Bombay High Court
Shiv Shankar Kothari Huf vs Income Tax Officer, Ward 2 (1) And Anr on 26 August, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-AS:34288-DB
930-WP-11364-2024.DOCX
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 11364 OF 2024
Digitally
Shiv Shankar Kothari HUF ... Petitioner
signed by
SHRADDHA
SHRADDHA KAMLESH
KAMLESH TALEKAR
Versus
TALEKAR Date:
2024.08.27
19:45:57
+0530 1. Income Tax Officer,
Ward 2(1), Thane & Anr. ...Respondents
Mr. Om Kandalkar, for Petitioner.
Mr. Akhileshwar Sharma, for Respondent Nos.1 and 2.
_______________________
CORAM: G. S. KULKARNI &
SOMASEKHAR SUNDARESAN, JJ.
Date : August 26, 2023
_______________________
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 30 March, 2024 (" 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 2017-18.
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3. On perusal of the record, it is apparent that the impugned notice dated 21
March, 2024 issued under Section 148A(b), the order passed thereon under
Section 148A(d) dated 30 March, 2024 and the consequent notice dated 30
March, 2024 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 151A 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
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.
(2024) 464 ITR 430
August 26, 2024
Shraddha Talekar, PS
930-WP-11364-2024.DOCX
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 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
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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 in 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
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930-WP-11364-2024.DOCX
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. Learned counsel for the revenue fairly agrees that this proceedings would
stand covered by the decision of a Division Bench of this Court in the case of
Hexaware.
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 (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 Petition (L.) No. 16918 of 2024 dt. 2-07-2024
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930-WP-11364-2024.DOCX
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 30.03.2024 passed under section 148A(d) of the Act and subsequent
notice dated 30.03.2024 issued under section 148 of the Act as the same are
without jurisdiction and bad in 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 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 26, 2024
Shraddha Talekar, PS
