Bombay High Court
Yeoman Marine Services Pvt. ... vs Assistant Commissioner Of ... on 26 August, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
Digitally signed
2024:BHC-OS:13119-DB
AARTI by AARTI
GAJANAN
GAJANAN PALKAR
PALKAR Date:
2024.08.28
10:59:04 +0530
947.WPL.20012.2024.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO.20012 OF 2024
Yeoman Marine Services Pvt. Ltd. .... Petitioner
Vs.
Asst. Commissioner of Income tax,
Circle-8(3)(1), Mumbai & Ors. .... Respondents
_________
Mr. Jitendra Singh a/w. Ms Shivali Mhatre & Mr. Satish Modi for
the Petitioner.
Mr. Akhileshwar Sharma for the Respondents.
_________
CORAM : G. S. KULKARNI &
SOMASEKHAR SUNDARESAN, JJ.
DATE : 26 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. This writ petition under Article 226 of the Constitution of
India has been filed to challenge a notice dated 26 April, 2023
("impugned notice") issued to the petitioner under Section 148 of
the Act, and also the underlying prior notice and order under
Section 148A(b) and Section 148A(d) of the Act, respectively. The
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reassessment under Section 148 of the Act has been initiated in
respect of returns filed by the petitioner-Assessee for the
Assessment Year 2019-20.
3. On perusal of the record, it is apparent that the impugned
notice dated 28 March, 2023 issued under Section 148A(b), the
order passed thereon under Section 148A(d) dated 26 April, 2023
and the consequent notice dated 26 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
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
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Limited Vs. Assistant Commissioner of Income Tax & 4 Ors. 1
("Hexaware")2. 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. 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
1 (2024) 464 ITR 430
2 Writ Petition (L) No. 22686 of 2024 dated 05.08.2024
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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 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
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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.3, 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
proceeding would stand covered by the decisions of the Division
Bench of this Court in the cases of Hexaware and Kairos Properties
Pvt. Ltd. vs. Assistant Commissioner of Income-tax and Ors.4
("Kairos Properties").
8. Learned counsel for the petitioner has also drawn our
3 Writ Petition (L.) No. 16918 of 2024 dt. 2-07-2024
4 Writ Petition (L) No. 22686 of 2024 dated 05.08.2024
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attention to the decision of this Court in Kairos Properties, 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 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 as also considering the
observations of this Court in Kairos Properties , the petition would
be required to be allowed.
9. 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 of
Certiorari or any other Writ, Order or Direction under Article 226
of the Constitution of India calling for the records of the case
leading to the issue of the initial impugned notice (Exhibit B)
dated 28th March 2023, passing of the impugned order (Exhibit E)
dated 26th April 2023 and the issue of the impugned notice
(Exhibit F) dated 26th April 2023and after going through the same
and examining the question of legality thereof quash, cancel and
set aside initial impugned notice (Exhibit B) dated 28 th March
2023, passing of the impugned order (Exhibit E) dated 26th April
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2023 and the issue of the impugned notice (Exhibit F) dated 26 th
April 2023;"
10. 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.
11. Rule is made absolute in the aforesaid terms. No costs.
[SOMASEKHAR SUNDARESAN, J.] [ G. S. KULKARNI, J. ]
26 August, 2024
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