Bombay High Court
Ulltra Lifespace Private Limited vs Assistant Commissioner Of Income-Tax ... on 12 August, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-OS:12447-DB
Digitally
signed by
936-WPL 20674-24.DOC
PRAJAKTA
PRAJAKTA SAGAR
SAGAR VARTAK
VARTAK Date:
2024.08.16
12:26:04
+0530
Prajakta Vartak
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L.) NO. 20674 OF 2024
Ultra Lifespace Pvt. Ltd. ..Petitioner
Vs.
Asst. Commissioner of Income Tax
Circle 3(1)-(1), Mumbai & Ors. ...Respondents
_______
Dr. Shivaram i/b. Shashi Bekal for the Petitioner.
Mr. Arjun Gupta 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. This Writ Petition under Article 226 of the Constitution of India has
been filed to challenge a notice dated 07 April, 2023 (" 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 2016-17.
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3. On perusal of the record, it is apparent that the impugned notices
dated 15 March 2023 and 21 March 2023 issued under Section 148A(b),
the order passed thereon under Section 148A(d) dated 07 April 2023 and
the consequent notice dated 07 April 2023 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 :
"35 Further, in our view, there is no question of concurrent
1 (2024) 464 ITR 430
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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
29th 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
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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. ........"
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
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before 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, whereby in similar circumstances, this
Court has allowed the petition considering the provisions of Section 151A
of the Act.
7. 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 (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 o f the Petitioner's case and after going into
the legality and propriety thereof, to quash and set aside
(i) Notice under section 148 of the Act dated April 07,
2 Writ Petition (L.) No. 16918 of 2024 dt. 2-07-2024
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2023 (Ex-A); (ii) Order dated April 07, 2023, passed
under section 148A (d) of the Act (Ex-B); (iii) Notice
under section 148A(b) of the Act dated March 15,2023
and March 21,2023 (Ex-C 1 & C-2)."
8. 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.
9. Rule is made absolute in the aforesaid terms. No costs.
(SOMASEKHAR SUNDARESAN, J.) (G. S. KULKARNI , J.)
12 August, 2024
