

of scheme as notified by the Central Government under the notification dated

29 March, 2022. The Court, considering the relevant provisions, has held that

this scheme as notified in paragraph 3 of the notification would take within its

ambit steps taken by the Revenue in issuing notice under section 148A(b) as

also an order passed under Section 148A(d), so as to be included within the

Writ Petition (L.) No. 16918 of 2024 dt. 2-07-2024

Writ Petition (L) No. 22686 of 2024 dated 05.08.2024

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ambit of Section 151A of the Act. In this view of the matter, on both

applicability of the law as laid down by this Court in Hexaware (supra) as also

considering the observations of this Court in Kairos Properties Pvt. Ltd. (supra)

and the view taken in assessee's own case in Writ Petition No. 7703 of 2024

dated 2 July, 2024, the petition would be required to be allowed.

8. In the light of the above discussion, and as there is no dispute that

the JAO had no jurisdiction to issue the impugned notice, the Writ Petition is

accordingly allowed in terms of prayer clause (c) which reads thus :

c) To issue writ of Mandamus or direction or order in the nature of Mandamus or writ of Certiorari or any other writ under Article 226 of the Constitution of India declaring notice dated 12.04.2022 under section 148 of the Act being "Exhibit G" as invalid."

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 raised in the Writ Petition. The other questions

raised in this petition are not being answered since it is not necessary to do so.

10. Rule is made absolute in the aforesaid terms. No costs.

                    (SOMASEKHAR SUNDARESAN, J.)                                  (G. S. KULKARNI , J.)





                                                         August 6, 2024


Signed by: Vidya S. Amin
Designation: PS To Honourable Judge
Date: 19/08/2024 15:43:03