Bombay High Court
Imran Nayab Hassan Khan vs Income Tax Officer International Tax, ... on 12 August, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-OS:12775-DB
Digitally
signed by
PRAJAKTA
923-WPL 16852-24.DOC
PRAJAKTA SAGAR
SAGAR VARTAK
VARTAK Date:
2024.08.22
11:49:17
+0530
Prajakta Vartak
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L.) NO. 16852 OF 2024
Imran Nayab Hassan Khan ..Petitioner
Vs.
Income Tax Officer International
Tax, Ward 3(1)(1)-Mumbai & Ors. ...Respondents
_______
Ms. Radha Halbe for the Petitioner.
Mr. Subir Kumar with Mr. Abhinav Palsikar for Respondents.
_______
CORAM: G. S. KULKARNI &
SOMASEKHAR SUNDARESAN, JJ.
DATED: 12 August, 2024
Oral Judgment (Per G. S. Kulkarni, J.) :-
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 28 July 2022 issued by respondent no.1 to the
Petitioner under Section 148 of the Income Tax Act, 1961 ("the Act"), and
also a prior notice under Section 148A(b) and an order passed thereon
under Section 148(A)(d) of the Act. The Assessment Year in question is AY
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2015-16.
4. It is apparent that the impugned notice dated 28 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-Revenue 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
1 (2024) 464 ITR 430
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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 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,
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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. It is hence apparent that in the present case, the impugned order and
the notices issued by respondent no.1 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
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impugned order and the notice is required to be accepted. 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 Technologies
Limited (supra).
6. 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. Also no appeal has been filed by the petitioner. The petition is
accordingly allowed in terms of prayer clause (a), which reads thus:-
"(a) that this Hon'ble Court may be pleased to issue a Writ o f
Certiorari or a Writ in the nature o f Certiorari or any other
appropriate Writ, Order or direction, calling for the records of
the Petitioner's case and after going into the legality and
propriety thereof, to quash and set aside the notice dated
31.05.2022 issued under Section 148A(b) (Exhibit D1); the
order dated 28.07.2022 passed under section 148A(d) of the Act
("Exhibit El"); the notice dated 28.07.2022 issued under section
148 of the Act ("Exhibit Fl "); the assessment order dated
23.03.2024 passed under section 147 read with section 144C(13)
("Exhibit M1"); the notice of Demand dated 23.03.2024 under section
156 ("Exhibit M2"); the penalty notice dated 23.03.2024 issued
under section 274 read with section 271(l)(c) (Exhibit "N1") and
the penalty notice dated 23.03.2024 issued under section 274 read with
section 271F(Exhibit "N1")."
7. 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.
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8. Rule is made absolute in the aforesaid terms. No costs.
(SOMASEKHAR SUNDARESAN, J.) (G. S. KULKARNI , J.)
12 August, 2024
