Bombay High Court
Raviraj Entrerprises vs Income Tax Officer Ward 3(2) And Anr on 27 August, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-AS:34641-DB
918.WP10932_2024.DOCX
Vidya Amin
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 10932 OF 2024
Raviraj Enterprises ... Petitioner
Versus
Income-Tax Officer, Ward-3(2), Thane & Anr. ...Respondents
Mr. Tanmay M. Phadke for the petitioner.
Mr. Akhileshwar Sharma for the respondents.
_______________________
CORAM: G. S. KULKARNI &
SOMASEKHAR SUNDARESAN, JJ.
Date : 27 August, 2024
_______________________
PC:
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 respondent is taken on record.
3. This Writ Petition under Article 226 of the Constitution of India has
been filed to challenge a notice dated 31 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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4. 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 31 March, 2024 and the consequent
notice dated 31 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.
5. 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 :
(2024) 464 ITR 430
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"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 issue
of notice under Section 148 of the Act being assessment,
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918.WP10932_2024.DOCX
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]
6. 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
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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.
7. 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.
8. Learned counsel for the petitioner has also drawn our attention to the
decision of this Court in Kairos Properties Pvt. Ltd. vs. Assistant
Commissioner of Income-tax and Ors .3 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
Writ Petition (L.) No. 16918 of 2024 dt. 2-07-2024
Writ Petition (L) No. 22686 of 2024 dated 05.08.2024
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918.WP10932_2024.DOCX
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 (supra) as also
considering the observations of this Court in Kairos Properties Pvt. Ltd.
(supra), 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 (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 31.03.2024 (Exhibit M), the impugned notice under
section 148 of the Act dated 31.03.2024 (Exhibit N)."
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.)
August 27, 2024
Signed by: Vidya S. Amin
Designation: PS To Honourable Judge
Date: 29/08/2024 14:33:37
