Shri Mukund Bhavan Trust vs The Assitant Commissioner Of Income Tax ...
2024 Latest Caselaw 23565 Bom

Bombay High Court

Shri Mukund Bhavan Trust vs The Assitant Commissioner Of Income Tax ... on 12 August, 2024

Author: G. S. Kulkarni

Bench: G. S. Kulkarni

2024:BHC-AS:32304-DB
                                                                              901-WP-7880-2023.DOC



                      IN THE HIGH COURT OF JUDICATURE AT BOMBAY

                                     CIVIL APPELLATE JURISDICTION

                                    WRIT PETITION NO. 7880 OF 2023

            Shri Mukund Bhavan Trust                                     ...Petitioner

                                    Versus
            The Assistant Commissioner of Income Tax,                    ...Respondents
            Exemption Circle, Pune & Ors.
                                            ----

            Mr. Tanmay Phadke i/b Mr. Ruturaj Gurjar, for Petitioner.
            Mr. Suresh Kumar, for Respondents.
                                _______________________
                        CORAM:             G. S. KULKARNI &
                                           SOMASEKHAR SUNDARESAN, JJ.

                             DATE                       12 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 21 March, 2023 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

12 August 2024 Kiran Kawre

901-WP-7880-2023.DOC

Section 148(A)(d) of the Act. The Assessment Year in question is AY 2019-20.

4. It is apparent that the impugned notice dated 21 March, 2023 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 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

1 (2024) 464 ITR 430

12 August 2024 Kiran Kawre

901-WP-7880-2023.DOC

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, no notice is required to be issued under

12 August 2024 Kiran Kawre

901-WP-7880-2023.DOC

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 impugned order and

12 August 2024 Kiran Kawre

901-WP-7880-2023.DOC

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. It

is accordingly allowed in terms of prayer clause (b), which reads thus:-

"(b) Issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction, quashing the impugned order under section 148A(d) of the Act dated 4 April, 2023 (Exhibit-D) and the impugned notice under section 148 of the Act dated 4 April, 2023 (Exhibit-E)."

7. 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.

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

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

12 August 2024 Kiran Kawre