Bombay High Court
Sahib Singh Agencies (Bombay) Private ... vs Deputy Commissioner Of Income Tax ... on 27 August, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-OS:13257-DB
921-WP(L)-22301-2024.DOCX
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 22301 OF 2024
Sahib Singh Agencies (Bombay) Private ... Petitioner
Limited
Versus
Deputy Commissioner of Income Tax, Circle
- 4(3) (1), Mumbai & Ors. ... Respondents
Mr. Dharan V. Gandhi, a/w. Aanchal Vyas for the Petitioner.
Ms. Shilpa Goel 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. This Writ Petition under Article 226 of the Constitution of
India has been filed to challenge a notice dated 28 th 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
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under Section 148 of the Act has been initiated in respect of
returns filed by the Petitioner-Assessee for the Assessment Year
2020-2021.
3. On perusal of the record, it is apparent that the impugned
notice dated 11th March 2024 issued under Section 148A(b), the
order passed thereon under Section 148A(d) dated 28 th March
2024 and the consequent notice dated 28 th 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 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
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by a Division Bench of this Court in the case of Hexaware
Technologies Limited Vs. Assistant Commissioner of Income Tax
& 4 Ors. ("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. When
specific jurisdiction has been assigned to either the JAO
or the FAO in the Scheme dated 29 th 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
(2024) 464 ITR 430
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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 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
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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 the law in Hexaware,
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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. We also find substance in the contentions of the
Petitioner that the Petitioner's application dated 9 August 2021
filed praying for condonation of delay in filing of return of
income and tax audit report for the assessment year 2020-21
could not have been kept pending for so long. The said
application was required to be decided as expeditiously
as possible. In these circumstances, we are also inclined to
Writ Petition (L.) No. 16918 of 2024 dt. 2-07-2024
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consider granting of prayer clause b(iii).
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) and b(iii) which reads thus :
"(a) that this Hon'ble Court may be pleased to issue a Writ
of Certiorari or a Writ in the nature of Certiorari or any other
appropriate Writ, Order or direction, calling for the records
of the Petitioner's case and after going into the legality and
propriety thereof, to quash and set aside the impugned order
u/s 148A(d) of the Act dated 28.03.2024 ("ExhibitI") the
impugned notice u/s 148 of the Act dated 28.03.2024
("Exhibit J") the notices u/s 148 A(b) of the Act dated
11.03.2024, ("Exhibit G") and the notices u/s 148A(a) of the
Act dated 02.02.2024, ("Exhibit E");
(b) This Hon'ble Court be pleased to issue a Writ of
Mandamus or a Writ in the nature off Mandamus or any
other appropriate Writ, Order or direction, directing the
Respondents, its servants, subordinates, agents and
successors in office:
(iii) the Respondent no. 2 to allow the application of the
Petitioner dated 09.08.2021 ("Exhibit A") and condone the
delay in filing of the return of income and tax audit report for
the AY 2020-21 and consequently, impugned order u/s
148A(d) of the Act dated 28.03.2024 ("Exhibit I") the
impugned notice u/s 148 of the Act dated 28.03.2024
("Exhibit J") should be quashed and set aside."
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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 (G. S. KULKARNI , J.)
SUNDARESAN, J.)
Digitally
signed by
GANESH
GANESH SUBHASH
SUBHASH LOKHANDE
LOKHANDE Date:
2024.08.29
17:31:51
August 27, 2024
Ganesh Lokhande, PA
